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I
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■tfHix
V.I I
I C
C'l
A A } I- ■
4,
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<^r|>-3
A\a1?EATISE
ON THE
LAW OF AGENCY
INCLUDING NOT ONLY A DISCUSSION OF THE GENERAL SUBJECT
BUT ALSO
SPECIAL CHAPTERS ON
AHORNEYS AUCTIONEERS BROKERS AND FACTORS
By FLOYD R. ^ECHJtM. LL.D.
ArTBOR or Mbchem on Public OnndKss, MaciiEiirow Salbs, Etc. ; Formeblt Tappah
Fbofbbbob ov Law in tbb Univbbiutt or Miohioan; PKorBSSOR or Law
IK THR UNIVRRSITT OP CBICAOO
SECOND EDITION
IN TWO VOLUMES.
VOLUME I
CHICAGO
CALLAGHAN AND COMPANY
1914
\
Entered according to Act of Congress, In the year 1888, by
Floyd R. Meohjem,
In the office of the Librarian of Congress, at Washington*
Copyright, 1914,
by
Flotd R. MfiCHKlf .
VJ9811
• • •
• • • •
. • • •
• , • • • .
* •
■ •
PREFACE TO SECOND EDITION
The writer would deem himself sadly lacking in appreciation if hfe
did not at the outset endeavor to express the gratitude he feels for
the exceedingly kind reception extended to the first edition of this
work, and for the unfailing support which has been given to it dur-
ing the past twenty-five years. He sincerely trusts that in its revised
form the book will be found worthy of continued favor.
A new edition should have appeared many years ago, but the writer
has not been able to supply it until now. To properly prepare such an
edition is no trifling task. Outside of the time required for his regular
work of teaching, the writer has worked hard and steadily upon this
edition for more than ten years. Tlie entire book has been revised,
and, in large measure, rewritten. The writer has made no attempt to
make it a mere digest of the cases. Neither has he endeavored to cite
every case. Hundreds of cases have been examined and discarded be-
cause they were so purely cumulative or so relatively unimportant as
not to seem to justify the use of space in citing them. Nevertheless
the citation of new cases will be found verv extensive. The writer has
felt that if, after working more or less constantly in this field for so
many years, he could contribute anything of value to the profession, it
would be in endeavoring to analyze and weigh the general principles
which underlie the subject. This he has attempted to do, and he has
stated his conclusions freely, though, he hopes, not without due con-
sideration and becoming modesty. That he will be found to be jus-
tified in all of his conclusions, he has no right to hope.
It seems desirable to point out, — what perhaps sufficiently appears
from the text itself, — that, although the title Agency in modem times
is quite frequently made to include the relation of Master and Servant
iv PREFACE SECONP EDITION
as well as that of Principal and Agent, this book is primarily designed
to deal with the latter subject, and the former subject is dealt with only
incidentally and for the purpose of rounding out the discussion of the
lajtter. The proper discussion of the law of Master and Servant, in
all of its bearings, would require volumes, rather than the few sections
which can be given to it here.
The general arrangement and classification have not been materially
changed, but the great addition of new matter has made it necessary
to number the sections anew. It is hoped that the index will be found
sufficiently specific to enable those who are familiar with the old edi-
tion to find what they are looking for in this one.
Although the amount of matter in this edition is nearly three times
as great as that in the first edition, it has, by the use of a large page
and very generous measure, been kept within the compa$s of two vol-
umes.
It is proper to say, so far as it bears upon the citztioik of recent cases.
that more than a year has been consumed in putting the book through
the press.
Floyd R. Mbchem.
The University of Chicago,
June I, 1914.
PREFACE TO FIRST EDITION
What here follows is the result of an earnest endeavor to make a
reliable, useful and comprehensive statement of the law of Agency,
including not only its general form, but certain also of its more im*
portant special forms. How far this effort has been successful, those
who use the book can alone determine.
The plan pursued has been to state in as clear and accurate form as
possible, the principles of law involved, supported by a full citation of
the authorities, and to illustrate and fortify these statements by ex-
amples and quotations from leading and characteristic cases. Upon
doubtful questions there has been given, either in the text or in the
notes, a more or less full presentation of the conflicting views, and
the writer has endeavored to extract from them what seemed to him
to be the true principle. This has involved, in many cases, an expres-
sion of his own opinion, for which he is, of course, alone responsible.
For the benefit of those to whom complete libraries are not accessi-
ble,— and they embrace the great majority of the profession, — he has,
in many instances, made the statements of cases and the excerpts from
the opinions of the courts, fuller than might otherwise seem necessary.
While this course has added to the size of the book, the writer hopes it
has also added proportionately to its value. If he has erred in this re-
gard, it is the error of a too abundant caution. To further increase
the practical usefulness of the book he has, at the expense of no little
additional labor, given parallel references to those excellent series of
reports, the American Decisions, American Reports, American State
Reports and Moak's English Reports, as well as to the various Re-
porters and Law Journals. In several of the States the law of agency
VI PREFACE FIRST EDITION
has been, to a greater or less extent, reduced to the form of a code.
The more important of these statutory provisions will be found col-
lected in the Appendix.
The work is divided into five parts or books. Of these, the first four
are devoted to k general exposition of the law of Agency, while the
fifth contains a consideration of the law applicable to Attorneys, Auc-
tioneers, Brokers, and Factors. That this method of treatment in-
volves something of repetition is true, but in the writer's opinion the ad-
vantages of consecutive and separate treatment more than compen-
sate for it. The subjects of ship and bank. officers, and others some-
times treated in works upon agency, have not been separately dealt
with, not only because they belong more appropriately to other topics,
but because the size of the work would not permit of it. Each of the
four separate forms treated might well be, as each has been, made the
subject of an independent treatise, and to compress them into single
chapters prevents exhaustive discussion. It is believed, however, that
no important principle has been omitted, and that what these chapters
lack will be matter which is cumulative or of detail only. Trusting
that his work will be of use to those for whom it was intended, the
writer submits it to the profession.
Floyd R. Mechem.
i6 and 17 Bank Chambers,
Detroit, October i, 1888.
. \
TABLE OF CONTENTS, VOL. L
BOOK I
OF THE RELATION IN GENERAL; HOW CREATED
AND TERMINATED
CHAPTER I. ,
INTRODUCTION
IRcfcremccs mf to Mettoui fg 1-1TM» Vol. If H VT^^-USS, Vh m
Meaning of agency 1
Pormfl of acting 2:
Lines of distinction 8:
Other forms 4^ 5 ,
Direct and indirect representation 6
Degrees of authority %'
Nomenclature adopted S;
Is there a law of agency? 9
Agency b^ongs to a commercial age 10
Agency a modern title In our law 11-16
Agency In Roman law 1^20
Other historical references 21
Agency in modern Continental systems 22
The early treatise on agency 23
Legislation in English and American law •••••••• 24
CHAPTER II.
DEFINITIONS AND DISTINCTIONS
Agency defined^. 25
Prlncii»al and agent 26
Parties involved ••••..•• 27
Relation usually a voluntary one 28
Authority created by law — ^Authority by necessity 29
Contractual — Consensual 90, 31
Agency as «totu« 32
Agency as a contract relation • ^ • • 83, 34
Contract of agency — Power of attorney defined 35
How agent compares with servant 36, 37
Distinction often immaterial — Tendency to ignore it 88
Occasionally distinction Important • ••• 39
b
i
Vlll TABLE OF CONTENTS
[Referemem are to seetloaat §§ 1-1705, Vol. I| §§ 1709-2588, Vol. II.1
How agent compares with independent contractor 40
Public iBBtrumentalities like post, telegraph, etc^ not naually agents.. 41
Agency differs from trust/ ;.-.... 42, 43
Agency to be distinguished from sale 44
Agency to buy or sale 45, 46
Agency to sell or sale — Goods 47, 48
Land 49
How question determined — Law or fact 50
Agebco^ differs from partnership. , 51
From lease 52
From license 53
FYom bailment 54
From borrowing 55
Classification of agents 56
1. Actual and ostensible agencies 57
2. Universal, general and special agents 58
Basis of dlstitfctioti 59
Definitions resulting — General agent €0
~ Special agent 61
Mere messenger 62
Person used merely as mechanical aid or instrument 63
How many of each one principal may have 64
Same person may be a general and a special agent 65
Not special because limited to a particular business 66
Uses of these distinctions 67
Difficulty of determination 68
■ ■ How determined 69
3. Special forms. of agency — Professional and non-professional agents.. 70
Attorneys ajt law. 71
Auctioneers • 72
- — Brokers 73
Factors or commission merchants 74
Traveling salesmen or "drummers" 75
Officers of ships 76
Partners 77
Bank Officers 78
CHAPTER III.
FOR WHAT PURPOSES AGENCY MAY BE CREATED
Object of this chapter 79
Geikeral Rule — For any lawful purpose , 80
Exceptions — Illegal and personal acts 81
• I. UNUERTAKINGS CONTRARY TO LAW OR OPPOSED TO PUBLIC POLICY
Preliminary considerations 82
In general — Contracts of agency in such cases are void 83
How these cases regarded in law 84
TABLE OF CONTENTS &
[Referemees am to Metiomst 98 1-170S» Vol. I| M 1706-2688, Vol. II.]
«
IVhat elements the rule involTes 85
The element of contingent compensation 80
Distinction betweeii: validity o^ eonttact and lawfalness of Service. ..'• ^i'.RT
What cases here considered • 88
1, Bfuployment to 46 AeU proXiDited lyg P68tth)e Law
Employment to commit crimes, misdemeanors, trespass^, etc. -. ^ S^
Employment to carry on forbidden occupation 90
Employment of unlicensed person 91
2. Employment to do Acts opposed to Puhlic Policy
Employment to secure legislations-lobbying ft2^ 9?
Legitimate services 94
-; Ambiguous cases ^ 9^
How far contract affected by illegal acts done under it 96
Obtaining consent of property owners 97
Procuring. contracts from gov^erament or heads of departments 98
Illustrations ...,., 9^
Contrary views 100*
Services in prosecuting claims lOi
Compromise of crime. lOJt
Encouragement of crime — Agreements to defend future violations.... 103
Services in securing appointment of office 104
Same rule applies to private offices and employments 105
Services in Improperly influencing elections 10&
What services legitimate lOT
Services In securing pardons 108
How when conviction illegal 109
Services in procuring or suppressing evidence 110
Unlawful dealing in stocks and merchandise 4.11, 112
Employments creating monopolies or in restraint of trade 113
Employment to Induce violation of contracts 114
Deception or defrauding of third persons or the public 116
Voting trusts 116
Marriage brokerage 117
Corruption of agents, corporate officers, etc 118
Corruption of public officers 110
Other cases involving same principles 120
Agent must participate in unlawful purpose 121
Whole contract void when entire 1^2
Distinction between illegal and merely void contracts 123
n. ACTS OF A PERSONAL NATUBK
Personal duty, trust or confidence cannot be delegated to agent 124
Illustrations — Voting — Affidavits — Statutory requirements 125
Assignments — Wills — Marriage 126
TABLE OF CONTENTS
CHAPTER IV.
WHO MAY BB PRINCIPAL OR AGENT; AND HEREIN OF JOINT FftlN-
CUPALS AND AQENTS
[RefevemcM lue tm nwsHommt 89 ]^-lT09t V9I. If ff 17M-^t|^8» Vol. II.]
PurpoQe of tliU chapter. « 127
I. WHO MAY BE PEINCIPAI*
What considerations Involved 128
General rule — Every person competent to aot in his own right 129
Private corporations 1 30
]Puhlic corporations 131
Fartnerships 132
lacompetency — In general 133
i. Persons Naturallp Imcompetent
Persona of unsound mind-^Idiots, Lunatics, Hatyltual Drunkards, etc. . 184
Contracts thrctugh agents usually voidable 135
Torts of their servants, or agents « 188
Drunken, persons as. principals 137
Ratification or disaffirmance by these persons 138
2. Persons Legally Incompetent
Who included 139
Infants as principals 140
Infant's appointment of agent generally held void 141
Ratification by infant 142
■ Further concerning rule 143
Dissent — Exceptions 144
How in reason 145
— ' — Effect of proposed rule 146
Liability of infant for torts of agent or servant , 147
Married woman as principal — Not at common law — Now generally by
statute 148
— — How agent appointed by — General effect 149
— ^Liability of married woman for torts of agents, or servants 150
AUens — Alien enemies 1^^
II. WHO MAY BE AQE.^TS
In general 152
1. Competency in General
What questions involved 153
Less competency required In agent than in principal 154
Infant as agent 155
Child as agent of parent 156
Parent as agent of child 157
Slaves as agents 158
TABLE OF CONTENTS xi
IWtmUr^wmm mw «• mfttUmmt fft 1-4705, Vol. i| If 17M-2S88^ Vol. II.l
Women , , 1=>9
Jfarried women— Ajei agen.t9 tor third person 160
ninstrations .,.,,,, , . • , 190
Ament inferred from eonduct 191
Rules stated , 192
Inchoate coritoratlons » 193
2. Execution in Behalf of Joint PrimcipaU
Authority usually to b^ executed in behalf of all Jointly • 194
XY. JQIKT AGENTS
Authority to several agents * 195
Legal ieffect of appointing joint agents. ; . . . v 196
Notice to one — Liability of one for acts of otheni 197
Private joidt agency must usually be executed by all 198
Public agency may be executed by majority 199
Committees — Boards — Directors — Majority of quorum , . 200
CHAPTER V.
OP THE APPOINTMENT AND AUTHORIZATION OP AGENTS BY THE
PRINCIPAL AND THE EVIDENCE THEREOF
Purpose of the chapter 201
Questions which are not here considered 202
Authority created by law * 203
Authority resulting merely from relation of parties .^. . . 204
Authority by necessity 205
Subject here considered is appointment and authorization of agents . . . 206
What considerations involved « 207
Partnerships as agents 174
Alien enemies as agents 175
t. DisqiiaUfication from Adverts Interest
What here included 176
One cannot be agent if duty and interest conflict 177
One cannot usually be agent of both parties 178
One cannot be both party and agent for opposite party 179
Other party as agent to sign memorandum under Statute •! Frauds* .» • X80
S. Incompetence from Lack of Professional Standing
Lack of professional standing may disqualify 181
m. JOUTT PBINCIPAL8
One person as agent for several 182
i. Appointment ty Several Principals
Usually all must unite in appointing 133
Joint power must be contemplated , 184
Partners 186
Joint tenants and tenants in common 186
XU TABLE OF CONTENTS
[Reference^* mt€ to se«tioiiai Si 1-19WS» V«l. I| fit lTtM-90S8^ VoK U.]
Associations — Clubs^-Societies — Committees 187
How assent may be given . ; , . 188
Liability may be limited to funds: 189
Wife fits agent for husband — 1. In domestic affairs 161
Wife as domestic manager ; . . . * 162-164
— ^ Authority when no domestic establishment •• 165
Wife may bilLd herself although domestic manager. 166
Wife aa agent for husband — 2. In non-domestic affairs 167
Wife as husband's sub-agent "... 168
Husband as agent for his wife. >, * 169
Usual attributes attach , 170
Proof required , 171
— ^ Statutory provisions . * 172
Corporations as agents. .- 173
Use of persons as instrumentalities is not appointment of agents — Acts ,
done in presence and by direction of principal 208
I. HOW AGENT MAT BE APPOINTED AND AUTHORIZED
Two persons Involved here. . . :; 209
1, On the Part of the Principal
Only by the act of the principal 210
The method to be pursued 211
a. Authority to Execute Instruments uikler Seal
Such authority must be conferred by instrument under seal 212
Authority to fill blanks in deeds and bonds 218
Estoppel 214
How when seal superfluous 215
-^— How when instrument executed in presence and by direction of
principal 216
How when princit>al adopts deed prepared by another 217
Instrument not good as deed sometimes effective as contract 218
Appointment by corporations 219
To execute deed of corporate realty 220
h. Authority required by Statute to be in Writing
Common law rules do not require written authority 221
Statutes often require it for selling or leasing land — English Statute of
Frauds : 222
American statutes requiring writing 223
Acknowledging or recording 224
Statutes requiring written, authority in other cases — Suretyship — Wrltr
ten instruments 225
Employments for more than one year 226
What writing sufficient when writing required 227
c. In other Cases Authority may be conferred by Words or Conduct
No formal method required 228
By parol — ^To sell or lease land. . . ; 229
:i
TABLE OF CONTENTS Xlll
To purclia0e laQd , *.,... 230
To deliver deed • 231
' To demand and collect rent 232
T4> ^nA purehaner for land — Employmeaat of broker 233
Tp. grant llcenaes respecting land — To sell standing timl)er 234
— r- To. sulwcrllw for. stock , , , • 235
To. execute written . instruments not under seal 236
To fill blanks in written Inatrumenta 2Z1
To buy or .sell goods <- 238
To "accept and receive" under statute of frauds 239
Authority may be partly written and partly oral« • • «..••.. 240
Authority need not be express-r Authority by implication 241
Conferring certain powers by tbe creation of otbers — ^Incidental powers 242
Customary powers * . . 243
Powers established by tbe course of business * . . 244
Powers resulting from estoppel , , , 245
Greneral rule .' 246
Intention to create agency *,*,.. -,...,..... 247
Names not controlling f ,.»...... 248
When principal's act becomes effective, ...» 249
2. On the Part of the Agent
In general 250
Agent must be notified of appointment 251
Agent must accept appointment 252
How acceptance established 253
n. EVIDENCE or APPOINTMENT AND AUTHORIZATION
Purpose of this subdivision .' , , 254
Authority must be proved — Burden of proof 255
Authority under seal or in writing 256
Written authority — When must be produced 257
Collateral inquiry 258
Unnecessary writing 259
In other cases may be proved by parol — By any competent witness. . . . 260
By informal writings — By conduct — By facts and circumstances 261.
By proof of agency on other occasions 262
By ac(iulesce^ce in or recognition of similar acts 263
Acquiescence to show expired authority apparently continues.... 264
Acquiescence to construe authority 265
By actb so open or notorious as to justify inference of acquiescence. . . 266
By regular and public exercise of office or agency 267
Presumptions based upon ordinary course of conduct — Answering let-
ters, telephone, etc ,,, 268
By proof of an express authority ^o which this is an incident 269
By proof of a custom covering t^e case 270
By proof of an established course of dealing 271
By ratification ; 272
XIV TABLE 6F contents
m^feir—«i» Are f «M*tfMwt «# 1-1706, ▼«!» I| ft ' 17««-1088» T^l. It]
Limitations upon these rules • » 278
What facts Bufficient^-Illustrations 274-286
What facts not sufficient— lUustrationg 2S1-284
Agent's authority cannot be estahilshed by his -own stiitements or ad'-
missions * 285
When admissible « 286
To show attitude or intention ol parties « 287
-«'^- Mere ordor of proof not material 288
rtr by his own acts only i 289
Or by general reputation '. 290
Agent must be called as a witness 291
Agent's testimony— EWect 2»2
How question of agency determined — Court or jury 298
Construction of writing for court 294
Bffect of undisputed facta for court 295
- — In other cases for jury . . . . « 296
Court should' instruct jury as to their functions 297
Burden of proof 298
Amount of evidence required. » • • 299
Whose agent is he - ^^
Stipulations declaring— Testimony of parties 301
CHAPTER VI.
OP THE APPOINTMENT OF AiGENTS BY OTHER AGENTS, AND HEREIN
OF DELEGATION OF AUTHORITY
In general — ^What here included 802
Same Subject : ... 803
I. or DEUBOATION BT THB AOINT
What Included here 304
Delegatus non potest delegan 305
The general rule 306
Judgment and discretion not to be delegated 307, 308
Attorneys may not delegate personal undertaking 309
Arbitrators may not delegate their duties 310
Auctioneers, brokers and factors may not'delegate 3li
Executors, etc., may not delegate 312
Same rule applies to municipal corporations and officers 313
Exceptions and modifications 814
I. Subagent may be employed to perform acts which are mechanical or
ministerial merely 315
II. When the proper conduct of the business demands It 816, 817
III. When justified by usage or course of trade 318
IV. When originally contemplated 319
V. When necessity or emergency requires It 320
— Assistants employed by servants 321
TABLE OF CONTENTS XV
[Referaiecs wtn to ae^tlQnst ft 1-1700, Vol, I| if n)M-?08^ Vol« 11.]
VI. Ratiflcatlon of unauthorized emplosnnent 322
Care required in making authorised appointment 828
Reidelegatlon — Subdelegation 224
What the delegate may be. . . .^ 825
Whose agent, etc., ia the subagent; 82«-32^
la there privity between principal and eubagent 330, 831
^eet of employment— Subagent is prlncipars agent, etc., if employ-
ment was authorized 882
^'-*^ But he is agent's agent, etc., in other case 883
U. or ▲UTHOBITY OF AN AQBNT TO SMPU>T AGENTS, SERVANTS ANI> QTHEBS ¥09
HIS PBINCIPAL
Agents generally have no such power. ...^.^..« ...».* 334
Servants usually have no such authority 335
Independent contractors heive usually no silch authority 336
Authority to appoint may be expressly conferred 337
Authority to employ may arise by imiflication 83^
Sniden emergency or special . necessity may lustlfy it 88^
Authority so. arising la a narrow one 840
lUnployment pf physicians and Burgeons in emergenotes 841
f>rivity between principal and persons thus employed 342
CHAPTER VII.
OP RATIFICATION
Purpose of ' this chapter ,.....« 843,.844
I. WHAT » MEANT BY BATlFrCATIOW
In general ,........, 345
Fictitious character of the doctrine. 346
Ratification defined 347
Ratification not a form of authorization 348-
RatiflcHtion difters ftom estoppel , 349
Ratification not a contract , , 350
No new consideration required 351
Ratification wholly optional with principal. 862
n. WBAT ACTS HAT BE. BATITIED
In general » . , . . ^ 858
The general rule 354
What acts need, ratification 355
-'— - Waiver rather than ratification ,,,, 356
Torts may be ratified as well as unauthQrized contracts 357
Void acts cannot be ratified — Voidable acts may be , 358
Illegal acts may be made' legal by ratification 359
Forgery : 360
Ratification 36 1-368
Estoppel ^4
r
XVI TABLE OF CONTENTS
tReferemcM are to ■eetionat 61 1-1705, Vol. I| '§§ 170«-2588» Vol. II.]
in. WHO MAT BATlFr
General rule 366
State may ratify ,,-. 366
Municipal corporations 367
Private corporation 36S
Partners 369
Infants 370
InBane. persons — Persons under duress 371
Married women 372
£iXecutor, administrator, etc 373
When agents may ratify 374
SubageutB 375
IV. coamTioas of katifioation
Certain conditions must be satisfied 376
1. Principal must have been Identified 977
2. Principal must have been in existence 378
AdminlBtrator, assignee, etc 379
Corporations subsequently organized 380-383
3. Transaction must atill st^d 4 » 384
4. Principal must have present ability , 385
5. Act must have been done as agent 386-392
6. Principal must have knowledge of material * tacts 393-396
What facts are material within this rule 397
Illustrations 398-402
Actual knowledge required 403
Wilful ignorance 404
Presumption of knowledge 405
Knowledge Inferred from facts 406
Imputed knowledge — Knowledge of agents — Of the particular agent 407
Duty to inquire ; 408
Effect of ratification without knowledge 409
7. No ratification of part of an act only 410
- — - Responsibility for instrumentalities employed 411
Limitations — Collateral contracts 412, 413
- — Collateral stipulation which makes whole contract illegal 414
Divisible acts— Involuntary receipt, etc 415
Intention to ratify ^1^
y. WHAT AMOUNTS TO A BATIFIOATIOK
Importance of question 417
Written or unwritten — Express or implied 418
1, Express Ratification
General rule 419
a. By Instrument under Seal
Deed at common law ratified only by instrument under seal 420
— *^ Rule relaxed In partnership cases 421
TABLE OF CONTENTS xvil
[RefereacM are to sei^tlonai f| 1-1705, Vol. I| §| 170«-258S^ Vol. 11.]
Massachusetts rule 422
Modern rule more liberal 428
Unnecessary seal may be disregarded 424
By power of attorney subsequently granted 425
h. By Instrument in Writing
Where authority must be conferred by writing, ratification In writing
necessary 426
Contracts for sale or leasing of land ' 427
Written ratification not otherwise required 428
''Lawfully authorized" under statute of frauds 429
2. Implied Ratiflcation
In general 430
Variety of methods 431
1. By declaring approval 432
2. By proceeding to perform ^ ••»;.^»..... 438
Z. By accepting benefits 434
Must take benefits with burdens , , . .^ . . . . 435
Vytty to restore what he has received 436
Principal must have received proceeds — Money apparently free
from trust 437
**— Knowledge of facts Indispensable i 438
Acceptance and receipt must have been voluntary and confirmatory 439
Mere efforts to avoid loss no ratification 440
lUustrationa of general rule< « 1 . 441*443
Other instances i « « « . . i '. 444, 445
4. By bringing sylts based on validity of agent's act 446
— — Illustrations * ......./*, 447, 448
Suits based on invalidity of agent's aet no ratiflcation 449
— -^ Delay in suing to disaflirm - • « < ^ 450
5. By acquteseence 451
What meant by aequiescence ....<. i 452
' Mere silence or failure to repudiate 453
How differs from estoppel 454, 455
Elements of ^atopp^-may be present. 456
Other statements pf the rule 457
Relations of the parties 458
Fiallnre to dissent as between principal and agent 459, 460
As between princU;)al and the other party ^ 461, 462
Principal must act within a reasonable time 463
Same rdl^s ap^ly to private corporations 464
• And to municipal aiid quasi-municipal corporations 465
How when assumed ageht Is a mere stranger 466
The cbntrary view 467
The true rule 468
Silence does not ratify if stranger acts in his own name ; . . • • 469
How when former agent continues to act 470
Acquiescence coupled with conduct inconsistent with disapproval .... 471
» • •
XVlll TABLE OF CONTENTS
r>l«fereBcc0 AM to ■eetlonai §6 1-1705, Vol. I| §| 1706-2888, Vol. li.]
Illustrations of ratification by acquiescence 472-474
Retaining in employment as ratification 475
Rnle of ratification by acquiescence applies only to principals 476
▼I. manii<t:btation of batification
Manifestation necessary 477
To yifhom 478
▼II. PBOOF OF THE RATIFICATION
Burden of proof .• 479
Amount of proof — Liberal interpretation of facts .••••• 480
Court or jury 4B1
What for this subdivision 482
VIII. THE RESULTS OF RATIFICATION
i. In Oenercl
Usually equivalent to precedent authtyrlty 48S
Scope and duration 484
May be so alleged in pleadings 4S5
Cannot affect Intervening rights of third persoifii 486
Defenses, conditfons, right to cancel 487
Law of what -plaice governs ..;::; 488
Ratification irrevocable— changing repudiation to ratification 48^
2, As between Principal and Agent
In general • •••••• 490
General effect to release agent, etc ; • 491
Limitetions 492,498
l^Iethods of ratification 494
-^ — Ratification of entire act 495
— Knowledge of the facts • • 496
Agent's motives unimportant -4^7
— I— Liberal interpretation , ^^
— ^- Acts of subagent • *^^
Gives agent claim for compensation, reimbursement, etc 500
Entitles principal to benefits as against agent • 501
S. As between Principal and other Party
In general • 602^
a. Other Party against Principal
What considerations involved 608
1. In contract cases 504, 505
2. In tort cases 606
Unique character of doctrine 507
b. Principal Against the Other Party
What considerations involved here 508
1. In contract — May principal ratify and enforce unauthorized con-
tract 509. 510
TABLE OF CONTENTS sffic
rilelfereBCM are to m^etioumt If I-ITOS, Vol. 1} |^ 170^-2^588, Vol. tl.]
If agent and other party liav^ previously eonBeated to cancel the con-
tract '. 511, 612
If other parly has attempted to withdraw from the contract 513
If agent and other party have done nothing to cancel the contract. . . . 614
— — The Wisconeln cases — Dodge v. Hopkins 516
The English cases — Bolton v. Lambert 516-518
American cases 61d-521
Rules compared — The weight of authority , - . . . 522
— Applications of the rule 523
Ratification by insured of insurance eiZected for his benefit.... 524, 525
Defence based on ratification 526
S. In tort cases 527
t. Othcs* acta creating rights or duties ...««.. 5^9
*' Actions, ratification of unautfaoriaed 529
-= Assignment of cause of action 530
Adding parties to existing actions ■. 531
Attaehiaent affidavits and bonds 532
— — - Declaration of maturity to accelerate action 533
Damaad of paytneot, delivery, etc 594
"•^^^ Notice of abandonment 535
Notice of dishonor , 536
— Notice to quit 537
— ^ Options W«
*-*- Stoppage in transit ; 539
4. -A* Betiveen Agent and Other Party
In general 540, 541
Ratification releases agent in contract cases 542
Limitations — I^atification after suit begun — Change In conditions 543
Failure of the ratification , 544
Ratification releases agent on justifiable trespass 545
tm tort case ratification does not release agent but charges principal. • 546
CHAPTER VIII.
OF THE TERMINATION OF THE REIiATION
Fttrpose of this chapter B47
Variety of methods 548
Classification adopted 649
I. BT ACT OF TUB PABTIES
i. By Force of Their Original Agreement
SL By eflhix of time 660, 551
>. By accomplishment of object 552-654
Where object txmtemplated involved a series of acts 555
AnthorHr does not necessarily continue until object accomplished 556
e. Termination In pursuance of a- term in the contract 5^7
TABLE OF CONTENTS
[R«fere«c«i are to nectioi&at §9 1-1705» Vol, I{ §9 1706-2588, Vol. II.l
2, By Their Subsequent Acts
What here included 558
A. Termination by Mutual Consent
Authority so terminable 55t)
B. Revocation by the Principal
Rules different In public and in private agency ^60
1. Private Agency
a. Power of Revocation
In general 601, 562
General rule — Authority revocable at any time 568
If not already executed 664
Rule applies though authority called "exclusive" or "irrevocable" 565
Rule applies though principal may have agreed that authority should
continue for a definite period 566
Or though agent may have performed some service or incurred some
expense 667
Distinction between power to revoke and right to revoke — Between an-
thority and contract of employment 568
Exceptions — ^Authority not revocable 569
1. Authority "coupled with an interest" 676
Variety of forms 671
American use of term * 572
English use of term *. 573
: DlfFerence In results '571
Power irrevocable by death irrevocable by act oif principal 575
2. Power given as security and therefore "coupled with an interest"... ,576
Power forming part of a contract \ 577
Power given* for a valuable consideration ' S7S
3. Authority "coupled with an obligation" 579, 580
"Interest" of third person 581
Provisions for agency in contracts with third persons 582
"Interest" and authority from same source 583
Express language as to i-evocabllity 584
illustrations — Sufficient interest — Powers given for security i^,.. 53^
— -- What interest not sufficient — Instances . ^jS
Bare powers 687
New nomenclature needed 588
What may be the subject matter of power given as security 589
Necessary characteristics of such a power 590
Against whom power given as security enforceable ^ 591
Contracts of employment — When right to terminate exists — Employ-
ments at will ; , . 592
.—r— Employment on conditioa — "Satisfaction" — "Good cause" 593
Termination lor cause speciHed # . , . • o94
TABLE OF CONTEXTS XXt
[Ref«reMee« are to aeetfoiiai 89 1-170CS, Vol. f( tS 1706-2588, Tol. n.1
Implied conditions 595
Contracts for definite time cannot be terminated without liability ex-
cept for legal cause 596
What amounts to contract for defialte time 597
Unilateral stipulations 59S, 599
Contrary views 60(>
Mutuality under statute of frauds 601
Contract for a definite time implied from circumstances » 602
Implications from yearly or periodical salary or accountings 603
Stipulation for "permanent" employment 604
Continuing under prior contract — Holding over 605
Agency terminable for agent's Incompetence 60Q
Agency terminable for agent's disobedience, dishonesty, or other mis-
conduct ^. 607
Agency terminable for agent's disloyalty 608
Illustrations •. 609, 610
Limitations^^ Waiver — Condonation ' -611-
Bven though employed for definite time, agent may he discharged sub-
ject to liability for damages 612
f>. Manner of Revocation
How authority may be revoked , 613.
By sealed instrument 614
Express revocation not required 61^
Revocation may be implied « 616.
Reducing rank, changing duties, etc 617.
Acts not working a revocation , j618.
By disposing of subject matter 619-
By dissolution of partnership or corporation 62^-
By severance of a joint interest 621
•—'^- Subagent's authority terminated by termination of principal's au-
thority 622
c. Notice of Revocation
Notice usually necessary 623
1. To the agent — When notice must be given to him 624
When notice not necessary 625
Constructive notice 62$
2. To subagents — When notice must be given 627
3. To third persons — Where authority was general 628
Where authority was special : 629-631
Theory of necessity of notice - 632, 633
Notice how given — ^What suflacient 634, 635
When power of attorney recorded, revocation should be recorded 636
Notice should be unequivocal 637
How sulflciently determined ^38
Burden of proof as to notice 639
XXU TABLE OF CONTENTS
[lUf erf Been. ■!« ^ arctioafii M 1-1709^ V/^U ||» tt.l7Qrth2«89»r'iri4v JH^
f. Pu&Zfe Agency
Statutory authority not revocable at will of principal C40
C. Renunciation by Agent
General rule — Agent may renounce at any time 641
Enforcement of contract — Specific performance — Injunction to prevent
breatdi 642
-^ — Injunction when services unique and damages not adequate 643
MutuaMty 644
Renunciation by mutual consent 645
Abandonment may be treated as renunciation 64C
Agent may lawfully renounce if required to do illegal acts 617
Agent's abandonment may be justified by principal's misconduct 649
Notice of renunciation 649
II. BY OPERATION OF LAW
III general , 650
i. By Death of One of tfie Parties
o. By Death of fhe Principal
In general 651
General rule — Death of principal terminates agency 652
Even though not terminable by principal's act in his life time.... 65S
Consideration of this rule 654
Authority not revocable by death when coupled with an Interest 6^5
— ^— What consCitutes such an Interest 656
- — What meant by interest — Difficulty in applying rule 667
The real reason — That the agent may act fn his own name ' 65S
What interest sufficient — Instances 65^-661
What interest not sufficient — Instances 662, 663
How when death unknown 66f , 666
Instances 666; 667
Effect of principars death on contract of employment ;.;....... 668
Death of partner or joint owner dissolves agency 669
Death of principal dissolves authority of substitute 670
ft. By Death of the Agent
General rule — Death of agent terminates agency 671
Not when coupled with an interest 672
When death of one of two agents terminates agency 673
Dissolution of artificial person which was the agent 674
Effect of agent's death on authority of substitute 675
9, By Insanity of One of the Parties
a. By Insanity of the Principal
la general , 67^
Qeaeral rule , 677
Ignorance of insanity ,^. 67S
• • •
TABLE OF CONTENTS 3CXIU
[References mx% to seetlOBat H 1-170S, Vol. I) St 1706-1888, VoL n«]
When authority coupled with an Interest 679
What evidence of insanity required 680
h. By Insanity of the Agent
In general ..... .^. , , . 681
General rvle-^ermfnatcs agency unless coupled with interest 682
How when insanity unknown 683
Insanity of one of two or more agents 684
Effect on subagents 685
S, By Bankrttptcy of One of the Pat ties
m
In general — ^Effect* of bankruptcy 686
fl. Bankruptcy of Principal
General nftle — ^Bankrnptey of prftnolpal termlAates ageot's aufth^rM^. . . 687
Mere insolvency not enough 688
▲ttihority not terminated when coupled with interest, 689
How when bankruptcy unknown ,.«•..••,•• 690
h. Bankruptcy of the Agent
General rule « 691
. ^ By Uarriage
ck Marriage of the principal 692
b. Marriage of the agent 693
5. By War
In general — ^War between ooun tries of principal and of agent termi-
nateft commercial agenoy 6M-696
6'. By Destruction of Svhject Matter
Destruction of subject matter usually terminates agency , 697
7. By Termination of Principal's Interest in Suhjeet Matter
Usually terminates authority 698
8. Bv TeiininAtUm of PrimdpaVs Authority
Principal^ removal from office removes subordinates .* 699
9. By Change in Law
Change in law rendering prosecution of agency unlawful...,*.»,4...., 700^
10, Notice of the Termination
Notice not generally necessary when authority terminated by opera-
tion 6f taw 701-703
c
xxiv Table of contents
BOOK H
OF THE AUTHORITY CONFERRED; ITS NATURE
AND EFFECT
CHAPTER I.
OF THE NATURE AND EXTENT OF THE AUTHORITY IN GENERAL
[Ilefev«Bcc« arc to Bectiout M 1-1706, Vol. 1$ f§ 1709-088, VoL H.]
Purpose of Book II 704
Scope of the questions Involved 705
Distinctions based upon nature and extent of authority 706
I. EXPRESS AND IMPLIED AUTHORITY
Where authority Is express — Effect of limitations 707
Where authority is Implied 708
II. THE ELEMETVT8 OF AUTHOBITT
Authority an attribute of character bestowed by principal : . 709
Limitations — Apparent authority cannot be limited by secret instnic-
tions • • 710
Distinction between authority and power 711
What constitutes authority ^ 713
Elements of authority — I. Authority Intentionally and directly con-
ferred 714
II. Incidental authority — Ordinary and necessary acts 715
III. Authority conferred by custom or usage 716
IV. The customB of the particular business, or an established
course of dealing in It 717
— -r— V. Authority by necessity or special emergency 718, 719
VI. Apparent authority 720, 721
VII. Liability by estoppel 722-726
VIII. Liability by ratification 727
: Recapitulation 728, 729
The province of "instructions" 730
What constitute instructions 731-735
in. UNIVEBSAL, GENERAL AND SPECIAL AGENTS
In general 736
General and special agents 737
Distinctions sometimes made 738
The true distinction 739
General agency not unlimited 740
General agent binds principal only within scope of his authority 741
Special agent's authority must be strictly pursued 742
TABLE OF CONTENTS XXV
. IRefexeaecfl «r« to pectlOAft iff 1-1705, Vol. Ij tf iroe-SWS^ Vol. n.]
XT. ASCBSrAIlflNO THE EXIBTENCB OF THB AUTHOBXT.
Persons dealing with an agent must ascertain his authority 743
What is meant by this 744
What such person is bound to ascertain 745
Not an unfair rule. . 746
Other theories 747, 748
The dilemma of choosing between two innocent persons 749
Through whom must authority be ascertained 750
Persons dealing with agent muSt act in good faith 751
Must exercise reasonable prudence 752
Notice of limitations ''SS
Notice of adverse interests ''^^
Effect of princlpars negligence 765
Must ascertain whether necessary conditions exist 756
Agent's representations as to his authority, not to be relied upon 757, 758
Facts peculiarly within agent's knowledge 759, 760
Fixed pecuniary limits : "^^^
Corporate agents ^^^
Authority of public agente must be ascertained 763
CHAPTER 11.
OF THE CONSTRUCTION OF THE AUTHORITY IN GENERAL
Purpose of this chapter 764
I; wue:( autiiobity is conferred bt writing
Construction of writing tor court 765
Intention to govern .-.• 1 766
How intention discoveredf— Language used '. 767
Entire writing—Other waitings 768
When drawn with reference to statute, to be interpreted in light of
statute .". 769
Admissibility Of 'parol evidence — To show surroundings of the parties. . 770
Latent and patent ambiguities 771
Identifying subject-matter 772
To lAow usage of business or of agents of a particular class 773
Parol evidence cannot enlarge authority 774
Parol evidence cannot contradict writing 775
E!ffect must be given to every word and clause 776
Tranflaction to be upheld rather than defeated 777
Authority to be interpreted in light of lex loci 778
Authority limited by ordinary meaning of words and by plain Import
of language 779
General powers limited by specific object or recital 780
Authority by Joint principals usually to be exercised only In behalf
of all Jointly 781
XXVI TABLE OF C0NTEKT3
ttleferelicea m« f •ertlonsi M 1-1705, Vol. If U 1706-2888, VoL II.]
Power of attorney referrtng to se^^eral intoreBts tsan not te applied to
Joint interests 7Sa
Porwer construed to apply only to prlncipara private business 783
Formal powers strictly construed— Only those powers expressly given
or necessarily implied 784
Practical construction by the parties may aid 785
II. WH£RE AUTHORITY IS UNWRITTEN OB IMPLIED
Where authority is unwritten but express 786
Where authority is unwritten but implied : 787
Authority to be construed in the light of established usages 788
Authority carries with it every power necessary to accomplish object. . 789
Implied authority not to be extended beyond Its legitimate scope 790
Implied power limited to principaFs business 791
m. WHERE AUTHORITY IS AMBlOUOiUS
Duty of principal to make his instructions clear 7^2
When ambiguous, construction adopted in good faith sufficient 798
CHAPTER III.
OF THE CONSTRUCTION OF AUTHORITIES OF CERTAIN KINDS
Purpose of this chapter 794
In general 795
L OF AGENT AUTHORIZED TO BEILL LaND
What here included 796
Authority to sell rather than merely to find a purchaser — Mere
broker no authority to make a binding contract 797
But authority to make a binding contract may 1^ fOund to exist. • 798
Agent usually a special agent — ^Authority strictly construed 79tt
Mere preliminary correspondence or negotiations not enough to confer
authority 800
Conditional authority 801
Authority to sell land not ordinarily to be inferred from mere general
authority to act 802, 803
What may be sold 804, 805
When authority to be exercised 806
What execution authorized 807, 808
Authority to make representations as to value, quantity, location,
boundaries or title 809
Authority to make contract of sale Justifies written contract, in usual
form 810
Authority to sell and dispose of land implies right to convey 811
To insert usual covenants of warranty 812
Authority to sell does not justify a mortgage 813
Authority to receive payment 814
Conveyance must be for consideration moving to principal 815
TABLE OF CONTENTS XXVli
lU^Htfwn^ »r« «• fe^tuMi ft 1-lTM, r«l. Ii fti ltD«-2K88, Vol. If.]
Authority to «lvf credit 816
AuthoFlty to sell does not authorize ezchftnge or barter 817
Or €ift V 818
Or giving optioa to buy 819
Or permitting waste or tale of timber separate from land 820
Or changing boundaries of land 821
Or partition 822
Or dedication to pubUe use 823
Or conveyance to pay prlncipars debts or assignment for creditors. 824
Or conyeyance In payment of agenfs debts 825
Or conveyance In trust for support of principal's child, etc 826
Or rescinding or altering contract 827
Or discharge of mortgage 828
Or Investment of proceeds of sale 829
II. or AQSIiT AUXHOaiZSP XO USASB LAN»
In general ^ .-. ^ S30
What execution authorized 8^1
Authority to execute a lease, in the usual form* With usual terms 833
Authority to make represeatatlottS as to ooAdltldn' of preratees, own-
ershipt, etc.. , 888
Authority to receive payment of rent 8S4
Authority to lease does not authorize lease to begin hi future 835
Authority to change terms, substitute tenants, accept surrender of
lease, or give notice to 4ult 886
To renew or extend a lease ^ ,.,,,...,,.. , 837
Authority to bind principal to furnish irrigation, supplies, stock, etc. . 388
Authority to waive Mene.^», 839
Authority to mortgage, er to impair or defeat the prlncipars title 840
m. OF AOSNT ATTTHOUZEP TO FURCHAflK LAND
Wh«n authority exists 341
Authority to make a binding contract 842
Authority to agree upon terms 843
Authority to bind {Nrincipal for ordinary expenses in purchase 844
Authority ta receive the deed ..*... 846
Authority to assume mortgages. . . » v . . •. 846
No authority to sell or mortgage land purchased 847
IV. OF AGE19T AVTHOBIZtl) TO 6KLL PKBBONAL FftOPEBTT
When authority exists 848
Limited or (juallfled authority 849
What may be sold — AH — Part 850
Commingling with other goods for dale 351
Authority when to be executed 852
No authority to sell at auction— When 853
Authority to fix price and terms of tfaie*. 854
Further as to price 855-857
Terms or conditions attached • 858, 859
XXVUl TABLE OF CONTENTS
(Reterences mrm to s^etiOMii M 1-17M(» Vol. I| H 17O#-208fl9 Tol. II.]
Failure to impose conditions prescribed by principal 860
Authority to make binding contract * 861
To execute and deliver necessary documents or memoranda 862
Authority of selling agent to receive payment— In general 863
Authority to receive payment not Implied from possession of bill 864
Agent authorized to deliver possession may receive payment 865
Payment to general sales-agent 866
Payment to agent as ostensible owner 867,868
Agent to sell merely or to Bolicit orders, without possession of goods,
not authorized to receive payment 869
When traveling salesmen may receive payment 870
When payment to agent part of terms of sale 871
Notice of want of authority 872
What may be received in payment when receipt is authorized. ... 873
Purchaser cannot set oft debt due from agent 874
Implied authority of traveling salesmen to hire horses 875-877
Authority to procure personal supplies 878
No implied authority to sell his samples 879
Implied authority to warrant quality 880
Authority to warrant as a necessary incident 881
Authority to warrant because warranty usual 862
Authority to give warranties which the law would imply 88S
Authority to warrant in accordance with descriptions furnished by
prinoipal 884
Illustrations of rules — Commercial paper — Agricultural implements —
Sample, etc 885
Horses 886
Limitations upon custom 887, 888
Limits of this rule — ^No extraordinary warranty 889
Authority to make representations concerning goods 890
Authority to warrant title 891
Authority to advertise the property 892
No implied authority to give credit 893
No authority to appropriate to his own use 894
No implied authority to exchange or barter 895
No authority to buy goods 896.
No authority to pledge goods 897
No authority to mortgage 989
No authority to promise commissions for sub-sales 899
Authority to guarantee exclusive markets, particular prices, etc 900
No implied authority to compromise, release principars rights, or pay
his debts 901
Authority to rescind the sale 902
Authority to waive performance of terms of contract 903
Alterations of contract 904, 905
May not sell to or deal with himself 906
Authority to receive notice 907
TABLE OF CONTENTS XXIX
- |Kef9»«Of» HM to mtidtUmMt M l-irM» Vol* If f f 17M*Si8% Vol. 11.]
V. OF AGENT AUTHORIZED TO PURCHASE PERSONAL PROPERTY
When authority exists 908
Authority from conduct 909
Limitations 910
RaUflcatlon 911
Powera and limitations Incident to authority to purchase 912
Agent with general authority may buy on credit 9l3
May not buy on credit, when furnished with funds. 914-917
May buy on credit when not supplied with funds 918
Agent with general authority to purchase haa authority to agree upon
price and terms 919
May not exceed limits as to quantity 920
Must observe Umlta as to Quality or species * .... ^ 921
Must observe limits as to price 922
May be restTtcted as to persons with whomr to deal 923
May make representations as to prlnclpars credit 924
May not borrow money to pay for goods 925
May not execute negotiable paper ,■ 92G
May not guarantee payment by his vendor • 927
May not sell goods « 928
Authority to alter or cancel contract 929
Authority to make admissions after the purchase 930
Agent can buy only for principal • 931
• • • "
VI. OF AGENT AX7THOEIZEO TO COLLECT OB RECEIVE PAYMENT
What here Involved 932
What constitutes such authority , 933
When Implied from making the loan or negotiating the contract 934
When Implied from possession of the securities 935
Possession by agent who negotiated loan evidence of authority 936
Possession indispensable , 937
Authority by conduct Independent of poesesslon. 938
— Estoppel to deny authority. . . * * * 939
Limitations 94O
Payment to agent of the owner of record * 941
Payment to agent as ostensible principal 942
Authority to receive proceeds of securities entrusted to agent for de-
livery 943
When authority implied from having sold the goods or land 944
Authority to receive interest does not authorize receipt of principal . . . 945
Can receive nothing but money 946
tJebt payable In goods 947
Enlarged authority — Authority by conduct or ratification 948
No authority to take checks, certificates of deposit, etc 949-9S1
If authorized to take check or note, has no authority to indorse and
collect it 952,963
No authority to release or compromise the debt 954
XXX TABLE OF CONTENTS
Authority to receive part pajanent 966
May not extend time 956
Or otherwise change the terms of the contract 957
Nbt authorized to receive hefore due 9^
Not authorized to accelerate maturity 9^
Authority to collect does not authorize sale of debt 9^
Noauthorlty to deal with funds collected 961
May give receipts or discharge • 962
Authority to sue • . . . 9€3
Authority to sue in his own name. . . .^ 9^
Authority to foreclose mortgages 969
May not submit claim to arbitration 966
May employ counsel... • 967
Authority to employ snb-agen.t8 • 96i9
Vn. OF AGENT AUTHOBIZBD TO MAKe' OB INDOBSE irBQOCIABU PJJPaB
An Important power, not lightly Inferred 969
How authority conferred 970
When authority Implied 971, 972
Authority strictly construed 973
Illustrations of acts not authorized 974
Illustrations of acts authorized 976
Must be confined to principal's business 976
Execution must be confined to limits' specified 977
Negotiable paper delivered to agent In blank ^ 978
Vin. OF AGENT AUTHORIZED TO MANAGE BUSINESS.
What is meant « 979
Extent of authority depends oa Balure of business 98(^
Execution tnust be confined to principal's business and for his benefit. • 991
Authority to pledge inrlnclpai's credit — Supplies for store or business.. 992
r Supplies for hotel.. 999
— ^-^Supplles for farm. or plantation ,• 994
-*-— Board and provisions for h^lp. ,.«««. 996
—-—Supplies procured by husband as manager of wife's business.... 986
Supplies procured by wife as domestic manager 987
Hiring help , i 989
Other incidental contracts. 989
Authority to waive liens* rights, conditions, notices, etc 990, 991
Contracts by architects, superintendents, etc 992
Contracts by station and ticket agents • 993
Contracts for medical aid or nursing 994
Implied authority to sell product of business ' 995
Authority to collect or receive payment 996
A'uthorlty to revive debt barred by limitation 997
Authority to make negotiable Instruments 998-1000
When may borrow money 1001, 1002
May not make accommodation paper 1008
TABLE OF CONTENTS XXIX
|Kef«»«Of» tfre to •etftfttatfi M 1-1TM» V^l. If if 17M*Si8% Vol. lY.]
V. OF AGENT AUTHOBIZRD TO PURCHASE PEBSONAL PBOPSBTY
When authority exists 908
Authority from conduct 909 •/
Limitations , 910
Ratification 911
Powers, and limitations incident to authority to purchase 912
Agent with general authority may buy on credit 9l3
May not buy on credit, when furnished with funds. 914-917
May buy on credit when not supplied with funds 918
Agent with general authority to purchase has authority to agree upon
price, and terms 919
May not exceed limits as to quantity * 920
Must observe limita as to Quality or species 921
Must observe limits as to price 922
May be restricted as to persons with whomf to deal 923
May make representations as to principal's credit 924
Ms^ not borrow money to pay for goods 925
May not execute negotiable paper ,■ 92&
May not guarantee payment by his vendor • 927
May not sell goods 928
Authority to alter or cancel contract 929
Authority to make admissions after the purchase 930
Agent can buy only for principal 931
VI. or AGENT AUTHORIZED TO COLLECT OK RECEIVE PAYMENT
What here involved 932
What constitutes such authority , . * 933
When implied from making the loan or negotiating the contract 934
When implied from possession of the securities 935
Possession by agent who negotiated I6an evidence of authority. . . . 936
Possession indispensable 937
Autiiority by conduct independent of possession 938^
Estoppel to deny authority. . . . < 4 < .- 939
Limitations „ 94O
Payment to agent of the owner of record. . . , * 941
Payment to agent as ostensible principal 942
Authority to receive proceeds of securities entrusted to agent for de-
livery 943
When authority Implied from having sold the goods or land 944
Authority to receive interest does not authorize receipt of principal . . . 945
Can receive nothing but money 946
Debt payable in goods 947
Enlarged authority — Authority . by conduct or ratification 948
No authority to take checks, certificates of deposit, etc 949-961
If authorized to take check or note, has no authority to Indorse and
collect it 952,953
No authority to release or compromise the debt 954
XXX TABLE OF CONTENTS
Authority to receive part payment 956
May not extend time 956
Or otherwise change the terms of the contract • « . . « 9S7
Nbt authorized to receive before due 968
Not authorized to accelerate maturity 9&9-
Authority to collect does not authorise sale of deht. 960-
No authority to deal with funds coUeoled 961
Mky give receipts or discharge • 962
Authority to sue • 963
Authority to sue in his own name. ...^ 964
Authority to foreclose mortgages 96ft
May not submit claim to arbitration 966
May employ counsel. 96?
Authority to employ sab-agents. .« « 969
Vn. OF AGENT AVTSOtJXMD- TO MAKE OB INDOBSE ZfMOTIABU FAF0
An important power, not lightly inferred 969
How authority conferred 870
When authority implied 971, 972
Authority strictly construed 978
Illustrations of acts not authorized 974
Illustrations of acts authorized. 975
Must be confined to principal's business 976
Execution must be confined to limits specified 977
Negotiable paper delivered to agent in blank 978
VIII. OF AGENT AUTHORIZED TO MANAGE BUSINESS.
What is . meant , 979
Extent of authority depends on nature of biisineas 98(>
Execution liiust be confined to principal's business and for Us benefit.. 981
Authority to pledge principal's credit — Supplies for store or business.. 9S2
—^Supplies for hotel 989
-—Supplies for farm, or plaatatioiu ..•• 994
Board and provisions fpr b^lPt i < « < « • 985
Supplies procured by husband as manager of wife's business.... 986
Supplies procured by wife as donifistie manager 987
Hiring help L 988
Other incidental contracts 989
Authority to waive liens» rights, conditions^ notices, etc 990, 991
Contracts by architects, superinteindeintB, etc. 992
Contracts by station and ticket agents 998
Contracts for medical aid or nursing , 994
Implied authority to sell prjoduct of business ' 995
Authority to collect or roceAve payment 996
Authority to revive debt barred by limitation 997
Authority to make negotiable Instruments 998-1000
When may borrow money 1001, 1002
May not make accommodation paper 1008
TABLE OF GONTfiKTS XX5ci
May not pledge or mortgage the property of his principal 1004
May not sell or lease principars land 1005
May not embark In new and ditf erent 'business 1006
May not sell the business or property lOOV
Ajuthority to pay debts 1608
Authority to make assignment for creditors •...•.... 1009
Authority to sue. «,...... 1010
To employ attorney • • r • . WH
IX. OF AGENT AUTHORIZED TO SETTLE
Of the nature of the authority , ^..p. .10^2
Burden of proof , • • « «....• 1013
When authority exists , 1014<«1016
What tenns of aettlsment binding « • 1017» 1018
Illustrations , , , 1019-1021
May receive the proceeds 1022
May not submit to arbitration • 1023
May not assign the demand • ...•«•.. 1024
May not assign or transfer proceeds • •••••*.,. 1025
X. OF AGENT AtTBOftl^ED TO BORROW MONET
When the authority exists 1026
What execution authorized 1027
Authority to give necessary securities » 1028
Authority to receive the money 1029
Uablllty of principal for money borrowed without authority 1030
XI. AdlSNT AOtfiOKI2ia> TO UCKD MdNBT.
When authority exists 1031
What execution authorized 1032
Authority to take usurious interest 1033
Authority to receive payment 1034
Authority to extend time or change terms 1035
No authority to loan to himself 1036
Authority to purchase securities 1037
Zn. OF AOENT AUTHOBIZCD TO BIND PRINCIPAL AS SURETY
When authority exists 1038
Authority strictly construed ; 1039
Xni. or AGENT AUTHORIZED TO EMPLOY
What here included , 1040
When authority exists 1041, 1042
What employment authorized 1043
XIT. or AOBNT AUTHORIZED TO SHIP GOODS
How authority arises 1044
How authority to be exercised — Agreeing upon terms of shipment 1045
Agreements limiting liability of carrier 1046, 1047
XXXll TABLE OF CONTENTS
(R«f«re»ces are to mcUobmi «| 1-1705, Vol. U ft§ 170#-2C»8, Vol. II.]
XT. OF AGENT AlPTHORIZED TO CARE FOB PROPERTY
Nature and extent of authority. 1048
XTI. OF AGENT AUTHORIZED TO REPRESENT INStTRERS
What here included , 1049
How classified ; 1050
How appointed 1061
Whose agent h-e is 1052
What kind of an agent he is 1053
Authority to appoint sub-agents 1054
Authority to make oral contracts 1055
Authority to renew insurance 1056
Authority to make alterations— Waiver — Estoppel — In general 1067
Authority at time of Issuance to alter policy or waive provisions there-
in . . . . ; ; 1058
By parol 1059, 1060
Waiving prepayment of premiums 1061
Restrictions- on authority . : 1062
Authority after issuance — ^Waiver of forfeitures 1063
Waiving proofs of loss 1064
Express restrictions on authority 1065
Knowledge of agent imputed to principal. 1066
Facts affecting the risk 1067, 1068
Statements in application 1069, 1076
Express restrictions 1071
Subsequent causes of forfeiture 1<>72
Collusion ,.s s 1073
Authority to adjust losses 1074
Miscellaneous cases — Instituting legal proceedings 1075
Authority to bind principal by admissions, representation 1076
Territorial limitations 1077
May not act In his own behalf 1078
TABLE OP CONTENTS XXXlli
*t t ■* %
BOOKJII
OF THE EXECUTION OF THE AUTHORITY
CHAPTER r. '
IN GENERAL
[Retere«c«s are to Mcttoasi H 1-170B, Vol. Ip U 1706-2588, VoL II.]
Parpoae of Book III 1079
Primary purpose to bind principal and not agent 1080
Must act within scope of authority • «..*.« 1081
Necessity of proper execution 1082
How question determined 1083
Execution within, and exceeding authority 1084
Slight deviation does not invalidate 1085
When separable, authorized part may stand ' 1086
When execution lacks essential elements « 1087
Summary of the rules ^ « . ^ « 1088
Should act in name of the principal 1089
CHAPTER IL
OP THE EXECUTION OF SEALED INSTRUMENTS
Purpose of this chapter 1090
The questions involved 1091
Rules may dtffer with class of instrument 1092
Deed by agent must purport to be made and sealed in the name of the
principal 1093
Exceptions — Powers exercisable in name of donee of power 1094
Rule different in Texas 109&
Rule changed by statute in a few states 1096
Effect of statutes abolishing seals or making them unnecessary.. 1097
'- How where instrument valid without a seal 1098
Instrument may bind neither principal nor agent 1099
Or be simply inoperative as conveyance — ^Agent's liability on
covenants — Estoppel 1100
Whose deed is a given deed — How question determined 1101
Not enough to make deed the principal's that the agent is described
as such 1102
Not principal's deed where agent appears as grantor and signer. . . 1103, 1104
Agent named as grantor but deed signed in name of principal . . . 1105
Agent purporting to act "as agent for" or "In behalf of" the prln-
r.inal 1106, 1107
XXXiv TABLE OF CONTENTS
[References are to aeetloui ff 1-lTOB, Vol. I| M 1706-9588, Vol. n.]
Deed naming principal as grantor but signed by agent person-
ally l,.i 1108-1110
Mere descriptive words wfll not change personal grants or cove-
nants 1111, 1112
Distinction In ease of pubhc agents. ^ 1118
Whether necessary that deed should purport to be executed by an
agent 1114
Further of this rule .,. 1115-1117
How in reason 1118
Parol evidence not admissible to discharge agent 1119
CHAPTER in.
aP THE EXECUTION OP SIMPLE CONTRACTS
Purpose of this chapter 1120
I. OF THE EXrCDTION OF NEGOTIABLE PAPCB
In general 1121
L Form and, Interpretation
In general ........... ^ ., 1122
General rule as. to form 112S
Method of signing 1124-1126
The Negotiable Instruments Act 1127
Not necessary that agent's name appear 1128
Not enough that principal be named only in body of instrument. . 1129-1132
Where intent to charge principal ts manifest 1133, 1134
ECTect of printed headings or titles on paper 1136
Effect of corporate seal ,,,,,.,,,..,. • 1136
Other evidences of intent — Direction to charge to principal.. 1187,1138
When no principal is disclosed, agent Is bound aotwithatandiog he
signs as "Agent" 118»-1142
Negotiable paper drawn upon an agent and accepted by him 1143, 1144
Negotiable paper drawn payable to an agent and indorsed by him.... 1146
Paper payable to cashier of bank 1146
Other similar cases 1147
How when made by public agents 1148, 1149
2. TJie Admissibility of Parol Evidence to show Intent
In general 1150, 1151
Cases holding such evidence admissible 1152-1156
Cases holding such evidence not admissible 1157, 1158
What rules applied 1159-1161
The true rules 1162
Further of these rules 1163
II. OF THE EXBOUnON OF OTHEB SIMPLE CONTBACTfl
In general 1164
TABLE OF CONTENTS XXXV
[R«fer«mcc« ara to ■eetloaa: M 1-1705, Vol. I| 61 1706-2S88» Vol. II.]
1. Written Contracts
1.^ The proper manner 1165
Intention of the parties as expressed in the Instrument the true test. . 1166
PrUelQid t^ne bouii4 by ceot^aot mude in- his niime l^r Vi aivtfaorized
agent , 1167
Presumption that known agent does not Intend to bind himself 1168
Agent bound who conceals fact of agency or name of principal 1169
Known agent may bind himself by express words 1170, 1171
Contrary Intention manifest 1172-1174
Personal liability excluded by terms of contract 1175
II. The admissibility of parol eytdence to show intent 1176
Right acquired under agent's contract 1177
Contracts involving the Statute of Frauds 1178
B, Oral Contracts
How to he executed , 1179
Principal presumptively bound where agency disclosed 118<>
Agent may bind himself by special agreement 1181
How question determined 1182
Or hy tailing to discloM his principal 1188
XXX VI TABLE OF CONTENTS
BOOK IV
OF THE RIGHTS, DUTIES AND LIABILITIES ARISING
OUT OF THE RELATION
CHAPTER L
IN OBNBRAL
[R«fer«iiCM are to iiertloniit e§ 1-170.% Vol« I| t9 1706-3588, Vol. II.]
Purpose of Book IV 1184
What parties interested * : 1185
How subject divided ,..,,../, 1186
In general — Duty the measure of liability 1187
I. TO BE LOYAL TO HIS TBVST
Loyalty to his trust, the flr^t duty of the ag^nt % . . , 1188
May not put himself in relations antagonistic to his principal 1189, 1190
May not deal in business of his agency for his own benefit liSl
Agent authorized to purchase for his principal may not purchase for
himself — Agent charged as trustee 1192
Same principle applied to leases 1193
What evidence of trust sufficient 1194
When rule does not apply 1195, ii96
Agent authorized to sell can not sell for himself 1197
Agent authorized to sell, exchange, or lease may not become the pur-
chaser or lessee 1198
Injury to principal not test — Sale at fixed price 1199
Public sale equally voidable 1200
Effect of fraud or concealment 1201
To what agents this rule applies 1202
Further of this rule — Indirect attempts 1203
Agent authorized to insure may not issue policies to himself 1204
Agent authorized to purchase or hire may not purchase or hire of him-
self 1205
Double agency — Agent may not represent other party also without con-
sent of principal 1206
Agent must fully inform the principal 1207
Agent liable for misrepresentations. 1208
Agent may not take advantage of confidential information acquired in
the business to make profit of principal's expense 1209
After termination of agency 1210
Information respecting trade secrets, names of customers, etc 1211
Ordinary experience, learned in the business 1212
Information leading to outside profit 1213
Information leading to patents or inventions 1214
TADLE OF CONTENTS XXXVU
[R«fereiic<« are to •eetlonai 9§ 1-1705» Vol. I| §9 170^-2088, Vol. II.1
Agent employed to settle claim, may not buy and enforce it against his
principal 1215
Agent may not acquire rights against his principal based on his own
neglect or default 1216, 1217
Agent may not acquire adverse rights in principal's property confided
to his care 1218, 1219
These rules can not be defeated by usage 1220
Agent may purchase, sell, etc., with principal's consent 1221
Principal may ratify act 1222
Gratuitous agents — Volunteers 1223
Profits made in the course of the agency belong to the principal 1224, 1225
Illustrations ^ 1226
Further illustrations — Rebates, Commissions, Rewards, Over-
charges "... 1227
Profits must be fruits of the agency 1228
Whether principal entitled to agent's earnings 1229
Work out of hours 1230
Gratuities 1231
Representing other principals — Exclusive service 1282
Remedies of the principal 1233, 1234
Agency must exist 1235
Other limitations \ 1236
Proof of the agency 1237
Against whom trust enforced 1238
Principal must not have consented to, waived or condoned the act.... 1239
n. WOT TO EXCEED HIS AUTHOHITT
Duty of agent hot to exceed his authority 1240
Duty of principal to make clear the extent of authority 1241
Duty of agent to know extent of authority 12*42
Liability of agent for exceeding his authority 1243
m. TO OBIPY IXSTSrCTIOXS ' -
Agent's duty to obey instructions 1244
Results of disobedience— Agent liable for losses caused by it 1245, 1246
Illustrations ; 1247-1252
Form of action — When agent liable in trover 1253
Mere breach of instructions 1254
Conversion 1255, 1256
The rule stated — Intent Immaterial 1257
How when agency is gratuitous 1258
Exceptions to rule requiring obedience 1259
Agent not bound to perform illegal or immoral act 1260
Agent not bound to Impair own security 1261
Departure from Instructions may be justified by sudden emer-
gency 1262, 1262
Limitations 1264
Where the authority has been substantially pursued agent not liable
for immaterial departure 1265
XXXViii TABLE OF CONTENTS
T
[Referenoea arc to •ectlonsi §§ 1-1705, Vol. I| §§ 170«-2688, Vol. II.]
Where instructions are ambiguoua, and agent acts in good
faith 126«, 1267
How affected by custom , 1268
When presumption as to custom, conclufiive 1269
No presumption of disobedience «, 1270
Measure of damages 1271
Ratification , 1272
Liability for subagents , , 1273
IV. XOT TO BE NEGLIGENT
In general 1274
Agent bound to exercise ordinary and reasonable care 1275
Agent bound to exercise usual precautions 1276
1 But not liable for mere accident or mistake 1277
Not bound to exercise highest care 1278
Good faith — Reasonable diligence 1279
When agent warrants possession of skill 1280
How when agency is gratuitous 1281
" — When employed in a capacity which implies skill 1282
Bound to exercise the skill he possesses 1283
Agent not liable for unforeseeable dangers 1284
But liability increased if special risks disclosed 1285
Agent presumed to have done his duty 1286
Agent not liable If principal also negligent 1287
When agent liable for neglect of subagent 1288
When agent liable for neglect tA co-agent 1289
effect of ratification upon the agent's liability 1290
The measure of damages ^^^^
Judgments, costs, counsel fees 12^2
The principal's remedies ^^^^
Illustrations of agent's liability 1294
i. Neglect of agents in making loans and investments
1295
Degree of care required ^'"^'^
Liability for resulting loss ^^^^
2. Neglect of agent to effect inswance
When duty to insure arises 1297
What the duty requires 12^8
S, Neglect of agent is making ootlections
Liable for loss from negligence. 1299
Forms of negligence 1300
Negligence as to medium of payment 1301
Illustrations 1302
Negligence in proceedings 1303-1306
Neglect to give principal notice of material facts 1307
Neglect in granting or permitting delays, extensions or forbearances. . 1308
Neglect in keeping the money 1309
Neglect in making remittances. . : 1310
TABLE OF CONTENXS XXXIX
[References are to seetloBst §8 1-170S, Vol. I; §1 1706-26S8, Vol. II.]
Liability for neglect of correapondence and subagents 1311
Liability of banks ! i 1312^
For the neglect of the notary 131S
VoT the neglect of a correspondent bank 1314
Liability of attorneys 1315
Liability of mercantile or collection agencies 1316-1318
Liability of express companies 1319
The measure of damages for agent's negligence 1320
Principars right of action against subagent 1321
Del credere agents — How liable to principal 1822
4. Neglect of agent in making sales
Nature of duty , . , , 1323
When agent liable for selling to irresponsible parties 1324
Conditions of agent's liability 1325
5. Neglect of agent in making purchase
Nature of duty 1326
V. TO ACCOUNT FOB MONET AND PBOPEBTT
*
In general 1327
Account only to principal — Joint principals , 1328
Accounting by Joint agents 1329
Subagents — Account to whom 1330
Agent may not dispute his principal's title 1331
May not allege illegality of transaction to defeat principal's claim. . . . 1332
When may maintain interpleader 1333
Agent's duty to keep correct accounts 1334
Duty to keep principal's property and funds separate from his own —
Liability for commingling 1335
At what time agent should account 1336-1338
Necessity for demand before action 1339
Exceptions ', 1340
When agent liable for interest 1341
Form of action. .*.... 1342
When equitable 1343
The burden of proof 1344
Proof of amount due — Special method agreed upon — Conclusiveness of
agent's accounts .' 1345
When liability barred by statute of limitations 1346-1348
Of the agent's right of set-off 1349
How far principal may follow trust funds 1350
Conclusiveness of account — Failure to object — ^Account stated 1351
Reopening account — Impeachment for fraud or mistake 1352
TI. TO GIVE NOTICB TO PRINCIPAL OF MATERIAL PACTS
Duty of agent to give principe^l notice of facts material. to agency. «••«• 1868
d
Xl TABLE OF CONTENTS
CHAPTER III.
THE DUTIES AND LIABILITIES OF THE AGENT TO THIRD PERSONS
[Reference* kre to •ecttons: gg 1-1705, Vol. I| 11 1706-2588, YoL II.l
Purpose of this chapter , 1354
A. PRIVATE AGENTS
How subject divided 1865
I. IN CONTRACT
In general 1356
Agent not personally liable upon authorized contract made in princi-
pal's name 1357
Liability of agent as here discussed assumes that agent is of normal
legal capacity 1358
1, Where he acts without authority
In general 1359-1361
V
A. Assuming to act for a disclosed principal.
Theories of liability , 1362
Deceit-^Warranty of authority 1363
Agreement to indemnify 1364
Objections — A fiction — Conflict with Derry v. Peek 1365
Liability not based on theory of agent's actual wrong 1366
Liability based on representations of matters of fact only 1367
Doctrine not confined to the making of contracts 1368
How where other party knows or agent discloses all the facts relating
to his authority 1369
Where agent disclaims present authority 1370
How in case of public agent 1371
To whom the liability extends 1372
Application of these rules 1373
I. Where authority never conferred • 1374
II. Where authority once existing has terminated 1375
Authority terminated by act of principal 1376, 1377
Authority terminated by death of principal 1378. 1379
Authority terminated by prlncipars insanity 1380
Authority terminated by other events 1381
Authority terminated by act of agent 1382
III. Where no principal In existence — Inchoate corporations — Pro-
moters 1383
Provisional arrangements with promoters 1384
Principal dead at time authority supposed to be conferred 1385
IV. Where principal in existence but principal had not the authority
to confer — Ultra vires acts— Liability of corporate directors and
agents < 1886
TABLE OF CONTENTS XU
[Hefevcmccs mr^ to se^loB*! H 1-17M, Vol. I| §§ ITIM-SSSSy Vol. II.]
Where principal temporarily forbidden to act 138T
Where prlncipars insolvency destroys his legal status 1388
When no legally responsible principal — Unincorporated associa-
tions 1389
Meetings, committees, etc 1390
Legal competency of an existing principal 1391
Infant principals 1392
Married woman 139$
Where principal insane at time authority was supposed to be con-
ferred 1894
When agen.t liable on the contract Itself 1395, 1896
Agent not liable merely because principal is not 1897
In what form of action Is agont liable ^ ...•••... 1898
Burden of proof 1899
The measure of damages • • • • 1400
To give damages for loss of a particular contract. It must have
been one of value against principal if authorized 1401
Effect of ratlficaUon 1402
Where a nominal agent is the real principal 1403
B. Assuming to act for an undisclosed principal
Liability of pretended agent 1404
8. Where, though authorized to hind his principal, he
hinda himself or no one
In general 140&
Authorized agent contracting in name of principal incurs no personal
liability 140C
Where ag^nt intending to bind principal, binds no one 1407
Where agent intending to bind principal, inadvertently uses apt
words to bind himself '. 1408
Reformation of contract to release agent 1409
Where agent conceals fact of agency or name of principal 1410
Disclosing fact of agency, but concealing identity of principal... 1411
Identity of princpal sufficiently disclosed — What terms sufll-
ciently exclude personal liability — Liability by custom 1412
Burden on agent to disclose principal 141&
Disclose when ^ 1414
Agent liable although principal might also be held 1415
Dealing with agent must have resulted in contract, etc 1416.
Where agent acts for a foreign principal 1417
Where there is no responsible principal 1419
Where agent pledges his own responsibility 1419-1421
How determined 1428
What facts not concluBive 1428
Principal also may be bound — Election 1424
Agent alone liable on negotiable and sealed instruments 142&
Agent may be Jointly liable with principal ••••• 1428
Xlil TABLE OP CONTENTS
i [R«fe^ae«i sre to «ectl««si tl' 1-1 TM, Tol. t; |g ttW-ifSSS, Tol. 11.]
Agent may bind himeelf by coIIat<eral contract 1427
How in case of public agent 1428
Agent's right of set off and recoupment '. 1429
3. Where the agent has received mortey
In general 1430
a. Where Money Has Been Paid to Agent for Principal
No liability where money properly paid to which principal was entitled 1431
Liability for money paid to him by mistake 1432, 1433
Liability for money received by him through wrongful act of principal
alone 1434
— *- Change in agent's situation as equivalent of payment 1435
Liability where principal's right terminated after payment 1486-1438
Agent liable for money mispaid though paid over, if agency was not
known 1439
Agent liable without notice for money illegally obtained 1440
Agent liable without notice for money obtained through his misconduct 1441
Agent liable where money is proceeds of act which principal could not
lawfully authorize 1442
Agent liable for money received without authority and not paid over to
V^e principal , 1443
Agent personally liable for return of deposits where he has pledged his
own responsibility 1444
Where agent is a mere stakeholder , 1445
Agent for undisclosed principal liable for returnable deposit 144$
ft. Where Money Has Been Paid to Agent for Third Person
Where agent's liability to such third person attaches — Revocation by
principal , 1447
What constitutes assent — Consideration 1448
Action at law by beneficfary against agent 1449
Trusts for the benefit of third persons 1460
II. IN TOBT
In general 1451
Agency usually no defense in tort cases 1452
Agent liable for negligent acts outside the scope of his agency 1453
When agent ostensible principal '. 1454
Liability of agent for trespass 1455
Principal's knowledge or direction no defense 1456
Liability of agent for conversion 1457
Agent's liability for fraud, misrepresentation or deceit 1458
Agent's liability for his wilful or malicious acts , 1459
Agent liable to third persons for negligent Injuries committed by him
while acting in performance of agency 1460, 1461
Agent must have been an actor, not a mere automaton 1462
— Mere -intermediate agent not liable 1463
Agent's liabiHty for negligent omissions— Misfeasance — Nonfeasance.. 1464
TABLE OF CONTENTS Xliil
[Bef«Mme«i jura-to teetlda^t «t l-<706^ Tin; I| §1 1796^2888, V<rt. n.]
— Certain rules quoted 1465
'Att^Unpted distinction between misfeasance and nottfeasance ..... 1469, 1467
Further of this distinction , .•.,.. 1468-1470
. Effect of beginning performance , 1471-1473
Agent Itabfe I6t cdndit'ibh of premises over which he has control 1474
Agent must be responsible 1476
Duration of liability 1476
Other cases inTolvlng thei sajne prineit)le. .' 1477, 1478
Casea in which agent held not liable 1479-1481
Agent not liable in tort to third .penKnMi fpr breaf^ of prlneipars con-
tract with them 1482
Liability of servant or agent to Xellbw «errattt or agent '148d
No liability for negligence of fellow agent or servant » 1484
Idability in respect to subagents 1485
Agent who conceals principal liable as principal to subagent .... 1486
Joinder of agent and principal in same action ,.,. 1487
>
B. PUBLIC AGENTS
What here kiduded 1488
I. UABiLrrr tob tkcb contracts
Already considered , * '.'..'... 1489
n. UABIUTT FOB TREIB OWN TOBTB •
In general—- Classification . .' 1490
No action by individual. for breach of duty owing solely to the public 1491
Liability for wrongs committed in private capacity 1492
1. Superior Governmental Offloers
Not usually subject to private action « . ,^ • .r^ • • •• » ^ 1493
£. Judicial Officers
JudiciiLT bfflcers not liable when acting within their Jurisdiction 1494
Liability not affected by motive . . . < 1495
This immunity extends to judicial officers of all grades • • 1496
S, Quasi-judicial Officevs
Quasi-judicial officer exempt from civil liability for his official actions 1497
Illustratioh ,,, 1498
Liability not affected by motive , « . . 1499
i, Ijeifistative Officers
Same Iihhiunity extends to legislative action 1600
5. Ministerial Officers
In ^eneral^-Liable to party specially injured .., 1501
^ in. UABILITV FOB *rHB TORTS OP THBIB OFFICIAL fltXBOBOlWATES •
Public officer of government not liable for ^eu^t8 of his official subordi-
nate i 1502
To what officers this rule applies— **bart officers 1503
xliv TABLE OF CONTENTS
Public trustees and commissloQers 1G04
Not to ministerial officers ; J.506
IV. LIABILITT FOB T0BT8 OF TUSIB PBIVATE 8EBVAKTS OB AGENTS
Liable for torts of private servant or agent ^. . • » 1506
r
CHAPTER IV.
THE DUTIES AND LrlABILITIBS OF THE PRINCIPAL TO THE AGENT
In general — Employment — Paywent of OompoiiBatloa — Reimbursement
— Indemnity— Lien ^ 1507
I. THE agent's right TO EMPLOYMENT
What here included 1508
The right to be received into the employment 1509
Right to be given work to do ' 1510
Compensation dependent upon work done 1611
n. THE agent's KIOHT TO PAYMENT OF COMPENSATION
What here Included 1511S
i. Tfie Agenf9 Right to Compensation
Agreement to pay compensation — Express — Implied 1513
Express agreement conclusive 1614
When agreement must be express 1616
When agreement to pay will not be implied 1516, 1517
When promise to pay will be Implied 1518-1520
Unauthorized agent entitled to compensation if acts are ratified 1521
When agent can recover for extra services 1522
Agent cannot recover compensation if agency was unlawful ......... 1523
S. The Amount of the Compensation
Express contract governs 1524
May be left for principal to determine 1625
In the absence of express agreement — How amount determined — Mar-
ket— Usage — Reasonable value 1526
What elements may be considered 1527
What evidence as to value is admissible 1528, 1529
Agent continuing after expiration of term presumed to be at prior
compensation 1530
5. When Compensation is Considered to he Earned
In general » * •••• 1581
Compensation earned when undertaking fully completed 1532
When full performance a condition precedent 1533, 1634
Agent's right not defeated by principal's default 1535*1537
Same subject— No defense that principal realized no profit « . 1538
TABLE OF CONTENTS xlv
|R6fww« «» tm m^eii9mmi M l«ir«B».Vol. If 9» If0e-M68, Vol. II.]
4 Effect of Termination of Agency
1.. Termlaationby tJbbe Act of tbe Principal
When agent is entitled- to compensation if agency ia terminated before
performance 1539, 1540
a. Agency Rightfully Terminated
Wben agency may be terminated without liability 1541
Agency at will of the principal 1542, 1543
Agency terminable on contingency * 1544
Agency terminable only on breach of express or implied eondittona.. 1545
When terminated for agent's misconduct 1546-164S
6. Agency Wrongfully Terminated
When agent discharged without cause — Breach of implied oontract X549, X550
What cases involved 1551
Breach of contract with agent to do particular acts 1552
Breach of express o(mtract of employment-^Agent's remedies ..: 1653
Theory of these remedies « , 1554
A middle ground 1555
When action may be brought 1566
The measure of damages 1557
Same subject 1558
Duty of agent to seek other employment 1559
New employment offered by defendant 1560
Duty to take service of a different sort 1561
Work for himself 15(J2
When right of action accrues 1563, 1584
No damages if «gent acquiesces in discharge 1565
t: Termination by Operation of Law
No damages where agency terminated by death of principal 1566
Joint principals-^Partnershlp 1567
Same rule where agency terminated by insanity of the principal 1668
Rule where agency terminated by bankruptcy o£ principal. 1569
Rule where agency terminated by death of the agent • , • • . 1570
Rule where agency terminated by insanity of the agent 1571
How when agency terminated by agent's sickness or Uteapacity 1572
8. Abandonment by Agent
1. When abandonment lawful 1573
2. When abandonment wrongful ^ • 1574
Entire and severable contracts — Right to compensation 1575, 1576
Full performance of entire contract usually required 1577
The more liberal rule — Britton v. TUrner 1578
Recovery for. services under contract unenforceable under Statute of
Frauds 1579
Brief absences as abandonment 1580
Condonation of abandonment • 1S81
Xlvi ' TABLE OF CONTENTS
1 [RefvreBM* «x« t» MetloMst M l-^ir«6, -VoL If- M- ITOt twej VM« 9.]
What will excuse abaadonment— Sicknegs — Epidemie — Physical vio-
lence 1582
Recovery for services actually rendered .,i 1688
Recovery of wages during illness ...i.«.». 1594
-rr — Principal's right to terminate employment 1585
Contracts not to terminate without notice — Forfeiture for breach.... 1586
What works a forfeiture 1587
5. Effect of AgenVs Dialoyalty upon Compensation
Disloyal agent cannot recover compensation .» * i • » .^i 1588
— Good faith does hot save—^Nor custom — Divisible transaotioas^ . • 1589
Double agencyr-Agent. cannot recover compensation from either party
when double agency unknown 1590
How when agent mere middleman .' .* 1591
May recover when double agency was fully kiiown find assented to . • . 1592
• • • •
6, Effect 0/ AgenVs Wilful Disobedimce
Forfeiture by wilful disobedience ,..«.••...•«.• 1593
7. PrincipaVs Right of Recoupment-
Principal may recoup damages 1594
What damages may be recouped .1695, 1596
Limit of recoveiy 1597
Right not cut off by assignment ■. . 1598
No recoupment against an infant 1599
m. THE aoe>^t's bight to beimburssment
What here Included 1600
Agent muAt be reimbursed for proper outlays 1601
When not entitled 1602
IV. THE agent's right TO INBEMlftTT
Agent must l>e indemnified against consequences of lawful acts ^ 1608
Liability must be a direct consequence of the execution of this' ageney 1604
-— Illustrations 1606, 1606
Right to indemnity extends to contractual obligations properly incurred 1607
No indemnity where loss cauaed by agent's 'default 1608
No indemnity where obligation incurred in excess of authority 1609
— ^ Unless lack of authority attributable to principal's default 1610
No indemnity where act is unlawful 1611, 1612
Agent indemnified only against loss, not mere liability 1613
V, THE agent's BIOHT TO PBOTECttON FBOM INJTTBT
In general 1614
i. Risks Incident to the Business
General rul&^Master not liable .'....* 1615, 1616
2. Negligence of the Master
Master responsible for his own. negligence 1617
TABLE OF CONTENTS xlvii
'fttet«i%ac««i are to ■ectltfni^i M1-17M^ ▼•!. T| ff 179»-aB88» V«l. fl.l
t. for dangorous preidiftes • ' ' 1618
Wartilng 1619*
'^— ^'Unsafeneflft wbere • Bepyant haa no bu6lnei(B to be 1620
Unsafeness reauUi&g from doing of the wortB ttself * . . ; ...... 1621
UnsafenesB caused by conditions upon adjacent premises 1622
Liability for places and lnstrtEm«ikt« used* but not owned, by the
master 1623
y. For dangerous appliances, tools and machinery 1624
Warning '. 1625
Inspection — Maintenance 1626
Repairing defective tools, etc. . . '. .' 1627
-^ Servants having no business. to use — TJ^Ang. tor unexpected put-
poses 1628
Dangers arising from dangerous use of proper appliances, etc... 1629
III. For injuries resulting from failure to repair as agreed 1630, 1631
iV. F'or employment of incompetent seTvants .' 1682
Sufficient number 1633, 1634
y. For not making and enforcing* rules % 1635
VI. For not furnishing necessary superintendence 1636
VII. For injuries outside of employment i ....,...., 1637, 1638
5. Negligence of Bis (General Superintendent or Other Representative
.... ... •
Principal cannot relieve himself by delegating duties , . 1639
Liable for negligence of general agent or superintendent— Viccrpri^ci-
pal , 1640
4. negligence of Independent Contractor Performing Master's Duties .
Liable for negligence of independent contractor performing maste.v's
duties , ,.,.,..* 1641
When liable to agents of contractor ,«•.•,..«..••*•*.. 1,64^
S. Ke'gligence of F€tlou>servant
Master not liable to one servant for negligence of a feUow-^ervant 1643*:^643l
Who is a fellow-servant? 1649
Association rule 1650
Departmental, rule , , 1651
Superior servant distinction ......' 1652
The -general^ rule • . . : 1653-165^
What risks within the rule 1657
Volunteer assisting «0rvant cannot recover . ; ...■•••».• 1658
6. Assumption of Risks
In general 1^9
Assumption of risks resulting from master's negligence ..... 1660-1666
Obviousness of the risk ; lg67
Voluntary action— Coercion — Command 1668
Emergencies — Assurances of safety 1669
Inexperience— Youth, etc, ;. . ; , . I'gvo
Xlviii TABLE OF CONTENTS
Assumption of risks ex^stios In violation of statute 1671. 1672
Assumption of risk distinguishable from contributory negligence 1678
How determined — Court' or Jury „ * . . . . 1674
Protests against doctrine 1676
6. OontriinUory Negligence
Contributory negligence of servant defeats his recovery 1676, 1677
Effect of express coknmand of master 167S
7. Statutes Changing Common Law Rules
Statutory changes 1679, 1660
8, Contracts Waiving Master's Liability
Agreements to waive liability invalid 1661
r
VI. agent's BIOHT to ▲ LIBX
In general 1682
Lien defined — General and particular liens 1683
Foundation of the claim of a lien 1684
Nature of Hen 1685
Requisites of lien — Possession 1686
Possession must have been lawfully acquired 1667
Possession must be continuous 16B8
Possession must have been acquired in course of employment 1689
No lien if contrary to Intention of parties — Waiver 1690
Waiver by Inconsistent conduct 1691
Claim of lien no waiver of personal remedies 1692
How lien may be enforced 1698
How these rules apply to agents 1694
Illustrations 1695
Agent's lien ordinarily a particnlar lien 1696
For what sums the lien attaches 1697
vn. agent's bight of stoppaob in than sit
Agent liable for price of goods, may stop them m transit 1698
Right exercised as in other cases 1699
Right of such an agent to retain the title until paid for • 1700
vm. bights of sub-agent against pbincipal
t
9
When principal liable for his compensation 1701
Effect of ratification 1702
Same rules govern reimbursement and indemnity 1703
How as to protection against injury 1704
When subagent entitled to a lien 17.05
TABLE OF CONTENTS, VOL. IL
CHAPTER V.
THE DUTIES AND LIABILITIES OP THE PRINCIPAL TO THIRD
PERSONS
[lUfereace* u« to ••etlomst f§ 1-170S, Vol. I) 9ft 1706--SS88, Vol. II.]
Purpose of chapter 1706
I. THl LIABILITY OF THE PRINCIPAL UPON CONTRACTS MADE BY AN AGENT
In general 1707
1, The Contractual LiaMlity of the Disclosed Principal
In general 1708
Principal liable on contracts made in his name by his authority 1709
Principal liable on informal contracts not expressly charging agent's
responsibility 1710
Informal entries or charges against agent not conclusive 1711
Principal may often be liable though agent also bound 1712
Written contract in agent's name — Principal not liable 1713
Same subject— Principal liable 1714-1716
Principal not liable where credit given exclusively to agent 1717
For what contracts and contractual acts of agent is principal liable. . . 1718
Qui facit per alium, facit per se 1719
Principal liable for acts and contracts within scope of authority 1720
Tliird person must ascertain agent's authority 1721
What constitutes authority 1722
Secret instructions and restrictions of principal or secret motives
of agent — Mistake of agent 1723
General and special agents 1724
Special agent's authority must be strictly pursued 1725
Effect of ratification 1726
Performance of unlawful act not enforced 1727
Principal not bound where agent had an adverse interest . . . . ^ • 1728
2. The Contractual Liability of an Undisclosed Principal
Preliminary considerations as to liability 1729, 1730
General rule — ^Undisclosed principal liable when discovered 1731
Rule applies to all simple contracts 1732
Parol evidence to identify the principal 1733
Does not apply to contracts under seal 1734, 1735
Does not apply to negotiable Instruments 1736
Exceptions to the general rule 1737
Of the first exception — Change in accounts — Misleading conduct 1738
Thompson v. Davenport 1739
Heald v. Kenworthy 1740
1 TABLE OF CONTENTS
[Reference* are to •eetlonsi 9§ 1-170S, Vol. I| H 170«-S689» Tol.^n.]
Armstrong v. Stokeir i . . . .- ; 1741
Irvine v. Wataon— In the Queen's Benafk 1742
Irvine v. Watson — In the Couit of Appeal 1743
What is misleading conduct w 1744
Delay, etc 174&-1747
The rule In the United States - 1748
*
General conclusions ^ 1749
Of the second exception — "Election" 1750
— Hiebrles of election : ; * . . i \ ; . 1751
— - Knowledge necessary 1752^ 1753
What constitutes an election 1754
I. Before discovery of principal ." . . . 1765
II. After discovery of principal 1756
Presenting claim 1757
Commencement of action 1758
Taking judgment against agent 175&
Taking agent's note 1760
Charging goods to agent 1761
Mere delay— Statute of limitations 1762
Intermediate party must have heen agent and not principal 1763
Alleged agent must have been really such 1764-1766
"Apparent" authority . . . i 1767, 1768
Right of assignee of other party against principal 1769
Apparent agent the real principal 1 . . 1770
Excluding principal's liability by terms of contract . . . .' 1771
Cases in which the agent may not be liable 1772
II. RESPONSiBILITT OF THE PBINCIPAL IfOU THI AOINT'B STATKIOBIVTB* BSFBEaUfXA-
TION8 A17D ADMISB10N8
In general 1773
Agent's authority must be first shown 1774
Authority cannot be shown by agent* s admissions 1776
Representations by agent * 1776
Principal liable for statements and representations expressly author-
ized 1777
Statements of agent expressly authorized to give, or referred to for,
information , 1778
Statements of agent impliedly referred to for information 1779
Statements of agent made as incidents of his position — General man-
ager— General agents, etc 1780
Statements' of agent made as Incident to an authorized act — Res gestae 1781
Various statements of the doctrine 1782
Limitations upon the rule 1783
Further limitations 1784
HOW question determined 1785
Effect of these statements not dependent upon their being true 1786
Statements showing notice to or knowledge by the agent 17S7
Statements of agent made to modify, qualify or explain the act 178S
Illustrations 1789
TABLE OF CONTENTS li
iRefvreaen «rv te. MCtlourM l-^lfeS, -Vol* If §§ 1706-M68y V#l* 11.1
SUteIne^ta Indicative of the agent's Btate of mind ITSO*
Words themselves constituting or aggrayating the wrong 1791
ik4znissionB of agent generally not competent to charge principal .... 179Z
Declarations and admissions of agent as part of res gestae . ; .*. * 1793
Meaning of res gestae as here used » 1794
What sort of statements admissible 1795
What embraced within res gestae ;...... 1796-
How admissibility determined .... * — ^. 179T
Illiifitrations of what has been called part of the res gestae — Inadmis-
sible declarations 1798
lUustrations — Admissible declarations 1799
When principal bound by agent's representation of extrinsic facts upon
which authority depends , X80Q
Illustrations — Bills of lading — Warehouse receipts — Certified
checks 1801
III. THK JEFFSCT UPON TKB PBINGIPAI*'S BIOHTB AND QBLIQATIOlfB OT ZfOTICS TO OR
KITOWUCDOE IN HTB A(»ENT
In general 1802
General rule — ^Notice to the agent is notice to the principal 180S
Illustrations 1804
The theory of the rule — a. Identification 1805
&. Conclusive presumption of communication 1806
L Notice acquired during agency 1807
II. Knowledge acquired prior to agency 1808
^— *■ Requirements of present knowledge 1809^1811
What is meant by notice acquired "during the agency" or "prior
to agency" 1812
The resulting rule ^ . . 18ia
The first exception — Privileged communications .,. 1814
The second exception — ^Agent acting adversely to principal . . . ; 1815
*< — Reasons for the exception 1816
Further of these reasons «.»... 1817-1821
The true exception .,, . . 1822^1824
Applicability of exception to corporate agents 182&
The third exception — Collusion of party claiming benefit of notice .... 1826
Who can avail himself of the notice U82T
What notice includes — Actual and constructive notice 1828, 1829
Agent must be agent of person to whom notice is to be imputed . . . 7. . 1880
Rule applies only to notice respecting matters within agent's authority 1821
Notice after termination of authority does not bind 1882
Notice must be of some material matter , . 188S
Notice must come to someone who is an agent , 1884
Ratification 1835
Releasing agent from duty — Enlarging it 1886
Ag;ent of two principals 1887-1831>
Two agents of same principal 1840
Jii TABLE OF COKTBNTS
IRfrf«reB«M mr^ t* ■^tloHsi H I^ITM, Vol. If W^ lT0«-<8m, ▼•!. H.]
Notice to subagent when notice to principal ■« . . . 1841
Notice of what sort of facts Imputed 1842
These rules apply to corporations — ^Notice to agent 184*3
What officer or agent 1844
Ordinary exceptions apply here 1845-1847
When notice must be acquired 1848-1850
Whe^ notice to director is notice to corporation 1851-1853
— Notice to stockholder not notice to the corporation 1854
IV. THE LIABILITT OF THE PBINCIPAI. FOB HIS AGENT'S TOBTS AND CKME8
In general 1855
Theories of liability 1S66, 1867
1, Did Relation of Frincipal and Agent or of Master and Servant Exist
Necessity for existence of the relation 1858
When relation exists 1859
Several masters erf one servant — General and special master —
I/ending servants — Adopting servants of others 1860
— Servant performing his own master's business under direction of
master's employer 1861
— Furnishing persons to be employed as servants 1862
— Tests for determining question 1863
Court or Jury » 1864
Contractual agreement as to who shall be principal 1865
Strangers assisting servants 1866--1869
Independent contractors 1870» 1871
Subagenu 1872
2. Liability for Acts ISxpressly Directed
Principal liable for acts expressly directed 1873
S. LiahiUty for Negligent Act of Servant or Agent
Liable for agent's negligent act in course of employment 1874
Liiabillty dependent upon agency 1875
Rules stated 1876, 1877
Forms of negligence 1878
—— What meant by course of employment 1879
Not merely a question of time or place 18S0
Master's prohibition or warning not conclusive 1881
Intention to benefit the master not the test 1882
Principars ignorance or good faith will not exonerate him 1883
Ordinary and natural attributes in the light of the event 1884
The question of apparent powers 1885
Illegal or unlawful acts 1886
Application of rules 1887
Illustrations 1888
Further illustrations 1889-1891
Forbidden acts 1892, 1893
Act of servant having large degree of discretion 1894
TABLE OF COXTENTS tin
[lUfctfeMW AM t* ••^tloitfit M l-iraS, Vol. It •• ITM-aOMb TiA.'n.r
— Servant comblnlag his own business with that of master 1895^
^•—Servant using master's vehicle, implement, etc., upon servant's
business — Facilitating master's business 1896
Servant under immediate direction of patron of master 1897
Master not liable for negligence not in course of employment 1898
Departure from service — Detour 1899
Distinction between a mere detour and a departure 1900
Illustrations 1901-1904
Resumption of service after departure *. 1905, 190&
Comments on these views 1907, 190^
Other acts not within course of employment 1909-1911
Further illuBtrations * . . . 1912
Injuries to servants' invitees !?9lJj
Negligence when servant off duty 1914, 1915
How question determined 1916
Master's liability for acts of independent contractor 1917-1920
Effect of ratification 1921
4. Liability for Trespass or Conversion
Liable for trespass or conversion in course of employment 1922
Special cases 1923
Illustrations 1924
Not liable if acts were not withia course of employment 1925
5. lAaMlity for Wilful or Malicious Acts of Servant
In general 1926-1929
Special classes of oases 193^
I. Where the master owed the plaintiff a special duty 1981
Non-delegable duties .' 19S«
^-— Rule applied to carriers of passengers 1983
— Illustrations of the carrier cases 1986
Plaintiff provoking assault 1985
Limitations of doctrine 1986
Servant a public ofBcer 1981
Servant insane 198ft
Application to other cases—Dlffleulty of determining elassee 1939-1944
II. Where master confides to servant the eare of a dangerous instni-
menUlity 1945-1950
III. Where the master entrusts to servant performance of duties in-
volving the use of force 1951
Breach of instructions no defense 1952
Master not liable for servant's personal malice 1953
Act must have been within course of employment 1954
Use of force must have been authorized 1955
Other limitations : 1^56
rv. Master's liability for malicious acts in other cases 1957
Illustrations 1958-19.7?
False imprisonment and unauthorized arrest 1973, 1971
llV TABLE OF CONTENTS
[RftfereaevM are to ae^tlonAt It i-lTQB, Vol. I» ift 17««-aBB6»' ¥ol* If.]
Unfounded prosecutions -....*..... 1976
Malicious prosecution 1976
— Assaults , 1977, 1978
Shooting 1979
Slander .and libel 1980, 1981
How question decided — Court or jury 1982
Ratification ; 1983
6, Liahility for Fraudulent Acts and Representationa
Iiiability for agent's fraudulent act 19S4, 1985
—--Agent's fraud supplemented by some act or omission of t^e prin*
cipal 1986
Liiability of principal for agent's false or fraudulent representations. . 1987
-^*— No liability for representations if any representation is outside
authority 1988
«-— * Representations within apparent authority .... 1 1989
—-—Liability for representations not made for principal's benefit.... 1999
——Representations concerning facts which condition authority 1991, 1992
Liability by ratification or adoption of act ^ 1993
Effect of misrepresentations— Remedies 1994
Action of deceit 1995, 1996
Effect of fraud not avoided by recitals in contract that there was none 1997
7. Liability for Penal or Criminal AcU of Agent
What here involved 1998
o. Civil Liability
Principal's civil liability for agent's criminal or penal act 1999
Civil liability for statutory torts committed in course of employment ^00
No civil liability for acts not in course of employment 2061
Usui-y 2002, 2003
Liability by ratification 2004, 2005
ft. Criminal or Penal Liability
Princlpars criminal liability for agent's criminal or penal acts 2006
Pena 1 acts 2007
Illustrations 2008
Contrary holdings 2009
8. Matters Relating to Procedure
Joinder of principal and agent in one action 2010
Weight of authority permits Joinder 2011
Master cannot be held if servant not liable 2012
The measure of damages against the principal — Compensation 2013
Exemplary damages 2014
Exemplary damages not allowed 2015
Exemplary damages allowed ..*...... 2016
Unsatisfied Judgment against agent no bar to action against principal 2017
Principal or master liable although other's negligence also contributed 2018
TABLE OF CONTEXTS Iv'
CHAPTER VI.
THE DUTIES AND LIABILITIES OF THIRD PERSONS TO THE AGENT
[Referenecs mv to SMttoMt §i 1-1T05, Vol. I| If 1706-2588, VoL II.]
What here Involved ......: ' 2019
l; IN OaNTBACT
In general — Right of; action in pr^nciiMil alone 2020
Considerations affecting this rule 2021
How cases may be classified '. 2022
AgeAt may sue when principal has clothed him with title or authority
for that purpose • ^ 202S
Agent may sue on contract made with him personally 202i
Undisclosed principal «......• 2025
:Disclosed principal 2026
When agent only can sue 2027
Statutes requiring suit by real party 1b Interest 2028
Assignees of bankrupt agent 2029
Illustrations of rule permitting agent to sue 2030-2032
Agent may sue when he has a twaeflclal interest 2038
What meant by rule . . . • 2034
What interest suffices 2035, 2036
Although agent may thus sue, principal may usually sue or control ao-
tion 2M7
Action on sealed contract, negotiable instrument, or contract made
with agent personally must be in agent's name 2038
Agent's rights depend upon the contract 2039
Right of assumed agent to show himself principal « 2040
1. Where he contracted for a named principal 2041, 2042
2. Where he contracted for an unnamed principal 2043
Agent may recover money paid by him under mistake or illegsU con-
tract 2044
What defenses open to third person 2045
Set-off 2046
Admissions — Discovery * 2047
What damages agent may recover on contract 2048
ri. IW TORT
Agent may sue for personal trespass » 2049
When agent may sue for injuries to principal's property • 2050
e
Ivi TABLE OF CONTENTS
CHAPTER VIL
THE DUTIES AND LIABILITIES OF THIRD PERSONS TO THB
PRINCIPAL
4
[References are to «ectloB«i if 1-170B, YoL I| •§ 170e-S5S8i Vol, IL]
In general . , 2051
The rule stated 2052
i. Right to Sue on Contracts Made by Agent
a. The Disclosed Principal
In general • 2053
May sue on contracts In the name of the principal • 2054
May usually sue on contracts made in his behalf but in agent's name 2065
May sue on contracts made on his account without authority but sub-
sequently ratified 2056
But principal must take contract as he finds It 2057
Defenses of other party based upon dealings with agent 2056
5. The Undisclosed Principal
May sue on contracts made in his b^alf but In agent's name 2059
One of several undisclosed principals cannot sue on entire con-
tract 2060
One of several apparently joint parties may show himself to be the
real principal 2061
Right of one who contracted as agent to show himself to be the
real principal 2062
What actions included 2063
Exceptions — Instruments under seal 2064
Negotiable Instruments 2065
Principal's remedies here — ^Rescission — Ehiforcement of trust 2066
How when contract involves elements of personal trust and confidence 2067
-**-- What contracts do involve personal elements 2068
Contracts of suretyship 2069
Principal cannot sue where terms of contract exclude him or where
contract is solely with agent personally 2070, 2071
Principal's right of action usually superior to agents 2072
Principal's rights governed by the contract 2073
When principal subject to defenses which could have been made against
agent — a. Those arising out of terms of contract itself 2074
b. Payment to agent 2075, 2076
c. Set-off of claims against agent 2077, 2078
Limitations of rule 2079
Performance by agent 2080
Release by agent 2081
TABLE OF CONTENTS Ivii
|R«teff«»«M we t* seettMBt m l^lTtS, V«L I| ft 17t«-»B8% V«l. XL]
Aasi^nment by agent 2082
Repudiation of unauthorized contract by other party • 2083
How principal affected by agent's fraud .•.••• 2084
How principal affected by notice to or knowledge of his agent •• 2085
Prlncipal'B actions-Measure of damages • • • 2086
Third person cannot set up agents want of authority to dispute prln-
cipars right • 2087
2, Right to Recover Money Paid or Used hy Agent
In general 2088
a. Money Wrongly Paid on Principal's Account
Right to recover money wrongly paid on principal's account 2089
h. Money Wrongfully Appropriated to Agent's Uses
Principal's right to recover njoney wrongfully disposed of by agent
on agent's account 2090-2094
Illustrations~-Bank deposits 2095-2100
Other illustrations 2101-2103
Further illustrations — Restrictive indorsements 2104
S, Right to Recover Property
In general ; 2105, 2106
Principal's- title cannot be divested except by his consent or voluntary
act 2107
Recovery of property disposed of by agent in excess of authority 2108
Recovery of property wrongfully disposed of by one alleged to be os-
tensible agent or owner 2109
Possession as evidence of ownership or authority 2110
Money — Negotiable paper 2111
Possession confided to recognized sales agent 2112-2114
Poesesslon coupled with indicia of ownership 2115
Principal may lose through agent's fraud 2116
But other party must have acted in good faith and with reason-
able prudence 2117
Illustrations — Pickering v. Busk 2118
McNeil V. The Tenth National Bank 2119
Commercial Bank v. Armsby 2120
Calais Steamboat Co. v. Van Pelt 2121
Nixon V. Brown • , 2122
Other cases — ^Title put in agent's name — Instruments delivered in
blank 2123
Limitations on doctrine in general 2124
Limitations on rule of McNeil v. Tenth National Bank 2125
Notice of principal's right from descriptive words in document. . 2126
Rule of McNeil v. Tenth National Bank does not apply to ordinary
chattels 2127
Possession under the Factor's Acts 2128
jlviii TABLE OF CONTENTS
Principal may recover his property appropriated to payment of agenVfl '
debts or seized by agent's creditors 2129
Right to recover securities wrongfully released 21)30
Right to recover property wrongfully sold to third person for the
agent's benefit 3181
4. RiQ^t to Recover for TorU
Principal may recover for injuries to his interests by third person's
torts - 2182
For enticing agent away • . . • 2183
For preventing agent from performing 2134
For personal injury to agent causing loss of service 2135
Third person not liable to principal for agent's fraud or neglect •••••.• -2186
5, Remedies for Double Dealing
liow when third person conspires with agent • 2127
How when agent in secret employment of the other party 2138, 2139
One of two principals not liable to other for defaults of their commoto
agent 2140
6, Conclusiveness upon Principal of Judgment against Agent
Principal not bound by Judgment respecting property rights against
agent in action to which he was not a party «. . . . 2141
Otherwise as to contract rights « 2142
. TABLE OF -CONTfiNTS lix
I .
• * •
BOOK Y
PARtlCULAR CLASSES OF AGENTS
CHAPTER I.
OF ATTORNEYS AT LAW
• • • . . I
[RefeMBCM are to •ectfenai §§ 1-1706, Vol. I| §§ 1706-9088, T&L H.]
Scope of chapter '. 2143
I. OF THE OFFICE
Who meant by attorney at law 2144
Attorney at law defined 2145
Is an officer, of the court ..»....* 2146
Who may te ........m... ....,•. 4 •••• -2147
Patiy may appear in person 2148
May not appear by agent «,........;...« « . 2149
II. OF THE BELATION OF ATTOItNET AND CLIENT
1. A Relation of Affen&y
Rulefit of agency govern. : ; : : 2150
ig.. Ron Oreatfi^
No formal power- neceBeary ^ i . . . «, 2151
m. APPEABA19CE PBE8UMPTIVELY AUTHOaiZED
Preaumption. of authority ,..,, ^ *.«..?.•.*•.,. .•••... 2152
The proBumptlon not^DoicluBlve* «.... 2158
a. While Proceedings Are Pending
1. Opposite party may require production of authority 2154
2. What evidence sufficient 2155
3. Client may dispute authority 2166
&. In Actiona upon the Judgment
1. Foreign judgments 2157
2. Domestic judementa* :i. «...;... «..,. 2158
IV, IliPUED AUTHOBITY OP ATTORNEY
t
In general 2159
Has general control of conduct of suit 2160
— — Presumption of authority , . . . 2161
What included , 2162
What not included 2163
Ix TABLE OF CONTENTS
[References are to seetlOBai §§ 1-170B» Vol. I| f| 170«-Jn8» ToL n.1
Can not delegate his powers , 2164, 2165
May not employ counsel , 2166
May employ subordinates 2167
Authority to Institute action 2168
Authority to Incur expense on client's account 2169
Authority to bind client by contracts 2170
Authority to bind clients by bonds 2171-2174
Authority to bind client by receipt of notlce^Notice to attorney as no-
tice to client 2175-2177
Authority to bind client by admissions 2178, 2179
Authority to receive payment 2180, 2181
After judgment 2182
What constitutes payment 2183
Authority to enforce judgment 2184-2186
Ratification 2187
V. DUTIES AND LIABILITIES OF ATTORNEY TO CLIENT
Bound to highest honor and integrity 2188
Duty to disclose adverse interests — Must not assume antagonistic po*
sltions 2189
Duty to remain loyal— Incapacities resulting 2190
Effect on opposite party 2191
Duty to use reasonable care and skill 2192
Errors in law or judgment 2193-2195
Negligence in collecting 2196, 2197
Negligence in bringing suit 2198-2200
Negligence in trial of action 2201
Negligence in examining titles 2252
Neglect in preparing contracts, etc 2203
Neglect of partners, clerks, etc : 2204
-; Neglect of subagent in eoHectlng* 2205
Lriabllity for exceeding authority, or violating instructions 2206
Liability for money collected 2207
— - When action may be brought 2208
Statute of limitations 2209
Liability for interest 2210
Attorney liable through acting gratuitously 2211
The burden of proof c^d measure of damages. . • • 2212
VL LIABILITY OF ATTOBNEY TO THIBD .PEBSONS
Not liable for breach of duty owing to. client only 2213
Cases in* which he would be liable 2214, 2215
Liable where he contracts personally -. 2216
Liability for clerk's, officer's, withesses's and other fees 2217
Liability to third person in tort 2218-2223
Liability for words written or spoken .', '. 2224
liiability for money received 2225
TABLE OF CONTENTS Ixi
j:RefeB^eiNi am to M^tloBai M.l-170a» Vol, I| tf 17q«-2tS8Si. ViU* II.]
« «
VII. LIABILITY OF CLIENT TO THIBD PBBSOIT
In contract 2226
In tort 2227, 2228
VilL LIABILITT OF CLIENT TO ATTOBNET
1. Attorney's Ri^ht io Reimlmrseinent and Indemnity
Attorney entitled to reimbursement Bnd indemnity 2229
2. Attorney's Right to Compensation
a. In General
Attorney entitled to compensation 2230
Attorney may sue for compensation 2231
1 Wliere There Was a Special Contract
In genera] 2232
Parties may agree upon amount of compensation 223S
Where such a contract Is fairly made it is conclusive 2234
Bztra compensation • 2285
Contracts for contingent compensation 2236
What contracts champertous 2237
Statutory changes 2238
The effect of champerty ; 2289
What contracts barratrous. 2240
Quantum meruit when contract void for champerty 2241
Agreements restricting settlement 2242
Contracts for contingent fees do not defeat settlement by client 2248
But attorney may recover from client 2244
r
2. Where There Was No Special Contract
Attorney entitled to statutory or usual rate, if any, otherwise to rea-
sonable value of his services 2245
What evidenee admissible 2246
What evidence not admissible • 2247
b. .When Compensation Deemed to be Barn^
In cases of ordinary retainer 2248
Compensation under express contract earned when undertaking sub-
stantially performed * 2249
Lack of success no defense 2250
Negligence or bad faith may be shown 2251
Fees forfeited by breach of trust 2252
How when attorney abandons service 2253
What will justify abandonment 2254
When discharged by client 2255
In violation of agreement 2256
Ixii TABLE OP CONTENTS
IftefeMmeM Ikm to m^eHonmi gg 1-iroS, VoL 1} gg 170«-S888^ ToL lil
What will justify .dlBchwge tt57
Effect of death of attorney or client , . , , .!535&
' Irrevocable power — Powers coupled with an interest 2259, .^260
Right to interest ....2261
When attorney's claim barred by limitation 2262
S, 4.ttomey'9 Right to Iden
Two kinds of lien 2263
1. The General or Retaining Lien
General nature of this lien 2264
Declared by statute in some states. ..... w 2265
What this lien adheres to. . . 2266
a. Upon papers 2267
b. Upon property 2268
c. Upon money , 2269
What charges the lien secures • 2270
Against what parties lien prevails ,. 227L
How lien may be lost 2272
How lien may be waived. • 2273
Enforcement of lien , ^ ... • 2274
2. The Special or Charging Lien
General nature of this lien 2275
In what states it exists. : 227i(
Whom this lien protects » 2277
What this lien protects » • 2278
When Uqu attaches ..*... 2279
To what the lien attaches. . . , , , . 2280
How lien protected — Settlement — Set off — ^Notice 2281
Abandonment — Discharge 2282
How lien enforced * 2283
— If the Judgment has resulted in a fund 22^4
Statute of limitations, etc 228l»
Liens by contract — Equitable protection independent of liea 2286
How lien lost or waived 2287
By what law governed 2288
IX. DEALINOS BETWEEN ATTOBN£T AND CLISIfT
In general — Good faith and perfect fairness required » 2289
Purchases from and sales to client — Adverse purchases 2290
Private purchases by the attorney of the client's property 2291
— — Gifts from client to attorney 2292
Other dealings 2293
Contracts for compensation made after relation exists 2294
Relation of attorney and client must exist 2295
Former relation terminated 2296
TABI-E OF CONTENTS Ixiii
CRefcfeac^Qi •t« to neetlprnvt jU t-VfW^ Vp), I»^| ITIMr^tfES^ T«L II.]
X. PBITILBQED OOICMUNIOATIOKS
Confldeiitial cdmitiUnicatlbnB privileged 2297, 2298
What comitiunications fncluded— By client to attorney 2299, 2300
By attorney to client 2301
Under wUat clfcutostanceB privileged — ^No auit need be pending —
MuBt be confidential 2302
Criminal acts i 2303
Frandulent or illegal acts ......»..;••..; 2804
Non-confidential communications w » . • 2305
Non-professional employments 2806
Collateral facts 2807
Relation of attorney and client must exist • 2803
Attorney as scrivener , 2309
Communications must have been made to an attoraear 2310
Privilege is the client's— Waiver 2811
How long it continues •«.••• • 2812
Attorney may disclose for his own protection 2313
XI. TERMINATION OF THE RELATION
By operation of law 2314
By act of the parties 2315
Notice of termination. ..••..•.... 2316
CHAPTER 11.
OF AUCTIONEERS
Purpose of this chapter 2317
i. Of the Auctioneer
Definition 2318
Who may be 2319
Whose agent he is. ...-.-. 2320
2. How Authorized
Like other agents 2321
« « I
t » • « •
5. Auctioneer's Implied Authoriiif
To fix terms of sale 2322
To accept the bid ^.......i*. •.«.»• 2323
To piake the necessary memorandum 2324
To receive the price « '. 232$
To sue in his own name for the price 2326
None — ^To delegate his authority 2327
Ixiv TABLE OF CONTENTS
[tlefe»«A«ev ttre tik u^tionmt ft 1-1705/ Vol. I; §§ 1706-2688, Tol. 11.]
None — ^To sell on credit 2828
None — ^To rescind or alter sale 2329
None — To sell at private sale , . 2330
None— To bid Tor himself 2331
None — ^To warrant quality * 2332
4, Auctioneer's Duties and Liabilities to Principal
Bound for reasonable skill and diligence 2333
To act with loyalty and good faith 2334
To obey instructions 2335
To account for proceeds 2336
To take care of goods 2387
To sell for cash only 2338
To sell to third parties only '. . 2339
To sell in person '. ' 2340
To disclose his principal 2341
5. Auctioneer's Duties and Liabilities to Third Persons
Liable where he conceals principal 2842
Liable where he exceeds his authority. 2348
Liable where he contracts personally , 2844
Liability for selling property of stranger 2345
Not liable for not holding auction as advertised 2346
Liable for refusing to surrender properly bought 2347
Liability for money received 2848
(
6, Auctioneer's Rights Against his Principal
Compensation — Reimbursement — Indemnity 2349
Recoupment of damages of principal * 2350
Auctioneer's lien 2351
Cannot dispute principal's title 2352
7. Auctioneer's Rights against Third Persons
Right to sue bidder ..••. .2868
Right to sue wrong-doer 2354
8, PrindpaVs Rights against Third Persons
To recover purchase price • . 2865
Where bidder refuses to complete purchase 2856
9. Rights of Third Persons against Principal
«
Principal's liability for auctioneer's acts 2857
Liability for breach of contract 235?
Liability for not holding sale, withdrawing property, etc 2359
Liability for failure of title to goods sold; 2360
TABLE OF CONTENTS IxT
CHAPTER IIL
OF BROKERS
CReferemeMi arc to M«tlOBst f| lr-1705, V«1. If If 170e-Mm» Tul. n.1
Purpose of this chapter • • • . . • • • 2S61
I. DKTINITIONS AND DIVISIONS
Brokers — In general 2S62
Different kinds of brokers ^6S
Bill and note^brokers 2364
Elzchange-brokers 2365
Insurance-brokers ' 2366
Distinctions 2367-2369
Broker's duties to employer 2370
Right to sue 2371
Right to lien 2372
Merchandise brokers 2873
As agent of both parties 2374
How authorized ... 2875
— When special agent 2376
When not authorized to sign 2377
"Bought and sold notes" in the English practice 2378
English rules governing "bought and sold notes 2379, 2380
"Bought and sold notes" in the United fitates 2381
Pawnbrokers 2882
Real estate brokers 2383
Ship brokers 2384
Stock brokers 2385
New York rules governing relation 2386
Broker a pledgee 2887
Massachusetts rule 2388
New York view generally adopted — Substitution of «thsr shares — ^Re-
pledge 2389
«
n. APPOINTMSNT AND CERMINATIOIf
Appointed like other agents 2390
How authority terminated 2391
m. IMPUED AUTHORITY OF BBOKEBS
111 general 2392
How aftected by usage . . .■ 2393
Local usages or customs 2394
Usual and necessary authority 2395
Authority to make and sign necessary memorandum 2396
Effect of Instructions 2397
IxVl • TABLE OF CONTENTS
IReferenecs are to ■eetlonst U 1-1709, Vol. I; ff t7fM-2SSSf Vol. II.]
Acting for both parties /. . 1 2398
May not delegate his powers 2309
Usually must act in the name 6f his principal 2400
Implied authority to fix the price 2401
-Tfirms /ol! 'lEtaJe . *. . .%. < : . j ^ •■ . . ; ««...««-. «?i . k i •. •'^ a*^ i-. v . >.'* 2402
May sell with warranty — ^When 2403
When may sell on credit : < 4 < i <*...>«.. /. .-. ZiOi
No authority to receive payment 2405
No authority to rescind or arbitrate 2406
No authority to accept or waive performance, , ..,.......•-...• 0407
Authority to sell property purchased . by. him •.. . 4 ..» . . . d408
Authority to pledge property i . . . 2409
IV, DUTIES AJH) LIABILITIES TO PBiyCIPAL -
Reasonable skill and diligence required ^ 2410
Fidelity to his principal — Concealing facts — DeaUag with or for him*
self , - 2411
Acting for both parties 2412
How. when . mere "middle-man" ......«.*... 2413
Duty to .obey Instructions. ; 2414
Illustrations 2415
Imperiling broker's security. 2416
Duty to keep and render accounts and to pay proceeds and deliver
property 2417
y. DUTIES AND XJABILITIES TO XHIBO PBRfiONfl
Not liable when he contracts for a principal disclosed 2418
Liability when principal concealed 2419
Liable when he expressly charges himself .• 2420
Lfiable when he acts without authority 2421
Liability for money received 2422
When guilty of a conversion * 2428
n. BIGBTS or BSOKXB AGAINST PRINCIPAL
, * • ■ • • >
1, Right to Compensation
Entitled to compensation ' 2424
How amount determined ^b.**. 2425
Broker must show employment — Volunteer — Ratification 2426
Broker must have performed undertaking 2427
Real estate broker — Nature of his undertaking 2428, 2429
Usually need not conclude a binding sale — Find purchaser ready, will-
ing and able to buy . . 2430
When is such a purchaser 'found?**; ...........;..'. 2431, 2482
Contract in particular cases may require less 2433
Contract with broker need not be in writing 2434
Broker must be procuring cause — May be such though not present at
sale — Directness of cause 2435, 2436
TABLE OF CONTENTS IxVli
[Ref4reb««« are to Motions » t0 l-170Sy Yot. I; M mm^^BSSi Tot. IT.l
Must be on tefms required — ^1. Where terms were prescribed 2437
2. Where- «o terms were prescribed ; 2438
Must be withiH time limited. -. 2439
Readiness and willingness of purchaser 244t)
Pecuniary responsibility of purchaser 2441
Abandonment by broker before success 2442
Must be sale, not mere option or conditional contract 2443
Must b6 (Mile, not eitchang:e — / — 2444
Sale by principal in person — Exclusive agencies 2445
Giving time ; ', 2446
Broker's right not defeated, how — Principal's default 2447
Buyer's default 2448
Hevocatlon of authority 2449
Reasonable time in which to find purchaser « 2450
Definite time — Contract for 2451
When such contract exists — Consideration for , 2452-2454
Performance liberally viewed in order to avoid hardships to broker... . 2455
Employment of two or more brokers .' 2456
When one entitled — How determined. 2457
Same subject — Interpleader 2458
• • •
Abandonment by one broker — Termination of his authority 2459
Duty to notify principal, when purchaser found 2460
How much compensation broker entitled to — Quantum meruit 2461
At what time commission payable 2462
Broker to sell chattels ^ 2463
Abandonment by one broker — ^Termination of his authority 2459
Revocation of authority. . . i , 2465
Several brokers 2466
Broker .to effect loan « 2467
Broker to effect exchange 2468
Bringing parties to terms 2469
Failure of contract 2470
Broker to purchase land 2471
Broker to find a tenant 2472
Other cases within the same principles 2473
Commissions from both parties ., 2474
How in case of mere middle-man 247-^
How affected by misconduct ., 2476
How affected by. disloyalty, double dealing, etc 2477
No compensation where undertaking illegal 2478
How when not licensed #..«...«.« ^ ^479
S, Right to Reimbursement and Indemnity
Entitled to reimbursement 2480
Needless expenses— Illegal transactions 2481
How when undertaking not performed 2482
S. Right to a Lien
No general lien • 2483^
Ixviii TABLE OF CONTENTS
Lriens in special cases— Stock brokers — Real estate brokers — Insurance
brokers 2484
Equitable liens *.. 2485*
No lien except for debt due from principal 2486
Vn. RIGHTS OF BROKER AGAINST THIRD PERSONS
1. In Contract
In general, no rigbt of action on contracts , 2487
WJien be may sue 2488
What defenses may be made wben broker sues 248D
2. In Tort
May recover when he sustains injury in the line of his business 2490
Vni. RIGHTS OF PRINCIPAL AGAINST THIRD PERSONS
Same as in other cases of agency 2491
No set off of broker's debts or obligations 2492
Right to recover money and property 2493
IX. RIGHTS OF THIRD PERSONS AGAINST PRINCIPAL
Same as in other cases of agency 2194
No remedy if broker did not act as defendant's agent 2495
CHAPTER IV.
OF FACTORS
Purpose of this chapter • •••• ••• 1496
I. DERNITIONS AND DISTINCTIONS
Factor or commission merchant defined 2497, 249S
Distinction between factor and purchaser • 2499
n. HOW APPOINTED
Same as other agents • •• • 2600
III. IMPLIED AUTHORITY OF FACTORS
•
In general 2601
How affected by usage 2602
To fix price and terms 2608
To sell on credit 2504
To sell in his own name 2505
To warrant quality 2506
To warrant title 2507
To receive payment 2608
To pledge 2609, 2510
— Under factor's act 2611
TABLE OF CONTENTS IxiX
IRftteMMM wre to m«MMmi N 1-1706, Vol. I) •§ 171M-9t88^ Tol. H.]
To pay his own debts • • . * 2512
To barter or exchange 2513
To delegate his authority 2514
To compromise or compound the debt 2515
To submit to arbitration 2516
To rescind sale 2517
To extend time of pajrment 2518
To receive anything but money in payment 2519
To make negotiable paper 2520
To insure property 2521
To sell to himself 2522
rr. DtmBS and liabilities to pbinoipal
To use reasonable care and prudence 2523
To be loyal to his prlneipars interest 2524
To obey instructions 2526
Instructions to sell 2526
Factor's right to sell, or to decline to sell, for his own protection 25i27
The measure of damages 2528, 2529
Instructions to sell for cash 2530
Instructions to insure 2531
Duty to inform principal 2532
Duty to sell only to responsible purchaser , 2538
Del credere commission 2534
Factor's duty to care for property 2535
Unforeseen contingency — Sudden emergency 2536
General duty as to sales 2537
Duty as to place of sale 2538
Duty as to time of sale 2539
Duty as to price 2540
Duty in collecting price 2541
Factor's duty in keeping account 2542
Not obliged to keep funds separate 2543
Factor's duty to account for money and property 2544, 2545
Set-oir 2546
Conclusiveness of accounts 2547
Duty in remitting money 2548
When principal may sue factor * 2549
Liability for acts of sub-agents 2550
V. RIGHTS OF FACTOB AGAINST PRINCIPAL
(k Oommisaions
Factor entitled to compensation 2651
When factor may have commissions from both parties 2552
When commission earned — Upon what computed 2563
b. Reimbursement
Factor entitled to reimbursement 2554, 2555
bcaC TABLE OF CONTENTS
— - Interest upon advances 2S66
— Conclusiveness of accounts ;••••. 2K7
• ' 1. - • ' ' '
c. Jndemniti/
Factor entitled to indemnity against losses « 25M
d. Lien
Factor entitled to lien 2659
When Hen does not exist 2560
Nature of the lien 2561
When Hen attaches ; 2562-2564
Who may confer lien *. 2565
How lien may be lost 2666
How lien enforced 2667
VI. BIGHTS OF FACTOR AGAINST TfilBO HttSONS.
a. In Contract
May sue for price of goods sold 2568, 2569
Defences 2570
May sue on contracts made in his name • 2671
6. In tort
May maintain trespass, replevin or trover S672
Actions against carriers > 2578
VH. BIGHTS OF PBIXCIFAL AGAINST THIBD PBBBONS
a. In Contract
May sue for price of goods sold 2574
What defenses principal subject to 2575
Right to follow property 2576, 2577
h. In Tort
For Injuries to or conversion of the goods • 2678
Tm. BIGHTS OF THIBD FEdSSONS AGAINST PRINCIPAL
Same as in other cases 2679
How when principal undisclosed • 2680
How when exclusive credit given to the factor • 2581
•
IX. BIGHTS OF THIRD PERSONS AGAINST FACTOR
Same as In other cases • • 2582
When liable for conversion 2583
How in case of foreign factor 2584
X. HOW RELATION TERMINATED
As in Other cases of agency — Revocation by principal 2585
Renunciation by agent 2586
Lapse of time, etc 2587
War, death, bankruptcy 2588
THE LAW CiF AGENCY
BOOK I. •: .
OF THE RELATION IN GENERAL; HOW. (31EATED AND
TERMINATED
CHAPTER I "' , ',
INTBODUCTION
S 1. Meaning of agency.
2. Forms of acting.
8. lilnes of distinction.
4, 6. Other tomm,
6. Direct and .indirect repcesentap
tion.
7. Degrees of authority.
8« Nomenclature adopted.
9. Is there a law of ac;ency?
10. Agency belongs to a commer-
cial age.
11-16. Agency a naodem title In our
law.
16-20. Agency in Roman law. *
21. Other historical references.
22* Agency in modem Continental
systems.
23. The early treatises on agency.
24. Legislation In Bnglish and
Ajnericaa law.
§ I. Meaning of agency.— Considered from the standpoint of ety-
mology, the word "agency" or "agent" (ago, ogere, agens, agentis)
denotes an actor, a doer, a force which accomplishes things. Such an
actor or force may be personal or impersonal, corporeal or incorporeal.
Thus, we speak of a mechanical or chemical "agent," or say that this
or that institution or influence is a great moral "agent," or is an
"agency" for good or evil. In such cases we use the words "agent"
and "agency" as practically synonymous.*
The force or actor which we call an agent or an agency may be one
which operates independently, or one which accompHfihes results for
the account or benefit of something or some one else. It may be usea
iThua for example in State ▼.
Llffrlng, 61 Ohio Bt.. 39, 76 Am. St. R.
358, 46 L. R. A. 334, the court had
occaslen to eonsid^ whether osteo-
pathy waa an "agency" within the
meaning of a statute which forbade
I
prescribing "any drag, or medicine or
other agency for the treatment/' etc.,
except under certain prescribed cop-
dltlons. The same expression Is found
in other similar statutes. See Ben-
nett ▼. Ware, 4 Oa. App. 293.
{§ 2-n4l THE LAW OF AGENCY [bOOK I
for a person without his knowledge or consent; it may also be used
against him. It may be also used by a person for his own benefit, being
set in motion and controlled by him for- that purpose. It is in the lat-
ter case that it becomes significant here.- Thus, we speak of an agency,
or more frequently of an agent, Vrhich acts or operates for a person.
• • •
It may be a mechanical agent qc'^ 'personal one. In the latter case we
have one person acting for-aiiofhcr.
At this point we are likely;, to make a distinction between agency and
agent. We apply the w&rd agent to the actor, and the word agency
to the relation or. condition or fact of his being the actor.
§ 2. It'orms pf iacting. — One person may act for another' in a great
variety of wajC"- Thus ohe may render to another a purely personal
service, as -where he acts as the valet or body servant of the latter or as
a men]ber«of his domestic establishment. He may act for another in
aiding -to* carry on the latter's industrial or mechanical enterprises, as
vvli^f-^ he tills his employer's fields, tends his flocks, works in his shop
or factory or mine,, or is employed upon his roads or ways. He may
act for the other in aiding in the performance, pf the latter's legal or
contractual obligations to third persons, as where he serves a public
carrier, warehouseman or innkeeper in the performatice of the latter's
duties to the public. Or he may act as the representative, of the other
in business negotiations, that is to say in the creation, modification or
termination of contractual obligations between that other and third
persons.
§ 3. Lines of distinction. — Between the last of these forms and
all of the others, there runs a line of cleavage which is of much im-
portance. The person who represents another in business negotiations
necessarily has to have contractual relations and dealings, with third
persons — that is the very essence of business. Of none of the others
is this necessarily true. The serving man or the working man may
never come into contact with third persons at all. He may workei^-
tircly alone, or, if he is associated with others at all, it may be with those
only who stand in a situation similar to his own. Moreover, even when
his functions bring him into contact with third persons, it is not for the
purpose of business. dealings with them, that is to say, it is not for the
piirpoco of entering into contractual relations with them on account of
his employer.
§ 4. Other fonnsj— One who undertakes to accomplish work for
his employer, may do so under one of two radically different methods,
(i) He may undertake to do so under the direction and subject to the
commands of his employer. Or (2) he may undertake to bring about
7
9
CHAP. l] INTRODUCTION ' [§§ 5'-^'
the result which the employer desires and for which he is willing to
pay, but be at liberty to do so wholly by his own methods, in his own
way, and free from the directions of his employei", being responsible to
the latter for the result only, and not for the means and agencies by
which it is brought about.
Thus, in actual practice, if I wish a house built, I may employ a per-
son to proceed to buy material and hire laborers for me and supervise
the building of it as my representative, or I may undertake to pay him
so much if he, buying material and hiring laborers on his own account,
shall turn over to me the completed structure.
§ 5. -i Again, if I wish property to be held or used on my ac-
count, I may proceed in two radically different methods, (i) I may
convey the legal title to another with the understanding that he shall
hold and deal with it to my use. Or (2) I may retain the title and
deliver to the other the possession or perhaps merely the custody with
the understanding that he shall hold and use the property as I ^hall
direct.
§ 6. Direct and indirect representation. — ^The person who is to
represent another in his contractual dealings with third persons may do
so in a great variety of forms ; but here also a clear line of demarca-
tion may well be drawn. The representative may be authorized and
expected (i) to bind his principal directly to, and with the third persons
with whom he deals, or (2) he may bind himself only to and ivith them,
and then be held to account for the results to his principal and be en-
titled to demand reimbursement from him. Although the latter form
is, as will be seen, unusual, it is entirely possible, and there have been
systems of law which, in the main, recognized no other.
§ 7. Degrees of authority. — ^This person who is to bring about
contractual relations between his principal and third persons may be
clothed with many degrees of authority. The whole matter may be
entrusted to his discretion. He may be restrained by minute and
specific instructions. He may be a m^r^ messenger who carries prop-
ositions back and forth until the chief parties have arrived at an agree-
ment. ThuSy to borrow an illustration from another,. if I bargain with
a horse dealer and reftisc his price, but afterwards, when he has gone
away, I send a messenger after him to say that I agree to the price, it is
obvious that I and not the messenger will be the real negotiating party»
§ 8. Nomenclature adopted.— ^A satisfactory nomenclature is ex-
ceedingly desirable, but difficult to attain. If we call the whole field
Agency, as is now often done, we may call the non-contractual field
service, but we have left no familiar term to apply to the contractual
3'
I 9] THE LAW OF AGENCY [bOCXK I
field. It has been suggested that the generic term may be representa-
tion, and we are then left at liberty to designate the non-contractual,
species as service and the contractual one as agency.
It has been proposed that we call the whole field Agency, and sub-
divide it into Principal and Agent and Master and Servant, to which
may be added the relation of Employer and Independent Contractor.
Historically just the reverse of this was the practice, — ^that is to say,
Agency was simply a branch of Master and Servant. There is also a
considerable tendency in recent times — ^perhaps more popular than legal
— to group everything under the general head of Employment, affixing
a different name to tiie actor according to his undertaking. Thus an
employer employs an agent to make a contract, a workman to do work,
a contractor to erect a house, and the like. Nevertheless, the method
which makes Agency the generic term and classifies these three rela-
tions under it, seems best to conform to actual legal practice in modem
times, and is the one which will be adopted in this book,
§ 9. Is there a law of agency. — It is sometimes said that there is
no distinct law of agency at all, — that is, that there is no body of xuJes
peculiar to it, but that it is simply a case in which we apply the familiar
rules of contract, tort, etc, to a new set of facts. If this latter state-
ment be true, then, however desirable it might be to collect and classify
the cases in which these familiar rules have been applied, the result
would not be to develop a I'aw of agency. If, on. the other hand» there
should be found to exist a respectable body of rules peculiar to this
situation, without which its phenomena could not be satisfactorily ex-
plained, then it might fairly be said that there is a law of agency.*
That there are some tmique cases, — ^like the rules respecting the imdis-
closed principal, for example — cannot be denied; though some have
preferred to treat these merely as anomalies rather than as the subject
of a distinct system of rules.
sThQs It Is said by Mr. Joitlce know of his very existence at the
Holmes: "If agency is a prq^r title time he made the contract By a
of our corpus juris, its peculiarities few words of ratiflcation a man may
must be sought in doctrines that go make a trespass or a contract his
farther than any yet mentiened [ia own in which he had no part in fact
this article]. Such doctrines are to The poBeesalon of a tangible object
be found in each of the great depart- may be attributed to him although
ments of the law. In tort masters he never saw it and may be denied
are held answerable for condnct on to another who has it under his ac^
the part of their servants, which they ual custody or control. The exist-
not only have not authorized, but ence of these rules is what makes
have forbidden. In contract an un- agency a proper title in the law." 4
disclosed principal may bind or may Harv. L. Rev., p. 348 (an extract from
be bound to another, who did not an arUcle on "Agency").
CHAP, l] INTRODUCTION [§§ IO-I4
§ xo. Agency bdongs to a commercial age. — ^If agency be deemed
to belong to contractual representation properly, it will at once be seen
that it belongs to a condition of society in which commercial transac-
tions are higlily developed. A non-commercial society, while it might
have much use for servants, would have little need of agents. The his-
torical condition seems to accord with this conclusion.
§ zi« Agency a modtm title in our law. — ^The title agency, as the
name of a distinct subject, belong^ to a comparatively recent period in
om- law. Bladcstone scarcely refers to it. ''The law of principal and
agent/' says one of Blackstone's most learned editors, Professor Ham«
mond,' "is derived from the canon law, and has only been introduced
into the common law in recent times. If the older books of English
law are examined, no such words as ^principal and agent' will be found
in them. Wherever any question is discussed which would now be
treated under that head, it is treated of as master and servant. Prin-
cipal and agent does not occur in Viner's Abridgement, or those pre-
ceding it ; and it is only at the end of the eighteenth century that we
find it beginning to appear as a separate title, as yet of very limited
application." '
§• la. — — "As late as Blackstone," says Mr. Justice Holmes in
his book on the Common Law ^ "agents appear only under the general
head of servants, and the first precedents cited for the pecuKar law of
agents were cases of master and servant. Bladcstone's language * is
worth quoting : There is yet a fourth species of servants, if they may
be so called, being rather in a superior, a ministerial capacity; such as
stewards, factors and baitWs; whom, however, the law considers as
servants pro tempore, with regard to such of their acts as affect their
master's or employer's property.' "
§ 13. ■ Writing in 181 1, Mr. Paley thought it necessary to
apologize for offering to the profession a treatise on agency, saying,
•*The law of principal and agent appears, at first view, to be founded
upon principles so few and simple, and in general so easy of application^
that a treatise upon such a subject may seem altogether superfluous.
And indeed the decisions upon this branch of the law, which are to be
met with in the older reports, are neither numerous nor important." •
§ 14. Pollock and Maitland in their History of English
Law before the time of Edward I, say : ^ "The whole law of agency is
9 Hammond's Blackstone, Bk. I, •! BIack8t<me*8 Com. 427.
p. 719. « Preface to Paley on Agssusy.
4 P. 228. See also bis articles on 7 2d ed.» p. 228.
Agency, 4 Harv. L. Rev. 354, 5 Id. 1.
5
{§ 15, l6] THE LAW OF AGENCY [bOOK I
yet in its infancy. The King- indeed ever since John's day has been
issuing letters of credit empowering his agents to borrow money and
to promise repayment in his name. A great prelate will sometimes do
the like. It is by this time admitted that a man by his deed can appoint
another to do many acts in his name, though he can not ^point ah
attorney to appear for him in court until litigation has been begun.
Attorneys were appointed to /deliver and to receive seisin. Ationg the
clergy the idea of procuration was striking root ; it was beginning to
bear fruit in the domain of public law ; the elected knights and burgesses
must bring with them to parliament 'full powers' for the represehtatic»x
of the shires and boroughs. But of any informal ageilcy, of any implied
agency, we read very little. We seem to see the beg^inning of it when
an abbott is sued for the price of goods which were purchased by a
monk and came to the use of the convent.
"The germ of agency is hardly to be distinguished ir<xn the germ of
another institution which in our English law has an evenfcful future be-
fore it, the 'use, trust or confidence/ In tracing its etnbryonic his-
tory we must first notice the now established truth that the English
word use when it is employed with a technical meaning in l^al docu-
ments is derived, not from the Latin word tusus, but from the Laiin
word opuSj which in old French becomes os or oes, * * * In the
thirteenth century we commonly find that where there ia what to our
eyes is an informal agency, this term ad opus is used to describe it,
Outside the ecclesiastical sphere there is but littde talk of 'procuration ;*
there is no current word that is equivalent to our ogent; John does not
receive money or chattels 'as agent for' Roger ; he receives it to the use
of Roger {ad opus Rogeri).'*
§ 15. ' ■ Sir Henry Maine has no references to agency in his
"Ancient Law." The index to Reeves' History of English Law con-
tains no reference either to agency or to principal and agent. Mr.
Holdsworth gives a few pages to it, but his instances are chiefly of
the sort which would now be classed under the head of Master and
Servant.
It is unnecessary to multiply quotations. Enough have been given
to show, what was stated at the outset, that agency as a separate sub-
ject is a matter of late development in our law.
§ 16. Agency in Roman law. — Nor does this appear to be a pe-
culiarity of English law. "The early Roman law of Contracts," says
Mr. Hunter, "was absolutely destitute of the notion of agency. Two
reasons may be assigned for this poverty. In the first place, the rule
that ever>'thing acquired by a slave or son under potestas belonged to
6
CHAP. l] tNTRODUCnOK [§§ I7» ^8
the pater familias, removed to a certain extent any urgent necessity for
an elastic law of agency. But, in the second place, it must be remarked
that the absence of agency characterizes every department of the an-
cient law." •
§ 1 7. — .*— .— Proceeding to explain his statement concerning the
Roman law of agency, Mr. Hunter says : "A perfect type of agency
implies three thmgs — (i) that the autfiority of the agent is derived
from the consent of the principal ; (2) that the agent can neither sue
nor be sued in respect of the contracts he makes for his principal ; and
(3) that the principal alone can sue or be sued. If A acts for B with-
out B's knowledge or consent, he may make himself responsible to B,
but he is not an agent. If the agent alone can sue or be sued, there is
no real agency. Thus in an ordinary mandate, if A asks B to buy the
farm of C, and B docs buy it, A cannot sue C on the contract ; he can
only compel B to sue C, or rather compel B to allow him to sue C in
B's name. In Kke manner C cannot sue A the principal, but must sue
B, who has in turn an action against A for indemnity. Again if either
the agent or the principal may be sued, then the agent is personally
responsible for the performance of the ccwitract, and is in effect a surety.
In order, therefore, to have true agency, it is necessary that the
agent should act by the authority of the principal, that the agent should
be entirely irresponsible, and the principal exclusively responsible." ^
Without necessarily committing ourselves to the soundness of all of
these conclusions, we may accept Mr. Hunter's statement of the condi-
tion of the Roman law as trustworthy.
§ 18. ■ ' ' In a number of cases, however, the Roman law pre-
sented situations which had some of the characteristics or results of
agency, and which may be briefly and generally enumerated. Thus all
rights acquired (whether in rem or in personam) by a person under
the power of another (no distinction being made between slaves, per-
sons under the potestas, wives in manu, and free persons in mancipio)
belonged to the person in whose power they were.*®
With respect of liability upon contracts made, if the contract were
made by one in the power of another but having property (peculium)
of his own, an action (actio de peculio) would in general lie against
the person having him in power to the extent of the property.^^
If a contract were made by one in power, e, g. by a slave, for the
8 Hunter's Roman Law (4th ed.) ^o Hunter's Roman Law, p. 610.
p. 609. See also Roby'B Roman Prl- n Hunter's Roman Law, p. 614;
v«te Law, vol. II, p. ^8. Roby's Roman Private Law, vol. II,
« Hanter'8 Roman Law, p.. 609. p. 238.
fiS I9>20] THE LAW OF AGBNCY [bOOR I
benefit of his master, an action {actio de in rem verso) would lie against
the master to th€ extent of the benefit conferred or intended to be con-
ferred."
If a contract were made by the command of the one in power, an
action {actio quod jussu) would lie based upon the command."
§ zg. ■ In addition to these, were cases having mote of the
aspects of agency. Thus if a fnaster provided a dup aiid put a captain
or skipper in charge, he was liable (in an action exercitoria) upon con-
tracts made relating to the ship, its seaworthiness and freight ^^ So if
the master established a shop or business and put another in diarge,
he was liable (in an action institoria) upon contracts made by the one
so put in charge in the proper conduct of the business."
"The same actions," says Professor Sohm," "by which a pater
familias or dominus can be rendered liable for acts performed by the
son or slave on the strength of a general authority bestowed upon them,
are equally available where the person upon whom the authority is
ccmferred is not subject to the power of another. Thus the actio
exercitoria and institoria are equally applicable where a free person is
appointed captain of a ship or manager of a business. Wherever an
authority — ^whether general or special — is conferred for any other pur*-
poses, wherever, that is to say, in the case of an unf ree representative
the actio quod jussu would lie, -in all such cases, where the representa*
tive is a free pierson, the actio quasi institoria is available. If the con-
tract, though concluded without authority, was nevertheless entered
upon in the interest of another party {e, g., a contract made by a nego^
tiorum gestor), the creditor with whom the contract was concluded may
sue the other party by the actio utilis de in rem verso. The defendant,
in such cases, is liable to the extent to which he was enriched by the
transaction, in other words, to the extent to which he himself would be
compellable to compensate the negotiorum gestor"
g 20. Aside from these cases in which, to some extent, a
direct liability was enforced against or rights were acquired by the one
on whose behalf the act was done, the general rule of the Roman law
was that the rights or obligations arising existed only between the im-
mediate parties, and the actor and the person acted for then settled
their respective rights between themselves. Mandatum (gratuitous
12 Roby's Roman Private Law, lo Roby, supra; Hunter, supra.
vol. II, p. 245: Hunter's Roman Law, i« Institutes of Roman Law (4th
p. 616. ed.) trans, by J. C. Ledlie. (The later
IS Hunter, p. 616. editions of the original present some
i«Iloby, vol. II, p. 248 el «e(jf.; Hun* verbal changes which do not alter
ter, p. 617. the meaning.)
8
CHAP. l] INTRODUCTION [§ 4^
agency) and negoHorum gestio (unauthorized agency) furnish many
iflust rations.
§ ai. Other historical references. — ^The late Professor Brissaud,
in his History of French Private Law, has some interesting comments
which it is worth while to reproduce here.*^ "In the very old law
jurrdical acts should be carried out by the interested party himself ; this
is a consequence of their formalistic character; ceremonies or words
which they assume imply his own presence ; they would have no mean-
ing if they came from a third party. Under the system of non-formal
transactions (for examjrfe, contracts by mutual consent) representation
became possible; each one could make known his 'will, not only by
means of a letter or a 'nuncius^ {'epistola loquens^) but by an agent
furnished with powers and instructions which were sufficiently broad
for one not to be able to term him merdy a mouthpiece. Owing to a
rather natural fiction, however, he is likened to a mere messenger ; the
act of the agent is looked upon as the act of the principal. Cases in
which it is necessary to act through a representative have occurred at
all times — for example, one is absent or ill. How did one proceed in
the formalistic period to 60 sl legal act in such a case as this? Inaction
is not always possible ; for example, if one is summoned to appear in
court, one is compelled to appear so as to avoid the penalties which fall
upon the defaulter. The head of the family sometimes escaped this
necessity by using the people dependent upon him, the people of his
household ; but their sphere of action was rather limited, for it is evi-
dent that they could not bind the master 'in infinitum/ To be sure,
representation was less caHed for than one might believe, for every act
which involved a person under disability was performed by his cus-
todian, who acted in his own name by reason of his status as head of
the family; such would also be the case when an individual 'sui jurist
had an interest in giving up his independence and placing himself un-
der the custody of some other person, with the result of placing that
other perscm over his affairs. As far as obligations were concerned,
bills to bearer furnished a means of dispensing with representation.
Besides the preceding cases, it was possible to secure the performance
of the majority of acts by a third person in his own name, assuming
that one obtained afterwards from him the transfer of the advantage
or the burden which resulted therefrom. Thus one person bought a
piece of land and paid for it, after which he resold it tp the one on whose
IT The quotation is reproduced firoiii Serlea^ f S98. (Little Brown A Go.,
the EngUsh translation in volume III Qoat^iu 1012.)
of The Continental Legal History
|§ 22, 23] TH£ LAW OF AGENOT [bOOK I
account the purchase had been made ; but this complicated proceeding
is not without its risks ; one of the parties may suffer by reason of the
insolvency of the other ; if the transaction is an advantageous one, the
third party may possibly want to keep it for himself ; be may die before
having carried out the transfer, and his heirs may refuse to carry it
out ; if the transaction is a bad one, it is the third party who is liable
to lose, as a consequence of a change of will or the death of the one
who is chiefly interested. Nothing can take the place of representation,
properly so called. It entered the customary law in proportion as
formalism disappeared. But, in order to show how slow was it prog-
ress, it is sufficient to establish that it was not allowed, upon principle,
in Germany before the thirteenth century. * * * And, when rep-
resentation is accepted, it is not a rare thing to find that there are doubts
cast upon the validity of the act of the representative, and that this act
must be confirmed by the man who is represented as soon as that be-
comes possible. Scruple and hesitation have disappeared towards the
end of the fourteenth century in a general way, and before that period
in many instances. The status of agents for business transactions (by
contrast with agents or attorneys at law) was worked out by borrow-
ing from the rules of the Roman law and the Canon law.''
§ 22. Agency in modem Continental 83rst!ein8« — ^Modern Con-
tinental legal systems exhibit agency in its full and true form. The
German civil and commercial codes provide many express regula-
tions ; ^® and the French civil code does the same, though with less ful-
ness and carefulness of statement.**
§ 23. The early treatises upon agency. — ^The first systematic and
separate English treatise upon the law of agency seems to have been
that of William Paley on Principal and Agent, which appeared in 1812,
and has passed through several English and American editions.
The first similar treatise produced by an American writer was that
of Samuel Livermore, in one volume, published at Boston in 181 1.
There was a second edition in two volumes published at Baltimore in
1818.
Judge Story's Commentaries on Agency appeared in 1839, *^d at
once became the leading American authority* The book has also fre-
quently been cited in English cases. The latest edition, the ninth, by
Mr. Charles P. Greenough, appeared in 1882. Judge Story made many
i« There are twa recent English i» There Is an English translation
translations of the Oerman Civil of the French Civil Code by Wright».
Code— one by Wang, ld07, and one 190S.
by Loewy» 1909. Of the Commercial
Code, one by Schuster, 1911.
10
CHAP. l] INTRODUCTION [§24
references to the Civil law, but the direct and acknowledged influence
of that system has been less obvious in the American courts than in
the English tribunals. Since then the literature upon all aspects of the
subject has come to be extensive.
§ 24. Legislation in English and American law. — No legislative
statement of the law of agency has as yet been attempted in England,
though Mr. Bowstead, in his Digest of the Law of Agency, has done
much to pave the way for such an undertaking.
In the United States, several states have statutory statements of the
law of agency as part of a general code. In California, and the states
which have followed it, the code is that of David Dudley Field. The
Louisiana code is based upon the Code Napoleon. The Georgia code
is of local origin. The most important of these codes will be found in
the appendix to this work. Nothing like uniform state l^islation upon
the subject has been thus far undertaken.
II
CHAPTER II
DBFINITI0N8 AND DISTINCTIONS
% 25.
26.
27.
28.
29.
SO.
32.
83,
35.
86,
38.
89.
40.
41.
42,
44.
45.
47,
49.
50.
51.
52.
58.
Agency defined.
Principal and agent
Parties involYed.
Relation usually a votuntary
one.
Authority created by law
— Authority by necessity.
81. Contractual*-<>oin0en8ual.
Agency as status,
84. Agency as a contract rela-
tion.
Contract of agency — Power of
attorney defined.
87. How agent compares with
servant
Distinction often imma-
terial— Tendency to ignore it
Occasionally distinction
important
How agent compares with in-
dependent contractor.
Public instrumentalities like
post, telegraph, etc., not usu-
ally agents.
43. Agency differs from trust
Agency to be distinguished
from sale.
46. Agency to buy or sale.
48. Agency to sell or sale
— Goods.
Land.
How question determined
— Law or fact.
Agency differs from partner-
ship.
From lease.
Prom license.
54.
55.
56.
57.
58.
69.
60.
61.
62.
63.
64.
66.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
From bailment
FYom borrowing.
Classification of agents.
1. Actual and ostensible agen-
cies.
2. Universal, general and spe-
cial agents.
— Basis of distinction.
Defiaiti0n8 resulting —
General agent.
Special agent.
Mere messenger.
Person used merely as me-
chanical aid or instrument.
How many of each one
principal may have.
Same person may be a gen-
eral and a special agent.
Not special because lim-
ited to a particular business.
Uses of these distinctions.
Difficulty of determina-
tion.
How determined.
3. Special forms of agency —
Professional and non-profes-
sional agents.
Attorneys at law.
Auctioneers.
Brokers.
Factors or commission
merchants.
— Traveling salesmen
or
"drummers."
Ofllcers of ships.
Partners.
Bank officers.
§ 25. Agency defined. — The word agency, when used in its broad
meaning as pointed out in the preceding chapter, indicates the relation
which exists when one person is employed to act for another. In this
aspect, it has, in our modem law, three chief forms : i. The relation of
principal and agent ; 2. The relation of master and servant, or, in the
12
GBtA1>« II ]
DBFlNItlONS AND DISTINCTIONS
«26
more modem phrase, the relation of employer and employee; and
3. The relation of employer or proprietor and independent contractor.
All of these have some points of similarity but, at the same time, many
aspects oi real distinction.
Of the three forms here suggested, the one with which this work has
chiefly to do, is the first, or the relation of principal and agent. At the
same time the Aree relations, and particularly the first two, are so
closely related, and the actor in these first two forms so frequently acts
in both capacities or so largely combines them both in liis own person,
that it is convenient and often desirable to consider tiiem side by side.
Moreover, even though they be distinct, the rules which govern one
relation are so frequently identical with those which apply to the other,
that one statement will suffice for both, atid illustrations may be freely
drawn from eidier field. A full discussion, however, of all of the as-
pects of all of these relations is far beyond the scope of the present
endeavor, and, where time or space requires, the other two forms are
herein constantly subordinated to the first.
This natich being determined, it will be next appropriate to make the
definitions and point out the distinctions which the method of treatment
here decided upon will make necessary.
§ a6. Principal and agent— The relation of principal and agent,
or the relation of agency in the narrower sense in which it is chiefly
employed in this work, is the legal relation which exists where one per-
son, called the agent, is authorized — usually by the act of the parties,
but occasionally perhaps by operation of law * to represent and act for
another^ called the principal, in the contractual dealings of the latter
with third persons.^ The distinguishing features of the agent may
1 See post i 29.
s See Chapter I. Many definitions
of Agency have been proposed, some
of which may prove of interest:
"Agency Is founded upon contract,
either express or implied, by which
one of the parties confides to the
other, the management of some busi-
ness to be transacted in his name or
on his account, and by which the
other assumes to do the business and
to render an account of it." Kent,
Com., 11, p. 784.
"An agent is a person duly author-
ized to act on the behalf of another,
or one whose unauthorized act has
been duly raUfled." Ewell'fi Evans'
Agency, 1.
''An agent Is one who acts for and
in the stead of another, termed the
principal, either generally or in some
particular business or thing, and
either after his own discretion in
full or in part, or under a specific
command." Bishop on Contracts,
§ 1027.
"In the common language of life,
he, who being competent and sui
juris, to do any act for his own bene-
fit or on his own account, employs an-
other person to do it« is called the
principal, constituent or employer,
and he who is thus employed is caUed
the agent, attorney, proxy or delegate
of the principal, constituent or em-
ployer. The relation thus created be-
13
I 27]
THE LAW OF AGENCY
[boqk I
briefly be said to be his representative character and his derivative zxfr
thority.*
The names principal and agent, though the usual ones, arc not the
only ones used to designate the parties to this relation. The agent is
frequently called an attorney, or an attorney in fact, and occasionally
is spoken of as a proxy, delegate or representative. The person rep-
resented, though usually called the principal, is sometinies called the
employer, constituent or chief.
§ 27. Parties involved.-— Agency^ in the sense in which it is here
used, contemplates three parties — ^the principal, the agent, and the third
party with whom the agent is to deah Each of these parties may incur
obligations to each of. the others and there are therefore presented six
possible aspects, namely — tlie principal against the agent, the agent
against the principal, the principal against the third party, the third
tween the parties U termed an
agency. Story, Agency, f 3.
"Agency is a contract by which one
person, with greater or less discre-
tionary powers, undertakes to repre-
sent another in certain business rela-
tions." Wharton, Agency, S 1.
"An agent is one who represeots
another, called the principal, in deal-
ing with third persons. Such repre-
sentation is called agency.** Code,
Cal., § 2296; Dakota, Code, S 1337.
"An 'agency* Is a contract of em-
ployment for the purpose of bringing
another in legal relations with a third
party." An agent is "a person either
actually or by law held to be author-
ized and employed by one person to
bring him into contractual or other
legal relations with a third party."
Wright, Principal and Agent, p. 3.
"An agent is a representative vested
with authority, real or ostensible, to
create voluntary primary obligations
for his principal, hj making contracts
with third persons, or by making
promises or representations to third
persons calculated to induce them to
change their legal relations." Huff-
cut on Agency, 2d ed. p. 17.
"An agent is a person having ex-
press or implied authority to repre-
sent or act on behalf of another per-
son, who is called his principal.
Bowstead on Agency, 3d ed. p. 8.
(•
When used in statutes, the word
agent may have a more or less flex-
ible meaning according to the context.
When used in statutes against em-
bezzlement, see PuUam v. State» 7S
Ala. 31, 56 Am. Rep. 21; Brewer v.
State, 83 Ala. 113, 3 Am. St. R. 693;
Echols 7 State. 16S Ala. 43; People
V. Tread well, 69 Cal. 226; Wynegar y.
State, 157 Ind. 577; State v. Hubbard,
58 Kan. 797, 89 U R. A. 860; State v.
PhUlips, 105 Minn. 875; State v. Bar-
ter, 58 N. H. 604; Territory v. Max-
well, 2 N. Mex. 250.
Statutes requiring notice to an
owner or his agent are usually held
to contemplate an agent having au-
thority or power of control and not
mere laborers or servants. Regina v.
Watson, 19 Ont. 646; Lofink v. Schu-
ette, 14 Pa. Dist. 558; City of St. Paul
V. Clark, 84 Minn. 138.
A statute requiring a license where
a business is carried on by a party or
his agent means the managing or su-
perintending agent. Stewart v. Keh-
rer, 115 Ga. 184, 197 U. S. 60.
Under a statute requiring an af-
fidavit to.be made by the plaintiff or
his agent, one who is merely de-
scribed as a "bookkeeper" can not be
presumed to be an agent Merriman
Co. V. Thomas, 103 Va. 24.
>See E well's Evans on Agency, 1;
Walton V. Dore, 118 Iowa, 1.
14
CHAP. H] DEFINITIONS AND DISTINCTIONS [§§ 28, 29
party against the principal, the agent against the third party, and the
third party against the agent.
§ 28, Relation usually a voluntary one. — ^The position of the par-
ties to this relation is usually a voluntary one, that is to say, in general
no one is bound to enter into it against his will. Speaking first of the
agent, — ^a master may command his slave to act for him ; to some extent
the parent may do so with reference to his chil'd ; at common law the
husband had' some power of control over his wife ; a hired servant may
to some degree in fact have subordinated his will to that of his master ;
adventitious circumstances in other situations may in fact have given
one a temporary though actual power to dominate another ; but these
cases in modern times are practically all exceptional, and in general no
one is bound to be the agent of another against his will. Even if he
has agreed to be, his power to renounce, as will be seen, is usually
absolute and the law will not as a rule attempt to coerce specific per-
formance.
Speaking next of the principal, his independence is usually still
more complete. As a rule no one can be bound by the act of another
unless he has in iEact, expressly or by implication, consented that that
other shall represent him.
§ 29. — ^— Authority created by law — Authority by necessity. —
To this rule, however, there are several more or less real exceptions, —
cases in which it is said that the principal's assent is unnecessary and in
which his dissent would be unavailing.
Thus with reference to the power of a married woman to buy neces-
saries on her husband's credit when he has failed to supply her, it has
been said: "In those cases where the law authorizes a wife to pledge
her husband's credit, even against his will, it creates a compulsory
agency, and her request is his request." * The same thing has been
said where a child is allowed to buy necessaries on his parent's credit.
Both of tiiese cases may doubtless be put on different grounds.
It has been said that an unpaid seller of goods, who makes a sale of
the goods for the purpose of foreclosing his lien, acts as the agent of
the buyer in making the sale ; but, as has been pointed out in several
^Per Holmes, J. In Benjamin v. Ky. 704, 32 L. R. A. (N. S.) 867;
Dockham* 1S4 Masfl. 418. See also ' Evans v. Crawford Co. Ins. Co., 130
per Pollock, C. B., in Johnston v. Wis. 189, 118 Am. St. R. 1009, 9 L. R.
Sumner, 8 H. & N. 261; Cantine y. A. (N. S.) 485; and many other cases
Phillips, 5 Harr. CI>el.) 428; Host- cited in Chapter V on Appointment
wick v. Brower, 22 Misc. 709; Hand- of Agents,
ricks V. American Express Co., 138
IS
§ 30] THE LAW OF AGENCY [bOOK I
cases, this is an inaccurate statement of the situation.' Somewhat
like this is the power of a pledgee to sell.
It is sometimes said that the master of a ship in buying supplies or
in making a sale of the ship, and the like, is an agent by necessity ; biA
this authority is doubtless not a legally created one at all, but merely
the outgrowth of custom and the presumed intention of the owner in
view of the special facts of exigency. Other instances of what are
called agencies by necessity are occasionally to be found, but they are
usually only agencies implied in fact; and, as will be seen hereafter,
the whole matter is confined within much narrower limits than is often
supposed.
There are, however, cases in which authority seems to be created by
mere rule of law. In a great variety of cases statutes provide for the
service of process, the giving of notice, and the like, upon particular
persons as agents of those sought to be reached. This is particularly
true in the case of corporations. Many of these cases can actually be
based upon assent ; but in some of them the element of assent seems to
be largely lacking.
All of these various cases will be more fully considered in a later
chapter.*
§ 30. Contractual — Consensual — ^Authority or power in one per-
son to bind another as his agent may be conferred without any coor
tract between the principal and the agent, and even, in some cases aa
will be seen, without any actual or effective consent upon the part of
the agent. In many of these cases the alleged agent would more prop-
erly be deemed an instrument or an agency than a true agent. The
command or direction of the principal given to one who is subject to
his command will, if acted upon, suffice to bind him, or his mere assent,
express or implied, may be adequate to the purpose. Mere assent npon
the part of the agent may be sufficient to make him an agent, upon his
side, so far as he actually enters upon the performance. Any agree-
ment, however, on the one side, that one zvill act as agent or any agree-
ment on the other side that one may act as agent, in order to be binding
as such, must take the form of a contract, and be based upon a sufficient
consideration. This consideration may be of various kinds. It is per-
haps ordinarily found in the express or implied agreement that one will
act if the other will pay compensation, or vice versa; but this is not the
only form. It may be found in other mutual promises of the parties.
A promise that one will act as agent in a particular case or for a partic*
5 Bee Moore v. Potter, 155 N. Y. Rubens, 167 N. Y. 405. 82 Am. St R.
481, 63 Am. St R. 692; Ackerman v. 728, 53 L. R. A. 867.
0 See post. Book I, Chapter V.
16
CHAP. Il] DEFINITIONS AND DISTINCTIONS [§§ 31-33
dlar period may find a sufficient consideration in the assent of the
other party that the first may so act, and vice versa. It is often^ said
that tliere can be no contract for a gratuitous agency, — ^by which is
meant a contract to serve without pay ; but this is not sound : there is
fio doubt that there may be such a contract, though it is probably true
that in the ordinary case of this sort the parties do not intend to create
a binding obligation.
§ 31. ' ■ In many cases a unilateral obligation only will be
intended. There may be the offer of a promise for an act, the actor
teing at liberty to act or not as he pleases. The common case of the
employment of a real-estate broker is often of this sort. The principal
promises to pay a commission if the broker finds a purchaser, but the
broker does not promise to find one or even to make any effort to find
one. The case may also be the reverse of this ; the offer of an act for
a promise. If I turn over to you this purchaser will you promise to
pay me a commission ?
The obligation may aUo be bilateral. I will promise to find you a
purchaser if you will promise to pay me a commission, and the like.
§ 32. Agency as status^*— It is sometimes disputed whether agency
is a matter of status. It really seems, however, to be. of very little
-consequence whether it is so or not. It is, in the end, largely a ques-
tion of definition. What is meant by status? The persons who use
the term do not agree» and many conflicting definitions are proposed*
Professor Holland in his book upon Jurisprudence collects a number of
them, most of which he rejects, and concludes — ^and the present writer
entirely agrees with him, — that the true test of status is to be found in
.some peculiarity of the person unconnected with the act which he un-
•dertakes to perform.^ According to this view, the law of status is the
law of abnormal personality. Applying such a test, the infant, the
idiot, the insane person, the slave, the alien,.the felon, the outlaw, the
married woman at common law, and the like, present instances of
status. Agency, on the otlier hand, does not necessarily involve or re-
sult in abnormal personality, and agency is no more a relation of status
than landlord and tenant, bailor and bailee, and the like.
§ 33* Agency as a contract relation. — Is agency then a contract
relation? That will, of course, also depend apon the d^nition. The
^writer ventures to define a contract relation as one which, under nor-
mal conditions, results from the contract or agreement of the parties
T HoUand'B Jurisprudence (10th ed.) Elements of Law, 4tli ed. ( 17S; Sal-
l>p. 136, 137. See also Appendix, Note mond's Jurisprudence, 3d ed. p. 213 ;
L» la Sir Frederick Pollock's edition Hunter's Roman Law, 4th ed. p. 138.
«of Maine's Ancient Law; Markby's
2 17
§ 34] THE LAW OF AGENCY [BOOK X
to it, which may ordinarily be terminated at their pleasure, and whose
rights and obligations, as between the parties to it, are in general cap-
able of being enlarged, diminished or modified by the contract or agree-
ment of the parties.
The relations of parent and child, of guardian and ward, of master
and slave, of sovereign and subject, and the like do not fall within this
definition. Neither does that of husband and wife. For while this
relation may freely be entered into, it may not yet, whatever the future
may have in store for it, be terminated at will, nor may its duties and
obligations be substantially altered by the agreement of the parties.
On the other hand, the relations of landlord and tenant, of bailor
and bailee, of carrier and passenger, of vendor and purchaser, of part-
ner and partner, and the like, do fall within the definition. Within this
class also falls agency, whether in the form of master and servant in
modem times or of principal and agent.
It is realized, of course, that all attempts at definition are dangerous ;
that definitions are easily made to fit the facts in the desired way ; and
that human relations do not develop along defined lines, and may at
any time take on new aspects. What is finally to be dealt with is the
facts as they from time to time present themselves.
g 3^. Although, as has been pointed out, agency may ex-
ist so far as third persons are concerned without any formal contract,
between the principal and the agent, or even where the agent has no
capacity to contract, yet in the great majority of the cases with which
the law, in modern times, has to deal, there is an actual contract be-
tween the parties to the relation. In those cases in which one of the
parties, usually the agent, has no contractual capacity, the relation is
at best an imperfect one, and does not furnish the mutual rights and
liabilities which ordinarily exist.
As to the obligations resting upon the parties to the relation in any
given case, certain of them will be imposed by the express contract of
the parties ; most if not all of the remainder may be based upon con-
tract implied in fact from the acts and situation of the parties ; as to a
few, other than those which may be regarded as equitable in their
nature, ther^ may be dispute as to whether they are implied in fact or
are purely legally created obligations imposed by law upon the parties
and enforceable at option by actions either of tort or of gwa^f-contract.
Either view can find authority for its support. For himself, the pres-
ent writer has no hesitation in expressing his preference for the con-
clusion which bases them wherever it is possible upon contract implied
in fact. Practically all of these obligations, moreover, may, subject
i8
CHAP. Il]
DEFINITIONS AND DISTINCTIONS
[§§ 35.36
to the ordinary rules of public policy which govern sinrilar contracts
in general, and subject also to the rules governing the legal capacity
of the particular parties, be limited, extended or superseded by the
actual agreement of the parties.
In practically all of the cases in which the obligations of the princi-
pal and agent to one another become material, the matter will have
gone so far that a real contract will have arisen between them — ^if they
be competent to contract-^whatever the initial absence of contractual
elements may have been. If, for example, I request another to do
some act for me as my agent, while he may be under no obligation to
do it, yet if he does do it, a contractual obligation on my part to com-
pensate, or reimburse or indemnify him. will arise ; and, on his part, a
like obligation to follow my instructions or act with appropriate care
or fidelity.
So far as the obligations of the principal or agent to third persons
are concerned, they will, from the nature of the case, be, in principal
and agent, generally contractual, or, if in tort, generally in tliose kinds
of tort like deceit and fraud which ordinarily accompany contractual
dealings; in master and servant, on the other hand, the obligations
will usually be in tort.
§ 35- "Contract of agency" — "Power of attorney." — The con-
tract, when one exists, by which the relation of principal and agent is
created is called a "contract of agency ;" the right of the agent to rep-
resent the principal is called his "authority" or "power;" when the
authority is conferred by formal instrument in writing, it is said to be
conferred by "letter of attorney," or, more commonly by "power of
attorney."* When the authority is conferred by power of attorney,
the agent is frequently called an "attorney," or more commonly, an
"attorney in fact," in order to distinguish him from the attorney at law.
§ 36. How agent compares with servant. — ^The distinction be-
tween the relation of principal and agent and that of master and serv-
8 "This power of attorney," said
Parke, B., In Hibberd v. Knight, 2
Ezch. 11 (a oase inyolvlng the ques-
tion of admitting secondary evidence
of its contents rather than subpoena-
ing the agent to produce it), "is the
deed of the attorney to whom it was
given, and he is to keep it and, under
it, to show that he has authority for
what he has done. The witness should
have been duly served with a <«&-
poena duces tecum,"
One who makes payment to an
agent having a power of attorney to
receive it, is not entitled to demand
and receive the power of attorney.
As between these parties, it belongs
to the attorney. Prldmore v. Harri-
son, 1 Car. ft Kir. 613.
Bnt upon the termination of the
agency, the principal must have the
right to have the power of attorney
returned or cancelled in any ease at
least in which its continued posses-
sion by the agent might be a menace
to the principal's Interests.
19
I 36]
THE LAW OF AGENCY
[book 1
ant IS not always easy to define. As has been seen,* the relation of
principal and agent is of comparatively late development in our law ;
it was preceded by the relation of master and servant, and from the
law respecting that relation the earliest precedents concerning agents
were drawn. The two relations are therefore very closely allied, and
it is sometimes said that they are not distinguishable. Nevertheless,,
notwithstanding this common origin, it is entirely possible to distin-
guish them; the line of distinction seems in the main to be a logical
and natural rather than a purely artificial one; and there can be no
doubt that now for many years there has been developing a body of
law known as the law of agency or of principal and agent and that a
distinction between this relation and that of master and servant has
come to be generally recognized.^® It is upon the basis of this fact,,
that the present discussion proceeds, and an attempt is made to show
what the line of demarcation is thought to be.
9 See ante, Chapter I.
10 "The distinction between a serv-
ant and an agent/' It is said by Mr.
Justice Holmes In his edition of
Kent's Commentaries (12th ed. vol. II,
p. 260, note), "is the distinction be-
tween serving and acting for"
"The great and fundamental dis-
tinction between a servant and an
agent," said Professor Dwight (Per-
sons and Personal Property, p. 323),
"is, that the former is principally
employed to do an act for the em-
ployer, not resulting in a contract
between the master and a third per-
son, while the main office of an agent
is to make such a contract Servants
may make contracts incidentally,
while agents may in the same way
render acta of service. The princi-
pal distinction between them, how-
ever, is as above stated."
Professor Huffcut (Agency, 2d ed.
§4) says: "The primary distinction
between representation through an
agent, and representation through a
servant, lies in the nature of the act
which the representative is author-
ized to perform. An agent represents
his principal in an act intended, or
calculated* to result in the creation
of a voluntary primary obligation or
undertaking. A servant represents
his master in the performance of an
operative or mechanical act of servioe-
not resulting in the creation of a
voluntary primary obligation but
wlilch may result, intentionally or in-
advertently, in the breach of an exist-
ing one. An agent makes offers,
representations, or promises for hiff
principal, addressed to third persons,
upon the strength of which such third
persons change their legal relation or
position. A servant performs opera-
tive acts not intended to Induce third
persons to change their legal rela-
tions. An agent has to take account
of the mind and will of two persons,
namely, of his principal whose minci
he r^resents, and of the third person
whose mind he seeks to influence, A
servant has to take account of the-
mind and will of one person, namely,
of his master whose existing obliga-
tions and duties he is to perform^
An agent may cause damage by tni-
ducing a third person to act. A serv-
ant may cause damage by acting upon,
a third person in his proirerty or
rights. In representation through an
agent there are always three person?
involved, the principal, the agent,
and the third person. In representa-
tion through a servant, there are only
two persons primarily Involved, the
master and the setvant, and the third
person Is introduced only wlien the
20
CHAP. Il]
DEFINITIONS AND DISTINCTIONS
II 36
The characteristic of the agent is that he is a bifsiness reptesenta-
tive. His function is to bring about, modify, affect, accept perform-
ance of, or terminate contractual obligations between his principal and
third persons. To the proper performance of his functions therefore,
it is absolutely essential that .there shall be third persons in contempla-
tion between whom and the principal legal obligations are to be thus
created, modified or otherwise affected by the acts of the agent**
'Berrant commits* In th% coutse of liU
maflter's busineBS* a breach of the ob-
ligationB owing by the master to a
third person. In the first case, there
are three persons and the third is
induced to act In the second case,
there are three persons and the third
is acted npon." See also the discus-
sion in Herriman y. Thomas, 108 Va.
24 (holding a bookkeeper to be a
servant but not an agent within a
statute requiring an affidavit by a
party or his agent).
On the other hand, Mr. Charles
Claflin Allen contributes an article in
28 American Law Review, 9, on
"Agent and Servant essentially Iden-
tical." This view is ^proved in
Brown v. Germ. Am. Title A Tr. Co.,
174 Pa. 443.
The codes distinguish between the
two relations thus: ''An agent is one
who represents another called the
principal in dealings with third per-
sons." Cal., § 2296; Dakota, I 1337.
"A servant is one who is employed
to render personal service to his em-
ployer, otherwise than in the pursuit
of an ind^endent calling, and who
in such service remains entirely un-
der the control and direction of the
latter, who Is called his master."
Cal., S 2009; Dakota, S 1157.
"A preliminary remark," says
Judge Cooley, "is essential regarding
the employment, in the law, of the
words master and servant. The com-
mon understanding of the words and
the legal understanding is not the
same; the latter Is broader and com-
prehends some cases in which the
parties are master and servant only
in a .peculiar sense, and for certain
purposes; perhaps only for a single
purpose. In strictness, a servant is
one who, for a valuable consideration^
engages in the service of another, and
undertakes to observe his directions
in some lawful bufdness. The rela-
tion is purely one of contract and the
contract may contemplate or stipulate
for any services, and any conditions
of service not absolutely unlawful."
Cooley on Torts, 531.
•The word servant," says Mr. Par-
8ons» "seems to have in law two mean-
ings. One is that which it has in
common use, when it indicates a per-
son hired by another for wages, to
work for him as he may direct We
may call such a person a servant in
fact: but the word is also used in
many cases to indicate a servant by
construction of law; it is sometimes
applied to any person employed by
another, and is scarcely to be dis»
criminated in these instances from
the word agent. This looseness in
the use of the word is the more to be
regretted, because it seems to havo
given rise to some legal difficulties
and questions which might have been
avoided." 1 Parsons on Contracts,
101.
"The word servant" says Mr. Wood,
"in our legal nomenclature, has a
broad significance, and embraces, all
persons of whatever rank or position
who are in the employ and subject
to the direction or control of another
in any department of labor or busi-
ness." Wood, Mast A Serv., i 1.
11 A person may be employed to
render service either to his employer
directly, as in the case of the cook,
the butler, the gardener, the coach-
man, or to some other person whom
the employer has undertaken to serve.
In the first case the person so em-
ployed comes in contact with his em-
21
§ 37]
THE LAW OF AGENCY
[book I
The function of the servant, on the other hand, as his name suggests,
is the rendition of service, — not the creation of contractual obligations.
He executes the commands of his master, chiefly in reference to things,
but occasionally with reference to persons when no contractual obliga-
tion is to result.**
§ 37. The agent usually is vested with more or less of
discretion as to the time and manner of acting, while the servant is
commonly required to act according to the directions of his master;
and this has sometimes been suggested as the basis for distingaishing
between the two relations.*' It is not, however, a satisfactory basis.
I may limit my broker (who would everywhere be regarded as an
agent), to sales or purchases at a particular place, time or amotmt,
while I may give to my gardener (who would everywhere be regarded
as a servant) the utmost discretion as to how or when or where or
what he shall plant or cultivate or gather.
ployer only; In the latter case he In
some measure represents his em-
ployer In rendering the service to
third persons. Although he thus
comes in contact with third persons,
he is none the less a servant. The
case of a porter on a sleeping car
may be used as illustration. He
comes in contact with third persons;
a large portion of his duties is to
assist passengers and look out for
their comfort and convenience; but
he is still a servant. The essence of
his duty is to render service for his
employer to the passengers, and he
has neither power nor occasion to
make contracts with them.
The case of the conductor, on the
other hand, is not so simple. If he
has no other duties than to manage
the train; if he has no power to make
contracts for carriage; If his sole
duty with respect to the passengers
is to perform the ministerial act of
collecting the tickets, and there is no
occasion in which he has the right to
bind his employer by contracts, then
he also is purely a servant. But if
he is authorized not only to manage
his train bul to make contracts for
carriage — to make the ordinary bar-
gains which are made between car-
rier and passenger, then he is also
an agent. As to the situation of the
conductor, see the remarks of Field,
J., in Chicago, etc., Ry. Co. v. Ross,
112 U. S. 377, 890, since overruled
upon the main question involved.
i« "As an agent is a person em-
ployed to bring the principal in legal
relations with a third party, it Is ab-
solutely necessary, in order to carry
out the contract of employment be-
tween the agent and his principal,
that there should be a third party
with whom the principal is to be
brought into relation. (See Robin-
son V. MoUett, 7 Eng. ft Ir. App. 802,
and see Brett, J., at p. 820.) The
contract between the principal and
agent is primarily a contract of em-
ployment to bring him into legal re-
lations with a third party, or to con-
duct such business as may be going
on between him and the third party/'
Wright, Principal and Agent, p. 4.
IS In McCroskey v. Hamilton, 108
Ga. 640, 75 Am. St. R. 79, this dis-
tinction is made use of in order to
hold that the act of a given person
was not the act of an agent or sub-
agent, but of a servant, a mere in-
strument, a messenger. In Flesh v.
Lindsay, 116 Mo. 1, 37 Am. St R. 874,
it is used to show that while a mar-
ried woman might not have an agent
she might have a servant. Ib Kin-
gan V. Silvers, 13 Ind. App. 80, the
22
CHAP. II ]
DEFINITIONS AND DISTINCTIONS
[§ 38
The tnie distinction is that already indicated, namely, the distinction
between representing another in business dealings with third persons,
and working for or serving another when no contractual obligation
or relation is to result.
A person who is ordinarily a servant may at times act as agent, and
znce versa. And a person may be an agent as to one branch of a trans-
action and a servant as to another.^*
g 38. Distinction often immaterial — ^Tendency to ignore
it — While the distinction between agency and service is thus quite
radical in theory, there is a marked tendency in many cases to ignore
it. There is in the first place, a strong popular inclination to use the
word agent to indicate any one who acts for another without distin-
guishing between those acts which are designed to create contractual
relations and others." This popular use is more and more reflected
from the courts and text books.
There is, moreover, in many quarters, a strong repugnance to the use
of the word "servant," because it is supposed to emphasize social dis-
tinctions which, it is thought, ought not to exist among us.** This
leads in popular language to the substitution of the word "agent," and
this popular use is often exhibited by legislatures and courts, with the
result that even in legal language the word "agent" is coming to be
distinction is used to hold that while
one might be an agent in negotiating
for a note, he became a Bervant in
receiving it to carry to his principal,
and that therefore his act of altering
it was not the act of his principal.
In Baltimore & Ohio Employees'
Relief Ass'n v. Post, 122 Pa. 579. ^
Am. St Rep. 147, 2 L. R. A. 44. the
court adopts the distinction made by
Mr. Wharton in his book on Evidence
(sec. 1182) that "An agent is author-
ized to exercise discretion; when a
servant is authorized to exercise dis-
cretion then he ceases to be a servant
and becomes an agent." In Singer
Mfg. Co. V. Rahn, 132 IT. S. 518, 33
L. Ed. 440, a sewing machine sales-
man was held to be a servant, so far
as to make his employer liable for
his negligence. largely because the
contract under which he was em-
ployed gave the company a large
measure of control as to the manner
fn which he should conduct the busi-
nesB.
1* If, for example, I request a per-
son to buy a horse for me, and he
does so, he will in the purchase act
as my agent. If I then request him
to drive or care for the horse for me.
and he does so, he will as to those
acts be ordinarily my servant See
also Kingan v. Silvers, supra.
IB Thus, In Kennedy v. DeTrafford
[1897] App. Cas. 180, Lord Herschell
says: "No word is more commonly
and constantly abused than the word
'agent.' A person may be spoken of
as an 'agent,' and no doubt in the
popular sense of the word may prop-
erly be said to be an 'agent,' although
when it is attempted to suggest that
he is an 'agent* under such circum-
stances as create the legal obligations
attaching to agency that use of the
word is only misleading."
i« See § 11 of article on "Agent and
Servant essentially Identical," in 28
American Law Review, 23.
«3
§ 39]
THE LAW OF AGENCY
[book I
more and more used where the word ''servant" would be more ap-
propriate.*''
Fortunately, the rules regulating the two relations are in the main
so much alike, that nice distinction is usually not material and the
tendency referred to leads to no serious difficulty.
§ 39. — — Occasionally distinction important. — ^There is, how-
ever, occasionally a case in which the distincticMi becomes important
A statute, for example, may use one word or the other tmder circum-
stances which call for strict construction, and it then becomes material
to distinguish. Thus a statute aimed at embezzlement by ''servants"
will not necessarily extend to embezzlement by agents ; ** and statutes
exti?nfiing special privileges to "servants" or "laborers" will not ordi-
nas^ily-T^pply where the person claiming their protection is an agent or
other employee of superior rank.**
IT statutes often use the word
agent as synonymous with servant.
Thus a prohibition against the doing
of an act by one or his agents would
usually have the same effect as
though It were prohibited to himself,
his servants or agents. See St.
Johnsbury, etc., R. C!o. v. Hunt, 59
Vt. 294.
A privilege extended to one and
his agents would also usually in-
clude servants and vice versa.
18 Thus in Regina v. Walker,
Dearsly 6 B. Cr. Cas. 600, the de-
fendant was prosecuted for embez-
zlement under a statute as a "serv-
ant." The defendant had been em-
ployd to solicit orders for goods,
with which he was supplied by his
employers; he was also to collect
payment and remit the proceeds to
his employers. Having appropri-
ated money so received, he was
prosecuted under the statute. There
was much discussion of the distinc-
tion between an agent and a servant,
though no definite rule was laid
down or principle evolved. The de-
fence contended that the prisoner
was an agent, i. e, a factor, and not
a servant, and this view was finally
adopted by the court, though with-
out an extended discussion.
10 Thus in Wakefield v. Fargo, 90
N. T. 213, an act was construed mak-
ing stockholders in a corporation lia-
ble for all debts owing to "their la-
borers, servants and tMl^prentipes."
A person who was "bookkeeper and
general manager" of the corporation
sought the benefit of the statute as a
"servant," but it was held that he
was not within that class. So also
of a "secretary."' Gordon v. Jen-
nings, L. R. 9 Q. B. Div. 45; Coflin
v. Reynolds, 87 N. Y. 640. An at-
torney at law is not within a statute
securing "wages or salaries to clerks,
servants or employees." Lewis v.
Fisher, 80 Md. 139, 26 L. R. A. 278,
45 Am. St. Rep. 327. Nor is a "mine
agent" Dean v. De Wolf, 16 Hun,
186, affirmed 82 N. T. 626; Krauser
V. Ruckel, 17 Hun, 463. The salary
due a travelling salesman is not a
"labor debt." Jones v. Avery, 50
Mich. 326; Epps v. Epps. 17 IlL App.
196; Eppstein v. Webb, 44 lU. App.
341. He is not "a clerk employed in
a store or elsewhere." MulhoUand
V. Wood, 166 Pa. 486. But he is
within a statute protecting "laborers,
servants, clerks, and operatives."
Hand v. C!ole, 88 Tenn. 400, 7 L. R.
A. 96. So also Wildner v. Ferguson,
42 Minn. 112, 6 L. R. A. 338. An as-
sistant chief engineer of a railroad
company is not a 'laborer.** Brock-
way V. Tunes, 39 Mich. 47, 38 Am.
Rep. 348. Same effect: Peuiy^
a4
CHAP. II ]
DEFIN'ITIONS AND DISTINCTIONS
[§ 40
§ 40. How agent compares with independent contiactorw — Al-
though all three are, in a large sense, agents, yet in ordinary legal usage
the agent — and the servant also— is further to be distinguished from the
"independent contractor," *• who is one who exercises some independ-
ent employment, in the course of which he undertakes, supplying his
own materials, servants and equipment, to accomplish a certain result,
not being subject while doing so to the direction and control of his
employer, but being responsible to him for the end to be achieved
rather than for the means by which he accomplishes it
Such a person is not an agent, in the sense in which that term is
here used, and has no authority to bind his employer in any form of
contracttial dealings.*^ The employer, moreover, in the ordinary
vaala, ete.» R. Co. v. Leufler, S4 Pa.
168, 24 Am. Rep. 189; Ericsson v.
Brown, 38 Barb. (N. Y.) 390; Mis-
souri, etc., R. Co. T. Baker, 14 Kan.
563. Nor is a^ bookkeeper. Blgnor
T. Webb, 44 111. App. 338. The com-
missions of a broker or factor are
not the "wages of a laborer." Ham-
berger v. Marcus, 157 Pa, 133, 37
Am. St Rep. 719.
In Tete t. Lanaux (1893), 45 La.
Ann. 1343, there was a necessity, in
view of a peculiar statute, to deter-
mine whether a certain person was
a clerk, or a broker. Said the court:
"A clerk is one who hires his serv-
ices to an employer at a fixed price
under a stipulation to do and per-
form some specific duty or labor
which requires the exercise of skill.
The broker is he who is employed
to negotiate a matter between par-
ties, and who for that reason is the
mandatory of both.' R. C. C. 3016.
The leading and essential diCTerence
between a clerk and a broker is that
the former hires his services exclu-
sively to one person, while the latter
is employed to make bargains and
contracts between other persons in
matters of trade, commerce and navi-
gation. For the services of the for-
mer there is a fixed stated salary,
while for the latter a compensation,
commonly styled brokerage, is al-
lowed."
20 See post. Book IV, Chap. V,
under head of Independent Con-
tractor, where the subject is more
fully considered.
SI Thus in a case wherein a loaded
vessel just leaving port was fdnnd to
be on fire, and the master employed
S. ft Co., who were doing business as
shipping-merchants, to take charge
of her and rescue her cargo, the
court said: "The employment of S.
ft Co., under these facts, was some-
thing more than the appointment of
an agent. It was more in the na-
ture of an employment or hiring
than an appointment to an agency.
It was in the nature of a contract
between the captain of the vessel, as
the owner's agent, and S. ft Co.»
whereby the latter agreed to extin-
guish the fire, and If necessary un-
load the vessel of its cargo, and do
everything else for the protection of
the vessel and cargo. They were
employed to do a particular thing,
and were contractors, instead of
agents, in the general understanding
of agency." Horan v. Strachan
(1890), 86 Ga. 408, 22 Am. St. Rep.
471.
So where a state made a contract
with a publisher to stereotype and
print certain state reports, the court
said: "In the case at bar the defend-
ant was not employed as an agent to
carry on a printing and publishing
business for the state. Its contract
was to manufacture certain plates
25
§41]
THE LAW OF AGENCY
[book I
case, not having the kgal power of control, is not responsible to tWrd
persons for the neglects or defaults of the independent contractor
occurring in the performance of his undertaking, while he would ordi-
narily be responsible for like neglects or defaults if the person em-
ployed were his servant There are, however, as will be seen, a num-
ber of well defined exceptions to this rule.^- Under statutory obliga-
tions even the word "agent" is sometimes construed to include inde-
pendent contractors.^'
Of the two, the agent more nearly corresponds to the independent
contractor than does the servant, but they are both distinguishable.
§ 41. Public instrumentalities like mail, telegraph, etc.^ not usu-
ally agents,— Usually to be regarded rather as a sort of independent
contractor, than as agents or servants whom the principal may di-
rect and control, and for whose acts or defaults he is responsible, are
such public instrumentalities as the mail, th^ telegraph, the public car-
rier, and the like, when employed in their ordinary capacity. Certain
of them may, undoubtedly, undertake to act as agent, and some of them
and certain books for the state.
When they were manufactured they
were to be delivered to the state, and
the defendant was to be paid a cer-
tain price therefor. This was the spe-
cial employment of the defendant by
the plaintiff [the state]. It was not
acting as the agent of the state In
making these plates and books. It
did the work in its own name. The
state could not be held responsible
for any acts or omissions of the de-
fendant, or any contracts entered
intOi or liabilities incurred by it in
carrying out this contract with the
state." State v. State Journal Co.,
75 Neb. 275; 9 L. R. A. (N. S.) 174.
Though a transfer company em-
ployed to receive goods from a car-
rier may be an independent con-
tractor as to the transportation of
them, It may also be so far an agent
as to charge the employer with its
notice as to the condition of the
goods. Rothchild v. Great Northern
Ry. Co., 68 Wash. 527.
Where a lumber company induced
a physician to locate at its plant and
undertook to collect for him certain
sums from its employees monthly.
it was held to be an absolute con-
tract on the part of the company to
pay him those sums, and not merely
an undertaking as agent to collect
and pay over to him. Texarkana
Lumber Co. v. Lennard, 47 Tex. Civ.
App. 116.
Independent contractor and not
agent. McKenna v. Stayman Mfg. Co.,
112 N. y. Supp. 1099.
22 See post, Book IV, Chap. V, In-
dependent Contractors.
28 Thus, under statutes requiring
the fencing of railways and imposing
liability for not doing it upon rail-
way companies and their "agents/'
the word agent is often construed in
a wide sense to include independent
contractors and others acting for and
by the authority of the railway com-
pany. See Gardner v. Smith, 7
Mich. 410, 71 Am. Dec. 722; Chicago,
etc., R. Co. V. McCarthy, 20 111. 385, 71
Am. Dec. 285.
So a lessee may be included.
Clement v. Canfield, 28 Vt. 303.
Same within statute giving right
of action for death by wrongful act,
Peters v. St. Louis, etc., R. Co., 160
Mo. App. 721.
26
CHAP. Xl"]
DEFINITIOXS AND DISTINCTIONS
[S 4^
frequently do. Express companies, for example, often undertake to
purchase or sell goods, as well as to carry them, or to collect money as
well as to transmit it. Banks often act as agents, though whether they
are agents or independent contractors in the ordinary case of receiving
checks, notes, drafts, etc., for collection, — is a disputed question, as
will be seen hereafter.
The distinction in the case of a govemmentally conducted institu-
tion, like the post office, is not difficult. And in the case of the tele-
graph, though the authorities are not uniform, the tendency of the
more recent cases is to regard it not as the agent of one who under-
takes to deal through its instrumentality but as a public institution
undertaking to serve all who employ it and liable for its own negligence
or default.^*
So it is held that members of a public fire department, who under-
take to extinguish fires, are not the agents or servants of those upon
whose property they attempt to extinguish a fire.**
§ 42. Agency differs from trust. — Agency differs in material re-
spects from the ordinary trust.^^ It is true that agency is often said
to be a relation of trust and confidence, and that property in the hands
of an agent is often held to be impressed with a trust for the benefit of
the principal,*^ yet the two relations are not identical. A trust in-
volves control of property; agency may be totally disconnected with
any particular property. The trustee holds a legal title ; the agent has
usually no title at all. The trustee may act in his own name ; the agent
acts regularly in the name of his principal. Trust is not necessarily a
s«8e6 the dlscnmfon In Pepper v.
Western Union Tel. Co., 87 Tenn.
554, 10 Am. 8t. R. 63», 4 L. R. A.
660; Shingleur v. Weet. Un. Tel. Co.,
72 Mies. lOaO, 48 Am. St. R. 604, 30
L. R. A. 444 J Pegnram v. West. Un.
Tel. Co., 100 N. C. 28, 6 Am. 8t. R.
557; Postal Tel. Go. v. Schaefer, 110
Ky. 907; Strong v. West. Un. Tel.
Co., 18 IdAbo, 389, 30 L. R. A. <N. S.)
409, where the caees will be found
more fully cited. But compare the
role in Georgia as found in West. Un.
Tel. Co. V. Shotter, 71 Ga. 760; West.
Un. Tel. Co. v. Flint Riv. Lumber
Co., 114 Ga. 676, 88 Am. St. R. 36;
Brooke v. West. Un. Tel. Co., 119 Ga.
694.
25 Erlcksen v. Great North. Ry. Co.,
117 Minn. 348, 39 L. R. A. (N. S.) 237.
*«See Taylor v. Davis, 110 U. S.
330, 28 L. Bd. 163; Hartley ▼. Phil-
lips, 198 Pa. 9; Knowles v. Scott,
[1891] 1 Ch. 717; James v. Smith,
[1891] 1 Ch. 384; Cleghom v. Castle,
13 Hawaiian, 186; Owen Y. Cronk,
[1895] 1 Q. B. 265; Shepard v. Ab-
bott, 179 Mass. 300; Chaffee v. Rut-
land R. Co., 53 Vt. 345; Simon v.
Burgess, 71 Misc. 300; Weer v. Gand,
88 111. 490.
See also per Bramwell, L. J., in
New Zealand Land Co. v. Watson, 7
Q. B. D. 374.
27 See posit under the head of Loy-
alty; Central Stock Exchange y. Ben-
dinger, 109 Fed. Rep. 92^ 56 L. R. A.
875; Roller v. Spilmore, 13 Wis. 26;
Long V. King, 117 Ala. 428; Conan v.
Rlseborough, 139 111 883.
27
§§ 43>44]
THE LAW OF AGENCY
[book I
contractual relation; agency is properly to be so regarde4. A trust
does not necessarily or even usually involve any authority to enter into
contracts which shall bind another; the authority to make such con-
tracts is the distinguishing characteristic of agency. Trusts are usu-
ally not revocable ; agency usually is revocable.**
§ 43* Occasion to distinguish between the two relations
may arise in many ways. A general statute may use one tenn^ under
circumstances which make discrimination necessary,** and the statute of
frauds or the statute of limitations may operate differently upon thera.**^
But the question most commonly arising is, whether the person who
may be either cestui que trust or principal is liable upon contracts made
by the person claimed to be agent or trustee. If the person acting be
agent the other, whether disclosed or not, may be liable as principal;
if the person acting be a trustee merely he may bind himself by his
contracts, but he can not make the cestui que trust personally respon-
sible.*^ This question difficult enough at best, is often rendered doubly
so by contracts apparently drawn purposely in such ambiguous terms
as to leave room for the one construction or the other as shall best
serve the purpose of the parties when the controversy arises.
For the solution of this difficulty, no inflexible rule can be laid down.
Names used are not conclusive, and the case must be determined, by the
preponderance of the conflicting characteristics contending for recog-
nition.
§ 44- Agency to be distinguished from sale, — ^Agency is, further,
to be distinguished from sale. In the ordinary case the two contracts
28 See this distinction in Flaherty
V. O'Connor, 24 R. I. 687; Lyle v.
Burke, iO Micli. 499; Kratt v. Nenffer,
202 Pa. 558.
29 Thus a trustee may acquire a
copyright, while an agent may not
Petty V. Taylor, [1897] 1 Ch. 465.
so Thus the statute of frauds has
distinguished in the way in which
agency, on the one hand, and trust
or confidence, on the other may be
proved. James y. Smith, [1891] 1
Ch. 384.
81 If the person who made the con-
tract is a trustee he binds himself
and not the cestui que trust. ChafEee
V Rutland Railroad Co., 53 Vt. 345;
Everett v. Drew, 129 Mass. 150;
Shepard v. Abbott, 179 Mass. 300;
Hartley v. Phillips, 198 Pa. 9; Mc-
Govern v. Bennett, 146 Mich. 558.
^*^
If, on the other hand, the so-called
trustee is a mere nominee or 'dummy,'
put forward for no other purpose but
to screen the so-called cestui que
trust from responsibility, the relation
between them is that of principal
and agent, and the principal is lia-
ble." 8 Law Quar. Rev, article,
"Trusteeship and Agency," p. 220, cit-
ing inter alia Cox's Caae, 4 De Cex,
J. Ik S. 53; Pugh and Sharman's Case,
Lb R. 13 Bq. 566. See alS9 Coventry's
Case, [1891] 1 Ch. 202.
Where the person is trustee it is
held that the rule exempting an agent
who has, before notice, paid over to
his principal money voluntarily paid
to him by mistake, does not apply.
Cleghom v. Castle, 13 Hawaiian 186«
28
CHAP. II ]
DEFINITIONS AND DISTINCTIONS
[8§ 45,46
are, of course, readily enough distinguished ; but there' also arise cases
wherein, because of the mixed motives of the parties or the artless or
artful framing of the contract, it is not easy to distinguish. The ques-
tion, in these doubtful cases, usually takes one of two forms : i. Is the
party in question an agent to buy goods for the other or is he buying
the goods on his own account and then himself selling them to that
other? 2. Is the party in question an agent to sell goods for the other,
or is he really buying the goods from that other to sell upon his own
account?
§ 45. ■ Agency to buy or sale.— A typical case of the first
:SQrt is presented where, under an ambiguous contract, one party is
acctunulating goods to be delivered to another. After the goods have
"been accumulated in whole or in part but before delivery, they are
accidentally destroyed. Upon whom does the loss fall? If the per*
son who was accumulating them was a vendor, the loss ordinarily wiH
fall upon him. If he was an agent to buy, the loss ordinarily wilt fall
upon the other party. Hence arises the controversy — a, controversy
which can be determined only by an investigation of all of the facts
and a balancing of the opposing features of agency and sale. In the
leading case upon the question,'^ the contract was thus found to be
one of sale rather than agency to buy; while in another presenting
some of the same features the opposite conclusion was reached.**
§ 46. The form of the contract, while not at all conclu-
sive, may go far in determining the question. The weight of this
evidence is increased by the extent to which the contract appears to
<lisclose the real intention of the parties rather than to be an artful and
wordy cover of the real purpose- Who is to be affected by fluctuations
in price, is often significant. If the one who is to supply the goods ia
to do so at a fixed price regardless of market fluctuations, there is
strong evidence of sale rather than of agency. Upon whose respon-
sibility are the goods to be procured, is also a significant question. If
they are to be obtained upon the credit of the person, who is to supply
them without possibility of recourse to the person to whom they are tO'
»» Black V. Webb, 20 Ohio, 304, 55
Am. Dec. 456, discussed more fully
In Mechem on Sales, S 41. So in a
prosecution for embezzlement, the
transaction was held to be a sale
rather than an agency to buy. ' State
V. Brown, 171 Mo. 477. See also St.
Ix)ai8, etc.-, R. Co. v. Blocker (Tex.
C!t. App.), 188 S. W. 156.
ss Hatch y. McBrien, 83 Mlch« 169 ;
Mechem on Sales, i 42. In Keswick
y. Rafter, 36 App. Diy. 608, affirmed
on opinion below, 165 N. Y. 653, the
correspondence between the parties
was held to show an order to the
plalntur to buy for the defendant and
not a sale by the plaintiff to the de-
fendant.
29
§§ 47»48] THE LAW OF AGENCY [bOOK I
be supplied, this also is strong evidence of sale. Who is to determine
of whom, where, to what extent, upon what terms, the goods to be sup-
plied are to be procured? If the person who is to supply them is to
determine these matters, then, as stated in one case,** "there is nothing
characteristic of agency in this."
The writer has, however, so fully discussed this question in another
place,'* as to make further examination here unnecessary.
§ 4y. ■ Agency to sell or sale of goods. — ^Agencies to sel?
are very numerous, the most familiar types being those of the auc-
tioneer, the broker, the factor or commission merchant; and the gen-
eral dealer who receives goods for sale under what is commonly termed
a "consignment." These present no peculiar difficulties and will be
more fiiily dealt with in their appropriate place. Anomalous cases,
however, do arise which are difficult of determination. The most com-
mon are those wherein goods have been delivered to another for sale,
but it is not certain whether he is to sell them as agent of the person
from whom he received them, or Avhether he has purchased them from
that person and is to sell them on his own account.'* This uncertainty
is to be attributed sometimes to the ignorance or inattention of the
parties in making their contracts, sometimes to the desire of the parties
to evade the operation of a particular statute, like a recording act,'^ but
more frequently to the conscious desire of one of the parties at least —
usually the one from whom the goods are received — ^to have the trans-
action afterward take the form either of agency or sale as shall best
suit his purposes.**
§ 48. '■ These doubtful cases are to be determined, not by
the name which the parties have seen fit to apply to their contract but
by its true nature and effect.*® The essence of sale is the transfer of
the title to the goods for a price paid or to be paid. Such a transfer
puts the transferee, who has obtained the goods to sell again, in the
attitude of one who is selling his own goods, and makes him liable to
the person from whom he received them as a debtor for the price to be
paid and not liable as an agent for the proceeds of the resale. The es-
sence of agency to sell is the delivery of the goods to a person who is to
sell them, not as his own property but as the property of the principal,
84 Black y. Webb, supra. Tenn. 221, 36 L. R. A. 285, 60 Am,
86 Mechem on Sales, $$ 41 et aeq, St. Rep. 854.
86 See Mechem on Sales, § 43 et aeq, s* Heryford v. Davis, 102 U. S. 235;
3T Norwegian Plow Co. v. Clark, Sturm v. Boker, 150 U. S. 312, 87 L.
102 Iowa, 31; Braunn v. Keally, 146. Ed. 1093; Hervey v. Locomotive
Pa. 519, 28 Am. St. Rep. 811. Works, 93 U. S. 664; Mennis v. Man-
ssArbuckle v. Klrkpatrick, 98 ning, 136 111. App. 406.
30
CHAP. II ]
DEFINITIONS AND DISTINCTIONS
[§ 48
who remains the owner of the goods and who therefore has the right to
control the sale, to fix the price and terms, to recall the goods, and to
demand and receive their proceeds when sold, less the agent's commis-
sion, but who has no right to a price for them before sale or unless sold
by the agent. .
In doubtful cases, the courts in endeavoring to extract the meaning
will incline against the party whose mixed motives or ambiguous lan-
guage has caused the uncertainty, where such a course is demanded for
4:he protection of innocent persons against whom the contract is sought
to be enforced/^
In the application of these principles, the courts have been called
upon to examine a great variety of contracts, holding some to create
agency ^ and others to create sale.*^ The most important cases thus
4oArbuckle v. Kirkpatrlck, 98
Tenn. 221, 36 L. R. A. 285, 60 Am.
6t. R«p. 854.
41 Ex parte White, L. R. 6 Ch. App.
31^7; Bldrldge v. Ben«on, 7 Gush.
(Maas.) 483; Walker v. Butterlck,
105 Mass. 237; Barnes Safe & Lock
Co. V, Bloch Bros. Tobacco Co., 38 W.
Va. 158, 22 L. R. A. 830, 45 Am. St.
Rep. 846; National Cordage Co. v.
Sims, 44 Neb. 148; Len2 v. Harrison,
148 III 598; Burton v. Qoodspeed, 69
111. 237; Barr v. Am. Copying Co.,
142 111. App. 92; Holleman v. Bradley
FerUlizer Co., 106 Ga. 156; National
Bank v. Goodyear, 90 Ga. 711; Bal-
derston v. Rubber Co., 18 R. I. 338,
49 Am. St Rep. 772; Norton v. Mel-
ick, 97 Iowa, 564; Milburn MIg. Co.
V. Peak, 89 Tex. 209; Moline Plow Co.
V. Rodgers, 53 Kan. 743, 42 Am. St.
Rep. 817; McKinney v. Grant, 76
Kan. 779; Metropolitan Nat. Bank y.
Benedict Co., 36 U. S. App. 604, 74
Fed. 182; Joslyn v. Cadillac Auto Co.,
101 C. C. A. 77, 177 Fed. 863; Sturm
V. Boker, 150 U. S. 312, 37 L. Ed.
1093; Sturtevant Co. v. Dugan 6 Co.,
106 Md. 587; Sligh & Co. v. Kuehne
Commission Co., 135 Mo. App. 206;
Barteldes Seed Co. v. Border, etc.,
Co., 23 Okla. 675, 101 Pac. 1130;
Sioux Remedy Co. v. Lindgren, 27 S.
Dak. 123, 130 N. W. 49; Undsey Lum-
ber Co. V. Mason, 165 Ala. 194; Coll-
yer v. Krakauer, 122 App. Div. (N.
Y.) 797; Arkansas Fertilizer Co. v.
Banks, 95 Ark. 86; Lance v. Butler,
135 N. Car. 419.
« Dr. Miles Medical Co. v. Park,
164 Fed. 803, 220 U. S. 373; Arbuckle
Bros. V. Kirkpatrick, 98 Tenn. 221,
86 L. R. A. 285, 60 Am. St. Rep. 854;
Snelling v. Arbuckle, 104 Ga. 362;
Arbuckle Bros. v. Gates, 95 Va. 802;
In re Linforth, 4 Sawy. 370, Fed* Cas.
No. 8,369; Ex parte Flannagans, 2
Hughes, 264, Fed. Cas. No. 4,855;
Nutter V. Wheeler, 2 Low. 346, Fed.
Cas. No. 10,384; Maek y. Tobacco
Co., 48 Neb, 397, 58 Am. St. Rep. 691;
Norwegian Plow Co. v. Clark, 102
Iowa, 31; Alpha Checkrower Co. v.
Bradley, 105 Iowa, 537; Armstrong
V. St. Paul, etc., Co., 48 Minn. 113;
Granite Roofing Co. v. Casler, 82
Mich. 466; Peoria Mfg. Co. v. Lyons,
153 111. 427; Yoder v. Haworth, 57
Neb. 150, 73 Am. St. Rep. 496; Chick-
ering v. Bas tress, 180 111. 206, 17 Am.
St Rep. 309; Mennis y. Manning 6
Co., 136 111. App. 406; ^tna Powder
Co. V. Hlldebrand, 137 Ind. 462, 45
Am. St. Rep. 194; Aspinwall Mfg.
Co. V. Johnson, 97 Mich. 531; Kellam
V. Brown, 112 N. C. 451; Heywood v.
Doernbecher Mfg. Co., 48 Oreg. 359;
Hessig-Ellis Drug Co. v. Sly, 83 Kan.
60; Jackson y. State, 2 Ala. App. 226,
57 So. 110; Conn y. Chambers, 123
App. Diy. (N. Y.) 298, affirmed in 195
N. Y. 538; Baldwin v. Feder, 135 App.
31
§§ 49, 5o]
THB LAW OF AGENCY
{book I
arising are cited in the notes, but as the writer has dealt with them at
large in another place,^ it seems neither necessary nor excusable ta
repeat the discussion here.
§ ^g. ■ Land. — ^The same questions may arise with refer-
ence to land. An authority to sell land is not an offer to sell it to the
agent, and he will not be permitted to buy it and hold it on his own
account without his principal's consent."^ The instrument creating die
authority may, however, be so broad or be couched in such language as
to amount to an option to the agent to purchase or to authorize him to
sell upon the basis that he is or may become the owner.**
On the other hand, while an option or a contract for the sale of land
does not per se create an agency to sell it,*** its language may be broad
enough to compass that result, with the effect that the giver may be
responsible for the acts of this agent like any other.*^
§ so. How question determined — ^Law or fact. — ^Where
the contract is in writing, or the facts are not disputed and only one in-
Div. (N. y.) 97; Polrler Mfg. Oa t.
Kitts, 18 N. Dak. 656.
MSee Mechem on Sales, §§ 41 e<
MThus in Checum v. Kreighbainu,
4 Wash. 680, an Instrument giving
the agent "the exclusive sale" of cer-
tain lands for a certain price, and
providing that he must get his com-
mission in addition to the price
named, was held not to authorize the
agent to take the land himself and
demand a conveyance from the prin-
cipal. See also Meek v. Hurst, 223
Mo. 688, 13& Am. 8t R. 531; Raddle
V. Lindemann, 151 111. App. 441.
Min Robinson v. Easton, 93 Cal.
80, 27 Am. St. R. 167, an instrument
authorizing certain pexsons to sell
land for a certain price "net" to the
owner and providing that for that
sum "they may sell said property
with our consent," was held to au-
thorize them to make themselves the
buyers.
Instrument in form of power of at-
torney construed as deed. Sims v.
Sealy, 53 Tex. Civ. App. 518.
46 Thus in Reeves v. MoCracken,
108 Tex. 416, the owners contracted
to sell land to a certain party "or
order." The latter made a contract,
induced by fraud, to resell the land
to a third person. When the saleft
were consummated. It was agreed, as
a short cut, that the owners shoulct
convey directly to the subpurchaser
and receive directly from him the
price agreed to be paid by the original
vendee. This arrangement was car-
ried out in entire ignorance of the
fraud. JETekf, that the original own>
era did not thereby become respon*
sible for the fraud of the intermedi-
ate party. To same effect. Alger v.
Keith. 44 C. C. A. 3>1. 106 Fed. 165.
47Shepard v. Pabet, 149 Wis. 85,
where it is said: "There Is nothing
inconsistent in a contract which cre-
ates an agency to sell and also gives
the agent an option to himself pur-
chase, which he is at liberty to avail
himself of at any time during his
agency, but Is not bound to do so.
Russell V. Andrae, 79 Wis. 108;
Puffer V. Welch, 144 Wis. 606; Ar^
nold V. Nat. Bank, 126 Wis. 362, 3 L.
R. A. (N. S.) 580."
One holding an option on land, and
who undertakes to sell "subject to
the approval of the owner," is not
iipBo facto made the agent of either
buyer or owner. Cartwright v. Ruf-
fin, 43 Cola 877.
3«
CHAP. II ]
DEFINXTIONS a\ND DISTINCTIONS
[§§ Sh 52
ference can fairly be drawn from them, the determination of the legal
effect of the writing or the facts in creating agency or sale, is a matter
for the court ; but where there is no writing and the facts are in dis-
pute, or where there is no dispute as to the facts but more than one
inference may fairly be drawn from them, the jury must determine,
under proper instructions from the court, not only what the facts are
but also what is their effect under the court's instructions upon the
law-**
§ 5Z. Agency differs from partnetBhip.-^Agency also differs from
partnership. For while partnership results in a certain type of agency,
and while the existence of agency has often been said to be the modern
test of partnership,*^ not every agent is a partner with his principal
even when he obtains his compensation by sharing in the profits of the
business which his principal carries on with his aid.**^ Where there
has been no holding out of the agent as a partner, the matter must be
determined by the agreement of the parties themselves,**^^ and while
parties may create partnership, without actually intending that specific
result where they voluntarily enter into an arrangement whose neces*
sary legal effect is the creation of partnership, courts are reluctant to
surprise parties into that relation when they clearly did not intend it.
"Every doubtful case," it has been weU said,'* "must be solved in favor
of their intent; otherwise we should 'carry the doctrine of constructive
partnership so far as to render it a trap to the unwary.' *'
§ 52. Agency differs from lease. — So agency may be distinguished
from lease. As in the preceding case of sale, the two contracts arc
usually very much unlike ; but, here as there, cases are met with wherein
one relation has apparently been disguised under the name of the other.
Here, as there, also, names are of no consequence, and the true nature
of the contract determines the case. If, therefore, though the contract
be called a lease, the alleged tenant is so far under the direction and
control of the alleged landlord as to make the latter the real party in
48 See Mechem on Sales, § 50;
Rauber v. Sundback, 1 S. D. 26S.
*• See Cox v. Hickman, S H. L. Caa.
268.
Ao See for example Sodiker v. Ap-
plegate, 24 W. Va. 411, 49 Am. Rep.
252; Zuber v. Hoberts* 147 Ala. 512;
Buzard v. Bank of Greenville, 67
Tex. 83, 60 Ani. Rep. 7.
ftiSee Grinton v. Strong, 147 111.
587, where the relation was held to
be agency and not partnership. So
also in National Lumber Co. y.
Gray's Harbor Com'l Co., — Wash.
— -, 127 Pac. 577; Duensing v. Paine,
150 Iowa, 417; Lance v. Butler, 135
N. Car. 419; Heidenhelpier v. Wal-
thew, 2 Tex. Civ. App. 601.
62 Per Cooley, J., In Beecher v.
Bush, 46 Mich. 188, 40 Am. Rep. 465,
Quoting Kent, C. J., in Post v. Kim-
berly, 9 Johns. (N. Y.) 470, 604.
33
H S3> 54]
THE LAW OF AGENCY
[book 1
interest and the former merely his representative, the contract will be
held to be one of agency.'*
Where, however, the relation is that of landlord and tenant merely,
the tenant is not an agent for whose contracts the landlord is respon-
sible,** nor a servant for whose torts the landlord can be held liable.'*^
8 53» Agency differs from license. — ^Also to be distinguished from
an agent is a mere licensee. The fact that one who has the power to give
or withhold permission, grants to another, gratuitously or for a con-
sideration, the right, for the grantee's benefit, to use the grantor's prop-
erty, cerate under his patent, publish under his copyright, sell under
his trade marks, and the like, does not of itself make the grantee an
agent to bind the grantor by contracts respecting the property involved
or otherwise, or make the grantor responsible for the acts or omissions
of the licensee.** On the other hand, where the act is being done for the
grantor and to accomplish his ends and purposes, agency may more
readily be found.*^
§ 54. Agency differs from bailment. — Equally clear is it that the
mere bailment of property does not. make the bailee an agent to make
contracts respecting the property or otherwise, or a servant for whose
acts or defaults the bailor will be responsible. Mere possession gives
BsPetteway v. Mclntyre, 131 N.
Car. 432. See also Ragsdale v. Merid-
ian Land Co., 71 Miss. 284.
^5* Hawley v. Curry, 74 111. App. 309.
A lessee, allowed a certain amount
out of the rent with which to make
certain agreed repairs and supply
furnishings, is not the agent of the
lessor. Pray v. Appledore Land ft
Bldg. Co., 76 N. H. 167.
Very similar to the last case is
Rothe y. Bellingrath, 71 Ala. 65,
where it was held that an agreement
that the tenant might make certain
improvements, which the lessor was
to take and pay for at the end of
the term, did not make the tenant
the lessor's agent to hind the lessor
for the cost In Oriental Investment
Co. V. Barclary, 25 Tex. Civ. App. 543,
a so-called lease was held to be a
mere cover for an agency, and that
the lessor was liable for an injury.
M Marsh V. Hand, 120 N. Y. 315;
Miller v. New York, etc., R. Co., 126
N. Y. 118; Harrison v. McClellan,
137 App. Div. 508. See also Moors-
head V. United Railways Co., 119 Mo,
App. 541, 203 Mo. 121.
BO See American Press Association
V. Daily Story Pub. Co., 120 Fed. 766,
66 L. R. A. 444, 193 U. S. 675. Or
charge the licensee as a fiduciary.
Thomson v. Batcheller, 201 N. Y.
551; State v. State Journal Co., 76
Neb. 275, 9 L. R. A. (N S.) 174.
67 See Blngamen v. Hickman, 115
Pa. 420, where the creditors of an
insolvent debtor who had made an
assignment for creditors, entered in-
to an arrangement with the assignee
by which a committee of three were
to be allowed to take the assigned
property — a manufacturing establish-
ment— and operate it with a view to
paying the creditors. Held, that the
committee were agents of the credit-
ors in such wise that they were en-
titled to compensation and reim-
bursement, and were not compelled
to look merely to the proceeds of the
factory. Compare with Cor v. Hick-
man, 8 H. L. Cas. 268.
34
CHAP. Il]
DEFINITIONS AND DISTINCTIONS
[§. 55
no authority to sell or otherwise dispose of, unless aided by such a stat-
ute as the Factor's Act. Possession, however, may be delivered to such
a person or under such circumstances or accompanied with such in-
dicia of authority or ownership, as to estop the true owner if the bailee
has thereby been enabled to deceive an innocent taker for value, as will
be seen in a later chapter wherein the subject is fully discussed.**
§ 55* Agency differs from borrowing.- — ^There would seem to be
no difficulty in the ordinary case in distinguishing the relation of prin<-
cipal and agent from that of lender and borrower, yet cases are by no
means infrequent in which one who claims to have been merely a
lender has so stipulated for a share of profits in lieu of interest or for
such an interest in the venture as to raise a serious question whether
he is not a principal or nwre commonly a partner. , Where there has
been no holding out as principal, courts in modern times endeavor to
give effect to the real intention of the parties, and not to charge one as
a principal or a partner who did not intend to become such, ualess that
is the necessary legal effect of the arrangement into which the parties
have entered.** Agency rather than loan has, however, been found in
some cases,** and where it exists it may be undisclosed, with the same
consequences as in other cases.
Some other cases of relations which may be distinguished from
agency are given in the notes.*^
MSee Book IV, Chap. VII, Right
to Recover Property.
SB See the dlBcussion in Meeban v.
Valentine, 145 U. 8. 611, 86 L. £d. 83$
(where partnership was charged hut
not sustained): Harvey v. ChUda*
28 Ohio St 319, 22 Am. Rep. 387
(same). There are many others.
In Davie, etc.. Com. Co. v. Mt Ve1^
non Bank, — Tex. Civ. App. — -, 133
S. W. 448, one who had advanced
money to enable another to buy cat-
tle was held to be merely a lender
and not a principal. So, in the pur-
chase of a mine. Krohn v. Iiambeth,
114 CaX. 802.
•oin Dow8 V. Morse, 62 Iowa, 231,
followed in Van Sandt v. Dows, 63
Iowa, 594, 50 Am. Rep. 759, where
money was advanced to another for
the purchase of corn, under a con-
tract providing that it should be uaed
for no other purpose, that the title
to the com should be deemed to be
in the one who advanced the money;
that the latter should sell it and re-
ceive the money and retain the
amount advanced and interest at 10
per cent and expenses and a compen-
sation of one cent a bushel* there was
held to be agency between the parties,
even though the person to whom the
money was advanced waa to guaran-
tee the other against all loss and to
make good the investment with in-
terest, compensation and expenses.
See also Hartshome v. Thomas, 43
N. J. £q. 410, where the question was
likewise between the immediate par-
ties only.
Compare Cassiday Fork Boom
Co. V. Terry. 69 W. Va. 672.
61 Relation of offlciOlg in church or-
ganization.— ^In Evangelista v. Ver, 8
Philip. 653, the supreme court of the
Philippine Islands held that the re-
lation of officials of a religious de-
nomination to one another is that
35
§S6]
THE LAW OF AGENCY
[book I
§ 56. Classification of agents. — ^Agencies and agents may be clas-
sified according to several lines of distinction. A statutory distinction
based upon a deeply rooted and natural line of demarcation is that
drawn between actual and ostensible agencies.** The nature and ex-
tent of the authority conferred have led to the classification of agents as
universal, general, and special or particulars^
Other classifications, based (a) upon the nature of the agency into
mercantile and non-mercantile agents ; or (fe) with regard to their ob-
ligations in selling, into del credere agents, and agents not del credere;
or (c) in regard to the degree of skill required of them, into gratuitous
and paid agents and professional and non-professional agents, are some-
times made for convenience of treatment.**
Each of these general groups will be given some attention.
of ecclesiastical subordination to a
common superior; rather than of
master and servant, principal and
agent, or landlord and tenant The
court Bald, "In the United States it
has been held that the relation be-
tween a Roman Catholic bishop and
a pastor of a church in his diocese is
not that of master and servant (Bax-
ter V. McDonnell, 155 N. Y. 83, p. 99),
not that of hirer and hired, nor of
principal and agent (Tuigg v. Shee-
han, 101 Pa. 363). They are fellow-
servants of their church, for which
the bishop acts merely as a superior
agent and not as a principal (Rose
v. Vertin, 46 Mich. 457). Nor are
they landlord and tenant (Chatard v.
O'Donovan, 80 Ind. 20). A like rule
in respect of master and servant has
been laid down as to bishops and
clergy of the Methodist Episcopal
Church (Bristor v. Burr, 120 N. Y.
427)."
Agency or Cotenancy* — Tor cases
holding a given situation to be the
former rather than the latter, see
Davis V. Peterson, 59 Minn. 165; El-
well V. Coon (N. J.), 46 Atl. 580.
Agency or Joint Venture. — ^In Man-
ker V. Tough, 79 Kan. 46, 19 L. R. A.
(N. S.) 676, 17 Ann. Cas. 208, a con*
tract between a real estate owner and
a broker by which the broker was
to undertake the sale of the land for
an interest in the proceeds above a
36
certain sum, was said to be "a con-
tract of agency and not a joint ven-
ture."
Vendor delivering goods to carrier
not agent of huyer.—A. seller of goods
delivering them to a carrier in pur-
suance of the contract of sale is not
thereby the agent of the buyer to
make the shipment so as to charge
the latter with the former's negli-
gence. Norfolk, etc., R. Co. v. Har-
man, 91 Va. 601.
Vendor obtaining deed to perfect
his own title not agent 0/ buyer, — ^A
vendor of land who, In order to per-
fect his own title to the satisfaction
of the buyer, obtains a <}uit-cla1m
deed from a third person, does not
do so as the agent of his vendee in
such wise that the latter is charged
with the notice which the vendor ac-
quires, "While obtaining the quit-^laim
deed, of the outstanding title of an-
other person. Riley v. Robinson, 128
App. Div. 178, afT'd, no opinion, 202
N. Y. 581.
Receiver not an agent. — ^Wildberger
V. Hartford P. Ins. CJo. 72 Miss. 338,
48 Am. St. R. 558.
62Cal. Code, § 2300; N. Dak. Code,
§ 4308; S. Dak. § 6151; Montana
Code, i 3075.
03 See Bwell's Evans' Agency, 2;
Story on Agency, § 17; Wharton on
Agency, § 116.
c4Ew6irs Evans' Agency, 8. '
CHAP, II]
DEFINITIONS AND DISTINCTIONS
[§§ 57,58
§ 57. I. Actual and ostensible agencies. — ^The distinction which
leads to the division of agencies into actual and ostensible is one which
is deeply rooted in the law of agency. In the nature of the case, as
will be more fully seen hereafter, the law must often, for the protection
of third persons, proceed upon the appearance of authority created by
the alleged principal without stopping to determine critically whether
the appearance corresponded in all respects with the fact. The formal
distinction was made in the proposed code for New York and has been
adopted in California and other of the western states.** As there
stated, the agency is actual when the agent has really been employed
and authorized by the principal ; the agency is ostensible when the prin-
cipal intentionally, or by want of ordinary care, leads a third person
to believe another to be his agent who has not really been employed
and authorized by him.
§ 58. 2. Universal, general and special agents. — ^The classification
of agents usually deemed to be the most important, is that based upon
the nature and extent of the authority conferred upon them, into uni-
^ersal, general, and special agents. Those who recognize the classi-
fication, however, are by no means entirely agreed upon the basis of it,
and it is undoubtedly difficult to frame a definition which will prove
satisfactory in every case.** To some extent, the words explain them-
selves, but so far as further statements will be of aid, the following
are, perhaps, the ones most generally agreed upon :
A universal agent is one authorized to do all acts for his principal
which can lawfully be delegated to an agent. .So far as such a condi-
tion is possible, such an agent may be said to have universal authority.
•'See California Code (Pomeroy
1901) IS 2298-2300, 2834; North Da-
kota, Rev. Codes (1899) %% 4320-
4322; South Dakota Ann. Stats.
(1901) §§ 5149-6161; Montana Codes
(Sanders' Ed. 1896) §§ 3078-8076.
09 Judge Story has said: "A spe-
cial agency properly exists, "^ben
there is a delegation of authority to
do a single act; a general agency
properly exists where there is a del-
egation to do all acts connected with
a particular trade, hualness or em-
ployment." Story on Agency» % 17.
Professor Parsons has said: "A gen-
eral agent is one authorized to trans^
act all his principal's business, or all
his business of some particular kind.
A particular [special] agent is one
authorized to do one or two special
things." 1 Parsons on CJontracts. *41.
Mr. Evans says: "General agents
are such as are authorized to trans-
act all business of a particular kind;
whilst a special agent is authorized
to a«t only in a single transaction."
Evans on Agency (Ewell's Ed.) p. 2.
Mr. Wrigbt says that the general
agent "Ib usually a person to whom
the principal has entrusted the man-
agement of a particular business,
such as an estate agent, or the man-
ager of a business;" while the special
agent is "an agent given authority
to deliver a particular message or
buy a particular thing on one occa-
sion, or do some special thing, and
has no implied authority aliunde
37
§§ 59>6o] THE LAW OF AGENCY [bOOK I
§ 59. Basis of distinction.— With respect of the general and the
special agents two bases of classification are possible, one the extent of
the authority and the other the extent of the act, that is to say, we may
distinguish between a general or unlimited authority on the one hand
and a particular or limited one on the other; or we may distinguish
between authority to do all the acts of a particular kind or class and
authority to do a single and particular act only. Logically it might
seem that the classification based upon the extent of the authority was
the one to be preferred, but actually the one based upon the extent of
the act has been the one commonly relied upon. Treating this as the
principal line of division and the other as subordinate, it is possible to
have a general agent with general powers, a general agent with special
and limited powers, a special agent with general powers and a special
agent with special or limited powers. It happens, however, in the ma-
jority of cases that an agent who under the familiar classification is a
general agent is clothed with powers which under the other would be
deemed general, and that the special agent has usually special powers —
a fact which doubtless accounts for the failure to press the logic of the
classification with more vigor.
§ 60. Definitions resulting — General agent — Adopting for
the present the current basis of classification — ^a general agent is one
to do all the acts pertaining to a business of a certain kind or at a
particular place, or all the acts of a particular class or series. He has
usually authority either expressly conferred in general terms or in ef-
fect made general by the usages, customs or nature of the business
which he is authorized to transact. A general authority may arise
from the creation or the recognition of authority in many particular
cases concerning the same subject matter.*^ It is usually general from
frdm his position or the nature of his several articles from a person named,
business." Wright on Principal and is a special agency, but authority to
Agent, 2d ed. 87, 88. make purchases from any persons
In Butler v. Maples, 76 U. S. (9 with whom the agent may choose to
Wall.) 766, 19 U Ed. 822, it is vaid: deal, or to make an indefinite num-
"The distinction between a general ber of purchases, is a general agency,
and a special agency is in most cases And it is not the less a general
a plain one. The purpose of the lat- agency because it does not extend
ter is a single transaction, or a trans- over the whole business of the prin-
action with designated persons. It clpal. • ♦ * The distinction be-
does not leave to the agent any dis- tween the two kinds of agencies is
cretion as to the persons with whom that the one is created by power
he may contract for the principal, if given to do acts of a class, and the
he be empowered to make more than other by power given to do individual
one contract Authority to buy for acts only."
a principal a single article of mer- erSee Whitehead v. Tuckett, 15
chandise by one contract, or to buy Bast, 400, where Lord Ellenborough
38
CHAP. II ]
DEFINITIONS AND DISTINCTIONS
[§6l
the difficulty or impossibility of enumerating specifically what shall be
.deemed to be the authority in each particular contingency which may
arise in accomplishing the general purpose.** An agent, therefore,
who is empowered to transact all the business of his principal of a par-
ticular kind or in a particular place, would, for this reason, be ordi-
narily deemed a general agent.**
§ 6i. ' Special agent — A special agent is one authorized to
do some particular act or to act upon some particular occasion. He acts
speaks of a general authority as
"that which is derived from a multi-
tude of instances."
«8 Something of the distinction may
be made clear by an illustration. If
I have a business which I cannot con-
duct in persouy I may employ an
agent to manage it for me. In the
very nature of the case, hov/ever, in
conferring his authority, I mnst do
so in general terms. I cannot easily
do more than to empower him to
manage it according to his best Judg-
ment for my best interest I cannot
well go into details and presorlbe
how he shall conduct himself and
what he shall do in all the multi-
tudinous contingencies which may
arise. I must give him authority in
general terms and leave the details
to his discretion. On the other hand,
if I need a horse, I may send a per-
son into the market to buy one only
on condition that it shall be of the age,
size, color, weight, disposition, speed
and price which I prescribe. This
case admits of special and particular
instruction; the other did not The
former, the business manager, would
be a general agent. The latter, who
is to buy the horse, would be a spe-
cial agent But suppose I say to an
agent, "Go into the market and buy
me a horse," and limit him neither as
to age, size, color, price or otherwise.
What kind of an agent is be? He
has general powers, but is to act only
on a particular occasion.
«» South Bend Toy Co. v. Dakota F.
A M. Ins. Co., 8 S. Dak. 205; Cruzan v.
Smith, 41 Ind. 288; Toledo, etc., R.
Co. V. Owen, 4Z Ind. 405. An agent
authorized to manage a business Is a
general agent Flsk v. Greeley Elec.
L. Co., 3 Colo. App. 319.
"Power to act generally in a par-
ticular business or a particular
course of trade in a business, how-
ever limited^ would constitute a gen-
eral agency, if the agent is so held
out to the world, however restricted
his private instructions may be."
Grain v. First Nat Bank, 114 111. 516;
St Louis, etc., Ry. Co. v. Elgin Milk
Co, 74 111. App. 619, 175 111. 557.
On the distinction between general
and special agency, see a few of the
great number of cases: Gllman v.
Robinson, Ry. A Moo. 226; Kaye v.
Brett 5 Ex. 269; Brady v. Todd, 9 C.
B. (N. S.) 592; Whitehead v. Tuckett
15 East 400; Loudon Savings Fund
Society V. Savings Bank, 36 Pa. St.
498, 78 Am. Dec. 390; Lobdell v.
Baker, 1 Mete. (Mass.) 193, 85 Am.
Dec. 358; Wood v. McCain, 7 Ala. 800,
42 Am. Dec. 612; Manning v. Ga-
sharie, 27 Ind. 399; Anderson v.
Coonley, 21 Wend. (N. Y.) 279; Far-
mers', etc., Bank v. Butchers*, etc..
Bank, 16 N. T. 125, 69 Am. Dec. 678;
Tomlinson v. Collett 3 Blackf. (Ind.)
436; Walker v. Skipwith, Meigs
(Tenn.) 502, 33 Am. Dec. 161; Sav-
age V. Rix, 9 N. H. 263; Union Stock
Yards Co. v. Mallory, 157 111. 554, 48
Am. St R. 341; Great West Min. Co.
V. Woodmas Min. Co., 12 Colo. 46, 13
Am. St R. 204; Mcintosh v. Rice, 13
Colo. App. 393; Dowden v. Cryder, 55
N. J. L. 329; Davis v. Talbot 137 Ind.
235; First Nat. Bank v. Robinson, 105
Iowa, 463.
39
§§62,63]
THE LAW OF AGENCY
[book I
usually in accordance with specific instructions or under limitations
necessarily implied from the nature of the act to be done.
§ 62. Mere messenger. — Lower in rank even than the
special agent is the mere messenger, whose character and functions,
however, have been very little considered in English law.^® He was
well known to the Roman law (nuntius) ^^ and his case (bote) has
been carefully differentiated by the German lawyers.^* If I have ne-
gotiated the terms of a contract >yhich shall be operative or not accord-
ing to the message which I am to send to the other party, the person
whom I employ to deliver the message may be the instrument or
agency through which I make the contract, but he does not make it
for me. He is no more an agent in the true sense than is the mail or
the telegraph which is the instrumentality through which a contract
may be negotiated.
§ 63. ' ■ Person used merely as mechanical aid or instru-
ment.— Low^er still in the scale of true agency is the person em-
ployed as a mere mechanical aid or instrument. Thus, where one per-
son, in the presence and by the express direction of another, serves as
an aid in performing some purely ministerial or mechanical part, —
such as signing the other's name, attaching his seal, and the like,— of
an act which that other is engaged in performing and to which he brings
his own volition, judgment and determination in all matters which con-
cern the essence of the transaction, the act is regarded in law as the
direct and personal act of the latter, and the person who aided minis*
terially or mechanically is deemed to be a mere tool or instrument. In
a large sense he is an agency, but in the legal sense he is not an agent
within the rules governing the method of authorization, at least; for,
as will be seen, it is settled that, even though the person so employed
70 In Johannson v. Gumundson, 19
Manitoba L. Rep. 83, 11 West L. Rep.
176, a distinction is made by Per-
due, J., between a messenger or in-
termediary and an agent.
71 Mr. Hunter (Roman Law, 4th ed.
p. 622) has some interesting com-
ments. Among other things he says,
answering an argument of Savigny,
"Although upon particular states of
fact a doubt may arise whether a per-
son is an agent, yet there is a broad
distinction between a messenger
( nuntius) and an agent. A messen-
ger, like a letter, is simply a medium
of communication; he exercises no
judgment of his own, but merely re-
peats what is told him. An agent, on
the other hand, acts on his own Judg-
ment, of course within the limits of
his instructions. These instructions
may be minute and precise, leaving
little to the exercise of the agent's
Judgment, but unless they do away
with the necessity of his exercising
his Judgment altogether, the agent is
distinguishable from a mere messen-
ger."
72 See, for example, Planck, Bttrger-
Itches Gesetzbuch, 4th ed. Vol. I,
p. 283.
40
CHAP. Il]
DEFINITIONS AND DISTINCTIONS
m 64-^7
IS to Sign a written instrument or an instrument under seal, he requires
only the oral direction or consent of the principal."
§ 64. ' How many of each one principal can have. — It has
been said that a principal can have but one universal agent, by which is
probably meant simply that the nature of such a universal power ex-
cludes the possibility of its being shared with others — ^a proposition by
no means free from doubt.
Universal agencies are very rare, and it has been doubted whether
such an agency could practically exist,'"* although the books furnish
illustrations of agencies called universal.^' Such an agency, however,
can only be created, if at all, by clear and unambiguous language, and
will not be inferred from any general expressions however broad."'*
A principal may have several general agents, and as many special
agents, messengers, and the like, as occasion may require.
S 65. — — Same person may be a special and a general agent. —
The same person may at one time or in regard to one transaction be a
special agent of his principal and at another time or in reference to
other transactions he may be a general agent. So, though he may be
authorized to act only in a particular case he may, with respect of that
transaction, have general power.'''
§ 66. Not special because limited to a particular busi-
ness.—The fact that the authority of the agent is limited to a partic-
ular business does not make it special; it may be as general in regard
to that business as though its range were unlimited.'®
§ 67. Uses of these distinctions. — Distinctions of this sort may
be of use in securing a logical statement of the law, and they are also
of some importance because of the more or less arbitrary rules which
have been based upon them ; but unless it be held clearly in mind that
they are aids only, and are not conclusive, in controversies between the
principal and third persons, they will often prove to be misleading
rather than useful.'*
78 See Qftrdner ▼. Gardner, 5 Cush.
(Mass.) 483, 52 Am. Dec. 740; Lewis
V. Watson, 98 Ala. 479, 39 Am. St. R.
82, 22 L. R. A. 297; Jansen v. McCa-
hUl, 22 Cal. 663, 88 Am. Dec. 84; Rein-
liart T. Miller, 22 Oa. 402, 68 Am. Dec.
506; People v. Organ, 27 111. 27, 79
Am. Dec. 391; Lord v. Lord, 58 N. H.
7, 42 Am. Rep. 566 (will); Hart v.
Withers, 1 P. A W. (Pa.) 285, 21 Am.
Dec. 382; Blood ▼. Goodrich, 9 Wend.
(N. Y.) 68, 24 Am. Dec. 121, and
many others cited po$t, Chapter V.
w See Story on Agency, § 21.
7»See Barr v. Schroeder, 32 Cal.
609.
7< Gulick V. Grover, 33 N. J. L. 463,
97 Am. Dec. 728; Wood v. McCain, 7
Ala. 800, 42 Am. Dec. 612.
TT Jeffrey v. Blgelow, 13 Wend. (N.
T.) 518, 28 Am. Dec. 476.
T8 Anderson v. Coonley, 21 Wend.
(N. Y.) 279; Cruzan v. Smith, 41 Ind.
288.
79 See poBt, Book 11, Chap. I.
41
§§ 68,69] THE LAW OF AGENCY [bOOK I
§ 68. Difficulty of determinationL — It is often difficult to
determine whether a given agency shall be deemed general or special,
and cases frequently occur, as will be seen hereafter,*® where the
agency, though it may be special as between the principal and the agent,
must be regarded as general as between the principal and third persons.
The distinction is of chief importance in determining the liability of
the agent to his principal, because, as will be seen,®^ the agent by ex-
ceeding the limits set to his authority or by violating express instruc-
tions may make himself liable to his principal for the loss or damage
occasioned thereby.
§ 69. How determined. — No abstract presumption of law
is made in reference either to the existence or to the nature or extent
of an agency. These are facts to be proved. If the agency is created
by writing, or, though there was no writing, if the facts are not dis-
puted, and but one inference can be drawn from them the question ad-
dresses itself to the court ; but if the facts are in dispute or if different
inferences may be drawn from the undisputed facts it is for the jury to
determine, under proper instructions from the court, both the existence
of the agency and its character and extent.** Where, however, an
agency is shown to exist, it is said that the presumption would be that
the agent's authority was general rather than limited.**
It is however always true that anybody who relies upon the existence
of agency has imposed upon. him the burden of proving it He must
not only prove that it exists, but he must also show what kind of an
agency it is. The law never simply presumes that agency exists, and
it never simply presumes that an agent is general or special. When it
appears that an agency does exist, the court, since it cannot presume
any particular limitation without proof, must, if it makes any presump-
tion at all, except such as grows out of the very nature of the agency,
presume it to be general rather than limited ; but, speaking generally,
not only must the fact of the agency be shown but also the nature and
extent of it
80 See post. Book 11, Gbap. L may do by virtue of it is a question
81 See post. Book II, Chap. I. of law." Glenn v. Savage, 14 Ore.
82 Dickinson County v. Mississippi 667; J^ng Creek Bldg. Ass'n y. State
Valley Ins. Co., 41 Iowa, 286; Morrl- Ins. Co,, 29 Ore. 669^.
son V. Whiteside, 17 Md. 452, 79 Am. m Trainer v. Morison, 78 Me. 160, 57
Dec. 661; Loudon Savings Fund So- Am. Rep. 790; Methuen Co. v. Hayes,
ciety V. Savings Bank, 36 Pa. 498, 78 33 Me. 169; Sharp v. Knox, 48 Mo.
Am. Dec. 390; Beringer y. Meanor, 85 App. 169; Missouri Pac. R. Co. v.
Pa. 223; Bean v. Howe, 85 Pa. 260; Simons, 6 Tex. Civ. App. 621; Oak
Dale V. Pierce, 85 Pa. 474. "The ex- Leaf Mill Co. y. Cooper, — Ark. — ^
istence of an agent's authority, is 146 S. W. 130; Austrian v. Springer,,
purely a question of fact. What he 94 Mich. 343, 34 Am. St R. 360.
42
CHAP. II ]
DEFINITIONS AND DISTINCTIONS
[§S l^T^
§ 70. 3. Special forms of agency — ^Professional and non-profes-
sional agents. — Certain forms of agency are of such great importance
and of stich universal use that many of them have come to be regarded
as distinct professions or occupations, and around each of them has
grown up a special body of the law that requires distinctive considera-
tion. Of this class are attorneys, auctioneers, bank officers, brokers,
factors, ship masters, and the like, some of which will be specially con-
sidered hereafter.
§ yi. ■ Attorneys at law. — As has been seen, the term at-
torney is often used in the law of agency as synonymous with the word
agent, particularly when the authority is conferred by a written instru-
ment. An agent of this sort is often further distinguished as an attor-
ney in fact.
The term has also its well understood significance of attorney at law,
by which is meant, in modem times, one whose profession it is to give
advice and assistance in legal matters, and to prosecute and defend in
courts, the causes of those who may employ him for that purpose.**
g ya. _— Auctioneers. — ^An auctioneer is one whose business
it is to sell or dispose of property, rights or privileges at public com-
petitive sale, to the person or persons offering or accepting the terms
most favorable to the owner.*' He differs from a broker in several
84 Weeks on Attorneys at Law, $31.
See the subject treated at length in
the chapter on Attorneys at Law.
«« Mr. Bishop defines an auctioneer
aa "one who dealing with asaemhled
persons competing, sells property to
those who make or accept the offers
most favorable to the owner." As
will be observed, the definition in the
text is based largely upon this. Of
this definition Mr. Bishop says: "I
have not observed in the books any
satisfactory definition of an auction-
eer. Even Story puts what seems to
have been meant for a definition,
very loosely, thus: 'An auctioneer is
a person who la authorized to sell
goods or merchandise at public auc-
tion or sale for a recompense or (as
it is commonly called) a commission.'
Story, Agency, S 27. My definition is
silent as to his remuneration, or the
manner of it; In which respect Story's
is to be preferred if this is really an
element in the question. But though
ordinarily, an auctioneer, like any
other agent, is paid, he is not the less
such if he does the work gratuitously.
State V. Rucker, 24 Mo. 657. Nor
does he cease to be an auctioneer
though he sells his own property.
Bent V. Cobb, 9 Gray (Mass.), 397, 69
Am. Dec. 295. Therefore the defini-
tion may well be silent as to the mat-
ter of agency. Not* is he less an auc-
tioneer though, selling his own prop-
erty, he conducts the competition by
some method other than outcry. Rex
V. Taylor, McClel. 362, 13 Price, 636.
Story's definition is defective in not
comprehending the auctioneer of real
estate. Emmerson v. Heelis, 2 Taunt
38, 47; Dobell v. Hutchinson, 3 A. A
E. 355. It may be a question whether
mine is not defective in not extending
to such a case as the letting out of
the board of paupers to the lowest
bidder, and various other cases of pro-
curing a contract other than a pur-
chase of property." Bishop on Con-
tracts, New Ed. S 1181, and note.
43
§§ 73. 74]
THE LAW OF AGENCY
[book I
particulars, chief among which are that he is employed to sell or dis-
pose of, only, and that his sales are always public. He is primarily
deemed to be the agent of the seller, but in the performance of his func-
tions he becomes the agent of the buyer also, as when he accepts the
buyer's bid and enters his name upon the memorandum of the sale.**
§ 73- Brokers. — A broker is one whose occupation it is to
bring parties together to bargain, or to bargain for them, in matters of
trade, commerce or navigation.*^ He is essentially a middle-man or
go-between. He differs from an auctioneer in that he has no special
property in the goods which he may be authorized to sell ; that he must
sell them in the name of the principal, and that his sales are private
and not at auction. He ordinarily receives a compensation or commis-
sion, usually called brokerage, but he may also serve gratuitously. He
differs from a factor, also, in that he does not ordinarly have the pos-
session of the property which he may be employed to sell and- that his
contracts are always made in the name of his employer. He is pri-
marily the agent of the person who first employs him, and he cannot,
without the full and free consent of both, be, throughout the transac-
tion, the agent of botH parties. Without such consent, he can only act
as the agent of the other party when the terms of the contract are fully
agreed upon between the principals and he is instructed to close it up
or where he acts as a mere middle-man who brings the parties together
to then deal in person.
Brokers are of many kinds, according to the particular class of trans-
actions in which they engage. Thus there are money-brokers, stock-
brokers, ship-brokers, bill-brokers, insurance-brokers, real estate-brok-
ers, pawnbrokers, and general merchandise-brokers.*®
§ 74. Factors or commission merchants. — ^These terms,
as is said by a learned writer,*® are nearly or quite synon3aTious. The
"An auctioneer," says Mr. Wharton,
"Is a person employed to sell at pub-
lic sale, after public notice, property
to the highest bidder." Agency, § 638.
86 See chapter on Auctioneers,
where the subject is separately
treated.
8T"A broker is one, who, as mid-
dleman, brings persons together to
bargain or bargains for them, in the
private purchase or sale of property
of any sort, not ordinarily in his pos-
session." Bishop, Contracts, § 1135.
"A broker Is a specialist employed
as a middleman to negotiate between
the parties, a sale or other business
contract." Wharton on Agency, S 695.
Bamberger v. Marcus, 157 Pa. 133, 37
Am. St. R. 719.
Judge Story says that a broker "is
an agent employed to make bargains
and contracts between other persons,
in matters of trade, commerce or
navigation, for a compensation, com-
monly called brokerage." Agency^
§ 28. This definition is the one given
by Evans* Agency, 4.
88 See this subject fully discussed
in the chapter on Brokers.
80 Bishop, Contracts, { 1138. See
44
CHAP. U]
DEFINITIONS AND DISTINCTIONS
[§74
former is the more common in the language of the law, the latter in
the language of commerce. A factor is one whose business it is to
receive and sell goods for a commission. He diifers from a broker in
that he is entrusted with the possession of the goods to be sold and usu-
ally sells in his own name.®* He is invested by law with a special prop-
erty in the goods to be sold and a general lien upon them, for his ad-
vances ; and unless there be an agreement or usage to the contrary, he
may sell upon a reasonable credit.®^
Del credere commission. Not unfrequently, in consideration of an
increased commission, the factor guarantees the payment of debts aris-
ing through his agency, in which case he is said to sell upon a del
credere commission.®^
Supercargo. A factor is called a supercargo when authorized to sell
a cargo which he accompanies on the voyage."*
also, Hamberger y. Marcus, 157 Pa.
133, 37 Am. St R. 719; Perkins v.
State, 50 Ala. 154.
»o"The distinction between a
broker and a factor," said Chief Jus-
tice Abbott, "is not merely nominal,
for they differ in many important par-
ticulars. A factor is a person to
whom goods are consigned for sale by
a merchant residing abroad, or at a
distance from the place of sale, and
he usually sells in his own name with-
out disclosing that of his principal.
The latter, therefore, with full knowl-
edge of these circumstances, trusts
him with the actual possession of the
goods, and gives him authority to sell
in his own name. But the broker is
in a different situation, — ^he is not
trusted with the possession of the
goods and he ought not to sell In his
own name." And in the same case it
is said by Holroyd, J., that a factor
"is a person to whom goods are sent
or consigned, and he has not only
possession, but in consequence of its
being usual to advance money upon
them, he has also a special property
in them, and a general lien upon
them. When, therefore, he sells In
his own name It is within the scope
of his authority, and it may be right
therefore that the principal should
be bound by the consequences of such
sale — ^amongst which the right of set-
ting off a debt due from the factor Is
one. But the case of a broker Is dif-
ferent; he has not the possession of
the goods and so the vendee cannot
be deceived by that circumstance;
and besides, the employing of a per-
son to sell goods as a broker does not
authorize him to sell in his own
name. If, therefore, he sells in. his
own name, he acts beyond the scope
of his authority and his principal is
not bound." Baring v. Corrie, 2 B. ft
Aid. 143.
91 See the subject discussed in the
chapter on Factors.
•2 See the question of his duties
and liabilities discussed in the chap-
ter on Factors, post.
Banians — A peculiar sort of agent,
known only In India, is the Banian,
who is a del credere agent with re-
spect of his employer but a principal
with reference to third persons. He
has been described as follows: "He
often, if not generally, advances
money to the firm In which he is em-
ployed; he gives security; if he sells
the goods of the firm he is a sort of
del credere agent, guaranteeing the
payment of the price by the bazaar
dealers or other purchasers to his
principal, and as to purchases he Is
the direct purchaser In the bazaar."
Per Norman, C. J., in Grant v. Shaw,
2 Hyde, 302. 309.
03 Ewell's Evans on Agency, 3.
"Supercargoes are persona em-
45
§§ 75-7^] THE LAW OF AGENCY [bOOK I
Mercantile agent. The English Factors Act of 1889, defines a "mer-
cantile agent," within the meaning of that act, as "a mercantile agent
having in the customary course of his business as such agent authority
either to sell goods or to consign goods for the purpose of sale, or to
buy goods or to raise money on the security of goods." Other similar
statutory definitions are to be found.
§ 75. Traveling salesmen. — In many respects unlike either
the broker or the factor is the traveling salesman commonly called $.
"drummer." "A traveling salesman," said the court in Pennsylvania,
"who exhibits samples of, and takes orders from purchasers for, his
employer's goods is not, in a technical or popular sense, a broker, or
factor, although he may be compensated for services by commissions
on the sales so effected by him." •* He differs from the broker in that
he is a traveling agent rather than one having a fixed place of business ;
he does not undertake to serve anyone who may desire his services but
is usually in the regular employment of a particular principal ; and he
has not usually, as the broker often has, the power to make a binding
contract, but merely to solicit orders for his principal's approval or
disapproval. He differs from the factor in the same particulars, and
also in the fact that he is not usually entrusted with the possession of
the goods but is merely provided with samples of them which he is to
exhibit for the purpose of securing orders.
§ 76. Cfficers of ships.^-Certain officers of ships, as the master
and the ship's husband, present well recognized forms of agency, but
the consideration of their rights, authority and duties belongs rather to
a treatise upon shipping or maritime law than to one upon the subject
of agency generally.**
§ 77. Partners. — ^The transaction of the business of an ordinary
partnership furnishes frequent opportunity for the application of the
law of agency, but this subject is also deemed to be beyond the scope of
the present treatise.
§ 78. Bank officers. — Certain officers of banks, and particularly
the cashier, also present familiar forms of agency, which will receive
some attention herein, though no attempt is made to deal with them ex-
tensively or separately.
ployed by commercial companies or board of which they were embarked,
private merchants, to take charge of and therein dlfter from factors, who
the cargoes they export to foreign reside abroad at the settlements of
countries, to sell them there to the the public companies for whom they
best advantage, and to purchase act." 1 Beawes Lex Men, 47 (nth ed.)
proper commodities to relade the s^Hamberger v. Marcus, 157 Pa.
ships on their return home. For this 133, 37 Am. St R. 719.
reason supercargoes generally go out os See Parsons on Maritime Law;
and return home With the ships on Abbott on Shipping.
46
CHAPTER III
FOR WHAT PURPOSES AaENCT MAY BE CREATED
I 79. Object of this chapter.
80. General Rule — ^FV)r any lawful
purpose.
81. Exceptions — Illegal and per-
sonal acts.
L UKDEBTAKINGS CONTBABT TO LAW OB
OPPOSED TO P17BLI0 POUCT
82. Preliminary considerationa
88. In general — Contracts of
agency in such cases are
Toid.
84. How these cases regarded 1e
law.
85. What elements the rule in-
Tolves.
86. The element of contingent
compensation.
87. Distinction between validity of
contract and lawfulness of
seryice.
88. What cases here considered.
1. JBmpJoyment to do Acta proTiiUted
by positive LaiD
89. Employment to commit crimes,
misdemeanors, trespasses,
etc.
90. Employment to carry on for-
bidden occupation.
91. Employment of unlicensed per-
son.
2. Employment to do Acta opposed to
Pul>lic Policy
92. 93. Employment to secure leg-
islation— ^Lobbying.
94. Legitimate services.
95. Ambiguous cases.
96. How far contract affected
by illegal acts done under it.
97. Obtaining consent of property
owners.
98. Procuring contracts from gov-
ernment or heads of depart-
ment&
99. Illustrations.
100. Contrary views.
101. Services in prosecuting claims.
102. CompromlBe of crime.
103. Encouragement of crime —
Agreements to defend future
violations.
104. Services In securing appoint-
ment of office.
105. Same rule applies to private of-
fices and employments.
106. Services In Improperly influ-
encing elections.
107, What services legitimate.
108. Services in securing pardons.
109. How when conviction il-
legal.
110. Services in procuring or sup-
pressing evidence.
111, 112. Unlawful dealing in stocks
and merchandise.
113. Employments creating mono-
polies or in. restraint of
trade.
114. Employment to induce viola-
tion of contracts.
115. Deception or defrauding of
third persons or the public.
116. Voting trusts.
117. Marriage brokerage.
118. Corruption of agents, corpo-
rate officers, etc.
119. Corruption of public officers.
120. Other cases Involving same
principles.
121. Agent must participate In un-
lawful purpose.
122. Whole contract void when en-
tire.
123. Distinction between illegal and
merely void contracts.
47
§§ 79-82]
THE LAW OF AGENCY
[book 1
n. ACTS OF A PERSONAL NATUBE
124. Personal duty, trust or confi-
dence cannot be delegated to
agent.
125. Illustrations — Voting — Afll-
vits — Statutory require-
ments.
126. Assignments — Wills —
Marriage.
§ 79. Object of this chapter. — ^Having now seen something re-
specting the nature of the relation of agency, it is desirable next to con-
sider what are the purposes for which it may be created. As to this —
§ 80. General rule — ^For any lawful purpose.— It is the general
rule that an agency may be created for the performance of any lawful
act, and that whatever a person may lawfully do, if acting in his own
right and in his own behalf, he may lawfully delegate to an agent.^
This general rule applies, ordinarily,* as much to acts done under a
statute, "or by the authority of a statute, as to any other class of acts.*
§ 8i. Exceptions — ^Illegal and personal acts cannot be delegated. —
In dealing with this general rule, two principles are important to be
considered. One of them results as the direct and natural effect of the
rule itself; the other is an exception to it. These are, i. That author-
ity cannot lawfully be delegated to do an act which is illegal, immoral
or opposed to public policy; and 2. That the performance of an act
which is personal in its nature cannot be delegated. Separate consid-
eration will be given to each of these exceptions.
I.
UNDERTAKINGS CONTRARY TO LAW, OR OPPOSED TO PUBLIC POLICY.
§ 82. Preliminary considerations. — The first corollary to the gen-
eral rule is based upon the nature of the service to be rendered. Three
classes of cases are suggested under it. While these cases have some as-
pects in common, they differ radically in others. The objections urged
1 Story on Agency, S 6 ; Com. Dig.
"Attorney,". C. I. "An agent may be
authorized to do any acts which his
principal might do, except those to
which the latter is bound to give
his personal attention." CaL Code,
§ 2304; Dak. Code, S 134S.
sFor exceptions, common to statu-
tory as well as to other acts, see post
H 125, 126.
8 Jackson v. Napper, 36 Ch. Div.
162; Reg. v. Kent, L. R. 8 Q. B. 305;
In re Whitley Partners, 32 Ch. Dir.
337; Dennison y. Jeffs, [1896] 1 Ch.
611; McClanahan v. Breeding, 172
48
Ind. 457; Cain v. Allen, 168 Ind. 8;
Ludwig V. Cory, 168 Ind. 582; Fried
V. Nelson, 80 Ind. App. 1; Finnegan
y. Lucy, 167 Mass. 489; In re Han-
nan's Express, etc., Co., [1896] 2 Ch.
648.
Thus subscriptions to stock in a
corporation may be made by agmit.
In re Hannan's Bmpress, etc., Co., su-
pra; In re Whitley Partners, Mupra,
So may an affidayit for the registra-
tion of a trade mark (Jackson y.
Napper, supra); or a statutory con-
sent to the dissolution of a partner-
ship (Dennison y. Jelb, Mipra^* or a
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§83
against them are founded upon different reasons. Certain of the em-
ployments are said to be opposed to positive law ; others are contrary
to good morals ; and still others are deemed to be opposed to that im-
portant but somewhat vague principle which is denominated public
policy. It is not within the present purpose to attempt to distinguish
these various grounds with any nicety ; but, recognizing them as more
or less familiar principles of our law, to attempt to discover how they
apply to the present subject Starting from this point and attempting
to state a general principle, it may be said that —
§ 83. In general, contracts for agency in such cases are void. — ^The
law will not sanction the creation, or enforce the performance, of an
agency which has for its object, or which naturally and directly tends
to promote, the commission of an act which is either illegal or immoral
in itself, or which is opposed to the public policy. It may be thought
at first view that the case here considered is not an exception to the
rule at all — ^that the principal himself could not do any of the acts
which are so condemned. It is true that there may be no difference in
the moral quality of the acts, but there may be great difference in the
practical ability of the law to deal with them. There are many cases
in which the principal might, with impunity, do the act in person, be-
cause there is no statute which would enable the court to reach it. But
there are abundant common law principles which would enable the
court to deal with a contract of agency for the doing of the same act, in
any case in which the contract was before the court for enforcement.*
Thus, for example, one may very frequently resort to personal persua-
sion to procure legislation, or obtain a contract or a pardon by personal
influence, and the like, and incur thereby no legal penalty, because no
remonstrance against the j^anting of uty as well may do as the principal,
liquor Ucenaes where no discretion is such requisition shall be satisfied by
involved (Ludwig v. Cory; McClana- the performance of such act by an au*
ban V. Breeding; Cain v. Allen; thorized agent or deputy."
Fried y. Nelson, supra) ; or a notice For cases holding statutory powers
not to sell liquor to one's husband, non delegable for various reasons, see
(Finnegan v. Lucy, supra} ; or a mem- p^at. If 125, 126.
crandum under the statute of frauds ^ Thus in State v. Brandenburg, 232
where the statute, unlike most of the Mo. 531, 32 L. R. A. (N. S.) 845; it
sort, makes no provision for signing was held that even though a mother
by agent (Fordyce v. Seaver, 74 Ark. might not be liable, under a statute
395). against enticing children away from
Stattttes sometimes declare the their parent, for "kidnapping" her
same rule. Thus the Indiana statute child from its father, she could not
(§ 240, Rev. Stat. 1881) provides lawfully appoint an agent to do It,
''when a statute requires an act to be and the agent would be liable if he
done which, by law, an agent or dep- did do It
A 49
§§ 84, 85]
THE LAW OF AGENCY
[book I
express statute has made it an offense. Such practices, however, are
undesirable, because they tend to substitute personal influences for con-
siderations of the public good. They are opposed to public policy,
and though the courts may not be able to reach them directly, they
will at least refuse to lend their aid to enforce them.
§ 84. How these cases regarded in law. — Pursuing this general
principle more fully into details, it may be further said that the law
scrutinizes undertakings of this nature with great strictness, and judges
of their validity by their general character and their natural and prob-
able results. It makes no difference in many instances, that in the
particular case nothing improper was done or intended to be done.
The law seeks to prevent, not only the evil itself, but the very tempta-
tion to evil. It concerns itself rather with the public weal than with
individual interest. The law therefore ordinarily determines the
case by the tendency of undertakings of that kind, and holds the partic-
ular contract unlawful if its general nature brings it within the pro-
hibited class.' It refuses, ordinarily, to assist either party, but leaves
them both in the situation in which their own cupidity has placed them.
These principles which apply here are the well established and fa*
miliar ones which regulate the formation and performance of contracts
generally. They are not in any sense distinctively a part of the law of
agency, and no attempt will be made here to discuss them fully. Their
application to the law of agency, however, is frequent, and some illus-
trations of that aspect will be given in the following sections!
§ 85. What elements the rule involves. — So far as the rule stated
condemns contracts of employment in direct violation of the dictates
8 Institutes Justinian, Liber 3, Title upon a third person, is void in law.
19, Par. 24; Gray v. Hook, 4 N. Y.
449; Marshall v. Baltimore & Ohio
R. R. Co., 16 How. (U. S.) 314, 14 L.
Ed. 963; and see generally the cases
cited dn the following sections.
"Contracts," says Devens, J.,
''which are opposed to open, upright
and fair dealing are opposed to pub-
lic policy. A contract by which one
la placed under a direct inducement
to violate the confidence reposed In
him by another Is of this (Character.
No one can be permitted to found
rights upon his own wrong, even
against another also in the wrong. A
promise made to one in consideration
of doing an unlawful act, as to com-
mit an assault or to practice a fraud
and the law will not only avoid con-
tracts the avowed purpose or express
object of which is to do an unlawful
act, but those made with a view to
place, or the necessary effect of which
Is to place, a person under wrong in-
fluences, and offer him a temptation
which may injuriously affect the
rights of third personp. Nor Is it
necessary to show that Injury to third
persons has actually resulted from
such a contract, for In many cases
where it had occurred It would be
Impossible to be proTed. The con-
tract is avoided on account of its
necessarily Injurious tendency.'*
Rice V. Wood, 113 Mass. 133, 18 Am.
Rep. 469.
50
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 86
of positive law, there is not much difficulty in its application. The
same thing may ordinarily be said of employments to violate the
familiar principles of good morals, though with reference to other al-
leged principles of morals there might be hopeless conflict. With
reference to the employments which are alleged to be opposed to public
policy, there is much room for controversy. As to some questions of
public policy, popular and judicial opinion seem pretty well agreed ;
but as to other questions courts differ widely in their views, and as to
some there is irreconcilable conflict.
Tlie vice in any given employment may be found either in the end to
be attained, or in the means employed to accomplish it. (i) The end
objected to may be either the direct and immediate one, or a conse-
quential one. In an employment to commit bribery, the wrongful end
is direct. In an employment to endeavor to procure a repeal of the
laws against bribery, the end objected to may be the more remote one
that thereby bribery will be encouraged. (2) With reference to the
means employed, it may be that while the end might be proper in itself,
the contract prescribed methods for attaining it which must be con-
demned ; or, though no methods are prescribed, none but bad ones are
possible ; or, though good ones are possible, bad ones are so likely to
be resorted to as to invalidate the emplo)mient ; or, still further, though
good methods are possible and perhaps not unlikely, bad ones are also
possible and perhaps likely, and therefore the emplo3rment should be
condemned. So far as the first two of these cases are concerned, there
is not much room for doubt ; but with the third and more so with the
fourth, the solution is not so easy. Where a contract unobjectionable
as to end is silent as to methods, but is perfectly capable of execu-
tion without resorting to undesirable methods, shall the mere fact that
objectionable methods may be resorted to, be sufficient to condemn it
without any evidence that such methods were contemplated or in-
tended ?
§ 86. ■ The element of contingent compensation. — It will be
noticed in many of the illustrations hereafter given that particular
stress is laid upon the fact that the undertaking was for a compensation
contingent upon success. In some of the cases, the employment was
per se objectionable, and the element of contingent compensation was
not needed to make it invalid. In some cases courts seem to have been
doubtful about the nature of the employment and to have seized upon
the contingent compensation as an element sufficient to turn the scale.
.In other cases^ though they are relatively few, an otherwise apparently
unobjectionable employment has been held bad simply because of this
feature.
51
§87]
TUE LAW OF AGENCY
[book I
Making compensation contingent upon success is undoubtedly to put
a spur to effort, but in many cases this is not deemed objectionable.
In many kinds of familiar employment, this is the regular and usual
method of making compensation. All cases wherein the employee is
paid by commissions, present this aspect. The real estate broker, the
stock and merchandise broker, the auctioneer, the factor or commission
merchant, the agent who solicits life or fire insurance, the book agent,
and many others are regularly and usually paid only upon and in pro-
portion to their success. In most states now, attorneys may lawfully
take cases upon contingent fees.
In addition to being an incentive to effort, a contingent fee may also
undoubtedly be an inducement to the use of unfair means.* In the
cases just referred to, that evil is met as it arises, but its possibility
does not invalidate all such employments. In the cases now being
dealt with in this chapter, if contingent fees are held to make the em-
ployment bad, it must be because of the peculiar nature of the employ-
ment, or because the courts taking that view have over estimated their
significance. Some courts have declined to adopt this view; and it
would seem that they are right. Contracts of this nature are not
robbed of their viciousness because the agent is certain of his compen-
sation ; nor is his undertaking any more righteous because it is surely
to be paid for. On the other hand, — questions of champerty and
maintenance aside — legitimate services ought not to be rendered un-
lawful because the agent is to be rewarded only in case of his success.
The nature of the undertaking and its natural and proxiirtate results
should be the criterion."^
§ 87. Distinction between validity of contract and lawfulness of
services.-:— It must also be kept in mind that the primary question
here in issue is as to the validity of the employment and not as to the
lawfulness of what may be done under it. Unlawful acts may be done
e Thus In Tool Co. v. Norrls. 2 WaU. justice In Oscanyan v. Arms Co.. 103
(U. S.) 45, 17 L. Ed. 868, Justice Field
said: "Agreements for compensation
contingent upon Buccess, suggest the
use of sinister and corrupt means for
the accomplishment of the end de-
sired. The law meets the suggestion
of evil and strikes down the contract
from its inception;" and similar lan-
guage has been used in many other
cases, e. g,, Spalding v. Ewing, 149
Pa. 875, 34 Am. St. R. 608, 15 L. R. A.
727. Bat that this is not always the
case is recognized by the same learned
U. S. 261. 276, 26 L. Ed. 539, where
he says that the commissions allowed
by established custom to commission
merchants and brokers, though de-
pendent upon sales made, are not re-
garded as contingent compensation in
the obnoxious sense of that term so
often the subject of aidmadTersion by
that court.
T Stanton v. Embrey. 93 U. S. 548.
23 L. Ed. 983; Bergen v. Prlsbie, 125
Cal. 168; Barber Asphalt Paving Co
y. Botsford, 56 Kan. 532; Kansas City
s^
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§§ 88-9O
under a lawful contract, and the question whether compensation may
be recovered for them may present a very different aspect from that
which is presented when the question is as to the validity of the em-
ployment itself.
§ 88. What cases here considered. — ^As has already been pointed
out, the general question of the legality of contracts is too great and
too remote to the present purpose to be here considered.* All that can
ibe here attempted is to give some illustrations of the application of the
rules involved to contracts of employment, and in doing this attention
will be confined to the cases most frequently arising and most fully
discussed by the courts.
The cases dealt with may be somewhat roughly divided into two
classes: i. Acts prohibited by positive law; and 2. Acts opposed to
public policy.
i. Employments to do Acts, Prohibited by Positive Lazv.
§ 89. Emplo3anents to commit crimes, misdemeanors, trespasses
and the like, are so clearly within the prohibited class, as to require
no extended discussion. An employment to abduct, assault, bribe,
conspire, forge, imprison, ravish, rob, seduce, and so on through the
category of crimes, needs no comment to show its illegality. Fortun-
ately such employments are not common.
Employments to convert the property of another, to libel or slander
him, to knowingly trespass upon his property or jjerson, to infringe his
patent or copyright, and many others of the same sort, though they
may not involve acts specifically made crimes or misdemeanors, are
nevertheless clearly illegal, and fall within the class here being con-
sidered. Fortunately these also are not very common.
§ 90. Emplo3rments to carry on forbidden occupations. — Employ-
ments of this sort also, by reason of their very obviousness, are not
particularly common. But wherever they do occur, there is usually
no difficulty in dealing with them. If the doing of the very thing con-
templated is prohibited by the express terms of a statute, the employ-
ment to do it or to aid in doing it, must be illegal. Thus an employ-
Paper House V. Foley Ry. Printing
Co., 85 Kan. 678. 39 L. R. A. (N. S.)
747; DIsbrow v. Cass Co., 119 Iowa,
538; Shinn v. Cimnlnghani, 120 Iowa,
383.
What might be regarded as objec-
tionable between' private persons is
not necessarily so when the state
(which may determine public policy^
is a party. Opinion of Justices, 72 N.
H. 601. As to champerty and main-
tenance, see Peck v. Heurlch, 167
U. S. 624, 42 L. Ed. 302; post, At-
torneys at Lav), Book V, Ch. I.
8 See the elaborate treatise of Mr.
Greenhood on "The Doctrine of Pub-
lic Policy in the Law of Contracts."
53
§91]
THE LAW OF AGENCY
[book I
ment to aid in carrying on a forbidden lottery,' or saloon *^ or billiard
table ; ^^ to serve at a time when work is forbidden, as upon Sunday ; ^*
to procure and ship goods in violation of legislation in time of war ; "
to secure business for a foreign corporation not authorized to do busi-
ness within the state and forbidden to do business by officers or
agents ; ** to obtain forbidden rebates on the shipment of goods : " to
acquire lands in a forbidden territory, e, g. in the Cherokee Nation ; *•
to sell goods in a prohibited territory;*^ and the like, is illegal, and
will not be enforced.
§ 91. Employment of unlicensed person to serve in occupation for
which a license is required. — ^The same principles apply to cases in
which a person without a license is employed to serve in an occupation
for which a license is required. If the statute or ordinance which re-
quires the license expressly or by clear implication forbids acting in a
given capacity or occupation without a license, or expressly or by clear
implication makes such acting illegal, a contract to so act must be itself
illegal and unenforceable." This question has arisen many times with
9 Mexican Internatioiial Banking
Go. y. Lichtenstein, 10 Utah, 338;
Rolfe ▼. Delmar, 7 Robt (N. Y.) 80;
Davis v. CaldweU, 2 Rob. (La.) 271;
Roby V. West, 4 N. H. 285. 17 Am.
Dec. 423; Roselle y. McAuIiffe, 141
Mo. 36, 64 Am. St Rep. 501, 172 U. S.
641. '
10 Blxby V. Moor, 51 N. H. 402. To
same effect: Sullivan y. Horgan, 17
R. I. 109, 9 L. R. A. 110.
Where a sale of liquor within the
state is forbidden, an employment of
an agent to order from or buy in an-
other state where the sale is legal, Is
not unlawful. Whltmore v. Statfe, 72
Ark. 14.
iiBadgley y. Beale, 3 Watts (Pa.),
263.
12 Watts y. Van Ness, 1 HiU (N. Y.).
76. Compare Boland y. Kistle, 92
Iowa, 369.
IS Irwin y. Levy, 24 La. Ann. 302.
See also Williams v. Ckiy, 21 La. Ann.
110; Haney y. Manning, 21 La. Ann.
166; Rhodes v. Summerhill, 4 Heisk.
(Tenn.) 204.
1* Dudley v. CoUier, 87 Ala. 431, 13
Am. St. R. 55; Lowey y. Granite
State, etc., Ass'n, 8 Misc. 319, 59 N.
Y. St. Rep. 246.
18 Parks y. Dold Packing Co., 6
Misc. 570, 57 N. Y. St. Rep. 788.
i« Alexander v. Barker, 64 Kan. 396.
"Crigler v. Shepler, 79 Kan. 834,
23 L. R. A. (N. S.) 500; Rocco v.
Frapoli, 50 Neb. 665.
i« Attorneys: Ames v. Oilman 10
Mete. (Mass.) 239; Hittson v. Browne,
3 Colo. 304. But see Yates v. Robert-
son, 80 Va. 475. In Harland y. Lflien-
thai, 53 N. Y. 438, an attorney not ad-
mitted to practice in that particular
court, was allowed to recover.
Physicians: Grardner v. Tatum, 81
Cal. 370; Puckett v. Alexander, 102
N. C. 95, 3 L. R. A. 43; Deaton v. Law-
son, 40 Wash. 486, 2 L. R. A. (N. S.)
392. (Compare Zeigler y. Illinois T.
& S. Bank, 245 IlL 180, 28 L. R. A.
[N. S.] 1112.)
Merchandisb Bhokebs: Hustis y.
Pickands, 27 111. App. 270; Holt v.
Green, 73 Pa. 198, 13 Am. Rep. 737.
Real Estate Brokers: Denning y.
Yount, 62 Kan. 217, 60 L. R. A. 103;
Buckley v. Humason, 50 Minn. 195, 16
L. R. A. 423, 36 Am. St R. 637; John-
son y. Hulings, 10$ Pa. 498, 49 Am.
Rep. 131; Stevenson y. Ewlng, 87
Tenn. 46.
!U
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 92
reference to attorneys, physicians, real estate and merchandise brokers,
and the like. As in many other cases of statutory prohibition, it is
often difficult to determine whether a statute or ordinance, not specific
in its terms, was designed to render the business unlawful when car-
ried on without a license, or merely to impose a personal penalty upon
the individual, often as a mere revenue measure, leaving the legality
\of the business unaffected."
2. Employment to do Acts Opposed to Public Policy.
§ 92. Employment to secure legislation. — ^Lobbying agents. — It is
of the utmost importance to the preservation and protection of the state
that the sources of its legislative enactments be kept uncontaminated
by any improper or debasing influence. Considerations of the public
good, motives of high policy, arguments based solely upon the true
interests of the people, are the only elements which can properly enter
into the question of the right discharge of the important functions of
the legislator. Personal solicitation, private intrigue, secret persua-
sion, arguments based upon the legislator's duty or obligations to in-
vdividuals or societies or parties, to say nothing of offers of personal or
pecuniary profit or advancement, are utterly hostile to the public good.
Courts of law and equity have not been slow to recognize this evil, or
to declare that all attempts to influence the course of legislation by
secret or sinister means, or even by using personal influence, solicita-
tion or persuasion with the members of the legislative body, are incon-
sistent with sound public policy.
Any contract, therefore, for services to be performed in procuring
or attempting to procure the passage or defeat of any public or private
act by the use of any improper means or the exercise of undue influ-
ence, or by using personal solicitation, influence or persuasion with the
members is void ; *® and any agreement for the payment of a fee for
!• This was held to be the eltuation
in Fairly v. Wappoo Mills, 44 S. Car.
227, 29 If. R. A. 216; Hughes v. Snell,
28 Okla. 828, 34 L. R. A. (N. S.) 1133,
25 Am. A Eng. Ann. Cas. 374.
20 Marshall v. Baltimore & Ohio R.
R. Co.. 16 How. (U. S.) 314, 14 L. Ed.
953 (here the real attitude of the
agent was to be concealed) ; Tool Co.
V. NorriB, 2 Wall. (U. S.) 45, 17 L.
Ed. 868; Trist v. Child, 21 Wall. (U.
S.) 441, 22 L. Ed. 623; Oscanyan v.
Arms Co., 103 U. S. 261, 26 L. Ed. 539;
Nutt V. Knutt, 200 U. S. 12, 50 L. Ed.
348; Hazelton v. Scheckells, 202 U. S.
71, 50 L. Ed. 939; Burke v. Wood, 162
Fed. 533; Globe Works v. U. S., 45 Ct
CI. 497; County of Colusa v. Welch,
122 Cal. 428; Weed v. Black, 2 Mc-
Arthur (D. C), 268, 29 Am. Rep. 618;
Owens V. Wilkinson, 20 D. C. App. 51 ;
Cook V. Shlpman, 24 111. 614; Crich-
fleld V. Bermudez Asphalt Paving Co.,
174 111. 466, 42 L. R. A. 347; Elkhart
County Lodge v. Crary, 98 Ind. 238,
49 Am. Rep. 746; Kansas Pacific Ry.
Co. V. McCoy, 8 Kan. 538; McBratney
V. Chandler, 22 Kan. 692; Burney v..
55
§ 93]
THE LAW OF AGENCY
[book t
such services is likewise void." Moreover, where the fee is made con-
tingent upK)n success many courts seem to hold contracts otherwise
unobjectionable to be invalid because in such a case there would be
such a strong incentive to the exercise of personal and sinister means
to effect the object that it probably would not be resisted."
§ g3. I So jealously do the courts scrutinize such contracts
tliat they condemn the very appearance of evil, and often declare that
it matters not that in the particular case nothing improper was done or
was expected to be done. It is enough that such employments tend
necessarily and directly to such results, even though in the particular
case the end desired was or might have been attained by wholly un-
exceptionable means." Neither is it material in such a case that the
Ludeling, 47 La. Ann. 73, 96; Frost v.
Belmont, 6 AUen (Mass.), 152; Houl-
ton y. Dunn, 60 Minn. 26, 51 Am. St.
R. 493, 30 L. R. A. 737; McDonald
V. Buckstaff, 56 Neb. 88; Richardson
V. Scott's Bluff Co., 59 Neb. 400, 80
Am. St. R. 682, 48 L. R. A. 294; Har-
ris v. Roof, 10 Barb. (N. Y.) 489;
Rose V. Truax, 21 Barb. (N. Y.) 361;
Harris v. Simonson, 28 Hun (N. Y.),
318; Carey v. Western U. Tel. Co., 47
Hun (N. Y.), 610, 20 Abb. N. C. 333,
15 N. Y. St. Rep. 204; Mills v. Mills,
40 N. Y. 543 ; Veazey v. Allen, 61 App.
Dlv. (N. Y.) 119, aff'd, 173 N. Y. 359;
Sweeney y. McLeod, 15 Oreg. 330;
Cllppinger v. Hepbaugh» 5 Watts &
Serg. (Pa.) 315, 40 Am. Dec. 519;
Spalding ▼. Ewing, 149 Pa. St 375, 34
Am. St R. 608, 15 L. R. A. 727;
Powers y. Skinner, 34 Vt. 274, 80 Am.
Dec. 677; Bryan v. Reynolds, 5 Wis.
200, 68 Am. Dec. 55; Chippewa Valley,
etc., Ry. Co. y. Chicago, etc., Ry. Co.,
75 Wis. 224, 6 L. R. A. 601; undertak-
ing to get legislation for the mere
purpose of affecting the market yalue
of certain stock is unlawful. Veazey
y. Allen, 173 N. Y, 369, 62 L. R. A.
362.
31 Clippinger y. Hepbaugh, 5 Watts
A Serg. (Penn.) 315, 40 Am. Dec. 519;
Wood V. McCann, 6 Dana (Ky.), 366;
Gil y. WiUlams. 12 La. Ann. 219, 68
Am. Dec. 767; and cases 8upra»
22 See ante, § 86; and especially
Chippewa Valley, etc., Ry. Co. v. Chi-
cago, etc., Ry. Co., 75 Wis. 224, 6 L.
56
R. A. 601; Richardson y. Scott's Bluff
Co., 59 Neb. 400, 80 Am. St R. 682,
48 L. R. A. 294 [but compare Stroe-
mer y. Van Orsdel, 74 Neb. 132. 121'
Am. St R. 713, 4 L. R. A. (N. S.)
212]; Coquillard v. Bearss. 21 Ind.
479, 83 Am. Dec. 362; Crlchfleld v.
Bermudez Paying Co., 174 111. 466, 42
L. R. A. 347; Gil y. WillUms, 12 La.
Ann. 219, 68 Am. Dec. 767; Spalding
y. Bwlng, 149 Pa. 375, 34 Am. St R.
608, 15 L. R. A. 727; Owens v. Wll-
kinson, 20 D. C. App. 61. But see
cases contra, in next section.
28 Clippinger y. Hepbaugh, supra;
Chippewa Valley, etc., Ry. Go. y. Chi-
cago, etc., Ry. Co., supra; MlUii y.
Mills, supra; McKee y. Cheney, 52
Howard Pr. (N. Y.) 144; Gil y. Will-
lams, supra; Powers y. Skinner,
supra; Atcheson y. Mallon, 43 N. Y.
147, 3 Am. Rep. 678; Spence y. Har-
vey, 22 Cal, 337; Thomas y. Caulkett,
57 Mich. 392, 58 Am. Rep. 369.
"It matters not," says Rogers, J., in
Clippinger y. Hepbaugh, supra, "that
nothing improper was done or was
expected to be done by the plaintiff.
It is enough that such is the tendency
of the contract, that it is contrary to
sound morality and public policy,
leading necessarily, in the handB of
designing and corrupt men, to im-
proper tampering with members, and
the use of an extraneous secret in-
fluence over an important branch of
the government. It may not corrupt
all; but if it corrupts, or tends to cor^
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 94
contract expressly stipulates that no improper influence is to be
used."
The rule respecting contingent fees applies equally whether a fixed
sum was agreed upon or whether the amount was left to be subse-
quently determined, as for example, where the promise is to pay a large
or a liberal fee. Such a transaction furnishes no foundation for a re-
covery quantum meruit, ^^
g g^ ■ Legitimate services. — It is not to be understood,
however, that every contract for services to be rendered in endeavoring
to procure or defeat legislation is unlawful. Services may be rendered,
public in their nature and intended to reach the understandings of the
legislators rather than to exercise any personal influence over them,
which are perfectly legitimate.
Thus a person may lawfully be employed to draft a bill and request
its introduction, prepare a petition, attend the taking of testimony, col-
lect facts, prepare arguments and to submit them publicly, either be-
fore a committee of the legislature or the legislature itself, if permitted
to do so, "because," as it is said by a learned judge, "a public discus-
sion could not tend to deceive or corrupt the legislature, while personal
solicitation and influence might produce that result." *•
mpt somep or if It deceives or tends to
deceive or mislead some, that is suffi-
cient to stamp its character with the
seal of reprobation before a judicial
tribunal."
[There is, howeTer. no doubt that
courts, in their zeal to overthrow
questionable contracts, often state too
strongly the effect of a possible use
of unlawful means and impute unlaw-
ful purposes to a degree that they
would not do in other cases. See
S 95, po^.l
«4 Chippewa Valley, etc., Ry. Co. v.
Chicago, etc., Ry. Co., supra; Marshall
V. Bait. A O. R. Co., supra; Elkhart
County Lodge v. Crary, supra;
Sweeney v. McLeod, supra,
» Richardson v. Scott's Bluff Co.,
59 Neb. 400, 80 Am. St. R. 682, 48 L.
R. A. 294.
M Bryan v. Reynolds, 5 Wis. 200, 68
Am. Dec. 55; Trist v. Child, 21 Wall.
(U. S.) 441, 22 L. Ed. 623: Salinas v.
Stillman, 66 Fed. 677; Sedgwick y.
sun ton, 14 N. Y. 289; Chesebrough
V. Conover, 140 N. Y. 382; Wildey v.
Collier, 7 Md. 273; Mfles v. Thome,
38 Cal. 835, 99 Am. Dec. 884; Foltz y.
Cogswell, 86 Cal. 542; Barber Asphalt
Paving Co. V. Botsford, 56 Kan. 532;
Kansas Pac. Ry. Co. v. McCoy, 8 Kan.
538; Denison y, Crawford Co., 48
Iowa, 211; Cole v. Hardware Co., 139
Iowa, 487, 18 U R. A. (N. S.) 1161;
Cavanagh v. Beer Co., 136 Iowa, 236;
Stroemer v. Van Orsdel, 74 Neb. 132,
121 Am. St. R. 713, 4 L. R. A. (N. S.)
212. *'It must be the right of every
citizen who is interested In any pro-
posed legislation to employ an agent
for compensation payable to him, to
draft his bill and explain it to any
committee or to any member of a com-
mittee or of the legislature fairly and
openly, and ask to have it introduced ;
and contracts which do not provide
for more, and services which do not
go farther. In our judgment violate no
principle of law or rule of public pol-
icy." Earl, J., in Chesebrough v.
Conover, supra.
In Eisenstein v. Maiden Lane Safe
Deposit Co.. 113 N. Y. Supp. 967, the
57
§ 95] THE LAW OF AGENCY [bOOK I
It has sometimes been thought that this rule could apply only to
lawyers or similar professional advocates, but it is clear that it is prop-
erly subject to no such limitation. It is the nature of the methods
used, rather than the profession of the advocate, which is material.
In several cases of this sort, the fact that compensation was con-
tingent upon success was held not of itself to invalidate the contract*^
§ 95. Ambiguous cases. — But conceding that all contracts
for the use of unlawful means or even for personal solicitation and in-
fluence, are void, and granting, as we must, that contracts for open
presentation and legitimate argument or for professional services as
an advocate openly avowed, are valid, what shall be done with a con-
tract for services which does not on its face disclose whether.it belongs
to the one class or the other ? It may be that, in such a case, the end
to be accomplished is such, or the character, position or relation of the
parties is such, that the court can see clearly, although it is nowhere
so stated, that personal solicitation or other improper influence was
contemplated or could alone be resorted to.*' In such a case, the con-
tract is properly to be condemned. But suppose that the contract
neither by its terms nor by any necessary implication involves the use
of such improper means. Suppose that while improper means might
be resorted to, the end could equally be attained by proper means, and
the parties offer to show or can show that in fact no improper means
defendant needed from the city conn- v. Van Orsdel, 74 Neb. 132, 121 Am.
cil a permit for the construction of st. R. 713. 4 L. R. A, (N. S.) 212.
railing near defendant's building, and 28 Such was the case which the
a lawyer was employed "to examine court had In mind in Bryan v. Rey-
the law with respect to such matter, nolds, 5 Wis. 200. 68 Am. Dec. 55 [al-
and to present the resolution to the though opinions might dltfer as to
board of aldermen, and to see various whe her the principle waa correctly
aldermen and explain to them the applieri to the case then in hand],
reasons and necessity for favorable when it said •'We know of no way by
action on said resolution and to ex- which a person who is not a member
plain its purport to the mayor, so that of the legislature can prosecute or
it would meet his approval." For superintend a claim before that body,
successful accomplishment of his em- except by means of the members them-
ployment the lawyer was to have a selves, or some of them. He could
$300 fee. The contract waa held not not, therefore, comply with the con-
improper and the defendant was held tract on his part without resorting to
liable for the lawyer's fee to one who personal solicitation with the mem-
had employed the lawyer at the de- bers of the legislative body. We
fendant's request. therefore think that the contract was
2T Chesebrough v. Conover, 140 N. hy its terms an agreement to pay
Y. 882; Sedgwick v. Stanton, 14 N. Y. money for a consideration which is
289; Miles v. Thorne, 38 Cal. 335, 99 inconsistent with public policy, and
Am. Dec. 384; Barber Asphalt Paving that the agreement is for that reason
Co. V. Botsford, 56 Kan. 532; Stroemer void."
58
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [^ 96
were contemplated or employed. Shall the court, in such a case, pre-
sume that improper means were used or intended to be used, and that
the contract is therefore invalid? To this question there should, it
would seem, be but one answer, though in fact another answer seems
sometimes to be given. In their zeal to defeat questionable contracts,
courts appear at times to have over looked presumptions of innocence
which are ordinarily given effect even in much more serious matters.**
As stated in a recent case, "It is sometimes lost sight of that the pre-
sumptions in human affairs are in favor of innocence rather than of
guilt, and that such rule applies in testing such a contract as the one
we have here by the principles of sound morals." **^
The principle which should control in dealings of this nature was
stated in the same case as follows : "If, properly construed, the contract
does not, by its terms or by necessary implication, contain anything
illegal, or tend to any violation of sound morals, the fatal element
should not — through any over zealous desire to fortify against the de-
plorable effects of lobbying contracts, strictly so called, which all rec-
ognize and should unhesitatingly condemn — be injected into it by
mere suspicion and conjecture that the parties intended to do some
illegal act, or a legal act by illegal means, or that the agreement might
probably have led to improper influences upon, or tampering with,
official conduct, and thereby defeat the contract."
§ 96. How fair contract affected by illegal acts done under
it. — Moreover, where the contract itself is unobjectionable upon its
face, the mere fact that the party employed did objectionable acts in
the execution of it, will not necessarily render the contract invalid,
although that fact may be of importance in determining the tendency
of such contracts.'^ As said in one case,*- "The plaintiff may have
rendered illegal services and yet the defendant's promise may have
>• See, for example, what is said in
Houlton T. Dunn, 60 Minn. 26, 30 L.
R. A. 737, 51 Am. St. Rep. 493, disap-
proved in Houlton v. Nichol, 93 Wis.
393, 33 L. R. A. 166, 57 Am. St. R. 928.
The case of Chippewa Valley Ry. Co.
V. Chicago, etc. Ry. Co. 75 Wis. 224,
6 L. R. A. 601, cited BuprOy although
not disapproved in Houlton v. Nichol,
Is certainly questionable for the same
reason.
That the presumption of innocence
should be Indulged, see Sillnas ▼,
Stillman, 66 Fed. 677; Barber Asphalt
Paving Co. v. Botsford, 56 Kan. 532;
Knut V. Nutt, 83 Miss 365, 102 Am.
St. R. 452, 200 U. S. 12; Drake v.
Lauer, 93 App. Div. 86, 15 N. Y. Ann.
Cas. 58, 182 N. Y. 533; Cole v. Brown-
Hurley Hardware Co., 139 Iowa, 487,
18 L. R. A. (N. S.) 1161.
80 Houlton y. Nichol, supra,
31 Barry v. Capen, 151 Mass. 99, 6
L. R. A. 808; Dunham v. Hastings
Pavement Co.," 56 N. Y. App. Div.
244; Chesebrough v. Conover, 140 N.
Y. 382; Kerr v. American Pneumatic
Service Co., 188 Mass. 27; Fox v. Rog-
ers, 171 Mass. 546; Church v. Proctor,
66 Fed. 240; Hardy v. Stonebraker,
31 Wis. 640.
«« Barry v. Capen, supra.
59
§ 97]
THE LAW OF AGENCY
[book I
been in consideration of the plaintiff's promising to perform or per-
forming legal ones only. If the contract was legal, it would *not be
made illegal by misconduct on the part of the plaintiff in carrying it
out.'* The judge having found that the contract was legal, the fact
that the plaintiff did things against public policy, if it be a fact, can be
considered only as bearing by way of illustration upon the question
whether the tendency of the contract necessarily was to induce the do-
ing of such things. If that was its necessary tendency to an appre-
ciable degree, it was void, whether it induced the acts or not."
§ 97. Obtaining consent of property owners to proposed public
improvements or to proposed business, etc.— Analogous to the ques-
tions considered in the preceding sections is. that which arises upon
employments to obtain the consent of property owners to proposed
public improvements, such as the paving of streets, and the like, or to
the licensing of saloons and similar places in particular localities, where
the consent of a prescribed proportion is made by law a condition pre-
cedent to the action. Such a condition is prescribed in order to guard
against ill advised or extravagant proposals, and contemplates the act-
ual consideration of the question by those whose interests it most di-
rectly affects. That such consents should be procured by bribery or
personal solicitation is prejudicial to the public welfare, and an employ-
ment to so procure them could not be upheld.'* But it is ordinarily
necessary that some one shall undertake to interview the persons in-
terested and obtain their consent if they are in favor of the project.
This may be done gratuitously by some one of the parties concerned,
but as it may often require more time than any one interested can
8s citing Howden v. Simpson, 10
Ad. 6 El. 793, 818, 819, s. c. 2 Per. ft
Day. 714, 740, 9 CI. ft Fin. 61. 68; Bar-
rett, J., in Powers v. Skinner, 34 Vt.
274, 284, 285, 80 Am. Dec. 677. In
Mulligan V. Smith, 32 Colo. 404. it is
held that the fact that the employer
thought the agent would use unfair
means, would not defeat the contract
if the contract did not contemplate
that he would, if he did not agree to
do 80, and did not in fi^ct do so.
84 In Riggs V. Ryan, 121 N. Y. App.
Div. 301, the defendant had promised
to reimburse the plaintiff if the plain-
tiff would pay $50 to a specified
owner of neighboring property and
thereby obtain such owner's consent
to the presence of a saloon upon the
defendant's property. Such consent
was necessary under the state statute
before a license could be obtained.
After the plaintiff had spent the
money and successfully obtained the
consent, he was denied recovery
against the defendant on the ground
that his contract was contrary to pub-
lic policy.
See also Howard v. First Independ-
ent Church of Baltimore, 18 Md. 451 ;
Farson v. Fogg. 205 111. 326; Doane
V. Chicago Cy. Ry. Co., 160 111. 22, 35
L. R. A. 588; Maguire v. Smock. 42
Ind. 1. 13 Am. Rep. 353, which are
not agency cases but involve this
kind of contract; but compare Mak-
emson v. Kaufman, 35 Ohio St 444.
60
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 98
devote to it, there seems to be no good reason why an agent may not be
emplo/ed to do the work or why his employment should per se be
deemed illegal. That he ts to be paid only in case he secures the
requisite number ought not, of itself alone, to invalidate the employ-
ment, even though it may be admitted that it should subject the con-
tract to close scrutiny .••
§ 98. Procuring contracts from government or heads of depart-
ments.— Employments to procure contracts from federal, state or
municipal governments, boards or bodies for the purchase of supplies,
the leasing of buildings, or the employment of labor, and the like, rest
upon the same principles as those considered in the preceding sections.
It is legitimate and proper to lay before the officer having the matter
in charge, facts, information and arguments intended for the public
good and calculated to enlighten the understanding and secure wise
and intelligent action. Parties desiring to furnish to the government —
whether national, state or municipal, — its necessary supplies, or to un-
dertake the performance of its public works, may lawfully employ an
agent to present their bids or offers; to call attention to their facilities
for the proper performance of their undertakings, and to make, in their
«»In Union Elevated R. Co. y.
Nixon, 199 ni. 235, tbe defendant
wished to construct an elevated loop
in the city of Chicago, an ordinance
authorizing sucb construction was
necessary and no such ordinance could
he passed by the city council except
upon petition signed by the owners
of land representing one half of the
frontage. The plaintiff was hired for
1500 a month "to use best efforts" to
obtain the signatures of property
owners to their consent. In case of
success the plaintiff was within
thirty days to have an additional
15,000. The contract was held valid
and not opposed to public policy.
The court said: 'The obtaining of
consents was legitimate and the em-
ployment of the plaintiff legal, and
we fail to see how the actions of the
plaintiff in obtaining consents can be
«ald 10 be contrary to public policy
by reason of the fact, alone, that he
was to be paid extra compensation
for such services after the ordinance
permitting the Improvement had been
passed. While a contract to obtain
the passage of an ordinance, would
be void, as against public policy, be-
cause under our system of law and
morals, influence to be exercised over
a legislative body to secure the pas-
sage of a law or an ordinance, cannot
legally be made the subject matter of
contract, a contract to obtain con-
sents from the property owners abut-
ting upon streets upon which Im-
provements are to be made, payment
for such services to be made after the
ordinance permitting such improve-
ment shall be passed, would not,
when, as here, the person obtaining
such consents had nothing to do
with the legislative body or the pas-'
sage of the ordinance, make tbe ob-
taining of such consents contrary to
public policy, so that the person ob-
taining such consents could not re-
cover the compensation agreed to be
paid him therefor.*'
See also Sussmaa Y. Porter, 137
Fed. 161.
61
§ 981
THE LAW OF AGENCY
[book I
behalf, such public and open arguments in favor of their propositions
as they may be afforded opportunity."
But where the employment contemplates the bringing to bear of Im»
proper, sinister or personal influence, or where its natural and direct
tendency is in that direction, it is opposed to public policy and void.'^
The fact that the compensation was to be contingent upon success
86 Trist V. Child, 21 WaH. (U. S.) the government for the uae of a post-
441, 22 L. Ed. 623; Stanton v. Em- office, and he was allowed to recover.
See also Green Co. v. Blodgett, 15^
111. 169, 60 Am. St. R. 146; Fearnley
V. De Mainville, 5 Colo. App. 441.
But compare Benson v. Bawden, 14$
Mich. 584, 13 L. R. A. (N. S.) 721.
sttIius in a case very similar to
Beal T. Polhemus» supra, the ^arty
had given his notes in consideration
that the owners of the building
"would use all proper persuasion to
secure the location of the postofflce la
their room." One of the owners waa
a personal friend of the postmaster-
general and represented to him that
the location was a suitable one and
urged upon him the propriety of
placing the postoffice in their build-
ing and this was done. The court,,
however, held that the agreement
was against public policy and that
the notes were vpid: Elkhart County
Lodge V. Crary, 98 Xnd. 238, 49 Am.
Rep. 746. See also. Woodman v.
Innes, 47 Kan. 26, 27 Am. St. R. 274;
Spence v. Harvey, 22 Cal. 336, 83 Anu
Dec. 69; Hutchen v. Gibson, 1 Bush,
(Ky.), 270; Hay ward v. Nordberg:
Mfg. Co., 85 Fed. 4; Oarman v.
United States, 34 Ct CI. 237; Russell
v. Courier Co., 43 Colo. 321; Flynnv.
Bank of Mineral Wells, 63 Tex. Civ^
App. 481; Hovey v. Storer, 63 Maine,
486; Benson v. Bawden, 149 Mich.
584, 13 L. R. A. (N. S.) 721; Ed-
wards V. Goldsboro, 141 N. Car. 60. 4
L. R. A. (N. S.) 589, 8 A. & E. Ann.
Cas. 479.
An employment to procure con-
tracts through "favoritism" is within
the forbidden class. Drake v. Lauer..
93 N. Y. App. Div. 86, 15 N. Y. Ann.
Cas. 58, aff'd 182 N. Y. 533.
brey, 93 U. S. 548, 23 L. Ed. 983;
Lyon V. Mitchell, 36 N. Y. 285, 93 Am.
Dec. 502; Pease v. Walah, 49 How.
Pr. (N. Y.) 269; Swift v. Aspel, 40
Misc. 453; Bergen v. Frisbie, 125 Cal.
168; Kerr v. American Pneumatic
Service Co., 188. Mass. 27; Kansas
City Paper House v. Foley Ry. Print-
ing Co., 85 Kan. 678, 39 L. R. A. (N.
S.) 747.
Thus in Beal v. Polhemus, 67 Mich.
130, Polhemus gave Beal a note to be
paid "as soon as the postofflce is
moved into" a building which Beal
was then erecting on property near
that belonging to Polhemus, the lat-
ter believing that its location there
would enhance the value of his own
property. Beal was an active and
prominent politician, but while there
was some .evidence that he had said
in relation to similar contracts with
other parties that he could control
the senators from his state, there
was no evidence that he made any
such representations to Polhemus or
that the using of any such influence
constituted any part of the considera-
tion of the contract. The postoffice
was duly moved into the building,
but Polhemus refused to pay the note,
alleging it to be invalid as against
public policy. In an action to re-
cover upon it the trial court found
as a fact that in securing the post-
office to be placed and located in his
building, Beal used no undue in-
fluence upon any department or offic-
ers of the government, and was not
guilty of any corruption or corrupt
practice in making the contract, and
did no more than any honorable man
might do in renting his building to
62
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§§ 99, lOO
has been given substantially the same effect here as in the cases dealt
with in the preceding sections."
§ 99. Illustrations. — ^Thus in a leading case decided by the
supreme court of the United States, one Norris had been employed by
the Providence Tool Company to endeavor to obtain from the war de-
partment an order for a large number of muskets, and, for his com-
pensation, he was to receive whatever the government should agree to
pay for each musket above a certain sum. Norris thereupon set him-
self to work, to use his own language, "concentrating influence at the
war department," and finally succeeded in obtaining a favorable con-
tract. Afterwards a dispute arose between him and the tool company,
as to the amount of his commission, and he brought an action to re-
cover it.
The supreme court, by Mr. Justice Field, said: "The question then
IS this : Can an agreement for compensation to procure a contract from
the government to furnish its supplies be enforced by the courts ? We
"have no hesitation in answering the question in the negative. All con-
tracts for supplies should be made with those, and with those only, who
will execute them most faithfully and at the least expense to the govern-
•ment. Considerations as to the most efficient and economical mode of
meeting the public wants should alone control, in this respect, the action
of every department of the government. No other element can lawfully
•enter into the transaction so far as the government is concerned. Such
is the rule of public policy ; and whatever tends to introduce any other
element into the transaction is against public policy. That agreements
like the one under consideration have this tendency is manifest. They
tend to introduce personal solicitation and personal influence as ele-
ments in the procurement of contracts, and thus directly lead to in-
efficiency in the public service, and to unnecessary expenditures of the
public funds. * * * Agreements for compensation contingent upon
success suggest the use of sinister and corrupt means for the accomp-
lishment of the end desired. The law meets the suggestion of evil, and
strikes down the contract from its inception." *•
§ 100. Contrary views. — ^The broad doctrine thus laid
<iown by the supreme court has not, however, passed unchallenged.
Thus in a case soon after decided by the New York court of appeals,
ssHeld not to make an otherwise rule was laid down and applied in
good contract bad. Kansas City Pa- Oscanyan v. Arms Ck)., 103 U. S. 261,
per House v. Foley Ry. Printing Co., 26 L. Ed. 539.
■85 Kan. 678. 39 L. R. A. (N. S.) 747. See also Russell v. Courier Co., 43
»»Tool Co. V. Norris, 2 Wall. (U. Colo. 321; Coqulliard'a Adm'r v.
S.) 45, 17 L. Ed. 868, and the same Bearss, 21 Ind. 479, 83 Am. Dec. 362.
63
§ lOlJ THE LAW OF AGENCY [BOOK 1
that court, one judge dissenting, held that a contract, fair upon Its face,
to obtain contracts from the government for a commission, which might
be carried out by perfectly legitimate methods, could not be deemed
to be opposed to public policy where it did not appear that unobjection-
able methods were contemplated.**^ Other courts have also reached
the same conclusion.*^
§ loi. Services in prosecuting claims. — Contracts for services to
be rendered in the prosecution of claims against governments and mu-
nicipal bodies stand upon the same footing. As is said by a learned
judge in a case involving the right of an attorney to recover upon such
a contract : "Professional services, to prepare and advocate just claims
for compensation, are as legitimate as services rendered in court in
arguing a cause to convince a court or jury that the claim presented,
or the defence set up against a claim presented by the other party,
ought to be allowed or rejected. Parties in such cases require advo-
cates, and the legal profession must have a right to accept such em-
ployment, and to receive compensation for their services; nor can
courts of justice adjudge such contracts illegal, if they are free from
any taint of fraud, misrepresentation or unfairness." "
But where the contract contemplates that the allowance of the claim
is to be sought by using improper, means or by bringing personal so-
licitation, influence or persuasion to bear upon the officer vested with
the duty of decision, the undertaking is unlawful and the courts will
not enforce it.*^
40 Lyon v. MltcheH, 36 N. Y. 235, 42 Clifford, J. In Stanton v. Em-
682, 93 Am. Dec. 502. (It waB said brey, 93 U. S. 548, 23 L. Ed. 983;
In this case tbat the fact that the Burbridge v. Fackler, 2 McArthur
agent was of the same political party (D. C), 407; Foltz v. Cogswell, 86
as the government executives, did not Cal. 542; Denison v, Crawford Co.,
change the rule.) 48 Iowa, 211; Knut v. Nutt, 83 Miss.
In Swift V. Aspell, 40 Misc. 453, the 365, 102 Am. St. R. 452, aff'd 200 U.
court expresses the opinion that this S. 12. The prosecution of a claim
is still the law in New York notwith- cannot be deemed to be opposed to
standing that in Veazey y. Allen, 173 public policy where the legislature
N. Y. 359, 62 L. R. A. 362, the federal authorizes it Davis v. Com., 164
cases were cited with apparent ap- Mass. 241, 30 L. R. A. 743; Penne*
proval. baker v. Williams, 136 Ky. 120.
*i In Kerr v. American Pneumatic ** Devlin v. Brady, 32 Barb. (N.
Service Co., 188 Mass. 27, a contract Y.) 518; McCallum v. Corn Products
of employment, for a compensation in Co., 131 App. Div. 617. A fortiori, ia
part contingent upon success, to pro- the undertaking void where the claim
cure franchises from governmental is a fictitious one and is to be pre-
bodies, was held valid since it was not sented as the claim of the agent
invalid upon its face, and could be ex- rather than as that of the principal,
ecuted without resorting to objection- Spotswood v. Bentley, 130 Ala. 310.
able methods. Where the claim requires iegislar
64
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ I02
§ I02. Compromise of crime. — It is a high requirement of the pub-
lic policy that crimes should be investigated and punished, and the law
frowns upon all attempts to suppress investigation or to defeat the ad-
ministration of justice. Any contract, therefore, for services to be
rendered for the purpose of stifling prosecutions, or of obstructing,
delaying or preventing the due course of public justice in its efforts to
pumsh crime, is opposed to public policy and void.
Thus an agreement with an attorney, for a contingent fee, to settle
a criminal case so as to avoid a prosecution ; ^^ an agreement to pay one
for endeavoring to induce the complainant in a prosecution for felony
to discontinue the proceedings ; *' an undertaking for compensation to
endeavor »to prevent the finding of an indictment/* and, if found, to
endeavor to have the public authorities dismiss it ; '•^ an agreement for
a contingent fee to use one's influence with a prosecuting attorney to
induce him to bring about a lighter punishment than otherwise, and to
permit the accused to turn state's evidence with the hope of receiving
a pardon therefor ; ** and an agreement with an attorney to attempt to
induce the sheriff to refrain from arresting A, who is charged with
murder, the object being to give A an opportunity to escape,*' are void.
tion to malce It payable, and the at-
torney Is to procure this, and the fee
is contingent upon success, the con-
tract, upon analogy to those involving
the procurement of legislation, is
held invalid. Spalding v. Ewlng, 149
Fa. 876, 15 L. R. A. 727, 34 Am. St
Rep. 608.
4*0rmerod v. Dearman, 100 Penn.
St 561, 45 Am. Rep. 891.
«s Rhodes v. Neal, 64 6a. 704, 37
Am. Rep. 98; Ricketts v. Harvey, 78
Ind. 152; Averbeck v. Hall, 14 Bush.
505 (Ky.); Crlsup T. Grosslight, 79
Mich. 380.
See also, Henderson v. Palmer^ 71
111. 579. 22 Am. Rep. 117; Smith v.
Blachley, 188 Pa. 550, 68 Am. St. R.
887; Smith V. Richmond, 114 Ky. 303,
24 Ky. L. 1117. 102 Am. St Rep. 283;
McNeese v. Carver, 40 Tex. Civ. App.
129.
*• Weber v. Shay. 56 Ohio St 116,
60 Am. St Rep. 743, 37 L. R. A. 230.
See also Kirkland v. Benjamin, 67
Ark. 480; Shaw v. Reed, 30 Me. 105;
Sumner v. Summers, 54 Mo. 340; Rid-
dle V. Hall, 99 Pa. 116.
47 Barron v. Tucker, 53 Vt. 338, 38
Am. Rep. 684.
« Wight V. RIndskopf, 42 Wis. 344.
ioArrington v. Sneed, 18 Tex. 135.
See also Buck v. First National
Bank, 27 Mich. 293, 16 AiA. Rep. 189;
Haines v. Lewis, 54 Iowa, 801, 87 Am.
Rep. 202; McMahon v. Smith, 47
Conn. 221, 36 Am. Rep. 67; Dodson
T. Swan, 2 W. Va. 511, 98 Am. Dec.
787; Way v. Greer, 196 Mass. 237.
In Arlington Hotel Co. v. Ewlng,
124 Tenn. 536, 38 L. R. A. (N. S.)
842, an attorney undertook to sus-
pend the enforcement of a prohibi-
tion statute by obstructive tactics
calculated to discourage prosecution.
In a suit for compensation the court
held that such a contract was neces-
sarily void as are all contracts made
with a view to the violation of a stat-
ute.
In Small v. Lowrey, — - Mo. App.
, 148 S. W. 132, a contract for
services in endeavoring to get the
complaining witness to leave Uie
state, was held bad.
65
§§ 103, i04l
THE LAW OF AGENCY
[book I
§ 103. Encouragement of crime — Agreemenjt bv attorney to defend
future prosecutions. — It needs no citation of authorities to show that
contracts for the commission of crimes are void, and so are contracts
for participation in or aid to be rendered in furthering criminal acts
and practices.''^ And even though the contract may not take on these
grosser forms, yet if its natural and necessary tendency is to encourage
the commission of crimes it will fall within the prohibited class. Thus
a contract by an attorney to defend future prosecutions for violations
of the law, — for example, a contract by an attorney to defend all mem-
bers of a liquor dealers' association for a fixed salary for a definite
period, — is held to be opposed to public policy as directly tending to
encourage violations of the law which but for the existence of the con-
tract the parties might never have committed.**
§ 104. Services in procuring appointment to office. — Contracts to
procure the appointment of a person to public office fall within the same
principles.*^^ These offices are trusts, held solely for the public good,
and should be conferred from considerations of the ability, integrity,
fidelity and fitness for the position of the appointee. No other consid-
erations can properly be regarded by the appointing power. What-
ever introduces other elements to control this power must necessarily
lower the character of the appointments to the great detriment of the
public. While, therefore, a candidate for such an office may undoubt-
edly lawfully employ an agent to openly urge his fitness for the place,
agreements for compensation to procure these appointments by personal
persuasion or influence tend directly and necessarily to introduce such
elements. The law, therefore, from this tendency alone, adjudges
these agreements inconsistent with sound morals and public policy.*'
so See ante § 89; Cook v. Shipman,
24 in. 614.
91 Bowman v. Phillips, 41 Kan. 364,
3 L. R. A. 631, 13 Am. St. R. 292.
B< See Mechem on Public Officers,
I 350 et seg., where the subject is
more fully discussed.
••Tool Ck). V. Norrls, 2 Wall. (U.
S.) 45, 17 L. Bd. 868; Gray v. Hook,
4 N. Y. 449; Gaston v. Drake, 14 Nev.
175, 33 Am. Rep. 548; Filson v.
Himes, 5 Penn. St. 452, 47 Am. Dec.
422; Paurie v. Morin, 4 Martin (La.),
39, 6 Am. Dec. 701; Outon v. Rodes,
3 A. K. Marsh. (Ky.) 432, 13 Am. Dec.
193; Basket v. Moss, 115 N. C. 448,
44 Am. St. R. 463, 48 L. R. A. 842;
Hager v. Catlin. 18 Hun (N. Y.), 448;
Haas y. Fenlon, 8 Kans. 601; Liness
Y. Hesing, 44 111. n3, 92 Am. Dec.
153 ; Edwards v. Randle, 63 Ark. 818,
58 Am. St. Rep. 108, 36 L. R. A. 174;
Harris v. Chamberlain, 126 Mich.
280; McCall v. Whaley, 52 Tex. Civ.
App. 64. See also Caton v. Stewart,
76 N. C. 357, in which a contract by
which a government employee hired
the plaintiff to continue a business,
that the need for the employee's place
should not cease, was held void as
against public policy.
Employment to get the present of-
ficer to resign and to get the plaintiff
appointed in his place, is opposed to
66
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ I05
§ 105. Same rule applies to private offices and einployments.--*The
same principles apply to contracts to procure private offices and em-
ployments, as well as those which are public or political in their nature.
Open and fair presentation of an applicant's qualifications for the posi-
tion is legitimate, and such presentation may lawfully be undertaken
for a compensation, where the agent's relations to the subject matter
and the appointing power will permit, and the fact that he comes as a
hired advocate is disclosed.
But where it is contemplated that the agent is to conceal his agency
and assume the position of a disinterested friend or adviser ; '* or where
the appointment is to be sought by bringing to bear personal influence
or persuasion ; ^' or where the undertaking of the commission at all is
inconsistent with duties already assumed or imposed by law, tlie con-
tract is repugnant to the public policy."*
Thus where A, an attorney, employed B, the agent of C, to endeavor
to persuade C to discharge a certain other attorney he was then em-
ploying, and to employ A instead, and promised B, by way of corapen-
public policy. Eversole v. Holllday,
131 Ky. 202. See also Hunter v.
Nolf, 71 Pa. 282.
In Law y. Law, 3 P. Wms. S91, 24
Eng. Reprints, 1114, equitable relief
including a surrender of the bond and
injunction against suit upon it, was
granted against a bond for the pay-
ment of an annual aum actually in
consideration of personal influence
need to secure appointment to office.
The court acted upon the doctrine of
public poHcy.
s« See Bollman v. Loomis, 41 Conn.
581, where A. for a fee from C. un-
dertook to pose as the confidential
friend and adviser of B. and thus in-
duce him to purchase property of C.
Followed in Simon v. Oarllta, —
Tex. Civ. App. — -, 133 S. W. 461. See
also Twentieth Century Co. y. Quill-
ing, 130 Wis. 318.
'This," says Chief Justice Shaw, in
Fuller v. Dame, 18 Pick. (Mass.) 472,
in speaking of this rule, "is founded
upon the general consideration of fit-
ness and expediency. Such advice
and solicitation, in whatever form the
agency may be exerted, are under-
stood to be disinterested and to flow
from a single regard to the interests
of the parties. They are lawful only
so far as they are free and disinter-
ested. If such advice and solicita-
tion, thus understood to be pure and
disinterested, may be Justly offered
from mercenary motives, they would
produce all the consequences of abso-
lute misrepresentation and falsehood.
It is understood to be the offer of
disinterested good offices, and the
measure proposed, to be recom-
mended by the unbiased judgment of
the person offering it; whereas, it is
in fact an offer flowing from una-
vowed motives of pecuniary interest,
and the recommendation is the result
of a judgment biased by a hope of a
large reward. If rewards might be
taken in consideration of the exertion
of direct or indirect influence, either
by the person acting under it, or by
others who should be influenced and
moved by him, it would destroy all
confidence, it would lead to false and
unfair representations and dealings,
and be productive of infinite mis-
chief."
Be See note 57, post
6« See note 57, 58 and 59, post.
67
§ io6]
THE LAW OF AGENCY
[book r
sation, to divide with him such fees as A might receive, it was held that
the agreement was void."'^ So a contract that in consideration of B's
purchasing of A certain stock in a corporation, A would procure B's
appointment as treasurer *• or manager *' or cashier ^* thereof, is void.
Such appointments should be made because of the personal fitness of
the applicant, and not because the appointing power is open to personal
influence or can be bought for a price. So A, who has been requested
to recommend to C, a suitable person for employment whom he could
endorse as in every way responsible and reliable, cannot lawfully un-
dertake to secure the position for B in consideration of B's paying him
a fee.**
§ 106. Services in improperly influencing elections. — ^Purity of
elections, and the free, fair and intelligent exercise of the ballot, un-
influenced by other considerations than the candidate's fitness and the
general good of the community, are of paramount public importance,
and any agreement for the rendition of services which have for their
object, or which immediately tend to, the introduction of other ele-
ments, as the bribery of voters or the bringing to bear upon them of
personal influence, solicitation or persuasion, is, in accordance with the
principles already referred to, clearly opposed to public policy and void.
Thus where one who was a candidate for the office of district attor-
ney, employed another to "use all of his influence" with the voters of
the county to secure the candidate's election, and who promised as com-
pensation therefor, that if he should be elected, he would divide the
fees of the office with the other, the court said : "Such a contract can-
BTByrd v. Hughes, 84 111. 174, 25
Am. Rep. 442; Megruire v. Corwlne,
101 U. 8. 108. 25 L. Ed. 539.
An employment to Induce prospec-
tive litigants to employ the defend-
ant as attorney, the agoit to be com-
pensated by a share of the fees .which
may be received, is opposed to public
policy. Langdon v. Conlin, 67 Neb.
243, 108 Am. St. R. 643. 60 L. R. A.
429; Alpers v. Hunt, 86 Cal. 78, 21
Am. St R. 17» 9 L. R. A. 483.
A contract with the large creditor
of a firm to secure A's appointment
as special receiver, the creditor to be
compensated by $1,000 out of receiv-
er's commissions to apply upon its
claims against the firm is Invalid.
McGraw v. Trader's National Bank,
64 W. Va. 509. See also Hirshback
V. Ketch um, 5 App. Dlv. 324 (under
a code); In re Clark, 184 N. Y. 222
(a disbarment proceeding).
»« Guernsey v. Cook, 120 Mass. 501;
Noyes v. Marsh, 123 Mass. 286: Jones
V. Scudder, 2 Cln. Sup. Ct. 178.
»» Wilbur V. Stoepel, 82 Mich. 844,
21 Am. St. R. 568. To like effect:
Dickson V. Kittson, 75 Minn. 168, 74
Am. St. Rep. 447; West v. Camden,
135 U. S. 507, 84 L. Bd. 264; Wood v.
Manchester P. Ins. Co., 30 N. Y. Misc.
330, afTd 54 App. Div. 522. Com-
pare Almy V. Orne, 165 Mass. 126.
60 As of a National Bank, Noel v.
Drake, 28 Kan. 265, 42 Am. Rep. 162;
see also Railroad Co. v. Ryan, 11 Kan.
602; Haas v. Fenlon, 8 Kan. 601; Tool
Co. V. Norris, 2 Wall. (U. S.) 45. 17
L. Ed. 868.
91 Holcomb V. VfTeaver, 136 Mass.
265.
68
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ TO/
not be upheld. Its tendency was to corrupt the people upon whose
integrity and intelligence the safety of the state and nation depends, —
to lead voters to work for individual interests rather than the public
welfare." «
So where one agreed to render services in procuring the election of
a certain candidate to the office of sheriff upon consideration that if
successful he should be appointed deputy, the court held the agreement
void.*^* And where one for money or other personal profit, agrees to
use his influence in an election against what he believes to be for the
public good, the contract is void, though as a matter of fact he uses no
unlawful means.**
§ 107. What services legitimate.— But it is not unlawful
for a candidate for a public office, particularly where his candidacy ex-
tends over a considerable territory, to employ another to make public
speeches in his behalf, or to prepare, print or distribute arguments upbn
the questions at issue, or to use other open and honorable rtieans to
promote the success of his candidacy, where the object is to convince
the understandings of the voters by public means and not to bring per-
sonal or other improper influences to bear upon their weaknesses or
prejudices.**
•« Gaston v. Drake, 14 Nev. 176, S8
Am. Rep. 548; Martin v. Wade, 37
Cal. 168; see also Swayze v. Hull, 3
Halstead (N. J.), 54, 14 Am. Dec. 399.
An agreement to pay another to
"work and canvass" voters for the
purpose of securing the promisor's
nomination for an office is void.
Keating v. Hyde, 23 Mo. App. 555. A
contract to use the influence of plain-
tiff's newspaper to secure defendant's
nomination to puhlic office, is opposed
to public policy. Livingston v. Page,
74 Vt. 356, 93 Am. St. R. 901, 59 L.
R. A. 336; King v. Raleigh, etc.. Rail-
road Co., 147 N. C. 263, 125 Am. St.
R. 546.
•s Stout V. Ennis, 28 Kan. 706. And
a like ruling was made In Robertson
y. Robinson, 65 Ala. 610, 39 Am. Rep.
17. See also Sailing v. McKinney, 1
Leigh (Va.). 42, 19 Am. Dec. 722;
Groton v. Waldoborough, 11 Me. 306,
26 Am. Dec. 630.
M Nichols y. Mudgett, 82 Vt. 546.
« "There is a clear distinction,"
says Lewis, P. J., in Keating v. Hyde,
23 Mo. App, 555, "between the pur-
chase of services to be devoted only
to an advertising of the fact that one
is or desires to be a candidate, and
the purchase of services to be em-
ployed in advocating his peculiar
merit and eligibility so aa to Influence
the choice of the voter. No public
policy forbids the making of compen-
sation, under agreement or otherwise,
for printing or distributing announce-
ments, or for the employment of any
proper agency which may bring the
fact of a person's candidacy more
prominently before the public eye.
* The information thus diaseminated is
essential to the intelligent determina-
tion of the voter's choice. But it be-
comes a very different thing when
money is paid or promised for efforts
to control the voter's free agency in
selecting the object of his suffrage."
See also Murphy v. English, 64 How.
Pr. (N. Y.) 362.
69
§§ I08-II0] THE I-AW OF AGENCY [bOOK 1
§ io8. Services in procuring pardons. — ^The same general princi-
ples which underlie the questions just discussed, govern here. An
agent or attorney may lawfully be employed to attend an open or public
hearing of the executive or board of pardons, and make such legitimate
arguments and present such petitions, memorials, statements of fact
and evidence as are appropriate to bring before the pardoning power
all the considerations whicli may be properly taken into account in be-
half of the convicted person ; •** but all employments having for their
object or natural tendency the using of any improper or sinister means,
or which contemplate the exercise of personal influence or solicitation,
especially if for a contingent fee, are looked upon by the law as de-
moralizing in their tendency, opposed to public policy and void, even
though in the particular case no improper means were used or con-
templated."^
§ 109. — — How when conviction illegal. — But where the con-
viction was unwarranted, as because the court had no jurisdiction, or
where there was a grave doubt as to the constitutionality of the statute
under which the conviction was had, it is held that no rule of public
policy would be violated by legitimate endeavor to secure the pardon
or release of the accused."'
§ no. Services in procuring or suppressing evidence. — Like con-
siderations apply to undertakings to procure evidence for use before
legal tribunals. It is entirely lawful and proper for a party to an ac-
tion or controversy to employ another to ascertain what documentary
and other evidence, and what witnesses are available; to obtain the
names of the witnesses and a memorandum of their testimony; to
cause them to be duly supoenaed for attendance upon trial, and to
take such other steps as may be necessary and proper to enable the
part\' to present all the existing and lawful evidence that is pertinent
to his case. This service is legitimate, and tends to promote and secure
the due administration of justice."®
«« Moyer T. Cant leny, 41 Minn. 242; Bush (Ky.), 563, 3 Am. Rep. 806;
Chadwick v. Knox, 31 N. H. 226, 64 Haines v. Lewis, 54 Iowa, 801, 87 Am.
Am. Dec. 829; Bremsen v. Bngler, 49 , Rep. 202; Kribben v. Haycraft, 26
N. Y. Super. Ct. 172; Fonnby v. Pryor, ' Mo. 396; McOili's Admr. t. Burnett,
15 Ga. 258; Bird v. Breedlove, 24 Oa. 7 J. J. Marsh. (Ky.) 640.
623. •« Thompson ▼. Wharton, supra;
But contra, see Norman v. Cole, 3 Timothy v. Wright, 8 Gray (Mass.),
Esp. 253. 522.
«7 Deerlng V. Cunningham, 63 Kan. ••Chandler y. Mason, 2 Vt 193;
174. 54 L. R. A. 410; Hatzfleld v. Gul- Lucas v. Pico, 55 Gal. 126; Wilkinson
den, 7 Watts (Penn.). 152. 82 Am. v. Olivelra, 1 Scott (Bng. 0. P.) 461,1
Dec. 750; Thompson ▼. Wharton, 7 Blng. N. C. 490; Cobb v. Cowdery, 40
70
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ HO
But contracts by which the agent undertakes, or which have for their
object, the procuring or furnishing, not simply of such evidence as act-
ually exists and may lawfully be produced, but of evidence sufficient to
win the case or to establish a certain fact or to convict a certain person,
or the procuring of witnesses to testify in a certain manner, or to pro-
cure the production of testimony which could be produced only by a
violation of a legal duty, stand upon, a different basis. The intention
and methods of the parties in a given case may be honorable and proper,
but the natural and probable result of such an undertaking is to defeat
the administration of justice and corrupt the morals of the people by
putting a premium upon> perjury and by holding out a direct incentive
to the subornation of witnesses. It requires no extended argument to
establish that such undertakings are contrary to sound public policy
and void.^®
Vt. 25, 94 Am. Dec. 870; Johnson ▼.
Pletsch, 94 ni. App. 459.
It is not unlawful to employ per^
sons to ascertain whether ofTences are
being committed, it not being contem-
plated that they shall encourage or
bring about riolationa of the law.
People V. Whitney. 105 Mich. 622.
Neither is it oblectionable to agree
to pfly another for producing or dis-
olosln*? existing and lawful evidence
within his knowledge or control and
which he can produce or disclose
without violating any leeal dutv.
Casserleigh v. Wood, 14 Colo. App.
265, aff*d as Wood v. Casserleigh, 80
Colo 287, 97 Am. St. R. 18S: Lucas
V. Pico, supra; Cobb v. Cowdery, su-
pi^: Smith V. Hartsell, 150 N. Car.
71, 22 L. R. A. (N. S.) 203. But com-
pare Casserleigh v. Wood, with Yoiipg
V. Thompson, reported in the same
volume, and referred to in the follow-
ing notes, where a contract not only
to supply certain evUence but also to
suppress certain testimony was held
invalid. (Wood v. Casserleigh In the
state court is also denied in Casser-
leigh V. Wood, 119 Fed. 308.) But
where a person had conspired with
another to defraud the government
and then agreed to furnish evidence
of his conspiracy, for a con<=iideratlon,
to a person interested in showing it
in order to establish his own right.
it WB8 held that the agreement to
pay the consideration would not be
enforced. Hagan v. Wellington, 7
Kan. App. 74.
A contract by which plaintiff
agreed to pay $1,000 for evidence that
R. Co. was selling machines at leei
than a certain price, the evidence to
be obtained by entering into a con-
tract with t^e R. Co. was not invalid.
Case Threshing Mch. Co. v. Fisher,
144 Iowa, 45.
ToOlllette V. Logan County, 67 111.
256; Goo^ri<»h v. Tenney, 144 Til. 422.
36 Am. St. R. 459, 19 L. R. A. 871;
Hoyt V. Macon, 2 Col. 502; Lucas v.
Allen, 80 Ky. 681; Patterson v. Don-
ner, 48 Cal. 869; Hughes v. Mullins,
36 Mont. 267. 13 A. A E. Ann. Cas.
209; Harris v. More, 70 Cal. 502;
Sherman v. Burton, 165 Mich. 293, 33
L. R. A. (N. S.) 87; Quirk v. Muller,
14 Mont. 467, 43 Am, St. R. 647, 26 L.
R. A. 87; Lyon v. ilussey, 82 Hun (N.
Y.), 15, 63 N. Y. St. Rep. 531; Ken-
nedy V. Hodges. 97 Ga. 758; Gotchell
v. Welday, 2 Ohio N. P. 390, 4 Ohio
S. ft C. P. Dec. 65; Bowling v. Blum
(Tex. Civ. App.), 52 S. W. 97; Neece
v. Joseph, 95 Ark. 552, 80 L. R. A.
(N. S.) 278; Barngroverv. Pettlgrew,
128 Iowa, 533, 111 Am. St. R. 206, 2 L.
R. A. (N. S.) 260. See also Delbridge
v. Beach, 66 Wash. 416.
71
§ III]
THE LAW OF AGENCY
[book I
Equally pernicious, and for similar reasons, are undertakings to sup-
press or destroy evidence by concealing, removing or tampering with
witnesses, or by compassing the destruction of the means of proof. "^^
§ III. Unlawful dealings in stocks and merchandise — Gambling
in "futures," etc. — So a contract for services to be rendered in un-
lawful dealings in stocks or merchandise is void. These contracts as-
"We fully agree," said the court In
Patterson v. Donner, "that a stlpttla-
tlon that one shall, in conaideratlon
of. a large sum. of money, not only
procure witnesses, but procure them
to swear to a particular fact. Is un-
lawful."
In Glllett V. LiOgan County, supra,
the board of supervisors of the county
desiring to prove a certain election
to have been carried by illegal means
employed an agent to procure testi*
mony for that purpose, agreeing to
pay him $100 for the first ten votes
which the testimony procured hy him
proved to be illegal, |200 for the next
ten votes, and so on, and an addi-
tional sum of $1,200, to be paid when
the case was decided in the county's
favor. These agreements were held
to be void.
In Perry v. Dicken, 105 Pa. 83, 51
Am. Rep. 181, an agreement with an
attorney to take a case upon a con-
tingent fee was upheld, even though
it waa known that the attorney was
an indispensable witness.
So public policy requires that wit-
nesses shall testify as to facts within
their knowledge without any extra
fee beyond the legal fee whether fixed
or contingent. See Clifford v.
Hughes, 139 App. Div. 730; Burnett
V. Freeman, 125 Mo. App. 683; a. o.
134 Uo. App. 709; and the following
cases in which a physician's contract
for fees for expert testimony in
amount contingent upon the amount
recovered was held bad. Lafflin v.
BiUington, 8€ N. Y. Supp. 267, 14 N.
Y. Ann. Cas. 360; Sherman v. Burton,
165 Mich. 293, 83 L. R. A. (N. S.) 87.
In Peltner v. Feltner, 182 Ky. 705,
a witness in a pending suit who had
been employed for 1 1,000 to remain
out of the state over the time of the
trial sued a third person to whom the
money had been given to hold until
the trial was over and the witneEs
had performed. On the ground of
the Illegality of the whole contract,
as one against puMic policy* recov-
ery was denied.
In Hough V. State, 145 App. Div.
718, a contract to pay an expert wit-
ness for his services, provided his es-
timate should be substantially less
than that of the expert on the other
side, was held to be opposed to public
policy,
71 Cobb V. Cowdery, 40 Vt 25, 94
Am. Dec. 370; Bostick v. McLaren, 2
Brev. (S. Car.) 275; Badger v. Will-
iams, 1 D. Chip. (Vt.) 137; Hoyt v.
Macon. 2 Col. 502; Valentine v. Stew-
art, 15 Cal. 387.
An agreement to pay an employee
his salary and expenses to keep out
of the reach of process issued to com-
pel him to be a witness against his
employer is void. Bierbauer v.
Wirth, 6 Fed. Rep. 336, 10 Biss. 60.
So an agreement to keep off the
stand is likewise void. Young v.
Thompson* 14 Colo. App. 294.
So of an agreement to get a cer-
tain witness out of Jail and "get him
away/' Crisup v. Grosslight, 79
Mich. 380.
In Lazenby v. Lazenby, 132 Ga. 836»
an agreement "to remain non-com-
mittal" as to a pending suit "and not
to volunteer any information or aa-
sistance to the other side" was held
Invalid. The court said "If it is not
a contract in terms to suppress testi-
mony, it * * ♦ is so closely akin
that it falls falls under the condem-
nation which the law pronounces
against contracts entered into for
the purposes of suppressing testi-
mony."
72
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ III
sume a great variety of forms but one of the most common is the agree-
ment by a broker to buy or sell goods for future delivery upon
''margins." As has been shown in another place/* there is no legal
objection to a sale of goods to be delivered in the future, even though
the seller is not now possessed of the goods and has no other means of
acquiring them than to go into the market and buy them. If the par-
ties actually intend a sale and delivery of the goods, the contract is
entirely valid ; ^* but if, under the guise of such a contract, valid on its
face, the real intention of the parties is not to deliver the goods, but
merely to speculate in the rise or fall of prices and to pay the difference
between the contract price and the market price at the time agreed
upon, then the transaction becomes a mere wagering one and is unlaw-
ful.^* In some of the states, this rule is confirmed or extended by
statute.''*
T2 See Mecbem on Sales, § 1030 et
seq., where this subject Is more fully
discussed.
78 If the parties intend actual pur-
chase or sale and delivery of the
goods on the part of the broker the
contract is valid, even although it is
the contemplation of the parties that
there shall be no delivery into the
principal's personal possession, but
that the broker shall again turn the
transaction for him. Thompson v.
WlUiamson, 67 N. J. Eq. 212. See
Wagner v. Engel-Millar Co., 144 Wis.
486.
74 Irwin V. Winiar, 110 U. S. 499,
28 L. Ed. 225; Embrey v. Jemison,
131 U. S. 336, 33 L. Ed. 172; Bibb v.
Allen, 149 U. S. 481, 37 L. Ed. 819;
Clews v. Jamieson, 182 U. S. 461, 45
L. Ed. 1183; Cobb v. Prell, 15 Fed.
774; Union Nat'l Bank v. Carr, 16
Fe4. 438; Lehman v. Feld, 37 Fed.
852; Marengo Abstract Co. v. Hooper,
Ala. , 56 So. 580; Raymond v.
Parker, 84 Conn. 694; Cunningham v.
Nafl Bank, 71 Ga. 400, 51 Am. Rep.
266; Hentz v. Booz, 8 Oa. App. 577;
Lyon V. Culbertson, .83 111. 33, 25 Am.
Rep. 349; Pearce v. Foote, 118 111.
228. 55 Am. Rep. 414; Samuelfl v.
Oliver, 130 111. 73 ; Pope v. Hanke, 155
111. 617, 28 L. R. A. 568; Whitesides
V. Hunt, 97 Ind. 191, 49 Am. Rep. 441;
Wilson V. Nat'l Fowler Bank, 47 In(^.
App. 689; Murry v. Ocheltree, 69
Iowa, 435; Timmons v. Timmons, 145
Ky. 259; (VBrien ▼. Luques. 81 Me.
46; Morris ▼. Western U. Tel. Co., 94
Me. 423: Stewart v. Schall, 65 Md.
289, 57 Am. Rep. 327; Burt v. Myer, 71
Md. 467; BHlingBlea v. Smith, 77 Md.
504; Gregory v. Wendell, 89 Mich. 837,
33 Am. Rep. 890; Mohr v. Miesen, 47
Minn. 228; Crawford v. Spencer, 92
Mo. 498, 1 Am. St. R. 745; Connor v.
Black, 119 Mo. 126; Spragne v. War-
ren, 26 Neb. 326, 3 L. R. A. 679;
Flagg V. Baldwin, 38 N. J. Eq. 219,
48 Am. Rep. 306; Cameron v. Durk-
heim, 55 N. Y. 426; Bigelow v. Bene-
dict, 70 N. Y. 202, 26 Am. Rep. 673;
Dows V. Glaspel, 4 N. Dak. 251; Kahn
V. Walton, 46 Ohio St. 195; Peters v.
Grim, 149 Pa. 163, 84 Am. St. R. 599;
Wagner v. Hildebrand, 187 Pa. 136;
Riordan v. Doty, 60 S. Car. 537;
Walte V. Prank, 14 S. Dak. 626; Bar-
nard V. Backhaus, 62 Wis. 698; Ever-
ingham v. Meighan, 65 Wis. 364; Wall
V. Schneider, 69 Wis. 352, 48 Am. Rep.
520; Bartlett v. Collins, 109 Wis. 477,
83 Am. St. R. 928; Wagner v. Bngel-
MiUar Co.. 144 Wis. 486; and many
other cases cited in Mechem on Sales,
§ 1031.
f^See for example: Arkansiu, Dig.
Stats. 1894, 8S 1684, 1635; Georgia,
Code 1895, § 3537; WinoU, Kurd's
Stats. 1901, ch. 38, §§ 130, 131; Jou>a,
73
§ 112]
THE LAW OF AGENCY
[book I
§ 112.
Unless otherwise declared by statute it is not
enough to make the contract invalid that one party only intended merely
to speculate ; it must appear that such was the intention of both par-
ties ^* and that this was their intention when they made the contract"
By the weight of authority, a party who alleges that a contract, fair
Code 1897, § 4967; Michipan, C. L.
1897, Ǥ 11, 373; Mississippi, Ann.
Ck)de. §1 2117, 1120, 1121; Missouri,
Rev. Stats. 1899, §S 2337, 2338; Ohio,
Bates' Ann. Stats. § 6934a, et seq,;
South Carolina, Code 1902, S 2310 et
seq.; Wisconsin, Stats. 1898, Ji 2319a.
In California, see Constitution, art.
IV, sec. 26; Montana, Rev. Codes
§ 8416.
If contract void when made, it is
not validated by subsequent change
in statute. WiUcox v. Edwards, 162
Cal. 455.
70 See Mechem on Sales, § 1032;
Crawford v. Spencer, 92 Mo. 498, 1
Am. St. Rep. 745; Wall v. Schneider,
59 Wis. 352, 48 Am. Rep. 520; Murry
v. Ocheltree, 59 Iowa, 435; Scanlon v.
Warren, 169 111. 142; Nash- Wright
Co. V. Wright, 156 111. App. 243; Pix-
ley V. Boynton, 79 111. 351; Bnnis v.
Edgar, 154 111. App. 543; Conner v.
Robertson, 37 La. Ann. 814, 55 Am.
Rep. 521; Ponder v. Cotton Co., 100
Fed. Rep. 373; Donovan v. Daiber,
124 Mich. 49; Gregory v. Wendell, 40
Mich. 432; Mohr v. Miesen, 47 Minn.
228; Barnes v. Smith, 159 Mass. 344;
Hocomb V. Kempner, 214 III. 458;
Thompson v. Williamson, 67 N. J. Kq.
212. But see McGrew v. Produce Ex-
change, 85 Tenn. 572, 4 Am. St. Rep.
771, and Connor v. Black, 119 Mo. 126.
The question of the intention of the
parties is not to be determined simply
by wixat the parties call their con-
tract or by their professed declara-
tions therein or by the form they
have given it. It Is a question of fact
and in deciding it the circumstances
of the parties, their position, their
facilities to actually deliver or receive
the goods, their ability to pay for
them, and the like, may all be taken
into account. Mechem on Sales,
i 1036; Gaw v. Bennett, 153 Pa. 247,
34 Am. St. Rep. 699; Rogers v. Mar-
riott, 59 Neb. 759; Sprague v. War-
ren, 26 Neb. 326, 3 L. R. A. 679; Press
V. Duncan, 100 Iowa, 355; Whitesides
V. Hunt, 97 Ind. 191, 49 Am. Rep. 441;
Nave V. Wilson, 12 Ind. App. 38; Knll-
man v. Simmems, 104 Cal. 595; Jamie-
son V. Wallace, 167 111. 388, 59 Am.
St. Rep. 302; Dows v. Glaspel, 4 N.
Dak. 251; Waite v. Prank, 14 S. Dak.
626; Burt v. Myer, 71 Md. 467; Bm-
brey v. Jemison, 131 U. S. 336, 33 L.
Ed. 172.
77 If the parties really intended an
actual sale and delivery at the time
they made the contract, the mere fact
that they afterwards settle upon the
basis of differences does not destroy
the validity. Wall v. Schneider, 59
Wis. 352, 48 Am. Rep. 520; Conner v.
Robertson, 37 La. Ann. 814, 55 Am.
Rep. 521. Or that one of them
thought the other would be willing
to settle upon that basis, if there was
no agreement to that effect. Barnes
V. Smith, 159 Mass. 344; MacDonald
V. Gessler, 208 Pa. 177.
But though they may not originally
have intended an actual delivery^ if
the buyer afterwards elects to treat
it as an actual purchase this is held
to validate the contract. Estate of
Taylor, Appeal of Lex, 192 Pa. 313;
Young V. GlendinnJng, 194 Pa. 550.
In an action against a broker under
Massachusetts Statutes 1890 c. 437,
§ 2, for money paid on margins, the
fact that the defendant actually pur-
chase'd the stock at the request of the
plaintiff and held It subject to his
own control until his lien was paid
properly may be considered by the
jury upon the question whether the
defendant had reasonable cause to be-
lieve that the plaintiff was carrying
on a wagering cpntract. Post v. Le-
land, 184 Mass. 601.
74
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 112
Upon its face, was really intended as a cover for an illegal transaction,
has the burden of proving it.'* Parol evidence may be used to show
the intention though the contract was in writing.'^'
Where the contract is really of the forbidden sort, the courts will not
lend their aid to either party in enforcing it, but will usually leave the
parties where they have put themselves. The agent, therefore, where
he must be deemed a guilty participant, cannot recover his commis-
sions, nor can he have indemnity for liability incurred or reimburse-
ment for advances made, moneys paid or losses sustained.*®
Moreover, even though the contract be not invalid because both
parties did not have an intention to gamble, it is held that, on general
grounds of public policy, the one who did intend to gamble can not re-
cover. The other party's innocence while it may enable him to re-
cover on the contract, is held not to enure to the benefit of the guilty
party.*^
78 ClewB y. Jamieaon, 182 U. 3. 461,
45 L. Ed. 1183; Irwin v. Willlar, 110
U. S. 499, 28 U Bd. 226; Roundtree
T. Smith, 108 U. 8. 269, 27 L. Ed. 722;
Crawford v. Spencer. 92 Mo. 498, 1
Am. St. Rep. 745; Ck)ckrell y. Thomp-
son, 85 Mo. 610; Pratt y, Boody, 55
N. J. Eq. 176; First Nat Bank v.
Oskaloosa Packing Ck>., 66 Iowa, 41;
Conner y. Robertson, 37 La. Ann. 814,
55 Am. Rep. 521; Bigelow y. Bene-
dict, 70 N. Y. 202, 26 Am. Rep. 678;
Story y. Salomon, 71 N. Y. 420; Rum-
sey V. Berry, 65 Me. 570; Williams
V. Carr, 80 N. Car. 294; Whitesides y.
Hunt, 97 Ind. 191, 49 Am. Rep. 441;
Clay y. Allen, 63 Miss. 426; Perry-
man y. Wolffe, 93 Ala. 290; Marengo
Abstract Co. y. Hooper, — Ala. — ,
56 So. 580; Beadles y. McElrath, 85
Ky. 230, 8 K. L. R. 848; Mohr y. Mle-
sen, 47 Minn. 228; Pixley y. Boynton,
79 111. 851.
The rule in Wisconsin seems to be
the other Way. Barnard y. Backhaus,
62 Wis. 593; Bartlett y. Collins, 109
Wis. 477, 83 Am. St. R. 928; Casso-
day, C. J., dissenting in a strong
opinion.
In Nebraska it is held that when
doubt Is thrown by the testimony
upon the yalidity of the transaction,
it then deyolyes upon the defendant
to show that the purchase was bona
fide and for actual delivery. Sprague
y. Warren, 26 Neb. 326, 3 L. R. A.
679; Cobb y. Prell, 15 Fed. 774, 5 Mc-
Crary, 80, at circuit, is to the same
effect
7» Wheeler y. Metropolitan Stock
Exchange, 72 N. H. 815; Hentz ft Co.
y. Boos, 8 Ga. App. 577; Wright y.
Vaughan,. 137 Oa. 52. See Collins v.
Blantern, 2 Wilson. 347; In re Can-
field, 190 Fed. 266.
80 This question is more fully dis-
cussed, post. Book IV, Chap. IV, on
the Liability of the Principal to the
Agent.
81 Most of these cases cited aboye
are ones in which the claim of an In-
nocent broker was not allowed to be
defeated by the princlpars proof that
the principal intended an Illegal
transaction. But in Barnes y. Smith,
supra^ the broker who expected that
the contract which he secured for his
principal would be used as a wager-
ing contract was neyertheless al-
lowed his commission, because the
contract was good in form and the
other party to It did not appear to
haye Intended or treated it as a wag-
ering contract. On the other hand In
Kurd y. Taylor, 181 N. Y. 231, a
broker was denied recoyery of his
75
§ 113]
THE L-\W OF AGENCY
[book 1
§ 113. Employments creating monopolies or in restraint of trade. —
Again, contracts whose purpose is to create an unlawful combination,
to bring about a monopoly in articles of common need, to unreasonably
restrain trade, to create "corners" in wheat, stock, and other commodi-
ties, to control the price of staple articles of commerce, and the like,
are opposed to public policy and unenforceable by the rules of the
common law, and these rules have frequently been confirmed or ex-
tended by express statutes. No contract of agency can lawfully be
made for such a purpose."
But a contract to make one the exclusive agent of a certain person
or for a certain commodity or in a certain place is not opposed to pub-
lic policy ; "^ nor is a contract to act only as agent for a certain person
commissions in a case when he failed
to show any actual purchase or sale
of stock and admitted that he re-
garded the transaction as a wagering
arrangement. The court did not dis-
close certainly what was thought to
be the intention of the defendant, and
so far as appears he may have been
Innocent.
In Nash-Wright Co. v. Wright, 156
111. App. 243, there was evidence that
Wright, the broker's principal, in-
tended to gamble and did not con-
template an actual delivery of the
grain; there was no evidence, how-
ever, from which such an intention
could be imputed to the third persons
with whom the contracts were made.
In speaking of the contracts. Mack,
J., said: "It does not, however, fol-
low that Wright could have enforced
them; in fact the law is clearly set-
tled that the gambling intent on his
part, even though not participated in
by the other side, would prevent him
from suing on the contract. This is
not because the contract is in itself
illegal; mutual illegal intent is nec-
essary for this; but because it is
against a sound public policy to per-
mit one who has entered into transac-
tions with an illegal intent, to recover
thereon." In Higgins v. McCrea, 116
U. S. 671, 29 L. Ed. 764, which was
relied on In the above case, the ques-
tion was as to whether the defend-
ant could recover under a counter-
claim certain sums which he had ad-
vanced to the plaintiffs, who were
brokers, for the purpose of negotiat-
ing gambling contracts. The plain-
tiffs who were innocent of any inten-
tion to participate in gambling had
improperly cancelled certain con-
tracts which had been entered into on
behalf of the defendant The court
held that the defendant was not en-
titled to recover, and that the fact
that the plalntilTs were innocent of
any unlawful purpose, and might
themselves have sued on the contract,
did not enure to the benefit of the de-
fendant, who confessed that he was
attempting to promote an illegal and
criminal venture.
82 Samuels v. Oliver, 130 111. 73;
Leonard v. Poole, 114 N. Y. 371, 11
Am. St. Rep. 667, 4 L. R. A. 728; Ray-
mond V. Leavitt, 46 Mich. 447, 9 N. W.
525, 41 Am. Rep. 170; Sampson v.
Shaw, 101 Mass. 145, 3 Am. Rep. 327;
Wright V. Crabbs, 78 Ind. 487; Craft
v. McConoughy, 79 111. 346; Morris
Run Coal Co. v. Barclay Coal Co., 68
Penn. St. 173; Arnot v. Coal Co., es
N. Y. 558; Street v. Houston Ice Co.
(Tex. Civ. App.), 55 S. W. 516. Serv-
ices in bringing about the consolida-
tion of competing corporations stand
upon the same footing. Gibbs v» Con-
solidated Gas Co., 130 U. S. 396, 32 L.
Ed. 979.
8» Woods V. Hart, 50 Neb. 497; New
York Trap Rock Co. v. Brown, 61 N,
J. L. 536*
76
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§§ II4, II5
or for the sale of a certain commodity ®* although a contract to sell
only goods of a certain sort might be deemed in violation of some of
the statutes ; " nor is a contract that, for a given time after the termi-
nation of such an agency, the former agent will not engage with a •
rival firm or carry on the same business or solicit the former cus-
tomers."
§ 114. Employment to induce violation of contracts. — Where the
act of inducing the violation of a contract would be a legal wrong, —
as it often is, — an employment to accomplish that result would also be
legally wrong and unenforceable.
§ 115. Deception or defrauding of third persons or the public. —
Contracts which have for their purpose, or whose natural and neces-
sary tendency is, to deceive and defraud third persons or the public
are clearly opposed to public policy although they may not be forbidden
by enactment, and any undertaking to act as agent in promoting or
executing such contracts is therefore unenforceable.*^ A typical illus-
tration is found in the familiar "Bohemian Oats" swindle in which a
person, who was usually being himself deluded and defrauded, under-
took to sell oats or other grain to others upon terms and conditions
which could only be carried into effect by deceiving and defrauding
those who might be induced to buy.®*
MWeiboldt v. Standard Fashion
Co., 80 111. App. 67.
sASee White Dental Mfg. Go. t.
Hertzberg (Tex. Civ. App.), 51 S. W.
355.
^« Eureka I^aundry Co. v. Long, 146
Wis. 205, 35 L. R. A. (N. S.) 119;
Carter v. AUlng, 43 Fed. Rep. 208;
Mills V. Dunham. [1891] 1 Ch. 576;
Rosenbaum v. U. S. Credit Sysrem
Co., 65 N. J. L. 255, 53 L. R. A. 449;
Rogers v. Maddocks, [1892] 3 Ch. 346;
Dubowski T. Goldstein, [1896] 1 Q. B.
478, but compare Perls v. Saalfeld,
[1892] 2 Ch. 149. [Contra, where the
restraint is without territorial limita-
tion. Kinney v. Scarborough Co., 138
Ga. 77, 40 L. R. A. (N. S.) 473.]
So, of a contract that an agent
would not, after the termination of
the relation, "interfere directly or in-
directly with the business" of his
former employer, it being limited to a
certain district. Barr v. Craven, 89
L. T. Rep. 574.
8T See Scott v. Brown, [1892] 2 Q. B.
724.
«8 Davis V. Seeley, 71 Mich. 209;
McNamara ▼. Gargett, 68 Mich. 454,
13 Am. St. R. 355; Sutton v. Beck-
wlth, 68 Mich. 303, 13 Am. St. R. 344;
Merrill v. Packer, 80 Iowa, 542; Ship-
ley V. Reasoner, 80 Iowa, 548. Com-
pare Rush V. Broussard (Miss.), 30
80. Rep. 635.
The same principle is applied in
the following cases, in which the
courts thought that, on the face, con-
tracts allowing an agent to sell an
agency contract to a subagent who
should have similar power to appoint
another subagent, so as to provide for
an endless chain, were not plans for
agencies to sell the goods, but
schemes for getting people to buy
worthless rights and for taking each
purchaser Into the scheme that he
might try it on others. Twentieth
Century Co. v. Quilling, 130 Wis. 318;
Bank t. Hanks, 142 Mo. App. 110.
77
§ "6]
THE LAW OF AGENCY
[bCX)K I
§ ii6. "Voting trusts." — ^The constating instruments of private
corporations ordinarily permit shareholders to vote at corporate meet-
ings by agent or "proxy." Powers of attorney for that purpose are,
therefore, ordinarily entirely valid. In some states, by statute, the
period during which any such power may endure is limited, — for ex-
ample, to one year.'* Even though there be no such limitation upon
its duration, a power of this sort, like any other, is ordinarily revocable
at the pleasure of the giver.*® The fact that a longer period is named
does not alter this restdt, nor the fact that the authority is called "ir-
revocable." •*
Powers of attorney to vote, like others, may be made irrevocable, in
accordance with well settled rules, by being given as a security, or by
being "coupled with an interest," within the legal definition of that
phrase.**
Beyond this, there is much apparent conflict in the cases, many hold-
ing that any attempt by the shareholder to permanently separate the
voting power from the general ownership of the stock is contrary to
99 X common sort of provision is
that "No person shall vote at any
meeting of the stockholders of any
hank or railroad company, by virtue
of any power of attorney not exe-
cuted within one year next preceding
such meeting; and no such power
shall be used at more than one an-
nual meeting of such corporation."
Connecticut General Stats. (1888)
I 1927.
MVanderbilt v. Bennett, 6 Pa. Co.
Ct Rep. 193, 19 Ab. N. C. 460.
•^ Vanderbilt v. Bennett, supra;
Blackstone v. Buttermore, 53 Pa. 266.
02 See for example. Mobile, etc., R.
Co. V. Nicholas, 98 Ala. 92; Boyer v.
Nesbltt, 227 Pa. 398, 136 Am. St. R.
890.
03 See, for example, the following:
Shepaug Voting Trust Cases, 60
Conn. 553, in which a syndicate pur-
chased a majority of the stock In a
certain railroad and placed ft in the
handa of a trustee company to vote
for five years as it should be directed
by a committee of the members of
the syndicate. At the suit of certain
members of the syndicate who had
declared a revocation as to so much
of the stock as they- owned, the con
78
tract was held invalid and said to be
against the policy of the law which
required that stockhblders exercise
their own Judgment.
Harvey v. The LinviUe Improve-
ment Co., et al., 118 N. C. 693, 54 Am.
St. R. 749, 32 L. R. A. 265, in which
a majority of stockholders in a cor-
poration transferred their stock to a
trustee to be voted in 80lido for five
years and the pooling agreement and
the trust were held Invalid at the in-
stance of a purchaser of the equitable
Interest in some of the shares. The
court argued that every owner of
stock must be free to vote for the in-
terest of the whole corporation and
not of any one clique.
Sheppard v. Power Co., 150 N. C.
776. In the case of a three year pool,
the court allowed an injunction
against the trustee restraining him
from voting the stock at the suit of a
subsequent purchaser of equitable in-
terest in some of the stock.
Bridgers v. First National Bank,
152 N. C. 293, 31 L. R. A. (N. S.) 1199.
A voting trust was created for the
purpose of keeping one particular
man from gaining control of the
bank. If any of the equitable own-
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ II7
public policy and void.®' Other. cases permit dealing with stock upon
substantially the same conditions as any other kind of property, that is,
they determine the case by reference to the nature of the acts and not
solely with reference to the kind of property.®*
As the question is primarily one of corporations rather than agency,
no extended discussion of it will be attempted here.*^
§ 117. Marriage brokerage. — A marriage brokerage contract is an
agreement for the procurement of a marriage for a commission or
other compensation. Such contracts are clearly opposed to public
policy and void, even though in the given case no fraud was practiced
on either party. Their tendency is to bring to pass mistaken and un-
happy marriages, to countervail parental influences in the training and
education of children, and to tempt the exercise of an undue and per-
nicious influence in respect to the most sacred of human relations.®*
ers wished to sell or pledge his stock
the trustee was to have first option.
At the instance of another stock*
holder, who had not Joined in the
pool an injunction was granted re-
straining the trustee from voting the
shares.
Morel V. Hoge, 130 Ga. 625, 16 L. R.
A. (N. S.) 1136, in which it had been
agreed between two factfons of stock-
holders in a corporation, at the time
of the corporate organization that one
faction should indefinitely have the
right to name the majority of the di-
rectors. This agreement was held
bad and not to bind the parties to it,
because it deprived the majority of
the stockholders from acting in what*
ever way they might deem for the
benefit of the whole corporation.
Cone V. Russell, 48 N. J. Eq. 208, in
which the plaintiffs had contracted
with the defendants that defendants
should have proxy to vote the plain-
tiffs' shares of stock for five years,
upon consideration that one of plain-
tiffs sjbould be constantly employed
as manager, and the agreement was
held contrary to public policy. White
V. Thomas Inflatable Tire Co., 52 N.
J. Eq. 178; Krelssl v. Distilling Co.,
61 N. J. Eq. 5, in both of which the
court holds the voting trust against
public policy, because matters of dis-
cretion were irrevocably given into
the hands of one who had no other or
any beneficial interest in the shares
which he voted or in the corpora*
tions. Warren v. Pim, 66 N. J. Eq.
353, in which a voting trust for five
years was held invalid and the court
said that its opinion rested both upon
statutory and upon common law
grounds. Moses v. Scott, 84 Ala. 608»
where a court of equity refused spe-
cifically to enforce a voting "trust"
agreement and placed Its determina-
tion largely upon the fact that the
restriction amounted to a restraint of
trade.
»4See Brightman v. Bates, 175
Mass. 105: Carnegie Trust Co. v. Se-
curity L. Ixks. Co., Ill Va. 1, 81 L. R.
A. (N. S.) 1186; Smith v. San Fran-
cisco, etc., Co., 115 Cal. 584, 56 Am. St.
R. 119, 35 L. R. A. 309; Faulds v.
Yates, 57 111. 416, 11 Am. Rep. 24;
Kantzler v. Bensinger, 214 111. 587.
See also Winsor v. Commonwealth
Coal Co., 63 Wash. 62, 33 L. R. A.
(N. S.) 63.
95 For discussions, see 1 Yale L.
Jour. 1, 13 id. 109; 17 Harvard L.
Rev. 364; 10 Columbia L. Rev. 658;
64 Albany L. Jour. 187; 69 Central L.
Jour. 390; Note, 16 L. R. A. (N. S.)
1140; Note, 56 Am. St. Rep. 138.
00 Hermann v. Charlesworth, [1905]
2 K. B. 123, 1 A. & E. Ann. Cas. 691;
White V. Equitable Nuptial Benefit
79
§ ii8]
THE LAW OF AGENCY
[book I
Moneys paid to the broker under such a contract, can, it is held,
be recovered back although the broker has brought about introductions
and has incurred expense in so doing.*^
§ ii8. Corruption of agents, corporate officers, etc. — Contracts for
services to be rendered in attempting to corrupt, bribe or mislead the
servant or agent of another, whether he be the agent of a private in-
dividual or a corporate officer or agent, as by giving him secret gratui-
ties, fees or commissions, to induce him to disregard, slight or ignore
his principal's interests, or to be less zealous and watchful in the dis-
charge of his duty, or to assume to his principal the appearance of a
disinterestedness or candor which he does not in fact feel, or to enter
into the secret service of the other party, or in any other manner to
violate the trust and confidence reposed in him, are obviously corrupt
and void.'*
Union, 76 Ala. 251, 52 Am. Rep. 325,
20 Cent. L. Jour. 288; Johnson v.
Hunt, 81 Ky. 321; In re Orobe, 127
Iowa, 121; Hellen v. Anderson, S3
in. App. 506; Duval v. Wellman, 124
N. Y. 156; Morrison v. Rogers, 116
Cal. 252, 56 Am. St. R. 96; Place v.
Ck>nklin, 34 App. Dlv. 191; Wennin-
ger y. Mitchell, 139 Mo. App. 420;
Crawford v. Ruaaell, 62 Barb. (N.
Y.) 92.
See also James v. Jelliaon, 94 Ind.
292, 48 Am. Rep. 151.
A contract to hasten an intended
marriage is a marriage brokerage
contract and is void. Jangraw v. Per-
kins, 76 Vt. 127, 104 Am. St. R. 917.
07 Hermann v. Charlesworth, supra.
But see Chalfant v. Payton, 91 Ind.
202, 46 Am. Rep. 586. Cf. Place v.
Conklin, supra.
08 See Atlee v. Fink, 75 Mo. 100, 42
Am. Rep. 385, where an agreement
secretly made by a lumber dealer
with one employed to supervise the
erection of buildings for another and
to pass upon accounts for materials,
but not to make purchases, by which
the lumber dealer agreed to pay him
a commission on sales made to the
employer through his influence, was
held void as against public policy.
So where a secret gratuity Is given
to the agent with the intention of in-
fluencing his mind in favor of the
giver of the gratuity, and the agent
on subsequently entering into a con-
tract with such giver on behalf of his
principal, is actually influenced by
this gratuity in assenting to stipula-
tions prejudicial to the interests of
his principal, although the gratuity
was not given directly with relation
to that particular contract, the trans-
action is fraudulent as against the
principal and the contract is voidable
at his option. Smith v. Sorby, 3 Q.
B. Div. 552. Bven though the agent
was not in fact influenced against his
principal's interests, the contract is
corrupt. Harrington v. Victoria
Graving Dock Co., 3 Q. B. Div. 549.
See also BoUman v. Loomis, 41 Conn.
581; Western Union Tel. Co. v. Rail-
road Co., 1 McCrary (U. S. C. C),
418; Summers v. Carey, 69 App. Div.
428; Sirkin v. Fourteenth Street
Store, 124 App. Div. 384, reversing s.
G. 54 Misc. 135, 55 Misc. 288; Smith
V. Townsend, 109 Mass. 500.
A contract by an architect, who is
to oversee the erection of a building
for the owner, to enter into relations
with a builder whose work he was
thus expected to supervise, cannot bo
enforced. Page v. Moore, 235 Pa.
161.
Where it is part of the contract of
employment of a salesman that he
may give bribes or bonuses to the
8o
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ II9
These principles find frequent application, among many other cases,
in those in which gifts of money, land or other things have been made
or promised to the officers, agents or directors of railroad companies
in consideration that they will use their influence or authority in
favor of locating the railroad line or its stations or shops at particular
places. The interests of the railroad company and of the public are
alike imperiled by such contracts.®* The same rules also apply to un-
dertakings to secure, by such methods, elections or appointments to
corporate offices, the taking of particular corporate action, the pur-
chase of supplies and the like.^
§ 119. Corruption of public officers. — ^The doctrines of the preced-
ing section apply also, it scarcely needs to be said, to the case of the
public officer. Many specific illustrations have already been given in
the preceding pages, but it may still further be laid down generally that
any contract with such an officer tending to lead him to disregard his
duty, or to be less zealous in its performance, or to be more partial to
one than another, or to do more than his legal duty, as, for example, by
promising him extra fees or rewards for doing for the promisor what
it was already his duty under the law to do, or for doing for the prom-
isor what it was not his duty to do at all, or by promising or paying
him less to induce or permit the officer to do less than his legal duty,
is within the prohibited class.^
agrents of purchasers and that his em-
ployer "Will reimburse him for the
amounts so expended, the whole con-
tract of employment Is unenforcea-
ble. Smith V. Crockett CJo., 85 Conn.
282. 39 L. R. A. (N. S.) 1148.
&» Woodstock Iron Co. v. Extension
Co., 129 U. S. 643. 32 L. Ed. 819; Ful-
ler v. Dame. 18 Pick. (Mass.) 472;
Bestor v. Wathen. 60 111. 138; Under
V. Carpenter, 62 111. 309; St. Louis,
etc., R. Co. V. Mathers, 71 111. 592, 22
Am. Rep. 122; Reed v. Johnson, 27
Wash. 42, 67 L. R. A. 404; Roby v.
Carter, 6 Tex. Civ. App. 295; Mc-
Cowen y. Pew, 153 Cal. 735, 21 L. R.
A. (N. S.) 800; Sauerherlng ▼. Ruep-
Ing, 137 Wis. 407; Holladay v. Patter-
son, 5 Ore. 177; Peckham v. Lane,
81 Kan. 489, 25 L. R. A. (N. S.) 967,
19 A. ft E. Ann. Cas. 369; McOuffln
V. Coyle, 16 Okla. 648, 6 L. R. A. (N.
S.) 524. To same effect: Lum T. Mc-
Bwen, 56 Minn. 278.
Where the agent is an officer of a
municipal corporation, the same rule
applies. Railroad Co. v. Morris, 10
Ohio Cir. CL 502, 6 O. C. D. 640. 3
Ohio Dec. 479, aff'd 57 Ohio St. 658.
See also Noble v. Davison, — Ind.
, 96 N. B. 325.
1 See Singers-Bigger v. Young. 166
Fed. 82; Dieckmann v. Robyn, 162
Mo. App. 67.
» See Mechem on Public Officers,
5§ 359-378; Brown v. First Nat. Bank,
137 Ind. 655, 24 L. R. A. 206; Cheney
V. Unroe, 166 Ind. 550, 117 Am. St. R.
391; Adams County v. Hunter, 78
Iowa, 328, 6 L, R. A. 615; Burck v.
Abbott, 22 Tex. Civ. App. 216; Galla-
her V. Lincoln, 63 Neb. 339; Mont-
ague V. Massey, 76 Va. 307; Orr v.
Sanford, 74 Mo. App. 187; Leveroos
V. Rels, 52 Minn. 259.
Of course, if the matter lies wholly
outside the domain of his official du-
ties, he is as free to contract as an
81
§§ I20, 121 ]
THE LAW OF AGENCY
[book Z
§ 1 20. Other cases involving same principles. — Other cases in-
volving the same principles may be cited. Thus, an undertaking for
a contingent compensation to endeavor to procure the discharge of a
drafted man;* an agreement for using personal influence with public
officers to secure the favorable allowance of an account ; * an employ-
ment for a contingent compensation of one, who ostensibly acted only
as a disinterested physician, to use his endeavors in procuring from a
railroad company as large damages as possible for one who has been
injured in a railroad accident ; ^ an agreement to pay one for assuming
to be the confidential friend and adviser of another, and in that capac-
ity to advise the latter to buy goods of the promisor ; • an employment
to buy shares in order to create the appearance of a demand for them
so that future purchasers may be deceived as to their value ; ^ an em-
ployment to obtain government land by fraudulent and perjured testi-
mony ; ' and the like, — all violate the rules of public policy and are not
enforceable. This list might be greatly extended, but the cases given
are sufficient to illustrate the principles.
§ 121. Agent must participate in unlawful purpose. — In order,,
however, to render the undertaking in these cases void, as between the
principal and the agent, it is necessary that the agent should have par-
ticipated in the unlawful purpose of the principal, or that, knowing of
that purpose, he has directly assisted in giving it effect. Thus where
the agent, as for example a broker, is employed simply to bring par-
ties together to contract, he is not affected by the illegality of the con-
tract which they alone make, without his aid or participation, although
he knew, or had reason to believe, that they intended to enter into an
unlawful arrangement.* But if he makes or assists in making the
unlawful contract for them, or if he brings them together for the very
purpose of entering into an illegal arrangement, he is pariiceps criminis
individual. See McCandless v. Alle- To same effect: McDonnell v. Rig-
gheny Bessemer Steel Co., 152 Pa.
139; Edmunds v. Bullett, 59 N. J. L.
312.
8 Bowman v. Coffroth, 59 Penn. St.
19; O'Hara v. Carpenter, 23 Mich.
410.
4 Devlin v. Brady, 32 Barb. (X. Y.)
518.
5 Thomas v. Caulkett, 57 Mich. 392,
58 Am. Rep. 369. See also Jerome v.
Bigelow, 66 HI. 452, 16 Am. Rep. 597.
«6ollman v. Loomls, 41 Conn. 581.
ney, 108 Mich. 276; Lablnsks v.
Hoist, 84 N. Y. Sui^. 991.
7 Scott V. Brown, [1892] 2 Q. B. 724.
8 Moore v. Moore, 180 Gal. 110, 80
Am. St. R. 78.
0 Roundtree v. Smith, 108 U. S. 269,.
27 li. Ed. 722; Ormes v. Dauchy, 45
N. Y. Super. Ct. 85; Patrick v. Littell,.
36 Ohio St 79; DeGroot v. VanDuzer,
17 Wend. (N. Y.) 170; Tracy v. Tal-
mage, 14 N. Y. 162, 67 Am. Dec. 132;
Crane v. Whlttemore, 4 Mo. App. 510.
82
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ 122
with them.*** In the cases which come most frequently before the
courts the broker is so immediately a party and so clearly a participant
in their means and ends, that he cannot hope to escape the conse-
quences.**
Clearly if the undertaking was lawful on its face, and the agent was
ignorant of the facts or the purpose which alone rendered it unlawful,
he is not aflfected by its illegality.**
The effect of the illegality upon the mutual rights of the principal
and agent will be more fully discussed in later sections.**
§ 122. Whole contract void when entire. — It is well settled that
where a contract is an entire one, and contains some elements which
are legal and others which are illegal, it cannot be so apportioned as
to select and sustain those elements only which are lawful. If any part
of an indivisible promise, or any part of an indivisible consideration
for a promise, is illegal, the whole is void, and no action can be main-
tained upon it.** Where, however, the contract is a divisible or ap-
10 "It Is certainly true," says Mat-
thews, J., In Irwin v. Wllliar, 110 U.
S. at p. 510, "that a broker might
negotiate such a contract without be-
ing privy to the illegal Intent of the
principal parties to it which renders
It void, and in such a case, being in-
nocent of any violation of law, and
not suing to enforce an unlawful con-
tract, has a meritorious ground for
the recovery of compensation for
services and advances. But we are
also of the opinion that when the
broker is privy to the unlawful design
of the parties, and brings them to-
gether for the very purpose of enter-
ing into an illegal agreement, he is
particeps cHminis^ and cannot recover
for services rendered or losses in-
curred by himself on behalf of either
tn forwarding the transaction."
To same effect: Embrey v. Jemi-
son, 131 U. S. 386, 33 L. Ed. 172; Pope
V. Hanke, 155 lU. 617, 28 L. R. A.
568; Kahn v Walton, 46 Ohio St. 195;
Dows V. Glaspel, 4 N. Dak. 251; Vi^ag-
ner v. Hildebrand, 187 Pa. 136.
11 See Bartlett v. Collins, 109 Wis.
477, 83 Am. St. R. 928; Lyons v. Coe,
177 Mass. 382; Gashman v. Root, 89
Cal. 378, 23 Am. St. R. 482, 12 L. R.
A. 511; Sprague v. Warren, 26 Neb.
326, 3 L. R. A. 679; Morris v. Nor-
ton, 75 Fed, Rep. 912; Lully v. Mor-
gan, 21 D. C. 88; Violett v. Mangold
(Miss.), 27 So. 875; Northrup v. Bnf«
flngton, 171 Mass. 468; O'Brien v.
Luques, 81 Me. 46; Burt v. Myer, 71
Md. 467; Floyd v. Patterson, 72 Tex.
202, 13 Am. St. Rep. 787, aff'd 18 S.
W. 654; Riordan v. Doty. 50 S. Car.
537.
"Roys V. Johnson, 7 Gray (Mass.),
162; Wright v. Crabbs, 78 Ind.
487; Pape v. Wright, 116 Ind. 502;
Haines v. Busk, 5 Taunt. (Eng. 0.
P.) 521.
It is enough to invalidate if he
learned of the Illegality before he
fully performed the contract, and then
went on to complete it. Small v.
Lowrey, 166 Mo. App. 108.
Upon the general question of parti-
cipation in unlawful purposes, see
Hubbard v. Moore, 24 La. Ann. 591,
13 Am. Rep. 128; Mahood v. Tealza,
26 La. Ann. 108, 21 Am. Rep. 546;
Michael v. Bacon, 49 Mo. 474, 8 Am.
Rep. 138; Harris v. Woodruff, 124
Mass. 205, 26 Am. Rep. 658; Walsh v.
Hastings, 20 Colo. 243.
i» See post, Book IV, Ch. IV.
li Parsons on Contracts, I, 486, et
aeq,; Powers v. Skinner, 84 Vt 274,
83
§§ 123, 124] THE LAW OF AGENCY [bCX)K 1
portionable and not an entire one, and the lawful elements can be sep-
arated from the unlawful, the legitimate portions may be given effect.^*
§ 123. Distinction between illegal and merely void contracts — Em-
plojmient to make latter. — A contract may be void, without being
either illegal, immoral or opposed to public policy, as, for example, a
perfectly unexceptionable contract which is declared "void" for want
of written evidence by the statute of frauds. The employment of an
agent to make such a contract would ordinarily be subject to no pro-
hibition, and contracts respecting it could be enforced. Other cases
falling under statutes to the same effect may be met with.^*
11.
ACTS OF A PERSONAL NATURE.
§ 124. Personal duty, trust or confidence cannot be delegated to
an agent. — The second exception to the general rule that whatever
one may lawfully do in his own right and in his own behalf he may law-
fully delegate to an agent, is, that a purely personal duty, trust or
power imposed upon or vested in a particular person cannot be dele-
gated by him to another. The considerations which declare the duty
personal may be found in the statute which requires or authorizes the
act. in the custom which permits it, or in the inherent nature of the act
itself. Thus powers which are conferred upon one in consideration
of his personal qualities or characteristics, or as the result of special
trust and confidence reposed in him, or which clearly contemplate the
exercise of his personal knowledge, judgment or experience, should
clearly be executed by him in person," So an authority which is con-
80 Am. Dec. 677; Filson v. Himes, 5 upon margin which a statute made
Penn. St. 452, 47 Am. Dec. 422; Rose void but not illegal.
V. Truax, 21 Barb. (N. Y.) 361; Hum- J 7 See Lyon v. Jerome, 26 Wend,
bolt County v. Stern, 136 Cal. 63; Par- (N. Y.) 485, 37 Am. Dec. 271; New-
drldge v. Cutler, 104 111. App. 89; Mc- ton v. Bronson, 13 N. Y. 687, 67 Am.
Neese v. Carver, 40 Tex. Civ. App. Dec. 89 ; Merrill v. Trust Co., 24 Hun
129. See also Central N. Y. Tel. Co. (N. Y.). 300; LUka v. Wilcox, 39
v. Averill, 199 K. Y. 128. 139 Am. St. Mich. 94. Contracts involving the
R. 878, 32 L. R. A. (N. S.) 494. delegation of personal official duties
18 Bishop on Contracts, § 487; Par- are opposed to pablic policy. ElUs v.
sons on Contracts, I, 486-488; Mc- Batson, Ala. , 58 So. 193.
Vlcker v. McKenzie, 136 Cal. 656; Os- Even though a mother might not
good V. Central Vt. Ry. Co., 77 Vt. be liable for decoying her child away
334, 70 L. R. A. 930; Faist v. Dahl, from its father, she cannot lawfully
86 Neb. 669. See also Piper v. Boston appoint an agent to do it. Her na*
& M. R. R., 75 N. H. 436. tural love for the child might limit
le See Jones v. Ames, 136 Mass. her in doing acts only for its welfare;
431, where a recovery was allowed but the agent would not be subject
upon a contract respecting dealings to such restraints. State v. Branden-
84
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ I25
ferred, or a duty which is created by statute, may, by the express terms
or necessary effect of the act, be required to be performed by the per-
son only who is named.^® So, too, where a man is enabled to do a
thing by special custom it may well be that he cannot do it by an agent,
if he is not warranted by the custom in so doing.^'
§ 125, Illustrations — Voting — Affidavits : — Statutory require-
ments.— Illustrations of these principles are numerous. Thus, for
example, on grounds of public policy as well as the language of the
law and the inherent nature of the act, an elector who is entitled to
vote at a public election must do so in person, and cannot send an
agent or give a proxy to vote for him, unless there be some express
provision authorizing it.^®
So, while, as has been seen, a statutory power is ordinarily as much
witliin the maxim qui facit per alium facit per sc as any other power ^*
yet the language of the statute, the end to be accomplished, or the evil
to be remedied, may be such as to demand a personal execution. Thus
where it appears from the language of a statute or from its relation to
other statutes, that the legislature had clearly in mind the distinction
burg, 232 Mo. 531. 32 L. R. A. (N. S.)
845.
18 Thus where the law for the li-
censing of vessels required that the
oath of ownership should be taken by
the owner, an oath by the master, act-
ing as agent for the owner, is not
sufficient. United States v. Bartletf,
Dav. (U. S. D. C.) 9, 2 Ware, 17, 24
Fed. Cas. p. 1021.
i» See Combes' Case, 9 Coke, 75a.
20 See Mechem on Public Officers,
§ 187. A stockholder in a corporation
cannot vote by proxy unless this is
authorized by statute, charter or by-
law. Commonwealth v, Bringhurst,
103 Pa. 134, 49 Am. Rep. 119; Com.
V. DetwlUer, 131 Pa. 614, 7 L. R. A.
357; Market St. Ry. Co. v. Hellman,
109 Cal. 571.
ti'Ante, § 80. The mere fact that
an authority is given or an act re-
quired by a statute does not exclude
the doing of the act by agent unless
there is something in the statute
properly leading to that result. Said
Sterling, J., in Jackson v. Napper, 35
Ch. Div. 162, "I understand the law
to be that, in order to make out that
a right conferred by statute is to be
85
exercised personally and not by an
agent, you must find something In
the act, either by way of express en-
actment or necessary implication,
which limits the common law right
of any person who Is aui juris to ap-
point an agent to act on his behalf.
Of course the legislature may do so,
but, prima facie, when there is noth-
ing said about it a person has the
same right of appointing an agent for
the purpose of exercising a statutory
right as for any other purpose."
Said Qualn, J., in Reg. v. Kent, L. R.
8 Q. B. 305, "We ought not to restrict
the common law rule, qui facit per
aUum facit per se, unless the statute
makes a personal signature indis-
pensable." To same effect: In re
Whitley Partners, 32 Ch. Div. 337,
where it was held that a subscriber
to a corporation memorandum could
sign by agent; Jackson v. Napper, 35
Ch. Div. 162, where it was held that
an applicant for registration of a
trade mark could act by agent; Den-
nison v. Jeffs, [1896] 1 Ch. 611, where
it was held that a statutory consent
to the dissolution of a partnership
could be executed by agent.
§ 126]
THE LAW OF AGENCY
[book I
between acts in person and those done by an agent, and yet made no
provision for the latter; and, still more clearly, where a statute, like
the statute of frauds, in some sections expressly provides for execu-
tion by an agent but in others which are in question has made no such
provision, it is held to be a fair inference that in the latter cases per-
sonal execution was intended.*^ And where a statute required an af-
fidavit to be made concerning matters peculiarly within the knowledge
of a certain person, it was held that he must make the affidavit him-
self, and that one made by an agent would not suffice.*'
§ 126. Assignments — ^Wills— Marriage, — So it has been
held that a statutory power to make an assignment for the benefit of
creditors so clearly contemplated that the assignor was expected to
exercise his own judgment in determining whether an assigfnment
should be made and if so to whom and when and upon what terms,
that a general power to make such an assignment could not be dele-
gated to an agent.**
The same rule would apply to the making of wills. It is expected
that the testator will exercise his own judgment concerning his rela-
tions to the donees, their needs, his obligations to them, and the like ;
and, while he may of course have clerical assistance, he doubtless may
not delegate his general authority and duty in this regard to an agent.
This is doubtless also true respecting marriage. Contracts to marry.
2» In Hyde v. Johnson, 3 Scott, 289,
2 Bing. N. G. 776, where the question
was whether an admission made
through an agent was sufficient under
the statute of limitations, as an ad-
mission signed "by the party charge-
able thereby" it was held not to be,
and the court referring to other stat-
utes, and particularly to the statute
of frauds, said that it appeared "that
the legislature well knew How to ex-
press the distinction between a signa-
ture by the party and a signature by
his agent/' and that as the statute did
not provide for the latter method It
was to be deemed to be excluded.
But however sound the rule may be,
the case seems wrong on its facts.
See also Clark v. Alexander, 8 Scott's
N. R. 147; Toms v. Cuming, 8 Scott's
N. R. 910. Held, not to apply in
Arkansas. Fordyce v. Seaver, 74 Ark.
395.
So under statutes excluding actions
for assurances and representations as
to credit, etc., "unless such represen-
tation or assurance be made in writ-
ing signed by the party to be charged
therewith," signature by an agent
has been held not to suffice. Will-
lams V. Mason, 28 L. T. (N. S.) '232;
Swift V. Jewsbury, L. R. 9 Q. B. 301;
Swift V. WInterbotham, L. R. 8 Q. B.
244; Hirst v. West Riding, etc.. Bank,
[1901] 2 K. B. 560.
28 United States v. Bartlett, Dav. 9,
2 Ware, 17, 24 Fed. Cas., p. 1021.
Where a petition proceeds upon in-
formation and belief, a verification by
an agent who Is not shown to be in a
position to have such information and
belief, is not enough, hi re Roukous,
128 Fed. 648. But otherwise where
the agent Is the one who has the in-
formation. In re African Farms,
[1906] 1 Ch. 640. See also Bangs v.
Mcintosh, 23 Barb. (N. Y,) 591.
24 Minneapolis Trust Co. v. School
District, 68 Minn. 414.
86
CHAP. Ill] FOR WHAT PURPOSES AGENCY MAY BE CREATED [§ I26
may doubtless be made through a messenger ; but general authority to
make marriage engagements would doubtless not be upheld ; and as to
the act of marriage, the substitution of an agent or representative,
while at times allowed to princes,^^ would not be tolerated generally.^*
The German Civil Code contains many express provisions, some of
which, at least, are probably merely declaratory of principles which
would be deemed general. Thus as agent may not be employed to give
parental approval to the adoption of a child, to avoid a marriage, to
repudiate legitimacy, to declare legitimacy, to rescind testamentary
dispositions, and the like.
Many other cases are cited in the notes.
The principle which is involved here is, in many respects, the same
as that which controls the delegation of authority by an agent to a
sub-agent, which is fully considered in a later chapter.'^
It must also be kept in mind that, as will be seen ha a later section '*
what is done in the presence and by the direction of a person, even
though so done by another person, is, in law, ordinarily regarded as
the personal act of the former, and therefore not involving delegation.
2sSee comments on "Marriage
through an Agent," in Brissaud. His-
tory of French Private Law, Conti-
nental Legal History Series, Vol. II,
p. 103, note.
26 As to wills and marriage see
dicta In Com. v. Warehouse Co., 107
Ky. 1, 21 Ky. Law Rep. 573; Minne-
apolis Trust Co. Y. School District,
supra.
Under the statute in Illinois pro-
viding for the recording of town
plats, the acknowledgment cannot be
made by an agent. Gosselin v. Chi-
cago, 103 111. 623; Thompson v. Ma-
loney, 199 111. 276, 93 Am. St. R. 133.
Under the Indiana statute (Acts
1895, p. 248, S 9) respecting licenses
to sell liquor, it was held that au-
thority given to voters to protest —
not against a license to a particular
person or a license to anyone — but
against licenses to such persons as
87
the attorney might "see fit" to object^
could not be delegated. Such a dis-
cretionary authority must be exer-
cised by the voter in person. Cochell
V. Reynolds. 156 Ind. 14.
Duty imposed by statute upon a
committee of a political party to call
an election, cannot be delegated.
Montgomery v. Chelf, 118 Ky. 766, 26
Ky. Law Rep. 638.
Under the early statutes authoriz-
ing a married woman to convey her
land by deed signed by her and sep-
arately acknowledged, it was held
that she could not convey by an agent
though his power of attorney was so
separately acknowledged by her.
Sumner v. Conant, 10 Vt. 9; Mott v.
Smith, 16 Cal. 533; Lewis v. Coxe, 5
Har. (Del.) 401; Steele v. Lewis, 1 T.
B. Mon. (Ky.) 48.
2TSee post, Ch. VI.
28 See post, § 208.
CHAPTER IV
WHO MAT BB PRINCIPAL OR AQENT; AND HBRBIN OF JOINT PRIN-
CIPALS AND AGENTS
I 127. Purpose of this chapter.
L WHO ICAT BE PRINCIPAL.
12S. What considerations Involved.
129. Qeneral rule — ^Every person
competent to act in his own
right.
130. Private corporations.
131. Public corporations.
132. Partnerships.
133. Incompetency — In general.
X, Persons NiUurally Incompetent.
134. Persons of unsound mind —
Idiots, Lunatics, Habitual
Drunkards, etc.
135. Contracts through agents
usually voidable.
136. Torts of their servants or
agents.
137. Drunken persons as principals.
138. Ratification or disafflrmance
by these persons.
t. Persons Legally Incompetent
139. Who included.
140. Infants as principals.
141. —
149.
150.
— Infant's appointment of
agent generally held void.
142. Ratification by infant.
143. Further concerning rule.
144. Dissent — Exceptions.
145. How in reason.
146. Effect of proposed rule.
147. Liability of infant for
torts of agent or servant.
148. Married woman as principal —
Not at common law — Now
generally by statute.
— How agent appointed by —
General effect.
Liability of married wo-
man for torts of agents or
servants.
151. Aliens — Alien enemies.
U. WHO MAT BS A0BNT8.
152. In general.
i. Competency in General.
153.
154.
155.
156.
157;
158.
159.
160.
161.
162-
165.
166.
167.
168.
169.
170.
171.
172.
173.
174.
175.
What questions involved.
Less competency required in
agent than In principal.
Infant as agent.
Child as agent of parent.
Parent as agent of child*
Slaves as agents.
Women.
Married women — ^As agents
for third person.
Wife as agent for husband —
1. In domestic afCalrs.
164. ^Wlfe as domestic man-
ager.
— Authority when no do-
mestic establUhment.
— Wife may bind herself al-
88
though domestic manager.
Wife as agent for husband —
2. In non-domestic affairs.
Wife as husband's sub-
agent.
Husband as agent for his wife.
Usual attributes attach.
Proof required.
Statutory provisions.
Corporations as agents.
Partnerships as agents.
Alien enemies as agents.
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ I27, I28
2. DUquaJification from Adverse In-
terest,
176. What here included.
177. One cannot be agent if diit^
and interest conflict.
178. One cannot usually be agent
of both parties.
179. One cannot be both party and
agent for opposite party.
180. Other party as agent to sign
memorandum under Statute
of Frauds.
S. Incompetence from Lack of Pro-
fessional Standing.
181. Lack of professional standing
may disqualify.
ni. JOIXT PRINCIPALS.
182. One person as agent for sev-
eral.
i. Appointment 6y Several Principals.
183. Usually all must unite in ap*
pointing.
184. Joint power must be con*
templated.
185. Partners.
186. Joint tenants and tenants in
common.
187. Associations — Clubs — Socie-
ties— Commi ttees.
188. — How assent may be
given.
Liability may be limited
189.
190.
191.
192.
to funds.
— Illustrations.
— Assent inferred from
conduct.
— Rules stated.
193. Inchoate corporations.
2, Execution in Behalf of Joint Prin-
cipals.
194. Authority usually to be exe*
cuted in behalf of all jointly.
IV. JOINT AGKNTS.
195. Authority to several agents.
196. Legal effect of appointing
Joint agents.
197. Notice to one — ^Liability
of one for acts of others.
198. Private joint agency must
usually be executed by all.
199. Public agency may be exe-
cuted by majority.
200. — Committees — Boards —
Directors — Majority of
quorum.
§ lay. Purpose of this chapter. — It is proposed in this chapter to
determine who are competent to enter into the relation of principal and
agent, and to consider briefly the special rules which apply to those
cases in which more than one person undertakes to act in either capac-
ity. In the execution of this purpose there will be considered : I. Who
may be principal; II. Who may be agent; III. Joint principals, and
IV. Joint agents.
I.
WHO MAY BE PRINCIPAL.
§ 128. What considerations involved. — As has been already seen,
the appointment of an agent, as distinguished from a servant, is made
in contemplation of business dealing, through that agent, on account
of the principal with third persons. There are thus, as has previously
been pointed out, three persons and three sets of relations involved in
the appointment and authorization of an agent, viz. : the principal, the
89
§ 129] THE LAW OF AGENCY [bOOK I
agent, and the third person with whom the agent is to deal, and the
relations and obligations of each one of these to every other one. This
fact bears directly upon the subject matter of the present section.
From the standpoint of the principal therefore there are two aspects ;
as between the principal and the agent, who is competent to be a prin-
cipal ? and as between the principal and the third person, who is com-
petent to be a principal ? If contractual obligations are to be entered
into by the proposed principal both with the agent and the third per-
son, the considerations will ordinarily be the same. If contractual ob-
ligations are to be entered into with one of them, but not necessarily
with the other, the considerations may differ. If it be assumed that
the characteristic of agency as distinguished from service, is that the
agent is to create or modify or affect contractual relations between the
principal and the third person, then, from that side of it at least, the
principal must be one who has the contractual capacity to so deal with
the third person. If contractual relations between the principal and
the agent are also required, then contractual capacity adequate to that
end is also requisite.
If service instead of agency is contemplated, the case will be differ-
ent. The obligations here to third persons at least may often be in
tort rather than in contract and a different degree of capacity may be
required, or may suffice, in this instance from that involved in the
other.
Inasmuch as agency is usually a means rather than an end, the
most important aspect is usually, who can act by agent rather than
who can appoint an agent. Taking up this aspect first —
§ 129. The general rule— Eveqr person competent to act in his
own right — It may be stated as the general rule that by the common
law every person who is competent to act in his own right and in his
own behalf may act by an agent.^ It has been seen also that as a gen-
eral rule a person may do by agent whatever he may do in person.
The reverse of this is also true in general, viz. : that a person who is
incompetent to act in his own right and in his own behalf cannot act
by agent ; neither can one do by agent what he cannot do in person.
The relation, as has been seen, is created primarily for the purpose
of investing the agent with authority to act for and represent the prin-
cipal in the transaction of business. His purpose is ordinarily to bring
1 Combes* Case, 9 Co. Rep. 75: person, having capacity to contract,
Com. Dig. "Attorney," c. I. may appoint an agent." CaL Code,
In the language of the codes of fi 2296; Dak. Code, § 1338; Qa. Code,
California, DakoU and Georgia, "Any § 2181.
90
CHAP, IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 130
about, or in some way to affect or modify, contractual relations be-
tween his principal and third persons. For the time and to the extent
limited, the agent is to be the alter ego of the principal ; his act is, in
law, to be the act of the principal, and the capacity and character in
which the agent is to act are those of the principal. It follows, then,
as a necessary conclusion, that the same kind and degree of legal com-
petency which would be requisite were the principal present and acting
in his own person, are in general necessary when he is present and
acts in the person of his agent.
The converse of these principles, as it finds expression in the gen-
eral rule already given, also follows as a necessary sequence, that he
who has this capacity and who is thus competent to act in person in a
given case, may, unless restrained by some statutory or other legal
prohibition, act in that case through the agent of his choice.
§ 130. Private corporations. — The same rule applies ordinarily to
artificial persons authorized to enter into contractual relations. Thus
authority to appoint the necessary and proper agents for the transac-
tion of the corporate business is usually conferred upon corporations
in express terms, but in the absence of such express authority, the
power to appoint will be implied. This power is a necessary incident
to the power to carry on the business for which the corporation was
created, inasmuch as it is only through the employment of agents that
the executive functions of the corporation can be exercised.*
The existence of the agency and the effect of the agent's acts in
these cases are subject to the same rules which apply to individuals.
Thus it is said in a recent case, "It is well settled that a corporation
may contract and be contracted with through an agent whose author-
ity may be implied from facts and circumstances showing recognition
or ratification by the corporation. Indeed, it seems that the same pre-
2 Protection Life Ins. Co. v. Foote,
79 m. 361; Hurlbut y. Marshall, 62
Wis. 590; St. Andrews Land CJo. v.
Mitchell, 4 Fla. 192, 54 Am. Dec. 340;
Lyman v. White River Bridge Co.,
2 Alk. (Vt) 225, 16 Am. Dec. 706;
Washburn y. Nashyille, etc., R. R.
Co., 3 Head (Tenn.), 638, 75 Am. Dec.
784; Kitchen y. Cape Girardeau ft
State L. R. Co., 59 Mo. 514.
As is said in Washburn v. Nash-
viUe, etc.» R. R. Co., »ttpra, "The cor^
poratlon of necessity acts through
the Instrumentality of its officers and
agents. If not prohibited by the
charter, it may delegate its authority
to its officers and agents so far as
may be necessary to effect the pur-
poses of Its creation. It must act in
this mode or not at all."
Extended citation of the cases upon
this point belongs rather to works
on Corporations. See Morawetz on
Corporations, I, fi 503; Ang. ft Ames
on Corporations, § 284; Thompson on
Corporations, V, ( 5832.
91
§§ I3I-I33]
THE LAW OF AGENCY
[book I
sumptions are applicable in this respect to corporations as to natural
persons." «
§ 131. Public corporations. — ^The rule applies also to public cor-
porations, towns, cities, states. Any one of these having authority to
act in a matter or manner, for which a constituted public agent or of-
ficer is not by law provided, may act through agents, general or special,
as the exigencies of the case may require.**
§ 132. Partnerships. — ^The same general principle applies to part-
nerships. It is, of course, competent for the partners to provide in
their partnership articles, what agents shall be employed and in what
manner. So all of the partners acting together may undoubtedly ap-
point agents for a purpose or in a manner other than that originally
contemplated or prescribed. And in the absence of restrictions in the
articles, each partner also has implied power to employ for the firm
such servants and agents as are necessary and proper for the transac-
tion of the partnership business.*
The rule applies to limited partnerships as well as to ordinary part-
nerships.*
§ 133. Incompetency— In general — Incompetency to enter into
this relation may arise either (a) from some defect in the mental
equipment of the party or (b) from the operation of law. The former
type may be chronic or temporary, curable or incurable, and may arise
from a variety of causes. This form of incompetency is sometimes
termed natural, while that arising from the operation of the law is
termed legal incompetency.
Of the first kind are the defects of idiots, lunatics and drunken per-
sons; while aliens, infants and married women afford illustrations of
the latter.
The effect of some of these forms of incompetency, so far as they ^
are applicable to the law of agency, will be noticed here. J
sMoyer r. Bast Shore Terminal
Co. (1894) 41 S. Car. 300, 44 Am. St.
R. 709.
*See Hall v. Wisconsin, 108 XJ. S.
5, 26 L. Ed. 302; State v. Torinus, 26
Minn. 1.
» Beckham v. Drake, 9 M. & W. 79;
Banner Tobacco Go. v. Jenison, 48
Mich. 459; Harvey v. Mc Adams, 32
Mich. 472; Wheatley v. Tutt, 4 Kan.
240; Charles v. Eshleman, 5 Colo.
107; Frye v. Saunders, 21 Kan. 26,
30 Am. Rep. 421; Coons v. Renlck,
11 Tex. 134, 60 Am. Dec. 230; Carley
▼. Jenklna, 46 Vt. 721; Durgln v.
Somers, 117 Mass. 55; Burgan v.
Lyell, 2 Mich. 102; St. Andrews Bay
Land Co. v. Mitchell, 4 Fla. 192, 54
Am. Dec. 340; Lucas v. Bank of
Darlen, 2 Stew. (Ala.) 280; <^ark r.
Slate Valley R. Co. (1890), 136 Pa.
408, 10 L. R. A. 238.
• Park Bros. A Co. v. Kelly Axe
Mfg. Co. 49 Fed. 618.
92
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 134
1. Persofts Naturally Incompetent
§ 134. Persons of unsound mind — Idiots — Lunatics— Habitual
drunkards, etc. — ^The question of the contractual capacity of persons
of unsound mind presents many complications : The person may have
been incompetent from birth ; his unsoundness of mind may be partial
only ; it may not be evident to the casual observer ; he may never have
been judicially declared insane, and the like. The contract in ques-
tion may have been one for necessaries ; it may have been entered into
while the other party was ignorant of the insanity "Slid may have been
so far performed that the parties can not be restored to their original
position.
It is often said, especially in the older cases, that the contracts ^ an^l
particularly the deeds * of the insane person, whether made before or
after an adjudication of insanity, are void; but the prevailing view ac-
cording to the modem authorities is that such contracts, made before
adjudication, are at most merely voidable and not void," except in cases
where the infirmity is so radical and apparent as to destroy any sem-
blance of a consenting mind. Fair contracts for necessaries may be
enforced to the extent of their value where the necessaries were sup-
plied in good faith ;^** and, by the weight of authority, an executed
contract, fairly made in ignorance of the insanity, can not be set aside
on the part of the insane party, unless he restores what he may have
7 See American Trust ft Banking
Co. V. Boone, 102 Ga. 202, 66 Am. St.
R, 167, 40 L. R. A. 250.
8 Van Deusen v. Sweet, 51 N. Y.
37S (though this Is not now the rule
in New York: BUnn v. Schwarz, 177
N. Y. 252. 101 Am. St. R. 806); Ed-
wards V. Davenport, 20 Fed. 756;
German Savings Society v. De LAsh-
mutt, 67 Fed. 399, following Dexter
V. Hall, 15 Wall. 9, 21 L. Ed. 73;
Wilkinson v. Wilkinson, 129 Ala. 279.
See also Farley v. Parker, 6 Ore.
105, 25 Am Rep. 504; Rogers v.
Blackwell, 49 Mich. 192; Hanley y.
National Loan Co., 44 W. Va. 450;
Owlngs' Case, 1 Bland Ch. (Md.) 370
17 Am. Dec. 311; Brigham v. Fayer-
weather, 144 Mass. 48; Valpey v. Rea,
130 Mass. 384; Halley v. Troester, 72
Mo. 73 ; Galloway v. Hendon, 131 Ala.
280.
• Blinn V. Schwarz. 177 N. Y. 252,
101 Am. St R. 806; French Lumber-
ing Co. V. Theriault, 107 Wis. 627, 51
L. R. A. 910, 81 Am. St. R. 856; Flach
v. Gottschalk Co., 88 Md. 368, 71 Am.
St. Rep. 418, 42 L. R. A. 745; Jordan
▼. Klrkpatrick, 251 111. 116; Mtaz. L.
Ins. Co. y. Sellers, 164 Ind. 870, 77
Am. St R. 481, citing many other
Indiana cases: Castro y. Cell, 110
Cal. 292, 52 Am. St Rep. 84; « First
Nat Bank v, McGinty, 29 Tex. Civ..
App. 539; Breckenridge's Heirs y.
Ormshy, 1 J. J. Marsh. (Ky.) 236, 19
Am. Dec. 71. See also Amos y. Amer.
Trust ft Say. Bank, 221 111. 100; Gin-
grich y. Rogers, 69 Neb. 527.
10 Richardson v. Strong, 18 Ired.
(N. C.) 106, 56 Am. Dec. 480; In re
Renz, 79 Mich. 216. See also McKee
y. Ward (Ky.), 38 S. W. 704, 18 Ky.
L. Rep. 987; McKee y. Pumell (Ky.),
88 S. W. 705, 18 Ky. L. Rep. 879.
93
§ 135]
THE LAW OF AGENCY
[book t
received under it.^* After an adjudication of insanity, however, con-
tracts entered into are usually held void.** Though ordinarily insane,
the person affected may make a valid contract during a sane intcrvaL**"
Within the operation of these rules are to be included persons whose
mental powers have been permanently impaired by dissipation or other
cause attributable to their own acts, as well as those whose incapacity-
arises from causes beyond their own control.**
§ 135. Contracts through agents usually voidable.-— The
considerations above set forth are applicable to the question of the
appointment of an agent by an insane person and of the liability of an>
insane person for an act done by his alleged agent. Usually such an.
11 Molton v. Camroux, 4 Exch. 17;
Beavan y. McDonnell, 9 Exch. 309;
Campbell y. Hooper, 8 Smale ft G.
153; Moss y. Tribe, 3 Fost ft F. 297;
BUnn y. Schwarz. 177 N. Y. 252, 101
Am. St. R. 806; Feigenbaum y. Howe,
32 (N. Y.) MlBc. 514; Mutual L. Ins.
Ck). y. Hunt, 79 N. Y. 541; Hicks v.
Marshall, 8 Hun, 327; Riggs y. Ameri-
can Tract Society, 84 N. Y. 330; Car-
ter y. Beckwith, 128 N. Y. 312; Young
y. Steyene, 48 N. H. 138, 2 Am. Rep.
202, 97 Am. Dec. 592; Behrens y. Me-
Kenzie, 23 Iowa, 333, 92 Am. Dec.
428; Abbott y. Creal, 56 Iowa 175;
Alexander y. Haskins, 68 Iowa, 73;
Harrison y. Otley, 101 Iowa, 652; Mc-
Cormick y. Littler, 85 111. 62, 28 Am.
Rep. 610; Ronan y. Bluhm, 173 III.
277; Fay y. Burditt, 81 Ind. 433, 42
Am. Rep. 142; Rusk y. Fenton, 14
Bush (Ky.), 490, 29 Am. Rep. 413;
Wilder V. Weakley, 34 Ind. 181;
Northwestern Mut. F. Ins. Co. y.
Blankenship, 94 Ind. 535; Copenrath
y. Kienby, 83 Ind. 18; Beals y. See,
10 Penn. St. 66, 49 Am. Dec. 573;
Yauger v. Skinner, 14 N. J. Bq. 389;
Gribben y. Maxwell, 34 Kans. 8, 55
Am. Rep. 238; Bank y. Sneed, 97
Tenn. 120, 56 Am. St. R. 788; Strod-
der y. Granite Co., 99 Ga. 595; More
y. Calkins, 85 Cal. 177; Riggan y.
Green, 80 N. Car. 236, 80 Am. Rep.
77; National Metal Edge Box Co. y.
Vanderyeer, — Vt , 82 Atl. 837.'
But see Hoyey y. Hobson, 53 Me.
451, 89 Am. Dec. 705; Gibson y.
Soper, 6 Gray (Mass.), 279, 66 Am.
Dec. 414; Bond y. Bond. 7 Allen-
(Mass.), 1; Chew v. Bank, 14 Md..
318; Rogers y. Blackwell, 49 Mich..
192; Edwards y. Dayenport, 20 Fed..
Rep. 756; Henry y. Fine, 23 Ark. 417.
In Jordan y. Klrkpatrlck, 251 III..
116, a note and mortgage upon land
executed by an insane woman, in a.
transaction in which her husband
purported to act as her agent and
having recelyed the money aband-
oned her, were set aside without re>
quiring her to return the money.
The court held that the duty to re-
store was limited to that which the
lunatic had received.
12 See Carter y. Beckwith, 128 N. Y.
312;. Boyer y. Berryman, 123 Ind»
451; American Trust A Banking Co.
y. Boone, 102 Ga. 202, 66 Am. St.
R. 167, 40 L. R. A. 250; Hovey y. Hob-
son, 53 Me. 451, 89 Am. Dec. 705;
Bumham v. Kidwell, 113 111. 425.
i«McCormick y. Littler, 85 111. 62,.
28 Am. Rep. 610; Beckwith y. Butler,.
1 Wash. (Va.) 224; Jones y. Perkins.
5 B. Monr. (Ky.) 222; In re Gang-
were, 14 Penn. St. 417, 53 Am. Dec.
554; Tozer y. Saturlee, 3 Grant
(Penn.), 162; Lilly y. Waggoner, 2T
111. 895.
i«Bll8s y. Railroad Co., 24 Vt. 424r
Menkins y. Lightner, 18 111. 282;
Bush y. Breinig, 113 Penn. St. 310,.
57 Am. Rep. 469.
94
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 135
act is voidable but not void if done before an adjudication of insanity."
In a few cases his formal power of attorney to confess judgment or
convey land is held to be void,'* but no very satisfactory reason for
this view is apparent and the weight of modern authority regards this
act as standing upon the same footing as the making of the conveyance
Itself and to be voidable rather than void.*^ A fair contract, made in
ignorance of the insanity, with the agent of an insane person, would,
doubtless, in accordance with the general rule, only be set aside upon
the application of the insane person upon condition that he restore
-what he had in fact received under it."
IB Bllnn V. Schwarz. 177 N. Y. 2r>2.
101 Am. St. R. 806; Wamsley v. Dar-
ragh. 12 N. Y. Misc. 199; Merritt v.
Ttferrltt, 43 App. Div. 68; Reams v.
Taylor. 31 Utah, 288, 120 Am. St. R.
^30, 11 Ann. Cas. 51, 8 L. R. A. (N.
S.) 436.
Void after adjudication. Glllet v.
Shaw, 117 Md. 508, 83 Atl. 394 ; Pearl
V. McDowell, 26 Ky. (3 J. J. Marsh.)
•658, 20 Am. Dec. 199.
The most elaborate treatment of
the question is to be found in Mc-
LAQghlln Y. Daily Telegraph Co., 1
Commonwealth L. R. 243, a case de-
cided by the High Court of Australia
(Appeal Befuaed [1904] A. C. 776).
In this case a married man, insane
and incapable of transacting any
business (though he had lucid inter-
vals) was induced to give an abso-
lute power of attorney to his wife,
who knew the facts but was acting in
«ood faith, authorizing her to dispose
of his real or personal estate. Act-
ing under this, the wife sold and
transferred certain shares of stock
held by her husband in the defend-
ant and other companies, both the
buyer 3 and the corporations acting in
good faith and in ignorance of the
insanity. The husband, having re-
covered his sanity, brought suit to
cancel these transfers and to be rein-
-stated upon the books. Held, that the
power of attorney was void; the
transfers invalid, and the plaintiff en-
titled to relief. The plaintiff how-
ever, offered in his bill to reimburse
Jthe defendants to the extent of all
moneys received by his pretended
agent as the proceeds of the sale, and
the decree was made upon this basis.
See also McLaughlin v. City Bank of
Sydney, 9 N. S. Wales, 319, cited in
a following note.
i« Dexter v. Hall, 82 U. S. (15
Wall.) 9, 21 L. Ed. 73; McClun v.
McClun, 176 111. 376; Plaster v. Rig-
ney, 97 Fed. Rep. 12.
See also Ellas v. Enterprise Build-
ing & Loan Ass'n, 46 S. C. 188; Clay
V. Hammond, 199 111. 370, 93 Am. St.
Rep. 146.
17 Williams v. Sapieha, 94 Tex. 430;
Wamsley v. Darragh, 12 N. Y. Mlac.
199.
i» In Jordan v. Kirkpatrick, 251 111.
116, referred to supra^ where a mar-
ried woman while insane had,
through the intervention of her hua-
band who assumed to act as her
agent, made a note and mortgage
upon which he obtained the money
and abandoned her, she was allowed
to disaffirm without restoring the
money, which she had never received.
In McLaughlin v. City Bank of Syd-
ney, 9 New South Wales State Rep.
319, where a married woman, while*
her husband was Insane and incom-
petent to act, obtained from him a
power of attorney under which she
raised money and pledged and mort-
gaged his property, it was held that
he could repudiate the acts, but that
the court, upon a proper showing,
would work out a subrogation to the
extent that the money had been used
to pay his legally binding debts. See
95
§§ 136-138]
THE LAW OF AGENCY
[book I
§ 136.
Torts of scrvantB or agents. — With respect of the
torts of the alleged servant or agent of an insane person, it is held
that, while the insane person's estate may be charged for his* own torts,
it is not liable for the tort of one who assumed to be his servant or
agent.***
§ 137. Drunken persons as principals. — The fact of being a drunk-
ard, or mere drunkenness at the time, does not of itself incapacitate.**
There must be drunkenness, or the impairment of intellect as tlie result
of drunkenness, to such an extent that the person is incapable of com-
prehending the nature and effect of his act.**
Sober interval. The contract of a habitual drunkard, however, is
binding, if made during a sober interval.'* His contracts of agency,
and his contracts through an agent, of course stand upon the same
ground.
§ X38. Ratification or disaffirmance. — A contract made by a party
during a period of incompetence may be ratified or disaffirmed by him
after his competency is restored." And this disaffirmance may be
effected by the incompetent's guardian or committee also,** or by his
personal representative after the incompetent's death.*' Upon this
question, the rules governing contracts generally apply.**
also McT aughlln v. Dally Te1<»f?raph
Co., 1 Commonwealth L. R. 243, re-
ferred to in the second preceding
note.
loGlllet V. Shaw, 117 Md. 50S, 83
Atl. 394; Ward v. Rogers, 51 N. Y.
Misc. 299; Reams v. Taylor, 81 Utah,
288, 120 Am. St. R. 930, 11 Ann. Cas.
51, 8 L. R. A. (N. S.) 436.
2© Pickett V. Sutter, 5 Cal. 412;
Henry v. Ritenour, 81 Ind. 136; Caul-
kins Y. Fry, 36 Conn. 170; Reynolds
v. Deehaums, 24 Tex. 174; Cavender
V. Waddingham, 5 Mo. App. 457;
Joest ▼. Williams, 42 Md. 565, 13 Am.
Rep. 877; Miller v. Flnley, 26 Mich.
249, 12 Am. Rep. 306.
"Bates V. Ball, 72 111. 108; Van
Wyck V. Brasher, 81 N. Y. 260;
Schramm v. O'Connor, 98 111. 539;
Bush V. Breinig, 113 Pa. 310, 57 Am.
Rep. 469.
32 Riteer's Appeal, 59 Pa. 9.
ss Oihson y. Soper, 6 Gray (Mass.),
279, 66 Am. Dec. 414; Bash y. Brel-
nig, 118 Pa. 810, 67 Am. Rep. 469;
Allls Y. Billings, 6 Mete. (Mass.) 415,
39 Am. Dec. 744; Arnold v. Rich-
mond Iron Works. 1 Gray (Mass.),.
434; Carrier y. Sears, 4 Allen
(Mass.), 337; Howe y. Howe, 99
Mass. 98; White y. Graves, 107 Ma:s.
328; Blakeley y. Blakeley, 33 N. J.
Bq. 508; Nichol y. Thomas. 58 Ind.
53; Mohr y. Tulip, 40 Wis. 82; El-
ston Y. Jajsper, 45 Tex. 409; Turner
Y. Rusk, 53 Md. 65; Northwestern
Mut F. Ins. Co. Y. Blankenship, 94
Ind. 635; Carpenter y. Rodgers, 61
Mich. 884, 1 Am. St Rep. 695.
24McClain y. DaYls, 77 Ind. 419;
Campbell y. Knhn, 45 Mich. 518, 40
Am. Rep. 479; Halley y. Troester, 72
Mo. 73; Moore y. Hershey, 90 Pa.
196; Gingrich Y. Rogers, 69 Neb. 527.
20 Campbell y. Kuhn, supra; SchufF
Y. Ransom, 79 Ind. 458.
20 See Bishop on Contracts, | 974.
96
CHAP. IV] WHO MAy BE PRINCIPAL OR AGENT [§§ I39, I40
2. Persons Legally Incompetent.
§ 139. Who included. — Of the persons who may be regarded as
legally incompetent the most important are the infant, the married
woman, and the alien. The incompetency of the infant is of a mixed
sort. During his early years, his incapacity is natural ; this disability
gradually fades away as he approaches maturity and he may in fact be-
coiTie fully competent before he reaches the legal age of maturity.
Here however the legal incapacity attaches to him, and continues with
him until the statutory age has been attained, — an age which may be
and is more or less arbitrarily fixed. The incapacity of the married
woman and the alien is purely artificial and depends wholly upon the
rules of law which prescribe it.
§ 140. Infants as principals. — ^The capacity of an infant to enter
into contractual and business obligations is limited; and the law re-
specting it is far from being in a satisfactory condition. Speaking
generally an infant has, for his own protection, a limited power to
charge himself for benefits actually received of the sort termed "neces-
saries," though it is perhaps questionable whether this obligation is
not gua^t-contractual rather than contractual. Even in this field the
infant is not bound by executory contracts for necessaries not actually
received. Outside of this field of necessaries, the general rule is that
the acts and contracts of the infant are voidable by him at his election.
If it be now attempted to apply these general rules to the question of
agency for an infant principal, there would be at once two aspects : the
relation between the infant principal and his agent, and the relation of
the infant principal to third persons. As to the first, unless there
might be cases in which the intervention of an agent to procure neces-
saries might be regarded as itself a necessary, all contractual obliga-
tions between the infant and his agent, such as those of employment,
payment, and the like, would be voidable at the infant's option.
With reference to third persons, the general rule of agency would
permit the infant to act through an agent to the same extent that he
could act in person ; that is to say, most of his acts and contracts done
or made through an agent would be voidable by the infant, just as they
would be if done by him in person, but they would not be void. Con-
tracts for necessaries actually received, made through an agent, would
bind the infant, either contractually or quasi contractually, as they
would if he had made them in person.
In the analogous field of partnership, it is settled that the infantas
partnership contracts are not void. He may be a partner and exer-
cise all the rights of one, and while he may escape personal responsi-
7 97
§ I4il
THE LAW OF AGENCY
[book I
bility on his contract either to his copartner or to creditors, it is held
that he can not, in the absence of fraud, recover what he paid for being
admitted as a partner, nor can he withdraw his contributions to capital
until the firm debts have been paid.
Notwitlistanding these considerations, however, this is not the, way
in which the actual law upon the subject has been developed, and a
principle quite different in theory, though perhaps not radically differ-
ent in result, has been adopted.
§ 141. -. Infant's appointment of agent generally held void. —
It has been regarded as the settled doctrine of the law that an infant
cannot empower an agent or attorney to act for him.^^ Indeed, the
rule deduced from the authorities has been said to be that the only act
which an infant is under a legal incapacity ta perform is the appoint-
ment of an attorney, or, in fact, an agent of any kind.^* The reason
upon which this rule depends, has been stated by the learned editors
of the American Leading Cases, as follows : "The constituting of an at-
torney by one whose acts are in their nature voidable, is repugnant and
impossible, for it is imparting a right which the principal does not
possess, — that of doing valid acts. If the acts when done by the at-
torney remain voidable at the option of the infant, the power of attor-
ney is not operative according to its terms; if tliey are binding upon
the infant, then he has done through the agency of another what he
could not have done directly — ^binding acts. The fundamental prin-
ciple of law in regard to infants requires that the infant should have
27 Armitage v. Widoe, 36 Mich. 124;
Whitney v. Dutch, 14 Mass. 457, 7
Am. Dec. 229; Lawrence v. McArter,
10 Ohio, 37; Fonda v. Van home, 15
Wend. (N. Y.) 631, 30 Am. Dec. 77;
Truehlood v. Trueblood, 8 Ind. 195,
65 Am. Dec. 756; Pickler v. State, 18
Ind. 266; Tapley v. McGee, 6 Ind.. 66;
Hiestand v. Kuns, 8 Blackf. (Ind.)
345; Fetrow v. Wiseman, 40 Ind.
155; Burns v. Smith, 29 Ind. App.
181, 94 Am. St. R. 268; CJole v. Pen-
noyer, 14 III. 158; Robblns v. Mount,
4 Robt. (N. Y.) 553; Mustard v.
Wohlford's Heirs, 15 Gratt. (Va.)
329, 76 Am. Dec. 209; Dexter v. Hall,
15 Wall. (U. S.) 9, 21 L. Ed. 73; Ben-
nett V. Davis, 6 Cow. (N.. Y.) 393;
Robinson v. Weeks, 56 Me. 102;
Wambole v. Foote, 2 Dak. 1; Waples
V. Hastings, 3 Harr. (Del.) 403; Car-
nahan v. Alderdlce, 4 Harr. (Del.)
99; Roof V. Stafford, 7 Cow. (N. Y.)
179; Blexner v. Dlckerson, 72 Ala.
318; Glass v. Glass, 76 Ala. 368;
Sadler v. Robinson, 2 Stew. (Ala.)
520; Phllpot v. Bingham, 55 Ala. 435;
Pyle V. Cravens, 4 Lltt. (Ky.) 17;
Bool v. Mix, 17 Wend. (N. Y.) 120;
Walnwrlght v. W^llklnson, 62 Md.
146; Deford v. State, 30 Md. 200;
State v. Field, 139 Mo. App. 20;
Turner v. Bondaller, 31 Mo. App. 582;
Poston V. Williams, 99 Mo. App. 513;
Holden v. Curry, 85 Wis. 504; MIU-
saps v. Estes, 134 N. C. 486; Lutes v.
Thompson, 5 Pa. Co. Ct. 451; Knox
▼. Flack, 22 Penn. St. 387; Doe v.
Roberts, 16 M. ft W. 778.
28 See note to Tucker v, Moreland,
1 Am. Lead. Cases, 224, 5th Ed. 280.
98
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 142
the power of affirming such acts done by the attorney as he chooses,
and avoiding others, at his option ; but this involves an immediate con-
tradiction, for to possess the right of availing himself of any of the
acts, he must ratify the power of attorney, and if he ratifies the power,
all that was done under it is confirmed. If he affirms part of a trans-
action, he at once confirms the power, and thereby, against his inten-
tion, affirms the whole transaction. Such personal and discretionary
legal capacity as an infant is vested with is, therefore, in its nature,
incapable of delegation; and the rule that an infant cannot make an
attorney is, perhaps, not an arbitrary or accidental exception to a prin-
ciple, but a direct, logical necessity of that principle. But if the con-
siderations suggested as the foundation of this rule be not satisfactory,
the rule itself is established by a conclusive" weight of authority." *•
This reasoning, as will be observed, is based upon the theory that an
act of an infant done through an agent must in any event be more
binding then if done by the infant in person ; and that the assumption is
that the infant can not do voidable acts through an agent as well as in
person.
§ 14a. < Ratification by infant— Upon the principle that one
cannot subsequently affirm what he could not previously have author-
ized, or that he cannot affirm a void act, it has likewise been held that
an infant cannot ratify and confirm what one, as an agent, has assumed
to do in his name.*® Neither, if it be void, could he ratify it after he
becomes of age.*^
>• Id. 247, 5th Ed. 305.
80 Fonda v. Van Home, 15 Wend.
(N. Y.) 631, 30 Am. Dec. 77, in which
the plaintiff was an infant whose
cow had been sold hy her father.
Later he bought another cow and
gave it to her in place of the first.
The father's creditors have the sec-
ond cow and the plaintiff claims it
against them. But the court held
that she could eet up no claim at all
to second cow (her father was insol-
vent at the time and could not make
a gift) even although she had subse-
quently assented to a sale and re-
placement on her behalf, for Infant
conld not have an agent, the appoint-
ment was void and could not be rati-
fied.
Poston V. Williams, 99 Mo. App.
513, the infant plaintiff sued In re-
plevin to recover a horse which the
defendant had received in trading, as
the plaintiff's agent, the plaintiff's
horse. Recovery was denied upon
the ground that replevin would be an
action in the nature of affirmance
and that an infant's appointment of
an agent was a void act incapable of
ratification. But see Ward v. Steam-
boat, 8 Mo. 358.
Armitage v. Widoe, 36 Mich. 124, a
father without the infant son's knowl-
edge made in the infant's name a con-
tract for purchase of real estate and
made part payment under the con-
tract. The son when he learned of
the contract sought to call the con-
tract his own but on the ground of
infancy to avoid it and recover the
part payments that had been made.
Upon the ground that an infant can-
not authorize an agent, and therefor
cannot ratify an agent's acts, that all
99
§ 142]
THE LAW OF AGENCY
[book I
In the few cases, however, in which the act of appointment or the
act done by the agent is deemed voidable only, the former infant after
maturity may ratify and confirm.'^ If the more liberal rule herein-
after contended for should prevail, there would be no reason why the
infant might not ratify, where he could authorize, even during mi-
nority."
such attempta are entirely void, the
suit was dismissed.
Doe V. Roberts, 16 M. A W. 778. An
executor on behalf of infant remain-
dermen accepted rent from a tenant
who had held from year to year un-
der the life tenant and with right to
a notice to quit. It was held that
this acceptance of rent did not make
a similar contract between the in-
fants and the tenant valid, and that
the infants might bring ejectment
without previous notice to quit.
Baron Parke said: "If an infant ap-
points a person to make a lease it
does not bind the Infant, neither does
his ratification bind him. There is
no doubt about the law."
81 In Trueblood v. Trueblood, 8
Ind. 195, 65 Am. Dec. 766, wherein a
father purporting to act for his minor
son made a bond for a deed of the
infant's land and it was claimed that
the son, after becoming of age, had
ratified it, it was held that it was not
possible to ratify It. The bond, not
being the act of the infant himself
(in which case It would have been
merely voidable) but an act by an al-
leged agent, — ^whlch an infant can-
not have — was void, and there can-
not be ratification of a void act.
See also Lutes v. Thompson, 5 Pa.
Co. Ct. 451; Weidenhammer v. Mc-
Adams, — Ind. App. — , 98 N. E.
883.
s« See Whitney v. Dutch, 14 Mass.
457, 7 Am. Dec. 229; (the defendant
had, while still an infant, made
through an agent a promissory note,
and after he had attained his major-
ity had acknowledged it and promised
to pay. This ratification was held
sufllcient to bind the defendant).
Hastings v. DoUarhide, 24 Cal. 195;
(it was held that one who after ma-
jority ratifies an endorsement made
on his behalf by an agent daring
principal's infancy is bound by the
endorsement).
Coursolle v. Weyerhauser, 69 Minn.
828 (the court held that a power of
attorney, given . after majority, for
the purpose of ratifying the locating
of a claim and a sale of land under
a power of attorney which had been
given before majority, was good as a
ratification and binding upon the
giver).
Ferguson v. Houston, etc., Ry. CJo..
73 Tex. 344; (where It was held that
even if the infant could not ratify
the act after maturity, his conduct
since that time might be sufllcient to
estop him).
In Stone v. Ellis, 69 Tex. 325, it
was held that there might be ratifica-
tion after maturity.
In Sims V. Smith, 99 Ind. 469, 50
Am. Rep. 99, it was held that if an
infant married woman makes a deed
with her husband of her land and au-
thorizes him to deliver it, and he
delivers it with her consent after she
becomes of age, she is bound.
For ratification, or es'oppel to ques-
tion, where sales made without au-
thority by a guardian are approved
after wards come of age, see Tracy
V. Roberts, 88 Me. 310, 51 Am. St. R.
394; Deford v. Mercer, 24 Iowa, 118,
92 Am. Dec. 460.
33 la Johannson v. Gudmundson^ 19
Manitoba L. Rep. 83, 11 West L.
Rep. 176, where the father of the in-
fant plaintiffs paid the defendant a
certain sum of money at their request
upon a contract In writing by which
ICO
CHAP. IV]
WHO MAY be; PRINCIPAL OR AGENT
[§ 143
§ 143.
Further of rulcirrThis rule, as has been seen, as
well as the rule governing the contracts of infants generally, finds its
reason in the law's desire to guard and protect the interests of the in-
fant. Like other rules, its rigor should be .abated when the n^scessity
for it no longer exists. - . .
It is difficult to harmonize all of the cases upon this subject, but an
examination of the facts of some of the leading ones will disclose the
occasions upon which it was invoked, and throw light uj^on the limits
of its application. \. ' -
Thus it is held that an infant's power of attorney to sell or;inQrtgage
his lands;'* his warrant of attorney to confess judgment .agjiinst
him ; ** his assent to the act of another in assuming as the infant's.agent
to sell his property ; *• or to bind him to a purchase of real estate ; *''
his authority to another to represent him in court;®" and any letter
of attorney not conveying a present interest,'^ are void.
the defendant agreed to sell and con-
vey to the plaintiffs a certain farm,
it was held that the infants could so
far ratify the act as to be able to
recover damages fbr the breach of
the contract One judge regarded the
father as a messenger rather than an
agent, and also said that the contract
could be enforced as a trust for the
benefit of the Infants. The other two
Judges held that an intent could al-
ways appoint an agent to do an act
for the infant's benefit, and that he
could even during infancy do it by
sin)sequent ratification.
In Ward v. Steamboat, 8 Mo. 358,
the owners of a boat, some of whom
were minors, sued under a statute for
Injury to the reversionary interest;
in order to show that their interest
was reversionary, they had to rely
upon a lease which was executed by
the adult owners only; but the court
held that the suit might be main*
tained, and said that an infant might
aiflrm a contract made for him, and
that then no one else can question its
vaUdity. But see Poston v. Williams*
99 Mo. App. 513.
84 Lawrence v. McArter, 10 Ohio,
37; Philpot V. Bingham, 55 Ala. 435;
Trueblood v. Trueblood, 8 Ind. 195,
65 Am. Dec* 756; Thompson v. Lyon^
20 Mo. 155, 61 Am. Dec. 599; Mor^
gage: Rocks v. Cornell, 21 R. I. 532;
Sawyer v. Northan, 112 N. C. 261.
a» Bennett v. Davis, 6 Oow. (N. Y.)
893; Knox v. Flack, 22 Penn. St.
337; Karcher v. Green, 8 Houst;
(Del.) 163; Fuqua v. Sholem, 60 111.
App. 141.
>B Fonda v. Van Home, 15 Wend.
(N. Y.) 631, 30 Am. Dec. 77.
«7 Armitage v. Wldoe, 36 Mich. 124.
««Tapley v. McGee, 6 Ind. 56; Star-
bird V. Moore, 21 Vt. 529; Somers v.
Rogers, 26 Vt. 685; Fuller v. Smith,
49 Vt 253; Millsaps v. Est&i» 134 N.
C. 486 (submission to arbitration by
any one for infant not binding).
The question of the infant's em-
ployment of an attorney presents two
aspects: first, his liability to pay for
the services and lecond, his liability
for what his attorney does. 1. Legal
services required to preserve or pro-
tect the infant's person, liberty or
personal rights are usually regarded
as necessaries to the extent of their
actual value. Barker v. Hlbbard, 54
N. H. 589, 20 Am. Rep. 160; Munson
V. Washband, 31 Conn. 303, 83 Am.
Dec. 151; Askey v. Williams, 74 Tex.
294, 5 L. R. A. 176; Petrie v. Will-
iams, 68 Hun (N. Y.), 589; Crafts v.
Oarr, 24 R. I. 397, 96 Am. St Rep.
721, 60 L. R. A. 128
lOX
§144]
THE LAW OF AGENCY
[book I
So, too, the rule has been declared without limitation in many cases
where it was not necessary. 4b-*t^ decision of the case,** being used
merely by way of illustratiorf'W asserted in order to round out some
general proposition in rHfere'nce to the powers of infants.
§ 144. Di^snBnV exceptions. — ^This unqualified statement
of the rule, however, *has not been without dissent in modem times,
and judges hare id several cases yielded to it only upon the ground
that it was l(kii5.'€stablished.**
So it ,has iJeen held that, notwithstanding the rule, an infant might
appoint an tigent to do an act unquestionably to his advantage,** — as
to .rftcfeiye' seizin of an estate conveyed to him, — and this exception is,
in re&son, undoubtedly well founded."*^
So what is sometimes termed a qualified form of agency may be
established by the appointment by a competent court of a guardian for
the infant's estate; and upon the doctrine of an agency, implied or
created by law, an infant husband may be bound for necessaries pur-
Services in protecting or securing
his property rights have been held
not necessaries. Phelps v. Worcester,
11 N. H. 51; but even in these cases
the tendency is to hold them neces-
saries when they are in fact needful
and beneficial. Searcy v. Hunter, 81
Tex. 644, 26 Am. St 837.
See also Thrall v. Wright, 38 Vt
493.
Bxamination of public records and
advice as to infant's rights as heir of
his deceased father, held not a neces-
sary in Cobbey v. Buchannan, 48 Neb.
391. So where the attorney was ap-
pointed guardian ad litem. EjUgle-
bert v. Troxell, 40 Neb. 195, 26 L. R.
A. 177, 42 Am. St. Rep. 665.
2. As to the effect of admissions,
waiversp receipts, etc., made by attor-
neys, guardians, etc., of infants, see
the exhaustive note to Kromer v. Fri-
day, 10 Wash. 621, 32 L. R. A. 671;
Belivean v. Amoskeag Co., 68 N. H.
225, 44 L. R. A. 167, 73 Am. St. Rep.
577; Glass v. Glass, 76 Ala. 368.
■•Lawrence v. McArter, 10 Ohio,
37.
40 Of this class are Cole v. Pen-
noyer; Robbins v. Mount; Dexter ▼.
Hall; Robinson v. Weeks; Fetrow t.
Wiseman; Flexner v. Dickerson;
Mustard y. Wohlford's Heirs; Roof v.
Stafford; Fonda v. Van Home; Bool
v. Mix; Heistand v. Kuns; Hamer
V. Dipple; and others cited in ft 141,
MuprtL
An infant deposited money with
stockbrokers to speculate in stocks.
He never received the stocks and the
speculation resulted in a loss. Held,
he might repudiate the arrangement
and recover his deposit in full. Mor-
decai Y. Pearl, 63 Hun, 553, aff'd no
opinion, 136 N. Y. 625.
«i See Philpot v. Bingham, 55 Ala.
435; Fetrow v. Wiseman, 40 Ind. 155.
42 See Whitney v. Dutch, 14 Mass.
457, 7 Am. Dec. 229; Tucker v. More-
land, 10 Pet. (U. S.) 58. In Hals-
bury's Laws of England, Vol. I, p.
150, it is said that an agent can bind
a minor for necessaries; and, though
no cases are cited, it is believed that
no one would doubt it.
M See per Lord Mansfield in Zouch
V. Parsons, 3 Burr. 1794. In Ewer v.
Jones, 9 Q. B. 623, Brie, J., arguendo
asks: "Cannot an infant authorise an
agent to turn out a wrongdoer?" In
that case it was held that an agent
could Ju3tify a trespass by the com-
mand of his infant principal.
102
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 145
chased by his wife/* though neither of these cases can probably be
regarded as a nmtter of agency at all.
In a few cases courts have gone further. Thus it has been held that
a note in the firm name given by the adult partner is not so far void
that it cannot be ratified by an infant partner after he becomes of
age.*' And the same conclusion was reached where an infant gave a
power of attorney under which a promissory note payable to his order
was indorsed and delivered ;*• and where an infant authorized his
brother, also an infant, to indorse and deliver a promissory note pay-
able to the former, who was under guardianship.*^ But other courts
have refused to follow these,""
§ 145, In reason how. — The tendency of modern cases,
although they are by no means harmonious, has been to regard all
contracts made by an infant, with the exception of his appointment of
an agent, in a more liberal spirit, and to treat them as voidable merely,
or if void at all, as void only in those cases where 4;hey cannot by any
possibility be to his advantage.**
Why this exception of the contract made. through an agent should
exist is not made clear by the authorities, nor is any sufficient reason
apparent,'^ and in some late well considered cases its soundness is de-
44Cantine v. Phillips, 6 Harr.
(Del.) 428.
*» Whitney v. Dutch, 14 Maas. 457, 7
Am. Dec. 229. See the notes to this
case in Am. Dec.
4« Hastings v. DoUarhide, 24 Cal.
195.
*f Hardy v. Waters, 38 Me. 450. So
it seems that where an infant seeks
to disaffirm a voidable contract and
demand restoration of property
parted with by him, he may make
such demand through an agent or at-
torney. Towle V. Dresser, 73 Me. 252.
48 See Turner v. Bondalier, 31 Mo.
App. 582, where it is held that the
infant's appointment of an agent to
make the affidavit in replevin is void,
and Hardy v. Waters and Hastings v.
Dollarhide, supra^ are denied. See
also Petrle v. Williams, 68 Hun (N.
Y.), 589.
49 In 1 Am. Lead. Cases, cited above,
the learned editors say: 'The numer-
ous decisions which have been had in
this country Justify the settlement of
the following definite rule as one that
is subject to no exceptions. The
only contract binding on an infant is
the implied contract for necessaries.
The only act which he is under a
legal disability to perform is the ap-
pointment of an attorney. All other
acts and contracts, executed or exe-
cutory, are voidable or conflrmable
by him at his election." See also
Bishop onContracts, Ed. 1887, §§917-
935.
»o Harner v. Dipple, 31 Ohio St. 72,
27 Am. Rep. 496; Patterson v. Lippin-
cott, 47 N. J. L. 457, 54 Am. Rep.
178; Cummings v. Powell, 8 Tex. 80.
See Bishop on Contracts, New Ed.
§ 930, where the learned author says:
"In reason, we shall find it difficult
to see why an infant, a person of im-
perfect capacity, cannot as validly act
through another whose capacity has
become perfected by age, and there-
fore presumably furnishing a sort of
protection, as by his sole and un-
guarded self," and he refers to Whit-
ney V. Dutch, and Bool v. Mix, cited,
91/pra. See also remarks of Holmes,
103
§§ 146, 147]
THE LAW OF AGENCY
[book I
nied.** Indeed no satisfactory reason is perceived why the rule should
not be that, within the limits and to the extent within which he may
bind himself by- his contracts, he may also bind himself by the inter-
vention of an agent appointed by him for that purpose." To such end
it is believed the authorities will come although it must be conceded
that the present weight of authority is against it.
§ 146. Effect of rule. — ^The general adoption of the view
that the infant may thus act by agent would not radically change the
results worked out by the existing rules, except as to the possibility
of ratification,** and the introduction of the well known rule that only
the infant or those who represent him may question the act.** The
obligations of the infant to the agent could still be avoided, as an in-
fant partner may now avoid his obligations to his copartner ; and the
infant's obligations, to third persons, arising from the agency, could
still be avoided by him,'^ very much as an infant partner may now
avoid personal obligations to firm creditors.
§ 147. Liability of infant for torts of agent or servant. —
With respect of the liability of an infant for the torts of one alleged
tO'be his servant or agent, much the same condition of the law is found
as in the case of contracts.** Under any view, an infant of sufficient
age would doubtless be held liable for a tort committed under his im-
mediate direction and control, without any reference to the question
of agency, on the ground that it was his own act." With reference
to his liability for the merely negligent act of his servant or agent, not
directly caused by the infant, the latter would doubtless not be bound
wherever it is held that an infant cannot appoint an agent or servant
J., In Fairbanks v. Snow, 145 Mass.
153, 1 Am. St. Rep. 446, citing Whit-
ney V. Dutch, supra; Welch v. Welch,
103 MaEB. 562; Moley v. Brine, 120
Mass. 324.
Bi Coursolle v. Weyerhauser, 69
Minn. 328; Benson v. Tucker, —
Mass. , 98 N. E. 589; Johannson
v. Oudmundson, 19 Manitoba, 83, 11
West. L. Rep. 176. See also Fergu-
son V. Houston, etc., Ry. Co., 73 Tex.
344; Simpson v. Prudential Ins. Co.,
184 Mass. 348, 63 L. R. A. 741, 100
Am. St. R. 560.
92 Thus an Infant may by agent
bind himself for necessaries. Fruchey
V. Eagleson, 15 Ind. App. 88.
B8 See ante, $ 140.
54 Thus in Patterson v. Lippincott,
47 N. J. L. 457, 54 Am. Rep. 178, it
was held that the other party to a
contract made through an agent with
an infant could not recover damages
from the agent for an alleged breach
of warranty of authority, where it
did not appear that the infant had re-
pudiated or Intended to repudiate the
contract on his part. In Continental
Nat. Bank v. Strauss, 137 N. Y. 148,
553, it is said to be the presumption
that the infant will not plead in-
fancy.
BB Vogelsang v. Null, 67 Tex. 465.
M See ante, f 141.
B7 Sikes v. Johnson, 16 Mass. 389.
See also Bumham v. Seaverns, 101
Mass. 360, 100 Am. Dec. 123.
104
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 148
at all.** Even if it should be held that an infant's appointment of an
agent or servant was not void but voidable merely, the infant would
doubtless be permitted to avoid the consequences of his servant's neg-
ligence, by avoiding the emplo3mient of the servant, in any case in
which the tort could not be regarded as his own act.
§ 148. Married woman as principal — Could not be at common law
— Now generally niay be. — ^An unmarried woman, whether tnaid or
widow, was, at the common law, subject to no general contractual dis-
abilities, and c6uld therefore appoint and act through agents as freely
as a man ; and this rule, of course, still prevails. But a married woman
at common law was, in general, incapable of entering into contracts and
therefore could neither enter into contractual obligations to an agent nor
make contracts with thirds persons through an agent.^® Modem stat-
B8ln Cooley on Torts (2d Ed.) 128,
It is said: "As the doctrine respond-
eat superior rests upon the relation
of master and servant which depends
upon contract actual or implied, it is
obvious that it can have no applica-
tion to the case of an infant em-
ployer, and he therefore is not re-
sponsible for torts of negligence by
those in his service." This is quoted
with approval and made the basis of
the decision in Burns v. Smith, 29
Ind. App. 181, 94 Am. St. Rep. 268.
So in Robbins v. Mount, 33 How. Pr.
(N. Y.) 24, 4 Robt. 553, it is said of
the infant, "He cannot in law be-
come a master or be responsible as
a master for the negligence or want
of skill of his servant."
See also Lowery v. Gate, 108 Tenn.
54, 57 L. R. A. 673 and note, 91 Am.
St. Rep. 744.
In the case of wrongs resulting
from the ownership of real estate,
however, a different rule apptlies.
Thus in Cooley on Torts (2d Ed.) 122,
It is said: "An infant as the owner
or occupant of lands is under the same
responsibility with other persons for
any nuisance created or continued
thereon to the prejudice or annoy-
ance of his neighbors, and for such
negligent use or management of the
flame, by himself or his servants, as
would render any other owner or oc-
cupant liable to an adjoining pro-
prietor." This is quoted and relied
upon in McCabe v. O'Connor, 4 N. Y.
App. Div. 354.
So in a case involving the liability
of an infant landowner for tres-
passes committed by his agent in the
course of the management of the land,
the trial court charged the jury that
tbe infant was not liable, but the su-
preme court said: "If the instruction
goes beyond the liability — growing
out of and inseparable from the rela-
tion of principal and agent, formed
by contract positive or implied, and
protects the infant of sufficient intel-
ligence and judgment from accounta-
bility for torts involved and done in
the necessary prosecution of the busi-
ness of the agency and the attain-
ment of its ends, we are not prepared
to concur in its correctness In law.
We do not see why the rule in such
case, qui facit per aHum facit per «e,
does not apply." Smith v. Kron, 96
N. C. 392.
B» Weisbrod v. Chicago, etc., Ry Co.,
18 Wis. 35, 86 Am. Dec. 743; Dorrance
V. Scott, 3 Whart. (Penn.) 313, 31
Am. Dec. 509; CaldweU v. Waters, 18
Penn. St 79, 55 Am. Dec. 592; Appeal
of Freeman, 68 Conn. 533, 37 L. R.
A. 452, 57 Am. St. R. 112; State v.
Clay, 100 Mo. 571; Marshall v. Rut-
ton, 8 T. R. 545; Lewis v. Lee, 3 B. &
C. 291; Fairthorne v. Blaquire, 6 M.
ft S. 73.
105
§ 1481
THE LAW OF AGENCY
[book I
utes, however, have quite generally removed her disability, at least so far
as her separate property is concerned, and she may now undoubtedly
appoint an agent to represent her in dealing with those matters con-
cerning which she is thus made competent to act in person.^® In this
respect, her competency is usually made coextensive with the right of
a feme sole. Her capacity to contract, however, is purely statutory
and she cannot confer upon her agent any greater powers than she
might herself exercise in the premises. Her agent, therefore, can bind
her only while acting within the limits fixed to her capacity.*^
«o Weisbrod v. Chicago, etc., Ry. Co., The same was held In First Nat.
supra; McLaren v. Hall, 26 Iowa, 297;
Knapp V. Smith, 27 N. Y. 277; Wood-
worth V. Sweet, 51 N. Y. 8; Bodine v.
Killeen, 53 N. Y. 93; Rowell v. Klein,
44 Ind. 290; Munger v. Baldridge, 41
Kan. 236, 13 Am. St R. 273; First
Com'l Bank v. Newton, 117 Mich. 433;
Crosby v. Washburn, 66 N. J. L. 494;
Lathrop-Hatten Lumber Co. v. Besse-
mer Sav. Bank, 96 Ala. 350; Bertrchy
V. Bank of Sheboygan, 89 Wis. 473;
Morris v. Linton, 61 Neb, 537 ; Linton
V. National L. Ins. Co., 104 Fed. 584;
Stout V. Perry, 152 N. C. 312, 136 Am.
St. R. 826. See cases cited in § 161,
et seq,, post.
«i Kenton Insurance Co. v. McClel-
Ian, 43 Mich. 564; Nash v. Mitchell,
71 N. Y. 199, 27 Am. Rep. 38; Fra-
zee V. Frazee, 79 Md. 27; Bowles v.
Trapp, 139 Ind, 55; Strode v. Miller,
7 Idaho, 16; McCollum v. Boughton,
132 Mo. 601, 35 L. R. A. 480; Free-
man's Appeal, 68 Conn. 533, 57 Am. St.
R. 112, 37 L. R. A. 452; McFarland v.
Heim, 127 Mo. 327, 48 Am. St. R. 629;
Spurlock V. Dornan, 182 Mo. 242;
Troy Fertilizer Co. v. Zachry, 114 Ala.
177.
By what law njLarried woman*s ca-
pacity governed — Conflict of laws. —
In Milliken v. Pratt, 125 Mass. 374,
28 Am. Rep. 241, a married woman
did not have capacity to make a con-
tract of guarantee in Massachusetts.
It was held she could appoint an
agent to make such a contract in
Maine, where such disability did not
exist
Bank v. Mitchell. 34 C. C. A. 542, 92
Fed. 565. But, on the same state of
facts, the state court came to the
contrary conclusion. Freeman's Ap-
peal, 68 Conn. 533, 37 L. R. A. 452,
57 Am. St. R. 112.
In Baum v. Birchall, 150 Pa. 164,.
30 Am. St. R. 797, a bond, signed by
a Pennsylvania woman in Pennsyl-
vania, was delivered by her agent
in Delaware where she would have
had capacity to make it. The bond
w^as held valid although no such
contract could be made at her dom-
icile.
So in Conn. Mut Ins. Co. v. West-
ervelt, 52 Conn. 586, the assignment
of an insurance policy was held
valid, when filled out by an agent in
a state where capacity existed.
In Loftus V. Farmers' ft Mer- .
chants* Nat. Bank, 133 Pa. 97, 7 L.
R. A. 313, a married woman in New
York appointed an agent to sell mu-
nicipal bonds in Pennsylvania.
Held, valid since such power was
expressly given by a statute of the
latter state.
In Thompson v. Taylor, 66 N. J.
L. 253, 54 L. R. A. 685, 88 Am, St.
R. 485, a married woman could not
sign an accommodation note In New
Jersey but could in New York. The
note was signed in New Jersey, but
as its inception dated from its ne-
gotiation by her agent in New York,
the latter law was held to govern.
To the same effect, see Voigt v.
Brown, 42 Hun (N. Y.), 894. But
io6
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 149
Where the married woman may appoint an agent, she may appoint
her husband as the agent, as will be more fully seen hereafter.**
g i^g. — ._ How agent appointed by — ^General effect. — ^The ap-
ix)intment of an agent by a married woman may be made in the same
manner as by any other principal, and when appointed the same legal
consequences and eflFects result from the relation which would flow
from the appointment by any other principal of like capacity."'*
As was said in a leading case," in New York : "With the removal
of common law disabilities from married women corresponding lia-
bilities have necessarily been imposed upon them. They take the civil
rights and privileges conferred, subject to all the incidental and cor-
relative burdens and obligations, and their rights and obligations are
to be determined by the same rules of law and evidence by which the
rights and obligations of the other sex are determined under like cir-
cumstances. To the extent, and in the matters of business in which
they are by law permitted to engage, they owe the same duty to those
with whom they deal, and to the public, and may be bound in the same
manner as if they were unmarried. Their common law incapacity
cannot serve as a shield to protect them from the consequences of their
acts, when they have statutory capacity to act. A married woman is
sui juris to the extent of the enlarged capacity to act conferred by
statute, and may be estopped by her acts and declarations and is sub-
ject to all the presumptions which the law indulges against others with
full capacity to act for themselves. * * * She has all the legal
capacity to do every act incident to tlie business or trade in which she
may engage which a feme sole would have, that is, full legal capacity
to transact the business, including, as incidents to it, tlie capacity to
contra. Union Nat. Bank v. Chap-
man, 169 N. Y. 538, 57 L. R. A. 513,
88 Am. St R. 614.
In Union Nat Bank v. Hartwell,
84 Ala. 379, the agent only had au-
thority to act in the state where
the principal did not have capacity
to contract Held, that the agent
conld not contract
In Basilea v. Spagnuolo, 80 N. J.
L. 88, the note was dated and made
payable in New Jersey where the
principal had no capacity to con-
tract Heldj that there would be a
presumption of authority to nego-
tiate only in that state and negotia-
tion in New York would not be bind-
ing. But contra^ see Voigt v.
Brown, supra.
In Johnston v. Gawtry, 11 Mo.
App. 322, the agent's act created a
charge on land. Capacity of prin-
cipal in such cases is determined by
the law of the state where the land
is located. In like manner, the va-
lidity of a power of attorney to sell
land is determined by the law of the
state where the land is situated.
Morris t. Linton, 61 Neb. 637; BIb-
sel V. Terry, 69 IlL 184.
«s See post, § 169.
M See cases cited post, $$ 169, 170.
«4 Bodine v. Killeen, 53 N. Y. 93.
107
§§ ISO. 151]
THE LAW OF AGENCY
[book I
contract debts and incur obligations in any form, and by any means,
by which others acting sui juris can assume responsibility. * * *
She is bound by the appearances which she has given to the transaction,
and upon the faith of which others have acted, up to the limits of her
legal capacity to act."
§ 150. — .— -^ Liability of married woman for torts of agents or
servants. — While the common law rules prevailed, a married woman,
as has been seen, could not enter into contracts in person or by agent
and could therefore incur no contractual liability by contract made by
another as her agent. And so with respect of her torts; while she
might be liable for the acts of another so committed under her imme-
diate direction as to be in law her own acts, if she would have been
liable if they had been committed by her in person •• she could not be
liable merely by reason of her previous or subsequent assent ••
Where her common law disabilities still prevail or in cases to which*^
the modern statutes do not extend,. she is not liable for the torts of one
alleged to be her servant.®^ But where she acts in the larger fields of
business created by the modem statutes, and employs servants and
agents, she is responsible for their torts in the same way as any other ^
master or principal.'*
§ 151. Aliens — Alien enemies. — The mere fact that one is an alien
does not in general disqualify him to be either principal or agent. An
alien, unless forbidden, may do business, make contracts, acquire prop-
erty— though he is often forbidden to hold land — and the like, and he
may usually do this through an agent like any other person. An alien
enemy, however, cannot, it is said, appoint an agent, or act by agent
across the line of hostilities, certainly not for commercial purposes ; ^^
though, as will be seen, if he already has one before the breaking out
of hostilities, the agency is not necessarily terminated as to all pur-
poses
70
05 See Sike6 v. Johnson, 16 Mass.
389. See also the interesting note ap-
pended to this case by the reporter.
66 See Vanneman v. Powers, 56 N. Y.
39 ; Ferguson v. Brooks* 67 Me. 251.
•7 Ferguson v. Neilson, 17 R. I. 81,
33 Am. St. 855, 9 L. R. A. 155, the dis-
abilities of married women not hav-
ing been removed in Rhode Island.
68 Shane v. Lyons, 172 Maas. 199,
70 Am. St 261; Ferguson v. Brooks,
67 Me. 251; Flesh v. Llndaay, 115 Mo.
1, 37 Am. SL 374.
69 See United States t. Grossmayer,
76 U. S. (9 Wall.) 72, 19 L. Ed. 627;
Hubbard v. Matthews* 54 N. T. 43, 13
Am. Rep. 562; Keersbaw y. Kelsey,
100 Mass. 561.
70 See post. Chapter VIII, Termi-
nation of Relatioru
loS
CHAP. IV] WHO MAY BE PRINCIPAL OR AGENT [§§,15^-154
II.
WHO MAY BE AGENTS.
§ 152. In general, — Having thus seen who is competent to be the
principal in the relation, attention will now be given to the question
who is competent to be the agent. Here several aspects may present
themselves: I. Who in general is competent to be agent; 2. Incom-
petency from some peculiar relation in which the parties already stand
either to one another or to the subject matter of the agency; and 3. In-
competency from lack of professional or other similar standing.
1. Competency in Generah
§ 153. What questions arise. — The question of the competency of
the agent may present itself in determining the rights and liabilities of
three groups of persons: (a) As between the principal and third per-
sons; (&) As between the principal and the agent; and (c) As between
the agent and third persons. Of these three, the first is the most im-
portant aspect. The primary purpose in the creation of agency is to
bring the principal and third persons into relations with each other,
and not at all to create obligations between the agent and the third
person or necessarily between the agent and the principal. If the
principal and the agent are both sui juris, then the rights of the third
person against the principal as well as the rights of the principal against
the agent, of the agent against the principal and of the third person
against the agent, if such rights exist, may all be valid and enforceable ;
but where the agent is not sui juris some or all of these rights may be
imperfect or unenforceable.
§ 154. Less competency in agent may suffice than is required of
principal. — From the standpoint of the rights and liabilities arising
between the principal and the third person with whom the agent deals,
it is obvious that a less degree of competency may suffice in the agent
than in the principal. The agent acts only in a representative capacity
and exercises only a derivative authority. The act to be performed is
to be done by the principalis direction and on the principars account.
The material question, therefore, is whether the principal had the
109
§ iS5l
THE LAW OF AGENCY
[book I
capacity to do the act and the right to cause it to be done by another.
The agent is not expected to bind himself, or to act upon any authority
or capacity of his own. He is but the instrument through which the
principal's power is to be exercised, the channel through which the
principal's capacity is to flow. If the principal's power is adequate,
if his capacity is sufficient, it is not at all essential that the agent also
shall have the capacity which would be required if he were himself the
principal. It is from this standpoint that it is often said that any per-
son may be an agent,'^ and that it has been declared that monks, in-
fants, feme coverts, persons attainted, outlawed or excommunicated,
slaves or villeins, and aliens are competent to act as agents.'^*
§ 155. Infant as agent. — As has been already seen, an infant is
generally held not to be competent to be a principal. He may, how-
ever, be an agent or a servant in such sense that his acts as such,
within the scope of the authority conferred upon him, will bind his
principal in formal transactions as well as informal ones to the same
degree and in the same manner as though the agent were an adult.^*
The infancy of the agent will also ordinarily be immaterial as affecting
the liability to the principal of the third persons who have had dealings
with the principal through an infant agent.
It is evident, however, that the relation between a principal and his
infant agent is not a perfect one, for though the infant may bind his
principal by his acts, and though the principal is bound by his contracts
with the infant, the infant himself may escape the liabilities to the pria-
cipal for the express or implied contractual obligations which an adult
agent would assume under like circumstances.^* Neither does such a
relation afford to third persons who may deal with the infant agent,
that protection which would be insured to them if the agent were sui
juris; for it would not be contended, for example, that, in the absence
»i Cal. Code, § 2296.
T2ErweU*B Evans on Agency, 17;
Wharton. Agency, § 14.
78 Talbot V. Bowen, 1 A. K. Marsh.
(Ky.) 436, 10 Am. Dec. 747; Ewell's
Evans on Agency, 17.
"The law Is perfectly settled that an
infant may absolutely and irrevocably
execute a power, either by absolute
deed, or otherwise, as fully and eflfec-
tually as an adult person." Sheldon
V. Newton, 3 Ohio St. 494.
"An infant can exercise a irawer
even though it be coupled with an in-
terest, where an intention appears
that it should be exercisable during
minority." Per Jessel, M. R., In re
Cardross. 7 Ch. Dlv. 728. An infant
may exercise a power of appointment
over personalty conferred by a mar-
riage settlement. In re D'Anglbau,
15 Ch. Dlv. 228.
74 See Derocher y. Continental
Mills. 58 Me. 217. 4 Am. Rep. 286;
Gaffriey v. Hayden, 110 Mass. 137, 14
Am. Rep. 680; Widrig v. Taggart, 61
Mich. 103 ; Whitmarsh v. Hall, 3 Den.
(N. Y.) 875; Vent v. Osgood, 19 Pick.
(Mass.) 572; Lufkin v. Mayall. 25 N.
H. 82; Robinson v. Weeks, 56 Me. 102.
1 10
CHAP. IVj
WHO MAY BE PRINCIPAL OR AGENT
t§ 156
of fraud, the infant would be bound by an implied warranty of author-
ity, or that, failing to bind his principal, he bound himself.
§ 156. Child as agent of parent. — An infant may be the agent or
servant either of his parent or of strangers, but in either case it must
be by virtue of some actual authorization, express or implied. Even
when he is to act for his parent, it must be by reason of the parent's
authorization, either express or implied, for, except possibly in some
cases respecting necessaries,^* a child has no implied authority, merely
because he is the child,^' to bind his parent as his agent, as, for ex-
ample, in buying or selling goods, making contracts, or loaning the
parent's property ; ^^ nor has he any power, merely because he is the
7B As to this question, which Is not
within the scope of this work, see
Porter v. Powell, 79 Iowa, 151, 18 Am.
St R. 353, 7 L. R. A. 176; Powlkes v.
Baker, 29 Tex. 137, 94 Am. Dec. 270;
Finn v. Adams, 138 Mich« 258, 4 A.
it E. Ann. Cas. 1186; Alvey v. Hart-
wig, 106 Md. 254, 14 A. A E. Ann. Cas.
250.
76 No authority results merely from
the relationship. Rltch v. Smith, 82
N. Y. 627, 60 How. Prac. 157; Walsh
V. Curley, 16 N. Y. Supp. 871; Mc^
Mahon v. Smith, 136 App. Div. 839;
Cousins V. Boyer, 114 App. Div. 787;
Hovey v. Brown, 59 N. H. 114; Nuck-
olls V. St Clair, 1 C(Ho. App. 427, 29
Pac. 284; Freeman v. Robinson, 38 N.
J. L. 383, 20 Am. Rep. 399; Hickox y.
Bacon, 17 S. Dak. 563; Hoag T. Hay,
103 Iowa, 291; Fisher y. Lutz, 146
Wis. 664; Habhegger y. King, 149
Wis. 1, 135 N. W. 166, 39 L. R. A.
(N. S.) 881.
77 "A son has no authority, as such,
to lend his father's property, and
there is no presumption that such au-
thority has been given to a son. It
may be shown that authority to lend
tools and the like has been given to
a son expressly, or such an authority
may be inferred from the conduct of
the father tending to show that he
reposed such confidence and intrusted
such discretion to the son, as by show-
ing that on other occasions the son
had lent the father's property of a
similar kind, and the father, upon
the facts coming to his knowledge,
approved what he had done, but with-
out such proof the son stands in the
same position as a stranger." John-
son V. Stone, 40 N. H. 197, 77 Am. Dec.
706.
Minor son living at home is not
presumed to be the father's agent in
hiring a tutor during vacations. Pea*
cock V. Linton, 22 R. I. 828, 63 L. R.
A. 192.
Where a minor son has paid out
his father's money for an unauthor-
ized purpose, e. g.^ for pipes and to-
bacco, the father on tendering back
the articles may recover the money.
A tender and demand made by the
plaintiffs wife is sufficient. Sequin
V. Peterson, 45 Vt 255, 12 Am. Rep.
195.
Money entrusted to a minor son
for a specific purpose and applied by
him without the father's consent in
compounding a crime committed by
the son may be recovered by the
father. Bnmham v. Holt, 14 N. H.
367.
The right of a child to use prop-
erty devoted to the purposes of the
family, in the usual and ordinary
way, may be implied, and where the
child invites another to participate in
that use, as for example to drive the
father's horses in company with the
child upon an occasion when the child
might properly use them, the person
so invited cannot be treated by the
father as a wrong-doer. Bennett v.
Gillette, 3 Minn. 423, 74 Am. Dec. 774.
Ill
§ 156]
THE LAW OF AGENCY
[book I
child, and when he is not acting as the parent's servant, to subject the
parent not himself at fault to liability for the child's torts/*
The parent may make the child his agent or servant, and this, as in
the case of other persons, may be done expressly, or be inferred from
the conduct of the parent — his acts or omissions, his acquiescence, his
approval.''®
The lack of actual authorization may also be supplied as in other
cases by the subsequent ratification, either express or implied, of the
parent,"^ and under the same qualifications and conditions.'^
For automobile cases, see Stowe v.
Morris, 147 Ky. 386, 39 L. R. A. (N.
S.) 224 (Daily v. Maxwell. 162 Mo.
App. 415, and Lashbrook v. Patten, 1
Duv. 316, were relied upon); Doran
V. Thomsen, 76 N. J. L. 754, 131 Am.
St. R. 677, 19 L. R. A. (N. S.) 335;
Moon V. Matthews, 227 Pa. 488, 136
Am. St. Rep. 902, 29 L. R. A. (NT. S.)
866 ; Smith v. Jordan, 211 Mass. 269.
For a gun case. Brittingham v.
Stadiem, 151 N. C. 299.
80 Evidence that a minor son had
on several occasion? signed for the
father with his consent tends to show
that he was authorized to sign upon
a subsequent similar occasion. Wat*
kins V. Vince, 2 Stark. 368. See also
Weaver v. Ogletree, 39 Ga. 686. Au-
thority to sign could not be inferred
from the fact that the son had on
several occasions signed, If it did not
appear that the father knew it, nor
can aothority properly be deduced
from acquiescence in a single In-
stance. Qreenfleld Bank v. Crafts, 2
Alien (Mass.), 269.
Where a son makes an exchange of
a horse belonging to his father and
the father apparently acquiesces for
a considerable period of time, he
cannot afterwards repudiate the act.
Hall V. Harper, 17 111. 82. So where
the son sold a half interest in his
father's mowing and reaping ma*
chine and the father acquiesced for
two years. Swartwout v. Evans, 37
111. 442; Condon v. Hughes, 92 Mich.
367, is to the same effect. See also
Thayer v. White, 53 Mass. (12 Mete)
343; Booker v. Tally, 21 Tenn. (2
Humph.) 308.
•I Knowledge necessary. White v.
Mann, 110 Ind. 74. Act must have
Where the parent's horse la ridden
by the son with the parent's authority
*'lt would seem to be an inference of
law, or an Incident of such authority
or loan, that the son might consent
to anything respecting the horze,
which in common prudence, would
be necessary to his existence or
preservation." White v. Edgman, 1
Over. (Tenn.) 19.
TsTifrt V. Tiirt, 4 Den. (N. Y.) 175;
Smith V. Davenport, 45 Kan. 423, 11
L. R. A. 429, 23 Am. St R. 737;
Baker v. Morris, 33 Kan. 580; Hag-
erty v. Powers, 66 Cal. 368, 56 Am.
Rep. 101; Wilson v. Qarrard, 59 111.
51; Maddox v. Brown, 71 Me. 432, 36
Am. Rep. 336; Brohl v. Lingeman, 41
Mich. 711; Needles v. Burk, 81 Mo.
569, 51 Am. Rep. 251; Paul v. Hum-
mel, 43 Mo. 119, 97 Am. Dec. 381;
Teagarden v. McLaughlin, 86 Ind.
476, 44 Am. Rep. 332; Winkler v.
Fisher, 95 Wis. 355; Schaefer v. Os-
terbrink, 67 Wis. 495, 58 Am. Rep.
875; Hoverson v. Noker, 60 Wis. 511,
50 Am. Rep. 381.
T9 Many cases in which agency for
the parent is implied from conduct,
are cited, in the following chapter,
upon Appointment and Authorization
of Agents, post, § 274, et seq.
For a case of rather direct appoint-
ment, e. g.t where a father told a
store keeper to let his daughter have
whatever she wanted out of the store,
see Harper v. Lemon, 38 Ga. 227.
Many cases involving the question
of the liability of a parent for the
negligence of hi 3 son as his servant,
are found in the chapter upon the
Liability of the Principal to Third
Persona.
I
12
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ I57-160
§ 157. Parent as agent of child. — A parent as such, whether father
or mother, is not per se agent of the child, to bind him or his estate
whether the child be infant or adult.*^ While the child is an infant,
the parent as such has no greater authority than as a natural guardian.
If the child be an adult he may appoint his parent as agent as in the
case of any other person.*^ If the child be an infant he could appoint
liis parent as agent if he was competent to appoint an agent for any
purpose.**
§ 158* Slaves as agents. — During the time of slavery it was held
that a slave could act as agent.*' Said the court in one case : *• "It is
not questioned that a master may constitute his slave his agent, and I
•cannot conceive of any distinction between the circumstances which
•constititte a slave and a freeman an agent, — they are both the creatures
of the principal and act upon his authority. There is no condition,
however degraded, which deprives one of the right to act as a private
agent ; the master is liable even for the act of his dog done in pursu-
ance of his command." While this statement could easily be shown to
•contain several errors, yet so far as it means merely that a master is
liable for the acts of his slave within the scope of the authority con-
ferred upon him, it is doubtless unexceptionable.
§ I59*. Women. — The contractual disabilities under which women
were placed at common law were practically all not disabilities of sex
"but disabilities by marriage. The unmarried woman, whether maid
or widow, was free to have an agent and certainly free to be one.
§ i6o. Married women — ^As agents for third persons. — Notwith-
standing her incapacity to appoint an agent, a married woman might,
^t common law, be the agent of third persons,*^ even in their dealings
with her husband." Her capacity in this respect, however, like that
of other persons not competent to contract generally, was necessarily
^ limited one, as the married woman was incapable of assuming the
been done as agent Fisher v. Lutz,
146 Wis. 664.
82 Parent not ipso facto agent of
minor child. Keeler v. Fassett, 21
Vt. 539, 52 Am. Dec. 71; Linton v.
Walker, 8 Fla. 144, 71 Am. Dec. 105;
Pittsburg, etc., Ry. Co. v. Haley, 170
111. 610; Houston, etc., Ry. Co. v.
Bradley, 45 Tex. 171; Clark v. Smith,
13 S. Car. 585.
83 See Reeves v. Kelly, 30 Mich.
133; Jordan v. Greig, 33 Colo. 360.
84 See Patterson v. Lippincott, 47
N. J. L. 457, 54 Am. Rep. 178.
85 Governor v. Dally, 14 Ala. 469;
Powell V. State, 27 Ala. 51; Lyon v.
Kent, 45 Ala. 656; Chastain v. Bow-
man, 1 Hill (S. C), 270.
80 Chastain v. Bowman, supra.
87 Hopkins V. Mollinieux. 4 Wend.
CN. Y.) 465; Singleton v. Mann, 8 Mo.
464; Butler v. Price, 110 Mass. 97;
McKee v. Kent, 24 Miss. 131; Whit-
worth V. Hart, 22 Ala. 343; Goodwin
V. Kelly, 42 Barb. (N. Y.) 194; Gray
V. Otis, 11 Vt 628; Sawyer v. Cut-
ting, 23 Vt. 486; White v. Oeland, 12
Rich. (S. C.) 308.
88 Story on Agency, $ 7.
8
"3
§ i6i]
THE LAW OF AGENCY
[book I
reciprocal liabilities and obligations which the perfect relation imposes
upon the agent,®*^ and as her duties to her husband and her family ren-
dered her assumption of many undertakings impossible.
The effect of the modern statutes has been to enlarge this limited
capacity according as they have enlarged her capacity to deal as a
feme sole, and where the removal of her disabilities is complete, or
where with the consent of her husband or of the law, she is competent
to carry on business as a feme sole, her capacity to bind herself to the
same extent by all of the obligations of an agent would seem to be a
necessary consequence.®^
§ i6i. Wife as agent for her husband, i. In domestic affairs. —
Both at the common law and under the modern statutes, the wife may
be the agent of her husband. This agency is often said to be of two
kinds: i. That which the law creates as the result of the marriage re-
lation, by virtue of which the wife is authorized to pledge her hus-
band's credit for the purpose of obtaining those necessaries which the
husband himself has neglected or refused to furnish ; and,
2. That which arises from the authority of the husband, expressly
or impliedly conferred as in other cases.
The wife has, by virtue of the marriage relation alone, no authority
to bind her husband by contracts of a general nature, and her author-
ity of the kind first mentioned is limited in its nature and extent by the
leg^l requirements fixed for its creation, of the existence of which
those persons who assume to deal with her as such agent must take
notice at their peril.®^ The full consideration of this question — ^the
89 See Tucker v. Cocke, 32 Miss.
184; Carleton v. Haywood, 49 N. H.
314.
00 See cases cited In note 2 to S 169,
PMt. Many interesting questions
arise in connection with this subject,
which are not yet determined, as for
example: How far is a married wo-
man acting as agent for her husband
or for a third person, bound by an
implied or express warranty of her
authority? What If she exceeds her
authority? What if she conceals her
principal? What, if intending to
bind her principal, she so executes a
written contract, as, in form, to bind
herself? How far may she assume
responBibility as an agent to third
persons without her husband's con-
sent? Upon this point, see Pullman
V. State, 78 Ala. 31.
»i Clark V. Cox, 32 Mich. 204;
Eames y. Sweetser, 101 Mass. 78;
Raynes y. Bennett, 114 Mais. 424;
Morrison y. Holt, 42 N. H. 478, 80 Am.
Dec. 120; Benjamin y. Benjamin, 1&
Conn. 347, 39 Am. Dec. 384; Jones v.
Gutman, 88 Md. 355; Bonney v. Per-
ham, 102 111. App. 634; Wanamaker
V. Weaver, 176 N. Y. 75, 98 Am. St.
R. 621, 65 L. R. A, 529; Constable v.
Rosener, 82 N. Y. App. Div. 155. aff'd
178 N. Y. 587; Rea v. Durkee, 25 111.
503; Henderson y. Stringer, 2 Dana
291; Vusler v. Cox, 53 N. J. L. 516;
Debenham v. Mellon, 6 App. Cas. 24;
Manby v. Scott, 1 Mod. 124; Jolly v.
Rees. 15 C. B. n. s. 628.
114
CHAP. IV]
WHO MAY BE FHINCIPAL OR AGENT
[§ 162
authority strictly speaking not being referable to the law of agency at
all — ^belongs properly to a treatise upon the marriage relation.**
Closely allied to the first kind and sometimes confused with it,
though really belonging to the second, because really depending upon
the doctrines of agency, is the agency of the wife resulting from the
manner in which she and her husband live, and the situation in which
•he has placed her. Many varieties of situation, of course, present
themselves, and it seems impossible to reconcile all of the cases.
§ i6a. Wife as domestic manager. — When a man main-
^ins a domestic establishment and places his wife in charge of it, she
takes by implication, as domestic manager, the power to make those
contracts and purchases respecting the conduct and maintenance of
the household affairs which are naturally and ordinarily incident to the
wife's management of such an establishment. Supplies for the house,
-domestic service, medical attendance, articles for the use of the wife
and children, and the like, suitable to the style in which the husband
lives, and of the sort and amount which are ordinarily ordered by the
wife under such circumstances, would fall within this rule.'* This
rule, it is to be observed, does not necessarily depend upon marriage,
for any other woman placed in the same situation might have substan-
•sSee Stewart on Husband and
^Ife, §S 89-98; Bishop on Married
^omen, Chap. 30; Schouler on Hus-
"band and Wife. See- also Hatch v.
Leonard, 165 N. Y. 435.
M See, for example, the opinions of
Lord Selborne and Lord Blackburn in
Debenham y. Mellon, 6 App. Cas. 24,
"2 Eng. Rul. Cas. 441, though the ac-
tual case there was not of this sort.
In'Haberman v. Grasser, 104 Wis.
"OS, upon the ground that the wife, a
-domestic manager, wa^ her husband's
-agent to purchase supplies, she was
allowed to rescind a contract for meat
which proved bad and recover the
consideration and still to have a tort
-action for Injuries to herself from the
bad meat
In Baker v. Wltten, 1 Okla. 160,
-an authority referable to the second
-class of cases is confused with the
Urst.
In Cory v. Cook, 24 R. I. 421, In a
case in which the defendant's wife
liad supplied board the converse of
the rule was applied and the court
lield that the claim for the board
money belonged to her husband's es-
tate.
This authority covers of course
only matters such as fairly belong to
the domestic management of the kind
of establishment maintained by the
husband and does not cover other
things: the receiving the husband's
telegram, Western Union Tel. Co. v.
Moseley, 28 Tex. Civ. App. 562, or the
purchase of an expensive guitar and
music, Phlllipron v. Hayter, 19 Week.
Rep. 130, 40 L. J. C. P. (N. S.) 14, L.
R. 6 C. P. 38, 23 L. T. (N. S.) 556;
Reid V. Teakle, 13 C. B. 627, 22 L. J.
C. P. (N. S.) 161, 17 Jurist, 841, or
of unnecessary Jewelry, Montague v.
Benedict, 3 B. & C. 631, 5 Dowl. ft R.
532, 3 L. J. K. B. 94, 27 Rev. Rep. 444.
See also Montague v. Esplnasse, 1
Carr. ft P. 356; Phnilps v. Sanchez, 35
Pla. 187.
See also M'George v. Egan, 7 Scott,
112, 6 Bing. N. C. 196, 3 Jurist, 266, in
which the wife's position as domestic
manager was allowed to cover a con-
tract for school for a child that lived
in the family.
"5
§ 1^3]
THE LAW OF AGENCY
[book I
tially the same authority.** Neither is the rule affected by the modcra
statutes removing the contractual disabilities of married women."*
Like any other authority so created, this would not be affected by
secret limitations sought to be placed upon it ; ®* and it would continue,
for the protection of third persons who had been led to rely upon it,
until they were notified of its discontinuance.'^
That the wife had thus been made domestic manager could be proved
either by direct statements or admissions of the husband, or by proof
of conduct reasonably warranting that conclusion.
§ 163. Some cases seem to hold that from marriage and
cohabitation a presumption will arise that the wife is domestic man-
ager which will suffice until the contrary is shown;®* but that this
presumption may be rebutted.** In many of these cases the facts un-
•*S€e per Pollock, C. B., In Ren-
eaux V. Teakle» 8 Ex. at p. 682; per
Lord Selborne. In Debenham v. Mel-
lon, 6 App. Cas. at p. 33.
M Wilson V. Herbert, 41 N. J. L.
454, 32 Am. Rep. 243.
»6 See per Lord Selborne In Deben-
ham V. Mellon, 6 App. Cas. 24, 2 Eng.
Rul. Cas. 441.
97 It may thus continue as to such
persons after the separation of the
parties, or the making of other ar-
rangements. Sibley V. Gilmer, 124
N. C. 631; Cowell v. PhUlips, 17 R. I.
188, 11 L. R. A. 182; Hartjen v. Rueb-
samen, 19 N. Y. Misc. 149; Bon wit,
Teller & Co. v. Lovett, 102 N. Y. Supp.
800; Watts v. Mofifet, 12 Ind. App.
399; Hudson v. Sholem & Sons, 65 111.
App. 61.
This kind of authority can, of
course, be cut off by notice. Keller
V. PhlUipfl, 39 N. Y. 351. See also
Harshaw v. Merryman, 18 Mo. 106.
98 Thus in New Jersey it is said,
"where husband and wife are living
together, the wife has implied au-
thority to pledge her husband's credit
for such things as fall within the
domestic department ordinarily con-
fided to her management, and for ar-
ticles furnished to her for her per-
sonal use suitable to the style in
w^hich the husband chooses to live.
Under such circumstances the .pre-
sumption is in favor of the wife's au-
thority to contract on behalf of her
I
husband. 1 Er. Pr. A A. 166; Wilsoik
V. Herbert, 41 N. J. L. 454. 32 Anu
Rep. 243; Jolly v. Rees, 15 C. B. N. S.
628; Notes to Manby ▼. Scott, $
Smith's Lead. Cbjb." Vusler v. Cox,.
53 N. J. L. 516. To thQ same effect
see: Bergh v. Warner, 47 Minn. 250,
50 N. W. 77, 28 Am. St. R. 362; Wag-
ner V. Nagel, 33 Minn. 848; Flynn y.
Messenger, 28 Minn. 208, 41 Am. Rep.
279; Tyler v. Messenger Co., 17 App..
D. C. 85; Furlong v. Hysom, 35 Me..
332; Bradt v. Shull, 46 App. Div. 347;
Tebbets v. Hapgood, 34 N. H. 420;
Wiler V. Flegel, 10 W. N. C. 240 (Pa.).
osFrom marriage and cohabitation
there is a presumption that the wife-
has authority for contracts for sup-
plies for herself and the family, but
that presumption apparently may be
rebutted by the husband by showing
that he had supplied the house or
that he had given her money and re-
quested her not to deal on credit.
Baker v. Carter, 83 Me. 132, 23 Am.
St. R. 764; Wanamaker v. Weaver^
176 N. Y. 75. 65 L. R. A. 529, 98 Am.
St. R. 621; Jones v. Gutman, 88 Md.
355; Compton v. Bates, 10 111. 78;
Morgan v. Chetwynd, 4 Fost. it F.
451 ; Lane v. Ironmonger, 13 M. A W.
368, 14 L. J. (N. S.) Ex. 35; Jolly v.
Rees, 15 C. B. (N. S.) 628. 33 L. J. C.
P. (N. S.) 177, 10 JuriBt (N. S.), 319,.
10 L. T. (N. 80 298, 12 Week. Rep.
473.
16
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ 164, 165
doubtedly were such as to justify a finding' that the wife was actually
the domestic manager with the husband's express or implied consent
(though the cases are not put upon that ground), and without that
element, or, at least, the fact of a domestic establishment, it would be
difficult to reconcile them with manv others which hold that from mar-
riage and cohabitation alone no such agency can be implied.
§ 164. Authority of this sort, arising from the acts of the
parties and not by act of law, would be revocable like any other. And
it might be revoked by acts as well as by words, as in the case of any
other authority. The breaking up of the domestic establishment, the
separation of the parties, and the like, suggest situations of this sort.
The same requirements as to notice of termination would also here
exist.
§ 165. — *^ Authority when no domestic establishment main-
tained.—-Even though the wife were not in fact put in charge of the
domestic establishment — perhaps because there was none maintained —
and had therefore no authority upon that ground, it may still be true
that authority to act as agent for her husband in domestic aiTairs can
be deduced from a course of dealing with the actual consent or the ac-
quiescence of the husband.^ Such a course of dealing might be suf-
ficient either to show an actual authority or to raise an estoppel in
favor of those who had relied upon it.
Where the wife has not been made domestic manager, and there is
no evidence of authority deducible from a course of dealing, acquies-
cence, and the like, the authority of the wife as the husband's agent
arising merely from marriage and cohabitation, is very limited, and is
dependent upon the fact that he has failed to supply her with those
things which are necessary and suitable to her position. If he had, in
fact, made a suitable provision for her, he could not be bound.* These
questions, however, are not considered in this work'.
1 Thus see Jones v. Gutman, 88 Md.
355; Hartjen v. Ruebsamen, 19 N. Y.
Mizc. 149; Bonwlt, Teller & Co. v.
Lovett, 102 N. Y. Supp. 800; Anthony
V. Phillips, 17 R. I. 188, 11 L. R. A.
182. See also Proctor v. Woodruff,
119 N. T. Supp. 232; Johnfion v. Bria-
coe, 104 Mo. App. 493.
-Thus where the husband and wife
were not keeping a house of their
own, but were serving^ he as manager
and she as manageress of a hotel
where they were supplied with food
and lodging, and the husband had
made the wife a sufficient allowance
for clothing and forbidden her to buy
upon his credit, it was held that the
husband was not liable for clothing
purchased by her. Debenham v. Mel-
lon, 6 App. Cas. 24, 2 Eng. Rul. Cas.
441. See also Dolan v. Brooks, 168
Mass. 350; Wananiaker v. Weaver,
17C N. Y. 75, 98 Am. St. R. 621, 65 L.
R. A. 529; Rosenfeld y. Peck, 149 N.
Y. App. Div. 663; Crittenden v.
Schermerhorn, 39 Mich. 661, 33 Am.
Rep. 440; Alley y. Winn, 134 Mass. 77.
117
§§ i66, 167]
THE LAW OF AGENCY
[book I
§ i66.
Wife may bind herself though dcmiestic manager. —
Where the wife has authority to bind her husband, she may, neverthe-
less, under modern statutes, bind herself, if she sees fit to do so ; but
the same rule would be applicable here as elsewhere that a known
agent acting as such is presumed to intend to bind his principal rather
than himself, and this presumption must be overcome before she can
be charged.'
§ 167. Wife as husband's agent. 2. In non-domestic affairs. —
Agencies of the second class, that is, those not relating to purely do-
mestic affairs rest upon the same considerations which control the cre-
ation and existence of the relation between other persons. The wife
may be either the general or the special agent of her husband by virtue
of his authorization, and this authorization may, as in other cases, be
express or implied ; and may be conferred by specialty or by parol ; or
by precedent act or subsequent ratification."* Her authority in this
• Powers V. Russell, 26 Mich. 179;
Wilson V. Herbert, 41 N. J. L. 454, 32
Am. Rep. 243; Peiner v. Boynton, 73
N. J. L. 136; Moore v. Copeley, 165
Pa. 294, 44 Am. St. R. 664.
♦ Cox V. Hoffman, 4 Dev. ft Batt.
(N. C.) 180; Sibley v. Gilmer, 124 N.
C. 631; Burk v. Howard, 13 Mo. 241;
Chunot V. Larson, 43 Wis. 536, 28 Am.
Rep. 567; McKinley v. McGregor, 3
Whart. (Penn.) 369; Camerlin v. Pal-
mer Co., 10 Allen (Mass.), 539; Pick-
ering V. Pickering, 6 N. H. 120; Ab-
bott ▼. McKinley, 2 Miles (Penn.),
220; Gray v. Otis, 11 Vt. 628; Miller
V. Delamater, 12 Wend. (N. Y.) 433;
Mickelberry v. Harvey, 58 Ind. 523;
Heny v. Sargent, 54 Cal. 396; Pullan
V. State, 78 Ala. 31; Ladd v. Newell.
34 Minn. 107; Lang v. Waters, 47 Ala.
624; Felker v. Emerson, 16 Vt. 653;
42 Am. Dec. 632; Cantrell v. Colwell,
3 Head (Tenn.), 471; Bdgerton v.
Thomas, 9 N. Y. 40; Weber v. Col-
lins, 139 Mo. 501; Hartjen v. Rueb-
samen, 19 Misc. (N. Y.) 149; Bon wit.
Teller v. Lovett, 102 N. Y. Suppl. 800.
See also the following cases which
treated a husband's agency for his
wife upon the same principle: Har-
per V. Dail, 92 N. C. 394; Knapp v.
Smith, 27 N. Y. 277; Buckley v. Wells,
33 N. Y. 518; Singleton v. Mann, 3
Mo. 465; Weisbrod v. Chicago, etc.,
Ry. Co., 18 Wis. 35, 86 Am. Dec. 743;
Sims V. Smith, 99 Ind. 469, 50 Am.
Rep. 99; Penn v. Whiteheads, 12
Gratt. (Va.) 74; Miller v. Watt, 70
Ga. 385; VaU v. Meyer, 71 Ind. 169;
Louisville Coffin Co. v. Stokes, 78 Ala.
372. See also Hardenbrook v. Har-
rison, 11 Colo. 9; Conrad y. Abbott,
132 Mass. 330.
Where written authority would be
requisite in other cases, it Is requi-
site when the wife is the agent Ed-
wards y. Tyler, 141 111. 454; but not
otherwise. Reeves y. McNeill, 127
Ala. 176.
Wife*9 acts during hushand^a ab-
sence,— ^The agency of the wife that
may be implied from the domestic
arrangements, may be enlarged by
the fact, that the husband during his
absence has left the wife in charge of
his affairs. See the following cases:
In Buford v. Speed, 74 Ky. 338, the
wife was in charge while her husband
was absent serving in the confederate
army. For the purpose of protecting
his property from confiscation the
wife employed and consulted with
lawyers. After his return he ex-
pressed approbation of her manage-
ment during his absence but the court
in holding him for the attorneys' fees
relies only upon the authority im-
plied from the necessity of the cir-
cumstances.
118
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 167
case, however, when implied, is to be implied from acts and conduct,
and not from her position as wife alone ; and when based upon subse-
quent ratification, is to be established by other evidence than that alone
In Church v. Landers, 10 Wend.
(N. Y.) 79, It wa3 held that In the
protracted absence of her husband a
wife may hire out one of his horses,
even although he may have given
her genera] instructions not to do so.
But held not so, where his absence
was only for a day or two. Savage
V. Davis, 18 Wis. 608.
In Evans v. Crawford County, etc.,
Insurance Company, 130 Wis. 189, 118
Am. St. R. 1009, 9 L. R. A. (N. S.)
486, during the husband's absence the
house burned and the wife made the
proof of loss, and the court, speaking
of an agency In the wife by necessity
because of the husband's absence, al-
lowed a suit upon the policy which
required proof of loss by the insured.
In Pelker t. E^merson, 16 Vt. 653,
42 Am. Dec. 532, the husband was
absent for several months and the
wife was in charge. During that
time a creditor attached cattle and
hay. The wife requested that the hay
be fed to the cattle, and this request
was held to bind the husband.
In Meader v. Page, 39 Vt. 306, the
husband was working in one state
and left his wife in charge of affairs
in another, where the home and the
family were. He sent her money and
she managed things herself. On a
visit home he ordered two tomb-
stones and promised to pay by money
which should be sent to the wife.
When the money came she used some
of it however to buy flour, because
she believed that price was rising,
and borrowed enough more of the de-
fendant to pay for the tombstones.
The husband was held liable on the
loan.
But in Benjamin y. Benjamin, 15
Conn. 347, 39 Am. Dec. 384, while the
husband was away and the wife in
charge a creditor of the husband lev-
ied on land. The wife agreed that
the creditor might cut grass growing
on the land and take the hay in pay-
ment of the debt, and it was held
that she had no implied power to
make such agreement.
In Cantrell v. Colwell, 3 Head
(Tenn.), 471, a wife, during her hus-
band's absence, was In charge of their
farm and upon seeing plaintiffs horse
in one of the fields asked a man to
get it out. The man unnecessarily
threw a stone and broke the horse's
leg. Upon the ground that because
of the husband's absence the wife
had by necessity an authority to ap-
point an agent to care for things and
authority to attend to the business of
the farm, the husband was held lia-
ble.
In Casteel v. Casteel, 8 Blackford
(Ind.) 240, 44 Am. Dec. 763, a hus-
band had abandoned his wife and
family and had left them upon a
small farm. The wife hired the
plaintiff to work the farm and the
husband was held liable upon the con-
tract as principal. The upper court
says that from these circumstances
"the jury has the right to consider
her as authorized by her husband to
procure its (the farm's) cultiyatlon
by labor."
In Fisher v. Conway, 21 Kan. 18.
30 Am. Rep. 419, the plaintiff had
gone away for a while and left his
wife upon the farm. During his ab-
sence, the defendants came upon the
land and threshed and carried off
grain. Kansas had a statute not al-
lowing a wife to testify for or against
her husband "except concerning
transactions where one acted as agent
for the other." Although there was
no evidence of any express arrange-
ment between the plaintiff and his
wife, the court allowed her to testify
as to the incidents of the alleged
trespass on the ground that, during
the husband's absence, the wife was
by implication his agent to defend
his possession. See also Butts v.
Newton, 29 Wis. 632; Moore v. Simp-
son, 5 Little (Ky.), 49.
119
§ i67]
THE LAW OF AGENCY
[book I
which is incident to the relation of the parties." But when the agency-
is found to exist, the wife may bind her husband-principal to the same
extent and in the same manner as any other agent might bind him un-
der the same circumstances.
How far the relation of agent of her husband may impose upon the
wife duties and obligations to third persons with whom she deals, is a
question suggested in a preceding section. How far the same relation
may impose upon the wife contractual obligations to her husband, is a
question which belongs rather to a treatise upon their mutual rights
and duties than to this.
The mere absence of the husband,
however, would not usually justify a
sale by the wife of his property.
Krebs v. O'Grady, 23 Ala. 726, 58 Am.
Dec. 312. Nor the return by her of
goods ordered by him and shipped to
him. Richelieu Wine Co. v. Rag-
land, 43 111. App. 257.
Hushand'8 ratification, acquies-
cence, etc. — ^Where a wife without
previous authority makes a contract
even in her own name, or does some-
thing else really on her husband's be-
half, the husband may ratify simply
by bringing suit relying upon that
act. See Grant et al. v. White, 42
Mo. 285; Evans v. Crawford Co., etc.,
Insurance Co., 130 Wis. 189, 18 Am.
St. R. 1009, 9 L. R, A. (N. S.) 485.
See also Wright v. Couch, 113 S. W.
821 (Tex. Civ. App.T, in which the
ratification was accomplished by re-
taining in the house the piano which
the wife had bought on credit.
In Stotts V. Bates, 73 111 App. 640,
the husband was held bound upon an
agreement that board should be paid
for her maintenance in her daughter's
home, made orally by the wife in his
presence and without his objection.
In Cook V. Newby, 213 Mo. 471, a
wife had written a letter making an
offer on behalf of her husband to the
defendant; the defendant ofTered in
evidence the letter with evidence that
it was written w^ith the husband's
knowledge and at his request. It was
held error to exclude the letter.
In Shuman v. Steinel, 129 Wis. 422,
116 Am. St. R. 961, 7 L. R. A, (N. S.)
1048, 9 Ann. Cas. 1064, It was h«ld
that when a wife had without pre-
vious authority signed in her own
name a contract for the purchase of
books, the husband was not bound
thereby, even although he had sub-
sequently said that he would pay if
he had ordered. The court thought
that this was no ratification because
she had not purported to act as agent.
BPlckler V. Plckler. 180 111. 168;
McNemar v. Cohen, 115 111. App. 31;
Nat. Fire Ins. Co. v. Wagley (Tex.
Civ. App.), 68 S. W. 819; McBride v.
Adams, 84 N. Y. Supp. 1060; Heyert
V. Reubman, 86 N. Y. Suppl. 797;
Ross V. Dunn, 130 Mich. 443; Martin
V. Oakes, 42 N. Y. Misc. 201; Essing-
ton V. Nelll, 21 111. 139 (dictum);
Thompson v. Brown, 121 Gfa. 814;
Colhy V. Thompson, 16 Colo. App. 271;
Syring v. Zelenski, 77 N. J. L. 406;
Ness V. Singer Co., 68 Minn. 237.
See also Howe v. Finnegan, 61 N. Y.
App. Div. 610.
In Brown v. Woodward, 75 Conn.
254, in which the question of fact was
whether the wife had been the de-
fendant's agent to borrow money,
the court held that the relationship
of husband and wife was not enough
of itself to constitute the wife agent,
but that it was evidence which they
might consider on the question of
agency. The court said, "The acts of
his wife would more readily be sup-
posed to have been with his knowl-
edge and authority than would those
of a stranger."
I20
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ l68, 169
§ 168.
Wife as husband's sub-agent. — ^Where the husband
is agent for a third person, the wife as such is in no sense tfie sub-
agent of the principal, or the agent of her husband in the performance
of his duties to the principal, so as to bind cither one for her acts.
The husband might make her his sub-agent on his own responsibility,
or he could make her such with the principal's express or implied con-
sent, but she would not stand in either relation simply because she was
the agent's wife.'
§ 169. Husband as agent for his wife. — It has been seen that
within the limits of her power under modern statutes to enter into
contracts, acquire, manage and dispose of property and carry on busi-
ness a married woman may act by.agent,^ and it is well settled that
her husband may be the agent. A husband has, however, by virtue of
his relation alone, no implied power to act as the agent of his wife in
the transaction of her business.* Whatever authority he exercises in
• Wbile an attonfey was absent
from home, a letter came to him, con-
taining a draft for collection. His
wife opened the letter and received
the money upon the draft, but the
money never reached the principal.
Held^ not payment Day v. Boyd, 58
Tenn. (6 Helsk.) 458.
fAnte, S 148.
• Hoffman v. McFadden, 56 Ark.
217, 35 Am. St. R. 101; Wagoner v.
Sllva, 139 Cal. 559; Steele v. Gold
FIssnre CJo., 42 Colo. 529, 126 Am. St.
R. 177; Dnssonlas r. Thomas, 6 Pen-
newell (Del.), 1; Jordan v. Dela-
ware Tel. ft Tel. Co., Del. — , 76
AtL 1014; Foertach v. Germuller, 9 D.
C. App. 351; Rheam v. Martin, 26 D.
C. App. 181; Byne v. Corker, 100 Ga.
445; Vizard v. Moody, 119 Qa. 918;
Devlne v. McMlUan, 61 111. App. 571;
Pratt V. Davis, 118 111. App. 161.
(While the wife still has lucid inter-
vals of complete sanity and when no
emergency exists, the hnsband is not
authorized, merely as husband, to
consent to a serioue operation upon
her.) McLaren v. Hall, 26 Iowa,
297; Price v. Seydel, 46 Iowa. 696;
Spratt V. Hugard, 5 Ky. L. R. 422;
Hayes v. Walker, 25 Ky. L. R. 1045,
76 S. W. 1099; Aiken v. Robinson, 52
La. 925; Succession of Sangplel, 114
La. 767; Steward v. Church, 108 Me.
83; Taylor v. Welslager, 90 Md. 414;
Wait V. Baldwin, 60 Mich. 622, 1 Am.
St. R. 551; Just V. State Bank, 132
Mich. 600; Detroit Lumber Co. v.
Cleff, 164 Mich. 276; Anderson v.
Gregg, 44 Mlea 170; Crawford v.
Redus, 54 Miss. 700; Henry v. Sneed,
99 Mo. 407, 17 Am. St. R. 580; Mc^
CoUum V. Boughton, 182 Mo. 601, 35
L. R. A. 480; Cox v. Railroad, 111 Mo.
App. 394; State v. Dickmann, 146
Mo. App. 396; Norfolk Nat'l Bank v.
Nenow, 50 Neb, 429; Cate v. Rollins,
69 N. H. 426; Aarons v. Klein, 29
Misc. (N. Y.) 639; Kurtz v. Potter,
44 (N. Y.) App. Dlv. 262, aff'd 167 N.
Y. 586; Gtarber v. Splrak, 114 N. Y.
Suppl. 762; Ricks v. Wilson, 164 N. C.
282; SUchtenoth v. Rife, 6 Ohio Cir.
Ct. R. 540. 3 O. C. D. 675; Cushman
V. Masterson, — Tex. Civ. App. — ,
64 S. W. 1031; Laufer v. Powell, 80
Tex. Civ. App. 604; Stroter v. Brack-
enrldge, 102 Tex. 886; Red River
Nat'l Bank v. Bray, Tex. CJiv.
App. — , 132 S. W. 968; Reed v.
Newcomb, 64 Vt. 49 ; Drake v. Drake,
142 Wis. 602.
Btatutorp Agency of HuBhand, In
a few states, the husband has been at
times made the statutory manager of
his wife's separate estate. See for
example, Sencerbox v. First Nat.
Bank, 14 Idaho, 96; Gross v. Pigg, 73
Miss. 286.
121
§ i69l
THE LAW OF AGENCY
[book I
that capacity must be derived as in the case of any other agent from
her prior appointment either express or implied, or be confirmed by her
subsequent ratification. He may, however, be authorized in the sam^
manner and be invested with the same power and authority as any
other agent, and when duly authorized his acts bind her, within the
limits of her capacity, and of his authority, to the same extent as though
she acted in person.*
• LouisviUe Coffin Co., y. Stokes, 78
Ala. 372; Hoene v. Pollak, 118 Ala.
617, 72 Am. St. R. 189; Reeve? v. Mc-
Neill, 127 Ala. 175; Hickey v. Thomp-
son, 52 Ark. 234; Puget Sound Lum-
ber Co. v. Krug, 89 Cal. 237; Foster
V. Jones, 78 Oa. 150; Wortman v.
Price, 47 111. 22; Haight v. McVeagh,
69 111. 624; Walker v. Carrlngton, 74
111. 446; Patten v. Patten, 75 111. 446;
Cnbberly v. Scott, 98 lU. 88; Ben-
nett V. Stout, 98 111. 47; Richards v.
Lumber Co., 169 111. 238; Amer. Ex-
press Co. v. Lankford, 2 Ind. Ter. 18;
Rowell V. Klein, 44 Ind. 290, 15 Am.
Rep. 235; Lichtenberger v. Graham,
50 Ind. 288; Griffin v. Ransdell, 71
Ind. 440; Pattison v. Babcock, 130
Ind. 474; Taylor v. Angel, 162 Ind.
670; Colt V. Lawrenceburg, etc., Co.,
44 Ind. App. 122; McLaren v. Hall,
26 Iowa, 297 ; Hamilton v. Hooper, 46
Iowa, 515, 26 Am. Rep. 161; Meylink
V. Rhea. 123 Iowa, 310; Rathke v.
Tyler, 136 Iowa, 284; Munger v. Bald-
ridge. 41 Kan. 286. 13 Am. St. R. 273;
Wilkinson v. Elliott, 43 Kan. 590, 19
Am. St. R. 158; Jones v. Read, 1 La.
Ann. 200; Maxcy Mfg. Co. v. Burn-
ham, 89 Me. 538, 56 Am. St. R. 436;
Coolidge V. Smith, 129 Mass. 554;
Arnold v. Spurr, 130 Mass. 347; Dug-
gan v. Wright, 157 Mass. 228; Shane
V. Lyons, 172 Mass. 199, 70 Am. St.
R. 261; Rankin v. West. 25 Mich.
195; McBain v. Seligman, 58 Mich.
294; First Comm. Bank v. Newton,
117 Mich. 433; Farley v. Stroeh, 68
Mo. App. 85; Eystra v. Capelle, 61 Mo.
578; Rodgers v. Pike County Bank,
69 Mo. 590; Ragan v. Railroad Co., Ill
Mo. 456; Long v. Martin, 152 Mo. 668;
Knappen v. Freeman, 47 Minn. 491;
Ross V. Baldwin. 65 Miss. 570; Reed
v^ Morton, 24 Neb. 760, 1 L. R. A. 736,
8 Am. St. R, 247; Harris v. Weir-
Shugart Co., 51 Neb. 483; Taylor
V. Wands. 55 N. J. Eq. 491, 62 Am.
St. R. 818; Elliott v. Bodine. 59 N.
J. L. 567; Black v. McQuald, 75 N.
J. L. (46 Vroom.), 639, (authority
by implication); Third Nat'l Bank
v. Guenther, 123 N. Y. 568, 20 Am.
St. R. 780; Wronkow v. Oakley, 133
N. T. 505, 28 Am. St. R. 661, 16 L.
R. A. 209; Baaemore v. Mountain.
121 N. C. 59; Stout v. Perry, 152 N.
C. 312, 136 Am.. St R. 826; Mitchell
V. Jodon, 22 Pa. Super. Ct. 304; Bax-
ter v. Maxwell, 115 Pa. 469; Bodey v.
Thakara, 143 Pa. 171, 24 Am. St. R.
526; Harrisburg Nat'l Bank v Brad-
Shaw, 178 Pa. 180, 84 L. R. A. 597;
Quebec Bank v. Jacobs, Rep. Jud.
Que., 23 C. S. 167; Brown v. Thomp-
son, 31 S. C. 436, 17 Am. St R. 40;
Scottish Mortg. Co. v. Deas, 35 S. C.
42, 28 Am. St. R. 832; Allen v. Garri-
son, 92 Tex. 546; Richmond v. Voor-
hees, 10 Wash. 316; Whiting v
Doughton, 31 Wash. 327; Trapnell v.
Conklyn, 37 W. Va. 242, 38 Am. St R.
30 ; Weisbrod v. Chicago, etc., Ry. C!o.,
18 Wis. 35, 86 Am. Dec. 743; Aus-
tin y. Austin, 45 Wis. 523; Lavassar
V. Washburne, 50 Wis. 200; Mayers
V. Kaiser, 85 Wis. 382, 39 Am. St R.
849, 21 L. R. A. 623; Wood v. Ar-
mour. 88 Wis. 488, 43 Am. St R.
918; Williams v. Paine, 169 U. S. 65,
42 L. Ed. 658.
"The authority of a husband to act
for his wife in the matter of making
a loan will not be presumed from the
circumstance that he has acted for
her in other matters, but must be
proved, like any otber fact, by com-
petent legal evidence." Three Rivers
Nat Bank v. Gilchrist 83 Mich. 253
122
CHAP, iv]
WHO MAY BE PRINCIPAL OR AGENT
[§ 170
§ 170-
The issuai attributes of agency also attach. Notice
to her agent is notice to her/® representations made by him affect her,**
the incidents of undisclosed agency apply to her,** as in other cases of
agency. The duties and disabilities of an agent also apply to him.
Thus he cannot, for example, use his power for his own advantage.*'
V. Terry, 105 La. 479; Jones v. Har-
rell, 110 6a. 873. But, subject to the
statutes goyeming the competency of
the husband as a witness against his
wife, it may be shown by his testi-
mony, American Express Co. ▼.
I^nkford, 2 Ind. Ter. 18; Long v.
Martin. 152 Mo. 668; Christian v.
Smith, 85 Mo. App. 117; Anderson
V. Ames, 151 Ma83. 11; Paulsen v.
Hall, 39 Kan. 365; Roberts v. North-
western Nat. Ins. Co., 90 Wis. 210.
Secret limitations upon the hus-
band's general or apparent authority
have no other effect than in other
cases. Bates v. HoUaday, 81 Mo. App.
162; Cowie v. Nat'l Bank, 147 Wis.
124.
Where written authority would be
requisite in other cases it is requisite
when the husband is agent. Shanks
V. Michael, 4 Cal. App. 658.
Some statutes require that the au-
thority given by a married woman
shall be in writing. First Nat. Bank
V. Leland, 122 Ala. 289.
10 Pringle v. Dunn, 87 Wis. 449, 19
Am. Rep. 772; Allen v. Garrison, 92
Tex. 646; Tilleny v. Wolverton, 6a
Minn. 419; Weightman v. Washing-
ton Critic Co., 4 D. C. App. 136; For-
ay the V. Brandenburg, 154 Ind. 588;
Copeland v. Dixie Co. (Ala. App.), 67
So. 124; Elias Brewing Co. v. Boeger.
74 Misc. (N. Y.) 547.
iiKnappen v. Freeman, 47 Minn.
491. See also Allen t. Garrison, stu-
pre; Quarg v. Scher, 136 Cal. 406;
Deering 6 Co. v. Veal, 25 Ky. L. R.
1809; Kelley v. Andrews, 102 Iowa,
119; Enslen v. Allen, 160 Ala. 529;
Bell V. McJonea, 161 N. C. 85.
i2puget Sound Lumber Co. v.
Krug. 89 Cal. 237; Harris v. Silver-
man, 154 Mo. App. 694.
iBArnett v. Glenn, 62 Ark. 253, as
by taking his own debt In payment
of an account due her.
Authority given by a married wo-
man to her husband to sign her name
as surety for his benefit does not in-,
dude authority to sign her name as
principal. Farmington Savings Bank
V. Buzzell, 61 N. H. 612. Nor wiU
authority to manage her plantation
authorize him to bind her by nego-
tiable paper. Folger v. Peterkin, 39
La. Ann. 815. Authority to a husband
to deposit hii wife's note in a bank
does not include authority to collect
the note or to dispose of the proceeds.
Norfolk Nat. Bank v. Nenow, 50 Neb.
429.
A power of attorney from a wife
to her husband to release a mortgage
is not evidence to show him to be a
general agent Trimble v. Thorson,
80 Iowa, 246. The mere fact that the
wife owns the premises upon which
her husband carries on his business,
does not tend to show that he does so
as her agent Dlckerson v. Rogers,
114 N. Y. 405; WiUson v. Underbill,
83 Hun (N. Y.), 233; Jones v. Har-
rell, 110 Ga. 873.
By allowing her husband to man-
age and to dispose of the products of
her farm and thereby making him
agent to manage the farm, a wife
doe 3 not by implication give him gen-
eral power to sell. Saunders v. King,
119 Iowa, 291. And in general the hus-
band agent can bind his wife only by
acts within the scope of his author-
ity. Joplin v. Freeman, 125 Mo". App.
717; Slaughter v. Elliot, 138 Mo. App.
692; Taylor v. Taylor, 54 Ore. 560.
The fact of the husband's agency
for his wife can not be established by
his declarations. Sanford v. Pollock,
105 N. Y. 450; Jarvisv. Schaefer, 105
N. Y. 289; Three Rivers Nat. Bank v.
Gilchrist, 83 Mich. 253; Ferris v.
Baker, 127 Cal. 520; Bank of Ravenna
v. Dobbins, 96 Mo. App. 698; Brown v.
Daugherty, 120 Fed. 526; First Nat.
Bank v. Leland, 122 Ala. 289; Baer
123
§ i7x]
THE LAW OF AGENCY
[book I
The third person, also, is bound in the same way and to the same ex-
tent as in any other case.*'*
§ 171. Proof required. — Because of the relation existing
between them and of the opportunities which it affords for coercion
and evasion, it has been held that the evidence of his agency, whether
it is sought to be established by the wife's prior appointment or lier
subsequent ratification, must be clear and satisfactory, and sufficiently
strong to explain and remove the equivocal character in which the
wife is placed." This rule, hovyever, it is held, does not mean that a
1* Runyon v. Snell, 116 Ind. 164, »
Am. St. Rep. 839; Magerstadt v.
Schaefer. 110 111. App. 166, 213 IH.
351. See also Wasem v. Raben,
45 Ind. App. 221; Hunt v. Rhodes
Bros., 207 Mass. 30. See also Taylor
V. Minlgus, 66 111. App. 70.
15 Rowell V. Klein, 44 Ind. 290; Mc-
Laren V. Hall, 26 Iowa, 297; Eystra v.
Capelle, 61 Mo. 578; Mead v. Spald-
ing, 94 Mo. 43; Alexander y. Perkins,
71 Mo. App. 286; Bridges v. Russell,
30 Mo. App. 258; Francis t. Reeves,
137 N. C. 269.
In McLaren v. Hall, supra, Ck>le, J.,
says, at page 305: "the husband may
act as agent for the wife. In order
to bind her, however, he mu3t be
previously authorized to act as her
agent, or she must subsequently with
express or implied knowledge of his
act, ratify it. The evidence neces-
sary to establish a ratification by the
wife of a contract made by her hus-
band a3 her agent, must be of a
stronger and more satisfactory chai^-
acter than that required to establish
a ratification by the husband of the
act of the wife as his agent, or than
as between independent parties.
And this for the reason that (in the
general experience of the past, at
least, if not in the philosophy of the
present), the wife is under the con-
trol of, and subordinate to, the hus-
band; and neither good law nor
sound reason will require the wife to
destroy the peace of her family and
endanger the marriage relation ' by
open repudiation or hostile conduct
toward her husband, in order to save
her property from liability for his
unauthorized contracts. Of course it
1 1 necessary In every case, in order to
bind her that he should, at least,
claim to act as her a^ent; and her
ratification should be shown by those
unmistakable acts or declarations
which evince a knowledge of the con-
tract by which she is sought to be
bound, and an intention to adopt or
ratify it as her own." See also San-
ford V. Pollock, 105 N. Y. 450.
It i\ on the contrary, suggested in
Cattell V. Ferguson, 3 Wash. 541, that
"less proof would probably suffice to
establish the agency of the husband
in such matters [the erection of a
house on the wife's land] than where
the relationship of husband and wife
does not exist." See also Simes v.
Rockwell, 156 Mass. 372, ^l N. E. 484;
Jefferds v. Alvord, 161 Mass. 94; Hen
derson v. State, 55 Tex. Cr. R. 640.
In Hoene v. Pollak, 118 Ala. 617,
72 Am. St. R. 189, a wife who could
not read or write had always en-
trusted to her husband the manage-
ment and control of her stock In
the H. Coal Co. He had voted it in
favor of transferring all the assets
to a new company, and had received
the new stock in her name. It was
found that she knew of the transac-
tion, and it was held, she was bound
by his acts and could not have the
deed set aside.
Mechanics' Liens on Wife's Prop-
er/2/.— In Wheaton v. Trimble, 145
Mass. 345, 1 Am. St. R. 463, where
the wife's real estate was managed
by the husband "just as he used to
when it was his" it was held that
he had authority to create a mechan-
ic's lien upon it. Her knowledge
and personal direction of the work
124
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENt
[§ 171
Afferent principle as to the weight of evidence, is to be applied in these
than in other civil cases. Where the attention of the jury has been
properly directed to the considerations involved, the question of agency
or not is to be determined by the fair preponderance of the evidence."
-showed she assented to this exercise
of his authority. The same knowl-
edge was of Importance in Richards
▼. Spry Lomber Co., 169 111. 238, in
which the wife wai hound hy an
agreement to pay the sub-contractor
hefore the general contractor, where
the husband had general charge of
the property and had executed the
general contract as agent of the wife.
Where the husband was in charge
merely for this particular operation,
but the wife knew of the work and
did not object, she is bound by the
lien created. Jobe v. Hunter, 165
Pa. 5, 44 Am. St. R. 639.
On similar facts, eyen her express
objection could not limit the au-
thority, according to Maxcy Mfg. Co.
v. Bnrnham, 39 Me. 588, 56 Am. St
R. 436, on the ground that she was
the responsible party even though
unknown to the material man, and
-she could limit the actual agency
only by bringing her objection to his
notice.
Other cases deny that the actual
agency was ever In existence against
her positive objection. The lower
-court was reversed in Zelgler v. Gal-
vin, 45 Hun (N. Y.), 44, because it
found as fact that the husband and
wife were agreed that the husband
snould pay for the work, and then
found, as matter of law, that he was
only her agent because it was her
house, the work was done at her re-
•quest, and for her benefit. Here
knowledge and assent to the work
were not conclusive of agency. On
the same ground, the lower court was
sustained in requiring the plaintiff
to prove the wife'3 actual intent that
the husband should act as her agent.
"The wife might very naturally ac-
quiesce in having the proposed build-
ing erected * ♦ ♦ and yet most
strenuously object, if thereby her
property was to be encumbered."
Rust-Owen Lumber Co. v. Holt, 60
Neb. 80, 83 Am. St. R. 512. Also
Hoffman v. McFadden, 56 Ark. 217,
35 Am. St. R. 101
Where the wife takes an active
part in directing the work, changing
the plans, or procuring the contract,
she is bound by the acts of the hus-
band. Bumgartner v. Hall, 163 111.
136; Bevan v. Thackara, 143 Pa. 182,
24 Am. St. R. 529; Spears v. Law-
rence, 10 Wash. 368, 45 Am. St. R.
789. But her interest must be more
significant than the participation
that any woman might take in her
husband's project. Hoffman v. Mc-
Fadden. supra.
In Bevan v. Thackara, supra, the
court said that to establish the
agency it must be proved that the
contract was reasonably necessary
for the improvement of the separate
estate of the wife. But a finding of
agency was sustained in Maxcy Mfg.
Co. V. Burnham, supra^ in spite of
the fact that the husband afterward
sold the lumber, and it did not go to
benefit the estate directly.
See also Bodey v. Thackara, 143
Pa. 171, 24 Am. St. R. 526.
i«In Long V. Martin, 152 Mo. 668,
the court referring to the cases above
cited said: "Upon the strength of
these cases It is contended that when
a question of this kind is submitted
to a jury under conflicting evidence
they should be instructed to find In
favor of the wife if a doubt remains
in their minds although a fair pre-
ponderance of the evidence is
again :t her. We do not think that
is the law. We recognize the wisdom
and justice of the principles an-
nounced in the cases above referred
to. It would be very unjust to draw
the same inferences from a married
woman's behavior In reference to her
husband's management of her prop-
erty as we would naturally draw
"5
§ 172]
THE LAW OF AGENCY
[book I
But these considerations are important. If, for example, a man
buys a sewing machine or piano for his wife, or makes repairs upon
her house which is their dwelling-, he may be doing it on his own ac-
count as her husband, or on her account as her agent. Surely, if he
is to bind her as her agent, it should appear that any acts or acquies-
cence on her part, relied upon as showing her authority, should indi-
cate approval of his acts as her agent and not merely acquiescence in
what he does as her husband. If the act be one which he himself ought
to do as husband, still clearer evidence should be required before she is
charged for it as his principal.
§ 172. Statutory provisions. — In some states, the rules of
agency are changed by statute when they would apply to an agency of
the husband for his wife. Some statutes forbid such agency for cer-
tain purposes." Another statute giving the husband the right of
management of his wife's property is construed to make him her
agent ^® in contracts concerning that property but not generally.** An-
other statute provides that where, without written recorded contract
between husband and wife changing the relation, the husband carries
on business with the means of the wife, such business shall be held to
be on her account by her husband as agent.*® Other statutes make
from the conduct of parties not bear-
ing that relation to each other. If it
be a question of implied agency, a
ratification, or estoppel, the jury
should be so cautioned in instruc-
tions that they would know how to
distinguish wifely conduct from bufii-
nesB acts. The trial judge should'
magnify the office of wife over that
of the mere woman of business. But
after the jury hai been properly cau-
tioned and instructed along that line
80 that they will know how to appre-
ciate and weigh the evidence they
should render their verdict according
to its fair preponderance." See also
Holden v. Kutscher, 17 N. Y. Misc.
640; Arnold v. Spurr, 130 Mass. 347.
And the burden of proof is of
course upon him who relies upon the
agency. Sanders v. Brown, 145 Ala.
665.
17 Van Brunt v. Wallace, 88 Minn.
116; Sutton v. Brekke. 117 Minn. 519
(all contracts between husband and
wife as to her real estate, void) ;
Sanford y. Johnson, 24 Minn. 172 (to
convey any interest in his wife'tf
realty, which was held to cover giv-
ing a lease). In Sawyer v. Blg-
gart, 114 Iowa, 489, under a statute
which provided that when property
was owned by husband or wife, the
other could have no interest therein
which could be the subject of con-
tract between them, it was held that
neither could make a contract consti-
tuting the other his attorney to con-
vey or release the expectant or po-
tential interest in the property of the
other.
18 See Dority v. Dority, 30 Tex. Civ.
App. 216, aff'd 96 Tex. 215; Sencer-
box ¥. Bank, 14 Idaho, 95.
IB Owens V. New York, etc., Land
Co. (Tex. Civ. App.), 32 S. W. 1057;
Parker v. Wood, 25 Tex. Civ. App.
506; Sutherin v. Chesney, 85 Kan.
122.
20 This was so even to the extent
of charging her by virtue of the stat-
ute with a liability as principal.
Johnson T. Jones, 82 Mi3S. 483.
126'
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ 1 73, 1 74
1x)th husband and wife liable for family expenses on debts incurred by
-either.*^
§ 173. Corporations as agents. — Within the scope of its corporate
powers, unless there are express provisions in its charter or constating
-instruments to the contrary, a corporation may act as agent, either for
:an individual, a partnership or another corporation.*^ Many of the
great corporations of the country are organized for this express .pur-
pose under statutes or charters conferring and defining their powers
:and the methods of executing them ; ^^ but even in other cases, author-
ity so to act might be implied as auxiliary to their main purposes.
But where the power is not expressly conferred and cannot be thus
implied, the corporation could not lawfully undertake to act as agent ; ^^
though if it had in fact done so it would not be permitted, in many
jurisdictions at least, to escape responsibility by alleging that its act
-was ultra vires,
§ 174. Partnership as agents. — ^The same rule applies to the case
of partnerships. They may be organized expressly for tliat purpose,
•or they may, within the limits of their powers, undertake to act as
agent as an incident to their general business. Where authority is
thus delegated to a firm, it is an appointment of the firm as the agent,
-and not of the individual members as several and separate agents.
Hence in the absence of anything to show a contrary intent, either
partner may execute the power, and the act of one in that respect is
the act of the partnership and is in strict pursuance of the power.**
21 See Mandell Bros. v. Fogg, 182
Mass. 582, 94 Am. St. R. 667, 17 L.
JL. A. (N. S.) 426, in which the Massa-
-chusetts court refuBed to enforce the
Illinois statute against a Massa-
chnsetts woman for goods bought In
Illinois by her husband without her
Icnowledge while they were both tem-
porarily lu Illinois.
22 Anderson v. First Nat. Bank, 5
N. Dak. 451. (This case held that
a corporation might properly act as
agent of its debtor in selling his se-
curity which it held as collateral.
Its dictum was that a mere agency
to collect would be ultra vires, but
ihat the bank which had undertaken
so to act, to its principal's injury,
would be estopped to plead ultra
vires.) San Diego Water Co. v. San
Diego Flume Co., 108 OaL 649, 29 L.
R. A. 839; McWiUiama v. Detroit
Mills Co., 31 Mich. 275; Land, etc.,
Co. V. Gillam, 49 S. Car. 345 j Dye r.
Virginia Midland Ry. Co., 20 D. C.
App. 63; Green-Grleb-Shernian Co. v.
Quinlen Co., 148 111. App. 1. See
also JemiBon v. Citizens' Savings
Bank, 122 N. Y. 135, 19 Am. St. R.
482. 9 L. R. A. 708.
-« KIllingBworth v. Trust Co., 18
Oreg. 351, il Am. St. R. 737, 7 L. R.
A. 638.
24 Peck-Williamson, etc., Co. v.
Board of Education, 6 Okla. 279. A
corporation organized under a gen-
eral act providing for general busi-
ness corporations cannot hire attor-
neys and do a law business. In re
Bensel, 68 Misc. 70.
s^Deakin v. Underwood, 37 Minn.
98, 6 Am. St. Rep. 827; Eggleston v.
Boardman, 37 Mich. 14; McLaughlin
v. Wheeler, 1 S. Dak. 497; Frost y.
127
§§ 175-177]
THE LAW OF AGENCY
[book I
§ 175. Alien enemies as agents. — ^While it seems to be generally-
agreed "that an agent constituted before a war may continue to rep-
resent his principal in transactions not contrary to the policy or in-
terests of the government of the agent's residence, though the principal
be an enemy resident under the hostile government," *• it is said also
to be agreed that "the agency must have been created before the war
began, for there is no power to appoint an agent for any purpose, after
hostilities have actually commenced." ^^
2, Disqualification from Adverse Interest.
§ 176. What here included. — A person may be disqualified to act
as agent in a particular case not by reason of any personal disability-
which would disqualify him for acting as agent generally, but merely
by reason of some peculiar relation which he already occupies towards
the subject matter of the agency or towards one of the parties to be
dealt with. There will be occasion to consider more fully the princi-
ples involved when dealing with the duties of the agent to his prin-
cipal" and other subjects,** but the matter requires brief attention
here, as furnishing one of the reasons why the relation of principal
and agent should not be assumed at all in particular cases.
§ 177. One cannot be agent if duty and interest conflict. — ^A per-
son will not be permitted to take upon himself the character of an
agent, where, on account of his relation to others, or on account of his
own personal interest, he would be compelled to assume incompatible
and inconsistent duties and obligations. An agent owes to his principal
a loyal adherence to his interest,^** and it would be a fraud upon the
principal and would contravene sound public policy, to permit a per-
son, without the full knowledge and consent of his proposed principal,
to enter into a relation involving such a duty, when his allegiance had
already been pledged to one having adverse interests, or when his own
personal interests would be antagonistic to those of his principal."*^
Erath Cattle Co., 81 Tex. 505, 26 Am.
St. R. 831; McCulloch Land A C. Co.
V. Whltefort, 21 Tex. Civ. App. 314.
Where a firm executes a deed as
agent one of the partners who signs
for the firm may also acknowledge
the execution. McCulloch L. A €L
Co. V. Whltefort, supra,
«• See United States v. Grossmayer,
76 U. S. (9 Wall.) 72, 19 L. Bd. 627;
New York L. Ins. Co. v. Dayis, 96 U.
S. 425, 24 L. Ed. 453; Hubbard v.
Matthews, 54 N. Y. 43, 13 Am. Rep,
562; Buford v. Speed, 74 Ky. fll
Bush.) 338; Small v. Lumpkin, 69 Va.
(28 Gratt.) 832.
27 In United States y. Grossmayer,.
supra,
M See po**, Book IV, Chap. II.
20 See post. Book IV, Chap. II„
Chap. VII.
so See post, Book IV, Chap. II.
81 See Rice v. Wood, 113 Mass. 133,.
18 Am. Rep. 459; Raisin y. Clark, 41
Md. 158, 20 Am. Rep. 66; Scribner v.
Collar, 40 Mich. 376, 29 Am. Rep.
128
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 178
With such full knowledge and consent, however, he may usually be
agent.
§ 178. One cannot be agent of both parties — ^When. — A person
may act as agent of two or more principals in the same transaction, if his
duties to each are not such as to require him to do incompatible things ; '*
or if he is employed in a capacity which does not imply trust and con-
fidence, as where he is a mere middleman who brings parties together
and then leaves them to bargain for themselves.** But wherever from
the nature of his employment, each of two principals with opposing
interests is entitled to the benefits of the agent's judgment, discretion
or personal influence, he will not be permitted to act as agent of both
parties, except with their full knowledge and consent.'* If, however,
541; Lynch v. Fallon, 11 R. I. 311, 23
Am. Rep. 468; Bell Y. McOonnell, 37
Ohio St 396, 41 Am. Rep. 528; Ses-
sions V. Payne, 113 Qa. 955; Morey
v. Laird, 108 Iowa, 670; Marsh v.
Buchan, 46 N. J. Bq. 695; Hammond
V. Bookwalter, 12 Ind. App. 177;
Campbell y. Baxter, 41 Neb. 729;
Shepard y. Hill, 6 Wash. 605; Colbert
Y. Shepherd, 89 Va. 401; Hafner y.
Herron, 165 111. 242; Armstrong y.
O'Brien, 83 Tex. 635; Frlesenhafan
WiB. 162; Bray y. Morse, 41 Wis.
343; Rice Y. Wood, 113 Masa 183, 18
Am. Rep. 469; Bell y. McConnell, 37
Ohio St. 396, 41 Am. Rep. 528; Stew-
art Y. Mather, 32 Wis. 344; Fama-
worth Y. Brunquest, 36 Wis. 202;
Famsworth y. Hemmer, 1 Allen
(Mass.), 494, 79 Am. Dec. 756;
Walker y. Osgood, 98 Mass. 348, 93
Am. Dec. 168; Raisin y. Clark, 41 Md.
168, 20 Am. Rep. 66; Lynch y. Fallon^
11 R. I. 311, 23 Am. Rep. 468; Pugs^
V. Bushnell, 47 Minn. 443; Hobson y. . ley y. Murray, 4 B. D. Smith (N. Y.),
Peake, 44 La. Ann. 883; Euneau y.
Rleger, 106 Mo. 669; and see, gener-
ally, the cases cited In following sec-
tions.
«2 Nolte Y. Hulbert, 37 Ohio St 446;
Hinckley y. Arey, 27 Me. 362; Scott
Y. Mann, 36 Tex. 167; Cottom Y. Halli-
day, 69 111. 176; Sheperd y. Lanfear,
5 La. 336, 26 Am. Dec. 181 ; Northrup
Y. Germanla Fire Ins. Co., 48 Wis.
420, 33 Am. Rep. 815; Adams Mining
Go. Y. Senter, 26 Mich. 73; Union
Planters' Bank y. Bdgell (Miss.), 33
So. 409.
»»See ^08t, Brokers; PoUatscheck
Y. Goodwin, 17 N. Y. Misc. 687; Casey
▼. DonoYan, 66 Mo. App. 621.
«* Hinckley y. Arey, supra; Cope-
land Y. Mercantile Ins. Co., G Pick.
(Mass.) 197; New York Ins. Co. y.
National Ins. Co., 14 N. Y. 85; Meyer
Y. Hanchett, 39 Wis. 419, s. 0. 43
Wis. 246; Greenwood Y. Spring, 54
Barb. (N. Y.) 375; Samner v. Char-
lotte, etc., R. R. Co., 78 N. C. 289;
Shirland y. Monitor Iron Works, 41
245; Everhart Y. Searle, 71 Penn. St.
256; Scribner y. Collar, 40 Mich. 376,
29 Am. Rep. 241; Sessions y. Payne,
113 Ga. 966; Clendennlng y. Hawk, 10
N. Dak. 90; Alta InYestment Co. y.
Worden, 25 Ck>lo. 216; Tinsley y. Pen-
nlman, 12 Tex. CIy. App. 591; Brit-
tlsh Am. Assur. Co. y. Cooper, 6 Colo.
App. 25; Greenwood Ice & Coal Co. y.
Georgia Home Ins. Co., 72 Miss. 46;
Armstrong y. O'Brien, 83 Tex. 635;
Morey y. Laird, 108 Iowa, 670; Ham-
mond Y. Bookwalter, 12 Ind. App.
177; Fitzgerald y. Fitzgerald Const.
Co., 44 Neb. 463, 160 U. S. 656; Camp-
bell Y. Baxter, 41 Neb. 729; Shepard
Y. Hill, 6 Wash. 605; Leathers y. Can-
field, 117 Mich. 277, 45 L. R. A. 33;
Hafner y. Herron, 165 111. 242; Marsh
Y. Buchan, 46 N. J. Bq. 696; Black y,
unier, 71 111. App. 842; Van Vlissin-
gen Y. Blum, 92 111. App. 146; Ham];>-
ton Y. Lackens, 72 111. App. 442; Per^
kins Y. Quarry Co., 11 N. Y. Misc.
328; Chapman y. Currie, 61 Mo. App.
40. •
129
§§ 179, i8o]
THE LAW OP AGENCY
[book I
having full knowledge of his relations to each, they see fit mutually to
confide in him, there can be no legal objection to such an employment,*"
nor will either of the principals be permitted afterwards to escape re-
sponsibility because of such double emplo)mient.**
§ 179. One cannot be party and agent far opposite party. — For the
same reason, one cannot, without the full knowledge and consent of the
opposite party, be both a party and the agent for the opposite party
in the same transaction. Thus, as will be more fully explained here-
after," except with the full knowledge and consent of his principal,
an agent appointed to buy or lease lands or goods for his principal
cannot buy or lease of himself ; and an agent to sell or lease lands or
goods for his principal cannot sell or lease to himself,** and the like ;
nor can an agent authorized to receive payment for his principal bind
the latter by the receipt of money due from himself.*®
As will also be more fully stated later, what he cannot do directly,
he will not be permitted to do indirectly ; it is not material that he had
no fraudulent intent, or that the principal sustained no actual injury.***
§ 180. Other party as agent to sign memorandum imder Statute
of Frauds. — ^While there does not appear to be any reason why, in
the ordinary case of a written contract or memorandum, one party may
not, in the presence and by the direction of the other at least, sign tlie
latter's name to the contract or memorandum made between them,**
«B Adams Mining Co. v. Senter, 26
Mich. 73; ColweU v. Keystone Iron
Co., 36 Mich. 53; Fitzslmmona v.
Southern Express Co., 40 Ga. 330, 2
Am. Rep. 577; Rowe v. Stevens, 53
N. Y. 621; Joslin v. Cowee, 56 N. Y.
626; Whiting v. Saunders, 22 N. Y.
Misc. 639; Rolling Stock Co. v. Rail-
road, 34 Ohio St. 450; Leekins v.
Nordyke, 66 Iowa, 471; Alexander v.
Northwestern University, 57 Ind. 466;
Rosenthal v. Drake, 82 Mo. App. 358,
86 Pltzsimmons v. Southern Express
Co., supra; DeStelger v. Hollington,
17 Mo. App. 387; Robinson v. Jarvis,
25 Mo. App. 421, and cases in pre-
ceding notes.
87 See post, Book IV, Chap. II.
M Ames V. Port Huron Log Driving
Co., 11 Mich. 139, 83 Am. Dec. 731;
Van Epps V. Van Epps, 9 Paige (N.
Y.), 237; Dutton v. Willner, 62 N. Y.
;319; Conkey v. Bond, 36 N. Y. 430;
Keighler v. Savage Mfg. Co., 12 Md.
383, 71 Am. Dec. 600; Ruckman v.
and cases In preceding note.
Bergholz. 37 N. J. L. 437; Bain v.
Brown, 66 N. Y. 285; Kerfoot v. Hy*
man, 62 111. 612; Parker v. Vose, 45
Me. 54; White v. War, 26 Ark. 446;
Stewart v. Mather, 32 Wis. 844:
Marsh v. Whitmore, 21 Wall. (U, 8.>
178, 22 L. Ed. 482; Euneau v. Rieger,
105 Mo. 659; Tllleny v. Wolverton, 46
Minn. 256; Clendenning v. Hawk, 10
N. Dak. 90; Rorebeck v. Van Eaton,
90 Iowa, 82; Colbert v. Shepherd, 89
Va. 401; Pinch v. Conradt), 154 Pa.
326; Webb v. Marks, 10 Colo. App.
429; Hodgson v. Raphael, 105 Ga. 480;
Burke v. Bours, 92 Cal. 108; Russell
V. Bradley, 47 Kan. 438; Friesenhahn
V. Bushnell, 47 Minn. 443; Hobson v.
Peake, 44 La. Ann. 383; Dlsbrow v.
Secor, 58 Conn. 35; Van Dusen v.
Bigelow, 13 N. D. 277.
89 See post, Book IV, Chap. II.
AoenVs diUy of Loyalty,
40 See postf Book IV, Chap. II.
Agent's duty of Loyalty.
41 In Bird v. Boulter, 4 B. & Ad. 443,
the solicitor general. Sir John Camiv
130
CHAP. IV]
WHO MAY* BE PRINCIPAL OR AGENT
[§ i8i
it is held that, in the case of the note or memorandum required by the
statutes of frauds, the other party cannot be the agent referred to in
the statute.*' The theory is that it would defeat the whole purpose
of the statute if the other party, who could not under the statute di-
rectly establish the contract by oral testimony, may do so indirectly by
establishing by such testimony that he was made the agent of the other
to sign the note or memorandum.
S. Incompetence from Lack of Professional or Other Similar Standing.
§ i8i. Lack of professional standing may disqualify. — Incapacity
to act as agent in a given situation may also arise from the lack of
some required professional training, standing or position. Thus though
one may have the right to prosecute or defend his cause in court,
"either in person or by an attorney or agent of his choice," it is held
that, if he chooses to appear by agent, that agent must be an attorney
at law.*'
Similar questions would arise if the authority could only be exer-
cised upon the floor of a particular stock exchange, and no one but
members of the exchange could act there. So if none but a licensed
broker or auctioneer was competent to act, the lack of the necessary
license would work a disability.
bell, argued that "at common law,
there is nothing to prevent one con-
tracting party from being the agent
of the other; an obligor, for instance,
from giving an obligee a power of
attorney to execute a bond for him;
a lessee from executing a lease as
attorney of the lessor; a party from
accepting a bill by procuration, pay-
able to his own order; — assuming the
authority In each case to be qomplete,
which would be matter of evidence."
In Clough V. Clough, 73 Me. 487,
40 Am. Rep. 386, It ia said by the
court argttendo. "An agent cannot
contract with himself. He cannot as
agent for the grantor execute a deed
to himself. But he can prepare a
deed running to himself, even to the
signing and sealing, and if the
grantor then adopts the deed by per-
sonally acknowledging and deliver-
ing It, it wlU be a legal and valid
instrument."
42 Wright V. Dannah, 2 Camp. 203;
Bird V. Boulter, supra; Sharman v.
Brandt, L. R. 6 Q. B. 720.
« Cobb V. Judge, 48 Mich. 290; Har-
klns V. Murphy, 61 Tex. Civ. App. 668.
See also Kelly v. Herb, 147 Pa. 563,
where a statutory requirement that a
pleading be signed by the party or
his attorney was held to mean his at-
torney at law and not his attorney in
fact
131
§§ 182-184] THE LAW OF AGENCY [BOOK I
III.
JOINT PRINCIPALS.
§ 182. One person as agent for several. — ^What has thus far been
said has contemplated the case wherein one person only — ^natural or
artificial — ^was to be the principal, but other cases may arise wherein a
number of persons are interested as principal or principals. Such
cases may present a variety of aspects. Thus it may happen that each
of a number of persons in no wise related and having neither com-
mtmity nor conflict of interest may chance to appoint the same person
as his agent, as where a number of owners of goods- consign them for
sale to the same factor, or a large number of clients employ the same
attorney or broker. Such cases present usually no peculiar aspects.
On the other hand, a number of persons having related or similar or
identical interests in the same subject matter may be involved, and the
questions will be, for example, whether they can appoint or have ap-
pointed one person to represent them as their agent ; whether all must
unite in appointing or whether one can appoint for all; whether all
must expressly assent to the appointment; and how, if such an agent
be appointed, he shall execute his authority.
With respect of the question of capacity there can ordinarily be
little difficulty, the general rule that whatever one may lawfully do in
person he can lawfully do by agent applying as well to a number of per-
sons as to one. How the agent is to be appointed, whether one has
implied power to appoint for all, and how the authority when conferred
shall be executed, are questions of more difficulty.
1. Appointment by Several Principals.
§ 183. Usually all must unite in appointing. — Where several per-
sons having common interests desire to be represented by an agent, it
is, in general, true that one of such persons has no implied power to
appoint an agent for all and that all must imite in making the appoint*
ment. Each may appoint for himself or all unitedly may appoint for
all, but one has no implied power to appoint for another or for all.
The fact that the parties have common or similar interests or that they
may be already associated or related makes ordinarily no difference in
the application of the rule. The case of the partnership, immediately
to be considered, is the most conspicuous if not the only exception.
§ 184. Must contemplate a joint power. — In order, more-
over, to the creation of a really joint power it is essential that the
i'62
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ 185, 186
parties shall contemplate aa exectition which shall bind them all
jointly : the mere fact that several individually appoint the same agent
is not enough ; for in such a case, in the absence of anything indicating
a contrary intention, the authority conferred by each will be deemed
to be limited to the separate individual business of each principal.**
§ 185. Partners.— It is one of the fundamental principles in the
law of partnership, that, within the scope of the partnership business,
each partner is the agent of all the other partners for the transaction
of Ae partnership affairs, and his acts are the acts of all. The nature
of the partnership business may be such as to make the employment of
agents and servants necessary or proper, and the employment of them
may be the usual and contemplated method of prosecuting the firm's
business, and fall within this implied agency of each partner. His
appointment of an agent, therefore, within these limits, is an appoint-
ment by all, and the acts of the agent are the acts of all.*"
§ 186. Joint tenants and tenants in common* — In the case of co-
tenants, on the other hand, there is no implied authority in each to act
for all so as to bind them personally,** and the act of one, or the ap-
pointment of an agent by one will, therefore, bind that one only.*^
All may, of course, join in the appointment or subsequently assent to it,
and thus make the agent the agent of them all.**
4« Harris ▼. Johnston, 54 Minn. 177,
40 Am. St. Rep. 312.
As to a duty to account to each of
several principals severally, see Gra-
ham V. Cummlngs, 208 Pa. 516, en-
forcing such a duty.
As to apportioning liability, see
Schick V. Warren Mtg. CJo., 86 Kan.
812.
«Carley v. Jenkins, 46 Vt. 721;
Coons V. Renlck, 11 Tex. 134, 60 Am.
Dec. 230; Banner Tobacco Ck). v. Jen-
Ison, 48 Mich. 459; Harvey v. Mc-
Adams, 32 Mich. 472; Wheatley v.
Tutt, 4 Kan. 240; Charles v. Eshle-
man, 5 Colo. 107; Clark v. Slate Val-
ley R. Co.,4rL36 Pa. 408, 10 L. R. A.
238; Beckham v. Drake, 9 M. ft W.
79. See antet § 132.
The agent of a partnership is not
the agent of the partners Individu-
ally, but of the partnership as a
whole. Johnston v. Brown, 18 La.
Ann, 330; Deakln v. Underwood, 37
Minn. 98, 5 Am. St. R. 827.
40 TutMe V. Campbell, 74 Mich. 652,
16 Am. St R. 652; James v. Darby,
100 Fed. 224; City of St. Louis v.
Laclede Gas L. Co., 96 Mo. 197, 9 Am.
St R. 334; Omaha Refining Co. v.
Tabor, 13 Colo. 41, 16 Am. St R. 185,
5 L. R. A. 236; Merrltt v. Kewanee,
175 111. 537; Baker v. Wlllard, 171
Mass. 220, 68 Am. St. R. 445, 40 L. R.
A. 754; Morrison v. Clark, 89 Me. 103,
56 Am. St R. 395; Lipscomb v. Wat
rous, 3 D. C. App. 1; Charleston, etc.,
R. Co. V. Leech, 33 S. Car. 175, 26,
Am. St R. 667; Union Hosiery Co. v.
Hodgson, 72 N. H. 427; Metzger v
Huntington, 139 Ind. 501; Blackledge
V. Davis, 129 Iowa, 592; Walker v.
Marion, 143 Mich. 27; Lee v. Living-
ston, 143 Mich. 203; Anderson v.
Northrop, 44 Fla. 472. Same of ten-
ants by entireties. Murphy v. Lewis,
76 N. J. L. 141. But see Williamson
V. Moore, 10 Idaho, 749.
*i Perminter v. Kelly, 18 Ala. 716,
54 Am. Dec. 177; Keay v. Fenwlck.
1 C. P. Dlv. 745; Corlies Y. Cummlng,
6 Cow. (N. Y.) 181; Noe v. Christie,
51 N. Y. 270.
«Keay v. Pen wick, supra; Lyons
133
§ i87]
THE LAW OF AGENCY
[book I
§ 187. Associations, clubs, societies and committees.— The case of
the voluntary unincorporated association, club, society or committee
presents similar questions. May one or more members, less than the
entire number, bind all or appoint agents whose acts shall be deemed
to be the acts of all? Are the members jointly liable as principals
upon contracts purporting to be made in their behalf in carrymg out
the enterprises which they undertake? Two classes of cases arise in
connection with such contracts. One of these is where it is sought to
charge the entire membership as principals in dealingrs had with a
smaller number alleged to have been the agents of all. The other is
where it is attempted to hold this smaller number — ^the alleged agents
in the former class — directly responsible as principals usually upon
the ground that they had assumed to act for a principal having no legal
existence. It is with the former class only that it is here proposed to
deal, the latter being reserved for subsequent consideration.**
In the first place it may be observed that it is now quite generally
settled that such organizations, not being organized to carry on busi-
ness for pecuniary profit, are not partnerships**^ and that the mem-
bers are not liable as partners,'^ but that their liability is to be deter-
mined upon the rules of principal and agent.** The principle which
applies here is the familiar one that no person can be charged upon a
contract alleged to have been made upon his re^x>nsibility, unless it
can be shown that to the making of that contract upon his responsi-
bility, he has given his express or implied assent.'^' Without such as-
V. Pyatt, 51 N. J. Eq. 60. All may ac-
quiesce in the act of one as their
agent so as to make his act their
act Clute V. Clute, 197 N. Y. 439,
134 Am. St. R. 891, 27 L. R. A. (N.
S.) 146; EUis v. Snyder, 83 Kan. 638,
• 32 L. R. A. (N, S.) 253.
But the Joint owner who is au-
thorized agent must act within the
scope of the authority conferred.
Gillham v. Walker, 135 Ala. 459.
4» For cases of the other class, see
post. Book IV, Chap. III.
BO McCabe v. GoodfeUow, 133 N. Y.
89, 17 L. R. A, 204; Dstrom v. Greene,
161 N. Y. 353; Ash v. Guie, 97 Penn.
St. 493, 39 Am. Rep. 818; Burt v.
Lathrop, 52 Mich. 106; Flemyng v.
Hector, 2 M. & W. 172; Caldicott v.
Griffiths, 8 Bxch. 898; Todd v. Emly,
7 M. & W. 427, s. c. 8 M. & W. 505;
Wise V. Perpetual Trustee Co., [1903]
App. Cas. 139; Lafond v. Deems, 81
N. Y. 514; Waller v. Thomas, 4 Daly,
651, 42 How. Pr. (N. Y.) 337; Ferris
v. Thaw, 5 Mo. App. 279; Richmond
V. Judy, 6 Mo. App. 465; Edgerly v.
Gardner, 9 Neb. 130; Austin y.
Thompson, 45 N. H. 113; Woodward
V. Cowing, 41 Me. 9, 66 Am. Dec. 211;
Ehrmantraut v. Robinson, 52 Minn.
333; Teed v. Parsons, 202 111. 455.
Bi Lewis v. Tilton, 64 Iowa, 220, 52
Am. Rep. 436, and cases cited in fore-
going note.
82 Flemyng v. Hector, supra; Todd
y. Emly, supra, and cases cited in fol-
lowing note.
esDevoss v. Gray, 22 Ohio St. 169;
Newell y. Borden, 128 Mass. 31; Vol-
ger y. Ray, 131 Mass. 439; Ash y.
Guie, supra; Ray y. Powers, 134
Mass. 22; Ridgely y. Dobson, 3 Watts
ft S. (Penn.) 118; Lewis y. Tilton,
supra; Heath v. Goslin, 80 Mo. 310,
60 Am. Rep. 505; Burt y. Lathrop, 62
134
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ i88
sent, therefore, no power arises merely from the existence of the
association which will justify one or some of the members in pledging
the credit of the others.**
§ i88. — — How assent may be given. — ^This assent may be
expressed in a variety of ways, and at one of several times. It may
have been g^ven in advance by consenting to be bound by all contracts
of a certain kind that may be made in the future ; it may be given con-
temporaneously with the making of the contract ; and it may also be
inferred from a subsequent ratification.
Thus where it is a part of the scheme or purpose of the organization
as provided by its articles of association, charter, constitution or by-
laws, that certain contracts or obligations in behalf and upon the
credit of the organization, may be entered into, either upon the vote of
a majority or at the discretion of a committee or officer, or upon any
other lawful contingency or event, every person who becomes a mem-
ber, by so doing impliedly cc«isents, in advance, to be bound by any
contract or obligation of the kind contemplated, entered into under the
circumstances prescribed.'*
Where, however, there is no such undertaking to abide by the action
of the majority,"^* or to be bound by contracts entered into by the com*
mittee or officers, those only who authorize the making of the contract
will be bound. Hence if there be a division of opinion and the con-
Mich. 106; Rice v. Peninsular Club,
52 Mich. 87; Flemyng v. Hector, 2 M.
A W. 172; Sproat v. Porter, 9 Mass.
300; Males v. Murray, 23 Ohio Clr. Ct.
R. 396.
»*McCabe v. Goodfellow, supra;
Plemyng v. Hector, supra; Todd v.
Emly, supra; Caldicott v. Griffiths,
supra; Ash v. Guie, supra; Devoss ▼.
Gray, supra; In re St. James' Club,
2 De G., M. ft G. 383 ; Wood ▼. Finch,
2 F. & P. 447; Bailey v. Macaulay, 19
L. J. Q. B. 73; Wise v. Perpetual
Trustee Co., [1903] App. Cas. 139;
Murray v. Walker, 83 Iowa, 202; First
Nat. Bank v. Rector, 59 Neb. 77;
Willis V. Greiner (Tex. Civ. App.),
26 8. W. 858; Sheehy v. Blake, 72
Wis. 411, 8. c. 77 Wis. 394, 9 L. R. A.
564, and other cases cited in preced-
ing notes.
55 Todd V. Emly, 7 M. ft W. 427;
Cockerell v. Ancompte, 2 Com. B. (N.
S.) 440; Flemyng v. Hector, 2 M. ft
W. 172; Devoss ▼. Gray, supra.
ThuB the members of a co-opera-
tive association which carries on a
store are liable for goods purchased
by the manager chosen by the mem-
bers. Davison v. Holden, 55 Conn.
103, 3 Am. St. R. 40. So also Bennett
V. Lathrop, 71 Conn. 613, 71 Am. St.
R. 222.
69 Where a voluntary association is
formed under rules, or a constitution
and by-laws and funds are contrib-
uted for the purposes prescribed by
such constitution, etc., the funds can-
not be appropriated to any diCFerent
purpose by a majority unless that
power is given by the constitution, or
unless such majority has power by
the terms of the constitution, etc., to
alter or amend it. Kalbitzer v. Good-
hue, 52 W. Va. 436.
However much a majority may con-
trol acts within the prescribed pur-
pose, they have no power to extend
or alter the agreed purpose. See
Brown v. Stoerkel, 74 Mich. 269, 8
135
§ 189] THE LAW OF AGENCY [BOOK I
tract is authorized by a majority only, the majority only can be held
responsible."
But though a member at the time dissents, yet if he subsequently
concurs or acquiesces in the making of the contract, he will be bound
in the same manner as though his assent had been previously given.**
§ 189. — Liability may be limited to funds. — It is entirely
possible that both as to other members and third persons, the liability
of the members of such an association may, either expressly or by im-
plication, be limited to the fund contributed or agreed to be contributed
for its purposes, unless there is something to indicate that they have as-
sented to a wider liability. In the case of the ordinary club, for ex-
ample, having fixed initiation fees and regular dues, it must be assumed
in the ordinary case that the liability of a member is to be limited to
the amount so- agreed to be contributed, and mere membership or ac-
quiescence in the ordinary affairs of the club cannot be deemed evi-
dence of an assent to be bound beyond this limit. His liability, more-
over, for what had been done during his membership would ordinarily
cease with the termination of his membership and the payment of his
dues for that period. In order to charge him with a personal liability
beyond this, something evidencing an assent to be bound in that man-
ner would be required."'
It is also entirely possible in other cases than those of clubs that
credit was given to funds to be raised, and that no personal liability
was to rest upon any member of the association, committee or group.
L. R. A. 430;^ Mason V. Finch, 28 Mich, partnerships; they are not associa-
282; Abels v. McKeen, 18 N. J. Eq. tions for gain; and the feature which
462. distinguishes them from other socle-
But where no such rules or consti- ties is that no member as such be-
tution have been adopted, it is held comes liable to pay to the funds of
that the general rules of parliament- the society or to any one else any
ary law rply« and that a majority money beyond the subscriptions re-
duly acting, may control. Ostrom v. quired by the rules of the club to be
Greene, 161 N. Y. 353. paid so long as he remains a mem-
ft7 Todd v. Emly, supra. ber. It is upon this fundamental con-
fts Heath v. Goslin, supra; Eich- dition, not usually expressed but un-
baum V. Irons, 6 W. ft S. (Pa.) 67, derstood by every one, that clubs are
40 Am. Dec. 540. formed; and this distinguishing fea-
B»Wise y. Perpetual Trustee Co., ture has been often Judicially recog-
[1903] App. Cas. 139; Flemyng v. Heo- nized."
tor, 2 M. ft W. 172; In re St James In this case it was held that a mem-
Club, 2 D. M. ft O. 383. her was not liable to contribute for
In Wise v. Perpetual Trustee Co., the indemnity of those who had in-
aupra, it is said: "Clubs are associa- curred a personal liability in renting
tions of a peculiar nature. They are the clubhouse, he having already
societies the members of which are paid all that was due by the terms of
perpetually changing. They are not membership.
136
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 190
Materials are not infrequently furnished and services rendered upon
this basis, and where this was the understanding, individuals can not
be held liable unless there be some other -evidence than membership
reasonably warranting the conclusion that a personal liability was con-
templated.'®
§ 190. ■' Illustrations.—- In a leading case upon this subject,
it was sought to hold certain members of an unincorporated club lia-
ble for work done and goods supplied to the club upon the order of a
standing committee appointed by the club. It appeared that the club,
which was one organized for the purpose of furnishing refreshments
and entertainment to its members, had adopted certain rules by which
each member was to pay admission and annual fees, and was also to
pay daily for his accommodations at the club. A committee was ap-
pointed €0 manage the affairs of the club, but it appeared that the rules
of the club gave the committee no authority to pledge the personal
credit of the members. The plaintiffs attempted to hold the defend-
ants personally responsible by virtue of their membership only, and
offered no evidence that they had ever expressly or impliedly assented
to the making of the particular contract sued upon. But the court
hcW that in the absence of such evidence, the defendants were not
liable and that mere membership in the club was not sufficient.*^ So,
where an action was brought to charge certain members of an unincor-
porated religious society for services performed in building a church
edifice, it was held that even if it were to be assumed that the defend-
«o Thus In Rlffe v. Proctor, 99 Mo.
App. 601, It was held that the min-
ister of an unincorporated church so-
ciety could not recover his salary of
the memhers personally, It heing the
well understood scheme at the time
of his employment that the salary of
the minister was to he raised by vol-
untary subscriptions.
So also where a newspaper pub-
lished as the organ of a political
party was to be maintained by funds
eontributed, workmen who furnished
service knowing the situation have
no personal claim against those who
were managing the enterprise. Hos-
man v. Kinneally, 43 Misc. 76, s. 0.
45 Misc. 411; Lightboum v. Walsh,
97 App. Dlv. 187.
In Clark v. O'Rourke, 111 Mich. lOS,
66 Am. 8t R. 369, it was recognized
that such an arrangement might be
made but it was held that there was
not sufficient evidence that it had
been made to Justify submitting it to
the Jury. See also Weatherford, etc.,
R. Co. v. Granger, 86 Tex. 350.
•iFlemyng v. Hector, 2 M. ft W.
172; and this case was followed in
the similar case of Todd v. E3mly, 7
M. A W. 427, s. 0. 8 Id, 605.
In Flemyng v. Hector, Alderson,
B., said: "This question turns sim-
ply on the authority which the par-
ties who made the contract had to
pledge the credit of the defendants
to the plaintiffs. Taking it that the
committee have made the contract,
and that they are by the rules of the
society authorized to manage the af-
fairs of the club, it may follow from
that that the defendants have given
authority to the committee to dis-
charge the contract out of the funds
137
§ 191] THE LAW OF AGENCY [bOOK I
ants were members because it was alleged that they were deacons of
the church, still their liability as principals would not follow, because
a member of an unincorporated religious society cannot be held per-
sonally responsible for the debts of the society unless it be shown that
in some way he had sanctioned or acquiesced in their creation,**
So at a meeting of a voluntary unincorporated association organized
for the purpose of encouraging the breeding and exhibition of fowls,
a premiiun list for an exhibition to be given was adopted. An action
in equity was afterwards brought to compel the defendants, as mem-
bers, to contribute their proportion of the expenses incurred in holding
the exhibition and paying the premiums. But the court held that
mere membership wotdd not bind a member for any further payment
than the initiation fee and annual assessment, and that only such mem-
bers as participated in the vote to hold the exhibition and award the
premiums or as assented to be bound by such vote, would be bound
thereby. It therefore became a question of fact whether any or all oi
the defendants so participated or assented. In determining the ques-
tion of such participation or assent, the testimony of those present was
admissible and the formal record of the meeting was not the only
means of proof, unless made so by some rule or regulation of the asso-
ciation.*'
§ igz. Assent inferred from conducts — ^This assent need
not always be declared in express terms. It may be, and often is, in
in their hands; but it Is contended bo» the committee are not authorized
on the part of the committee that to pledge the credit of individual
they had a right to pledge the per- members; and if they do deal on
Bonal credit of the members, and credit, it is their own affair, done
therefore to make these defendants on the faith of the money in their
liable. I think they have not. When hands, which would enable them to
I come to look at the mles of the pay their accounts." So also In re
club, which are to be the guide by St. James' Club, 2 Pe O., M. & G. 388.
which we are to act, and which con- See also Caldicott v. Griffiths* 8 Bxch.
stitute the only authority the com- 898; Wood v. Finch, 2 F. 4^ F. 447;
mittee had, I do not find anything to Bailey v. MacauUy, 19 L. J. Q. B. 73 ;
lead me to the conclusion that the Wise v. Perpetual Trustee Ck)., [1903]
authority of the committee extended App. Cas. 139, 72 L. J. P. G. 31.
to the right of pledging the personal ^^ Devoss v. Gray, 22 Ohio St 159.
liability of any of the members of it; •* Ray v. Powers, 134 Mass. 22.
on the contrary, I find the members Where there was evidence that a col-
of the club carefully provided a fund, lege class, at a class meeting, voted to
which was to be collected before they publish a classbook, the members who
became members of the club, and either voted or assented to the vote
having. collected that fund and pro- may be held personally liable for the
vided it, the committee are to man- expense, to one who printed it, under
age it Then what is it the com- a contract with that member of the
mittee are to manage? Why, the class who was elected "business man-
fund so provided, and to manage the ager of the publication." WlUcox v
club upon those terms. If that be Arnold, 162 Mass. 577.
138
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 192
this, as in other cases, inferred from the conduct of the parties. Thus
a school-board had for years employed and paid the plaintiff as a
teacher. The president of the board employed her for another year
and she performed the service, but not being paid in full, she brought
suit against the board for the balance. Some of the defendants ob-
jected that they had never authorized the president to make the con-
tract, but the court said: "There is ample (evidence) in the case to
submit to the jury from which the knowledge and co-operation of all
of the defendants may be justly inferred. They were the acting board
intrusted with the management of the school. They had for years
been employing and paying this woman. They knew that she was
continuing to teach and being paid out of the funds. They had not
withdrawn from their self-imposed office as a managing board." •*
So certain members of a committee were held personally liable for a
public dinner ordered by the committee, upon the ground that, though
they opposed the resolution while it was under consideration, they had
at last submitted to the majority and made the resolution their own.*'
And, generally, if, with knowledge of the facts, the members ac-
quiesce, or fail reasonably to dissent, and, a fortiori, if, with such
knowledge, they take the benefits of the act, they may fairly be deemed
to have ratified and approved it.'*
§ 192. The rules stated, — It is believed that the following
rules embrace the authorities upon this subject :
I. That mere membership in such an association, society, club or
committee does not make the member personally liable upon contracts
purporting to be made on its behalf, unless there is something in the
charter, by-laws or articles of association authorizing the pledging of
the credit of the association, to which he is presumed to have assented
M Heath ▼. Goslin, 80 Mo. 810, 50
Am. Rep. 505.
•s Elcbbaum y. Irons, 6 Watts Ml S.
(Penn.) 67, 40 Am. Dec 540. In this
case. Chief Justice Gibson said:
"E^rery member present assents be-
forehand to whatever the majority
may do, and becomes a party to acts
done, it may be, directly against his
will. If he wonld escape responsi-
bility for them, he ought to protest
and throw np his membership on the
spot, and there was no evidence that
any of the defendants did so. On the
contrary they all remained till the
meeting was dissolved and the order
given." It is evident, However, that
the chief justice did not mean to be
understood as holding that liability
attached to the mere fact of member-
ship or that the defendants could
be bound without their assent, but
that the assent of the defendants was
to be inferred from their conduct.
In another part of the opinion he
says: *'Did the defendants then con-
cur in the order given for the dinner
in question? If they did not, the
plaintiff cannot recover/'
M As where the making of the con-
tract was reported at a meeting of
the members and no dissent was ex-
pressed. Btikeman v. Flack, 58 N.
T. App. Div. 277. And where a lodge
moved into and occupied for many
years and paid the rent of premises
139
§ 193] THE LAW OF AGENCY [BOOK I
by becoming a member, and then only in those cases where the con-
tract is within the limits there prescribed.
2. That except in the case last mentioned, the member can only be
made liable upon proof of his express or implied assent to the contract;
but this may be shown either by his previous consent or his subse-
quent adoption or by his acquiescence in an established course of
dealing.
§ 193. Inchoate corporations. — ^A corporation is not responsible
for acts performed or contracts entered into before its organization
by its promoters or other persons assuming to bind it in advance.*^
Having as yet no corporate existence it is, of course, incapable of
entering into contracts, or appointing officers or agents. When its
organization is effected, however, it may expressly or impliedly become
a party to a previous contract by novation ; it may make a present con-
tract by now accepting an outstanding offer made before the corpora-
tion was organized; or it may, it is said, by what is loosely termed
adoption adopt and assume the responsibility of such acts or contracts,
if within its corporate powers, and thus make them the valid obliga-
tions of the corporation. Such an assumption it is said may, as in
other cases, be implied where the corporation, with knowledge of the
facts, appropriates to itself the benefits and advantages derived from
the act or contract of the promoters, for "it cannot take the benefit of
the contract, without performing that part of it which the projectors
undertook that it should perform." •• This, however, is a matter to
be more fully discussed in a later section.**
rented by the offlcera. Ehrmanntraut St. R. 468, 29 L. R. A. 63; Bufflngton
V. Roblnaon, 52 Minn. 333. See also v. Bardon, 86 Wis. 636; Pitts v. Steele
Sheehy v. Blake, 72 Wis. 411, 77 Merc. Co., 75 Mo. App. 221; Hill ▼.
Wis. 394, 9 L. R. A. 564, where the Ctould. 129 Mo. 106; Bash v. Culver
court held that members of an unin- Min. Co., 7 Wash. 122; Franklin Fire
corporated religious society were per- ^^b* ^« ^* Hart, 31 Md. 60; Western
sonally bound by acquiescence for the Screw Co ▼. Cousley, 72 111. 531.
salary of their minister. •» Bell's Oap R. R. Co. v. Christy,
07 Morawetz on Corporations, S 547; 9upra; Rockford, etc., R. R. Co. v.
McArthur v. Times Printing Co., 48 Sage, supra; Western Screw Co. v.
Minn. 319, 31 Am. St. R. 653; Pratt T. Cousley. 9U9ra; Pratt v. Oehkoih
Oshkosh Match Co., 89 Wis. 406; Pax- Match Co., 9upra; McArthur v. Times
ton Cattle Co. t. First Nat Bank, 21 Printing Co., •upra; Bufflngton v.
Neb. 621, 89 Am. Rep. 852; Bell's Gap Bardon, «upra; Stanton v. New York,
R. Co. V. Chrtety, 79 Penn. St 54, 21 etc.. R. Co., 59 Conn. 272, 21 Am. St
Am. Rep. 39; Rockford. etc., R. R. R- HO I O^kes v. Cattaraugus Water
Co. v. Sage, 65 111, 328, 16 Am. Rep. Co., 143 N. Y. 430, 26 L. R. A. 544»
587; New York, etc., R. R. Co. v. and note; Bridgeport Electric Co. v.
Ketchum, 27 Conn. 170; Weatherford, Header, 72 Fed. 115; Farmers' Bank
etc., R. Co. ▼. Cteanger, 86 Tex. 360, v. Smtth, 105 Ky. S16, 88 Am. St R.
40 Am. St R. 837; St Johns Mfg. 341. See 16 Am. L. Rev. 367 and 67 U
Co. V. Munger, 106 Mich. 90, 58 Am. «• See po9t, U 380-383,
140
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT [§§ I94, I95
5. Execution in Behalf of Joint Principals.
§ i94« Authority usually to be executed in behalf of all jointly. —
Where two or more persons thus unite in the appointment of an agent,
the authority so conferred upon him is usually to be exercised only in
behalf and in the name of all jointly and with reference to property or
other subjects which they own jointly or in which they have a joint
interesf® A power of attorney to convey lands, — ^an instrument sub-
ject always to strict interpretation — given by two or more joint owners
is^ therefore, usually to be deemed limited in its operation to lands in
which the donors of the power have a joint interest and does not au-
thorize the conveyance of the separate property of one of them only."
But this rule is not inflexible and the circumstances may indicate a
contrary purpose. The nature of the interests of the grantors or their
relations to each other may make a different conclusion permissible.
Thus if the parties have distinct or severable interests a power to con-
vey, not limited by its terms, may be- deemed sufficient to authorize a
conveyance either jointly with the interests of others or separately.^*
IV.
JOINT AGENTS.
§ 195. Authority to several agents. — Much of that which was said
respecting joint principals is, mutatis mutandis, applicable here. One'
person may appoint a great many agents not only as of course where
their duties relate to different subjects, but also frequently where,
though severally appointed and authorized, their powers and duties
may relate to ihe same subject. Thus, for example, as will be seen, a
person having property to sell may ordinarily authorize a number of
brokers to endeavor to find a purchaser," and may appoint them at
difiFerent times, for different periods and upon different terms. These,
however, are not the cases here to be referred to. Instead of thus con-
70 Authority given by several sep-
arately to the same agent must, In
the absence of anything showing a
contrary intention, be construed as
relating to the separate individual
business of his respective principal
and as not Justifying the making of
a joint obligation. Harris v. John-
ston, 54 Minn. 177, 40 Am. St R. 312.
n Gilbert v. How, 45 Minn. 121, 2S
Am. St. R. 724; Dodge v. Hopkins, 14
Wis. 630. Where two of four Joint
owners give Joint power to the other
two, they must unite in the execution.
Separate sales will convey their own
interests only. Smith v. Glover, 50
Minn. 58.
T2Holladay v. DaHy, S6 U. 8. (19
Wall.) 606, 22 U Ed. 187.
T8 Tinges V. Moale, 25 Md. 480, 90
Am. Dec. 73; Ahem v. Baker, 34
Minn. 98; Minto v. Moore, 1 Ala. App.
556.
T4I
§§ 196-198] THE LAW OP AGENCY [BOOK I
ferring a several authority upon a number, the principal may confer
the authority as a unit upon two or more agents jointly, and the nature
of the powers and duties in such a case and the method of executing
such an authority require special consideration.
§ 196. Legal effect of appointing joint agents. — Where the prin-
cipal thus confers authority upon two or more agents jointly, the ordi-
nary effect is to put those agents in the same attitude in which a single
agent would be placed. As said in one case,'* "If a principal employs
several agents to transact jointly a particular piece of business, he is
equally responsible for the conduct of each and all of them while acting
within the limit and scope of their power, as completely so as he would
be for the conduct of a single agent upon whom the whole authority
had been conferred. He cannot shift or avoid this responsibility by
the multiplication of his agents. It is also clear that the correspond-
ing responsibility of each of the several joint agents to the principal
for the faithful discharge of their duties, is as complete and perfect as
in the case of a single agency ; and any prejudice to the principal aris-
ing from fraud, misconduct or negligence of either of them would
afford ground for redress from the party guilty of the wrong."
§ 197. Notice to one — Liability of one for acts of others. —
Upon the ground that the duty of communicating to the principal
knowledge coming to the agent rests alike upon each member of such
a joint agency, it is held that notice to one of them is to be deemed
notice to the principal ; '• and this is doubtless true wherever his rela-
tion to the subject matter is such as to impose a duty upon him of an
individual character.
So, from the standpoint of their liability to the principal, it is said in
a recent case,'* "It is familiar law that where two or more perscms
undertake to execute a private agency together, they are jointly liable
each for the acts of the other ; nor is it any defence that one of them
wholly transacted the business with the knowledge of the principal.
Each is liable for the whole, if they jointly undertake the agency, not-
withstanding an agreement between themselves to the contrary, or
that one shall have the profits." But this would not be true of mere
fellow-agents or co-agents who had not jointly undertaken to perform
the service.^'
§ 198. Private joint agency must usually be executed by all. — The
most important distinction relating to this subject, however^ is that
T* Nelson, C. J., In Bank of U. S. ▼. ^e MUwaukee Harvester Co. v. Pin-
Davis, 2 Hill (N. Y.). 451. negan, 43 Minn. 183.
rs Bank of U. S. v. Davia, 2 Hill ^^ Sergeant v. Emlen, 141 Pa. 580.
(N. Y.), 451.
142
CHAP. IV]
WHO MAY B£ PRINCIPAL OR AGENT
[§ 198
respecting the method of execution dependent upon whether the agency
is public or private in its character. Where authority is conferred
upon two or more agents to represent their principal in the transactioir
of business of a private native, it may well be presumed ordinarily
that it was so conferred upon them all from considerations of a per-
sonal nature and in order to derive the benefit of their combined experi-
ence, discretion or ability.^*
It is, therefore, the general rule that such an agency will be pre-
sumed to be joint, and it can be performed by the agents only jointly
unless an intent appears that it may be otherwise executed.'^* If, how-
T» Commonwealth v. Commission-
ers, 9 Watts (Penn.), 470.
^•Robblns y. Horgan, 192 Mass.
443; Cedar Rapids, etc., R. R. Co. v.
Stewart, 25 Iowa, 115; Kupfer v. Au-
gusta, 12 Mass. 185; Caldwell v. Har-
rison, 11 Ala. 756; Loeb v. Drakeford,
75 Ala. 464; Soens v. Racine, 10 Wis.
271; White v. Davidson, 8 Md. 169,
63 Am. Dec. 699; Rogers v. Cru-
ger, 7 Jphns. (N. Y.) 557; Damon v.
Granby, 2 Pick. (Mass.) 845; Sutton
V. Cole, 3 Id, 232; Woolsey v. Tomp-
kins, 23 Wend. (N. Y.) 324; Hartford
P. Ina. Co. V. Wilcox, 57 111. 180;
Scott ▼. Detroit, etc.. Society, 1 Doug.
(Mich.) 119; Low v. Perkins, 10 Vt.
632, 33 Am. Dec. 217; Towne v.
Jaquith, 6 Mass. 46; Heard v. March,
12 CnBh. (Mass.) 580; Hawley v.
Keeler, 53 N. Y. 114; Johnston v.
Bingham. 9 W. & 8. (Penn.) 56;
Smith V. Glorer, 50 Minn. 58; Run-
dl« V. Cutting, 18 Colo. 387.
So in the case of arbitrators!
Moore v. Swing, Coxe (N. J.), 144, 1
Am. Dec. 195; Blln v. Hay, 2 Tyler
(Vt), 804, 4 Am. Dec. 738; Oreen ▼.
MiUer, 6 Johns. (N. Y.) 39, 5 Am.
Dec. 184; Patterson y. Leavltt, 4
Oonn. 50, 10 Am. Dec. 98; Wilder v.
Ranney, 96 N. Y. 7; Brennan t. WUl-
aon, 71 N. Y. 602; PenH y. Erans, 28
La. Anm 676.
One of several joint agents cannot
delegate to the others his authority to
act Loeb v. Drakefiord, Bupra;
White T. DaTidson* tupra.
"It is well settled," says Andrews,
J., in Itawley v. Keeler, supra^ "acs a
general doctrine in the law of agency.
that when an authority to act in a
matter of a private nature is con-
ferred by the principal upon more
than one person, all must act in the
execution of the power. This is the
construction which the law puts upon
the power, following the supposed in-
tention of tne parties, and there must,
ordinarily be a Joint execution of the
agency. The authority may be con-
ferred In such terms as to authorize
a several execution, or an execution
by a majority or other number; and
in the absence of express words It
may have been exercised under such
circumstances as will justify the In-
ference that the principal intended
that less than the whole number
might act; In whieh case he would
be bound to those who had acted
upon such Inference. The general
rule that a Joint execution must be
had of an autiiorlty given to several,
has been made to yield for the bene-
fit of trade and to meet supposed
necessities, in contracts made by one
of several joint owners of ships, and
In case of sales ms.de by one of two
factors, of goods consigned to them
f^r sale."
Not an collective appointments
joint. "And" may mean "or."— It
seems quite clear that the mere fact
that a number of agents are au-
thorised conjunctively does not neces-
sarily lead to the conclusion that the
authority Is Joint The context or the
circumstances may show that mnd
merely means or. If I say or write
that A and B and C and D, ecc, are
all my agents authorized to da acts
143
§ 198]
THE LAW OP AGENCY
[book I
ever, it is shown, by the instrument conferring the power or otherwise,
that it was originally the intention that a part might execute it, or if
the principal has subsequently waived the necessity or has so con-
ducted himself as to lead reasonably to the inference that a joint execu-
tion would not be insisted upon, and that less than all may validly
exercise the power, such an execution will be sufficient.'*^ Where the
agency is joint or several, it must, it is said, be executed by all or one,
and not by an intermediate number, but this rule gives way when an
intention that it may be so exercised clearly appears.'* Where, how-
of a certain sort, this may mean —
and perhaps usually would mean —
no more than that any one of them
is agent to do any act of the class.
Suppose that a large dealer by one
act or instrument appoints a consid-
erable number of agents, who are
however expected to act in different
places or In different fields; the mere
fact that they are united in appoint-
ment does not necessarily make them
joint witL.a the rule. For illustra-
tion; A surety company by power of
attorney appoints "R. S. M. and A. W.
M. and B. P. H" attorneys in fact for
the company to sign bonds. It also
declares that tt is the intention of
the instrument to authorize and em-
power "the said R. S. M. and A« W. M.
cr £3. P. H. to sign the name of said
company." A bond Is issued signed
in the name of the company by *'A.
W. M., agent." The court construes
the power as an appointment sever-
ally, and not jointly, or even as re-
quiring action by R. S. M. and also by
either A. W. M., or E. P. H. United
States Fidelity & Guar. Co. v. Etten-
heimer, 70 Neb. 144, 113 Am. St. R.
783.
80 Cedar Rapids, etc., R. R. Co. ▼.
Stewart, 25 Iowa, 115, where the in-
strument expressly authorized execu-
tion by a majority. Hawley v.
Keeler, 53 N. Y. 114, where execution
by less than all was long acquiesced
in. Where one of two Joint agents
assigned his interest to the others,
and the latter for seven months acted
alone to the principaFs knowledge
and without objection, the principal's
aeaent waa inferred. Albany Land
Co. V. Rickel, 162 Ind. 222. When
usage will justify, see Godfrey v.
Saunders, 3 Wils. 94; WiUet v. Cham-
bers, Cowp. 814.
81 Guthrie v. Armstrong, 5 B. & Aid.
628. In this case, by a power of at-
torney the principal authorized fif-
teen i>er8ons "Jointly and separately
for him and in his name to sign and
underwrite all such policies of in-
surance as they or any of them
should Jointly and separately think
proper." A policy was executed by
four of these persons and a recoyery
had upon it. J. Williams moved to
enter a non-suit. He relied upon
Viner's Abridgement, title Authority
B. pi. 7, and Com. Dig. Attorney C. 11.
"And in Co. Litt. 181, b., it is stated,
'If a charter of feoffment be made,
and a letter of attorney to four or
three Jointly or severally to deliver
seizin, two cannot make livery be-
cause it is neither by the four or
three Jointly nor any of them sever-
aHy.' Here the power is to fifteen
Jointly or severally and it is neither
executed by the whole Jointly nor by
one of theifi severally. The latter
words 'or any of them' only apply to
the persons who are to exercise the
discretion, but they have no reference
to the authority itself." Abbott, C. J.,
said: "The law undoubtedly is as
stated by Mr. Williams, but we are
not disposed to extend the rule fur-
ther. Whenever a case exactly simi-
lar to those cited shall occur, the
court will feel itself bound by them.
But in this case we ought to look at
the whole instrument; and if we do
so, there is no doubt what the meaa-
144
CHAP. IV]
WHO MAY BE PRINCIPAL OR AGENT
[§ 199
ever, the authority is conferred upon a partnership, it noay be executed
by one of the partners."
Where the agency is clearly joint, the death or disability of one of
the agents terminates the agency unless it be coupled with an interest
in the survivors.®'
§ 199. Public agency may be executed by a majority. — ^Where,
however, the agency is created by law or is public in its nature, and
requires the exercise of deliberation, discretion or judgment, the rule
is otherwise. Here while all of the agents or officers (unless the law
makes a less number a quorum) must be present to deliberate, or what
is usually regarded as the same thing *^ must be duly notified and have
an opportunity to be present, yet, unless the law clearly requires the
joint action of all of them,'* it is well settled that a majority of them,
where the number is such as to admit of a majority,'* if present may
act and their act will be deemed to be the act of the body."
ing of It Is. Here a power is given to
fifteen persons Jointly and severally
to execute such policies as they or
any of them shall jointly or severally
think proper. The true construction
of this is, as it seems to me, that the
power is given to all or any of them
to sign such policies, as all or any
of them should think proper. The ar-
gument is that the latter words only
apply to the persons who are to exer-
cise the discretion. That would have
been quite correct if those had been
different from prsons entrusted with
the power. But they are the same:
these latter words therefore control
the meaning of the former and the
verdict is right."
•sDeakin v. Underwood, 87 Minn.
9S; Frost v. Cattle Co., 81 Tex. 60G,
26 Am. St. R. 831; McCulloch Land
& Cattle Co. V. Whitefort, 21 Tex. Civ.
App. 314; McLaughlin ▼. Wheeler, 1
S. Dak. 497.
•3 Salisbury v. Brisbane, 61 N. Y.
617; Boone v. Clark, 3 Cranch (U. S.
C. C), 389; Hartford P. Ins. Co. v.
Wilcox, 57 111. 180.
84 Notice and a fair opportunity to
attend are usually regarded as equiv-
alent to attendance, though not all of
the cases have recognised the distinc-
tion. See Williams v. School Dis-
trict, 21 Pick. (Mass.) 75, 32 Am. Dec.
243; Horton v. Garrison, 28 Barb. (N.
Y.) 176; First Nat. Bank v. Mt.
Tabor, 52 Vt. 87, 36 Am. Rep. 734.
M See First Nat. Bank v. Mt. Tabor,
supra; People v. Coghill, 47 Cal. 361;
Powell V. Tuttle, 3 N. Y. 896.
•« Where the number is such as not
to admit of a majority, as where there
are only two, the concurrence of both
Is indispensable; though it is said
that if one should die or become dis-
abled the other might act alone ex-
cept in the case of offlcer&k, exercising
powers of a Judicial nature. Down-
ing V. Rugar, 21 Wend. (N. Y.) 178,
34 Am. Dec. 223.
87 See the subject more fully con-
sidered in Mechem on PuMIc Officers.
See also McCready v. Guardians of the
Poor, 9 Serg. ft R. (Penn.) 94, 11 Am.
Dec. 667; Scott v. Detroit, etc., Soci-
ety, 1 Doug. (Mich.) 119; Jewett v.
Alton, 7 N. H. 253; Caldwell v. Har-
rison, 11 Ala. 755; Soens v. Racine, 10
Wis. 271; Despatch Line v. Bellamy
Mfg. Co., 12 N. H. 205, 37 Am. Dec.
203; First National Bank v. Mount
Tabor, 52 Vt. 87, 36 Am. Rep. 734;
Kingsbury v. School District, 12 Mete.
(Mass.) 99; (3ooley v. O'Connor, 12
Wall. (U. S.) 391, 20 L. Ed. 446;
Baltimore TurniHke, Case of, 5 Binn.
(Penn.) 481; Louk v. Woods, 15 111.
256; Jefferson (bounty v. Slagle, 66
ID
I4S
§ 20O]
THE LAW OF AGENCY
[book I
The rule which generally applies to these cases was well stated by
Chief Justice Shaw, as follows : ''Where a body or board of officers is
constituted by law to perform a trust for the public, or to execute a
power or perform a duty prescribed by law, it is not necessary that all
should concur in the act done. The act of the majority is the act of
the body. And where all have due notice of the time and place of
meeting in the manner prescribed by law, if so prescribed; or by the
rules and regulations of the body itself, if there be any ; otherwise, if
reasonable notice is given, and no practice or unfair means are used to
prevent all from attending and participating in the proceeding, it is no
objection that all the members do not attend, if there be a quorum."**
§ 200. Committees — Boards — Directors — Majority of
quorum. — ^This rule permitting action by a majority is constantly
applied to county, township and city boards, and to general and special
committees and commissions exercising public functions.** It is ap-
plied also in the case of boards of directors of private corporations and
to committees representing such corporations.*^
Where a majority may thus lawfully meet and constitute a quorum
a majority of that majority, though actually less than a majority of
the whole number, may usually determine the action.*^
Penn. St. 202; Axntln ▼. Helizus, 65 N.
C. 560; People v. Nichols, 52 N. Y. 478,
11 Am. Rep. 784; WiUiama v. School
District, 21 Pick. (Mass.) 75, 32 Am.
Dec. 243; Leavenworth, etc., R. Co. v.
Meyer, 58 Kail 805; McNeil v. Cham-
ber of Commerce, 154 Mass. 277, 13 L.
R. A. 559; Withnell v. Gartham, 6 T.
R. 388; Grindley v. Barker, 1 B. 6 P.
229.
8«In WlHiams v. School District,
9fipra,
•• See cases cited in preceding sec-
tion; Damon v. Qranby, 2 Pick.
(Mass.) 345; Sprague ▼. Bailey, 19
Pick. 436; George y. School District,
6 Mete. (Mass.) 497.
00 See McNeil v. Boston Chamber of
Commerce, 154 Mass. 277, 13 L. R. A.
569.
M See Morawets on Corporations,
§ 531; Cook on Corp. S 713a; McNeil
Y. Chamber of Comjnerce, supra;
Wells ▼. Rubber Co., 19 N. J. Sq. 402;
Sargent v. Webster, 13 Mete (Mass.)
497, 46 Am. Dec. 743; Edgerly y. Em-
erson, 28 N. H. 555, 55 Am. Dec 207.
146
CHAPTER V
OP THE APPOINTMENT AND AUTHORIZATION OF AGENTS BY THE
PRINCIPAL AND THE EVIDENCE THEREOF
S 201 Purpose of the chapter.
202. Questions which are not here
considered.
203. Anthority created hy law.
204. Authority resulting
merely from relation of par-
ties.
205. Authority hf necessity.
206. Subject here considered is apf
pointment and authorization
of agents.
207. What considerations involved.
208. Use of persons as instrument-
alties is not appointment of
agents — ^Acts done in pres-
ence and by direction of
principal.
I. HOW ▲OBNT MAT BB -APPOINTED AND
AirrHOBIZBD
209. Two persons involved here.
1. On the Part of the Principal
210. Only by the act of the prin-
cipal.
211. The method to be pursued.
B. Authority to Execute Instruments
under Seal
212. Such authority must be con-
ferred by Instrument under
seal.
— Authority to fill blanlu in
deeds and bonds.
— Estoppel.
— How when seal superflu-
ous.
— How when Instrument ex-
ecuted in presence and by
direction of principal.
— How when principal
adopts deed prepared by an-
other.
218.
Instrument not good as
218.
214.
215.
216.
217.
deed sometimes effective as
contract.
219. Appointment by corporations.
220. To execute deed of corpo-
rate realty.
5. Authority required by Statute to
be in Writing
221. Common law rules do not re-
quire written authority.
222. Statutes often require it for
selling or leasing land — Eng-
lish Statute of Frauds.
223. American statutes requir-
ing writing.
224. Acknowledging or record-
ing.
225. Statutes requiring written au-
thority in other cases-
Suretyship — Written Instru-
ments.
226. Emplo3rments for more than
one year.
227. What writing sufficient when
writing required.
0. In other Cases Authority may be
conferred by Words or Conduct
228. No formal method required.
229. By parol — ^To sell or lease
land.
230. To purchase land.
231. To deliver deed.
232. To demand and collect
rent.
— To find purchaser for
land — Employment of
broker.
— To grant licenses respect-
233.
234.
286.
236.
ing land— To sell standing
timber.
— To subscribe for stock.
— To execute written instru-
ments not under seal.
M7
THE LAW OF AGENCY
[book I
237. To fill blanks in written
instruments.
238. To buy or sell goods.
289. To "accept and receive'*
under statute of frauds.
240. Authority may be partly writ-
ten and partly oral.
241. Authority need not be express
— Authority by implication.
242. Conferring certain powers by
the creation of others-r-Inci-
dental powers.
243. Customary powers.
244. Powers established by the
course of business.
— Powers resulting from es-
toppel.
— General rule.
245.
246.
247. Intention to create agency.
248. Names not controlling.
249. When principal's act becomes
effective.
2. On the Part of the Agent
250. In general.
251. Agent must be notified of ap-
pointment.
252. Agent must accept appoint-
ment.
253. How acceptance estab-
lished.
11. EVIDENCB or APPOINTMENT AND AU-
THORIZATION
254. Purpose of this subdivision.
255. Authority must be proved—
Burden of proof.
256. Authority under seal or in
writing.
267. Written authority — When
muBt be produced.
258. Collateral inquiry.
259. Unnecesaary writing.
260. In other cases may be proved
by parol — By any competent
witness.
261. By informal writings — By con-
duct— By facts and circum-
stances.
262. By proof of agency oq other oc-
casions.
263. By acquiescence in or recogni-
tion of similar acts.
264.
266.
— Acquiescence to show ex-
pired authority apparently
continues.
— Acquiescence to construe
authority.
266. By acts so open or notorious
as to Justify inference of ac-
quiescence.
267. By regular and public exercise
of office or agency.
268. Presumptions based upon ordi-
nary course of conduct — ^An-
swering letters* telephone,
etc.
269. By proof of an express author-
ity to which this Is an inci-
dent.
270. By proof of a custom covering
the case.
271. By proof of an established
course of dealing.
272. By ratification.
273. Limitations upon these rules.
274-280. What facts sufficient— Il-
lustrations.
281-284. What facts not sufficient
— Illustrations.
285. Agent's authority cannot be es-
tablished by his own state-
ments or admissions.
286. When admissible.
287. To show attitude or in-
tention of parties.
— Mere order of proof not
288. —
material.
289. Or by his own acts only.
290. Or by general reputation.
291. Agent must be called as a wit-
ness.
292. Agent's testimony— Ef-
fect.
298. How question of agency deter-
mined— Court or Jury.
— Construction of writing
for court.
— Effect of undisputed facts
for court.
— In other cases for jury-
— Court should instruct
294. -
296. -
296. -
297. -
Jury as to their functions.
298. Burden of proof.
299. Amount of evidence required.
300. Whose agent is he.
301. •" — Stipulations declaring-—
Testimony of parties.
148
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 20I-204
§ 201. Purpose of this chapter. — Having now seen who may be
principal and agent, and for what purposes agency may be created, it
is next in order to consider, I. The different methods by which agency
may be created ; and, II. By what evidence its existence may be estab-
lished.
Appointment and authorization are often used as synonymous terms,
but though the two acts are often coincident, they are not necessarily
either identical or coincident. The appointment, in the sense of desig-
nation and agreement, may take place at one time, while the authority
may be conferred, enlarged or diminished at another time.
§ 202. Questions not here considered. — Before taking up that dis-
cussion, it will be desirable to eliminate certain questions which are
not within the scope fixed for this work. It is the purpose here to con-
fine attention to what may be termed agency by appointment or author-
ity by the direct act or omission of the parties. Therefore —
g 203. Authority created by law, independently of the act
of the parties, in the few cases in which that may exist, is not a matter
here to be considered. As has been already suggested, there are a few
cases in which authority, or, more properly speaking, power, is con-
ferred by law in certain cases. Thus an unpaid vendor of goods has a
power of sale of the goods under certain circumstances.^ A pledgee
has a power of sale, expressly conferred usually in formal contracts of
pledge, but not dependent upon that.* A married woman, whose hus-
band does not supply her, has, as has been already seen, a limited power
to buy necessaries upon her husband's credit, which prevails notwith-
standing his dissent.' A minor child is sometimes said to have a
somewhat similar power.* The authority of a ship master is sometimes
said to be legally conferred, though it probably rests upon a presump-
tion of actual authority to act. in an emergency. None of these cases,
except the last, is a question of agency at all, or within the scope of the
present work, and will not be considered further than they already
have been.
§ 204. Authority resulting from the relation of the par-
ties.— Reference is sometimes made to authority resulting merely
1 See 2 Mechem on Sales, § 1621 See Sencerboz v. First National
€t seq. Bank, 14 Idaho, 95; Dorlty v. Dority,
2 See Jones on Pledges (2d Ed.), 30 Tex. Civ. App. 216, affirmed 96 Tex.
I 602. 215; Owens v. New York Land Co.
«See ante, § 161. (Tex. Civ. App.), 32 S. W. 1057;
Statutory Ageney of Hushand. — In Gross v. Pigg, 73 Miss. 286; Roas v.
a Bnmbei^ of states statutes have Baldwin, 66 Miss. 670.
made the husband a statutory man- * See antCr f 166.
ager of his wife's separate estate.
149
§ 205] THE LAW OF AGENCY [BOOK I
from the relation of the parties. As a general rule, there is no such
authority whatever. The conspicuous if not the only exception is that
of partnership. Here each partner is the agent of his copartner within
the scope of the business, unless some other arrangement has been
made. But, as has been seen, no authority in either spouse results
merely from the marriage relation. The wife's authority to buy neces-
sanes, which is the strongest case, depends upon the condition of the
husband's failure to supply her. So of parent and child. In the case
of the less intimate relations, brother, uncle, cousin, co-tenant, and the
like, there is no trace of authority resulting merely from the relation.
All of these persons may be given authority, but it must be given as in
other cases and is not inherent.
§ 205. — — Authority by necessity. — ^As has already been
pointed out, it is sometimes said that authority may arise from neces-
sity— ex necessitate. This, however, is a most vague and unsatisfac-
tory expression. It often refers simply to the so^alled authority cre-
ated by law or to liability enforced qu(isi ex contractu, as in the case of
the married woman who may buy necessaries upon her husband's credit,
when he has failed to supply her, even though he dissents.' It is often
used also in a more accurate sense to refer to cases of unexpected ne-
cessity, or, more properly speaking, of sudden emergency. Speaking
generally, necessity alone confers authority upon no one. Coupled,
however, with an existing relation of some sort, and, here, with a rela-
tion of principal and agent or master and servant, necessity or emer-
gency not infrequently plays an important part. It is important to
observe, however, that here it is ordinarily an unexpected necessity or
a sudden and unforeseen emergency. So far as the expected and fore-
seeable necessities are concerned, it will ordinarily be presumed that
the principal or master takes those into .account, and makes such pro-
vision for them as he desires ; the unexpected ones, on the other hand/
he cannot usually provide for. An unforeseen emergency may, ac-
cording to the circumstances, affect situations in a variety of ways:
It may increase the duty of care or it may diminish it ; it may relieve
the agent from the duty of strict compliance with instructions,* or it
may conceivably only serve to make such compliance more imperative ;
it may reasonably enlarge an existing authority sufficiently to meet the
emergency, or it may operate to restrict it, where it cannot reasonably
be expected that the principal could have intended that so wide an
s It is In this sense, of course, that • This subject is discussed later,
it is used in such expressions as that Book IV, Chapter II, under Dut^ of
of Pollock, C. B., in Johnston y. Sum- Agent to Ohey Instructions,
ner, 3 H. & N. 261.
150
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 206, 207
authority as that given should continue to be exercised in the new
circumstances.''
It is important also to keep in mind, that, since it is the principal's
purposes and plans that are to be subserved in the ordinary case, he is
the one to decide, where possible, how the emergency is to be met ; and
it is therefore a just and proper rule which limits the inference of au-
thority from an emergency to the case in which the principal cannot
be consulted.^
It will not fail to be observed also that the authority which arises
from necessity or emergency, in the sense in which it is now being dis-
cussed, is an authority by implied appointment by the principal, and
not merely an authority given by law regardless of his act or implied
consent*
§ 2o6. Subject here considered is appointment and authorization
of agents and not the creation or existence of other relations from
which some authority may result. It is in this view, that the proposed
classification as to methods and evidence was suggested, and it is in
tliis view that the discussion proceeds.
§ 207. What considerations involved. — ^As has been pointed out
in an earlier section, the matter of the appointment of an agent ordi-
narily involves at least two persons — the principal and the proposed
agent. While it is true that there may be exceptional cases — ^like those
of master and slave or parent and child — where the proposed principal
may be in a position to coerce the proposed agent, the ordinary situa-
tion is different, and the proposed principal must not only be ready to
become such, but the proposed agent must also be willing to accept
Before an actual agency can exist, therefore, in the ordinary case the
principal must not only appoint but the agent must accept.
Under ordinary circumstances, probably, where an agency is con-
templated, the proposed principal takes the initiative. He selects the
agent, appoints him, and sends him forth to act. On the other hand,
the one who becomes agent may take the initiative, and seek the ap-
pointment.
More than this also is possible. The question of the creation of the
agency may first arise, not between the principal and agent, but be-
7 This subject is more fully dls- 189, IIS Am. 6t R. 1009, 9 L. R. A.
cussed in Book IT, Chapter I, on 2*M (N. S.) 485, takes pains to point out
Vature and Extent of the Authority, that the authority of the wife which
9 See preceding reference. It Ui he refers to as one ex neceasitate la
also discussed In various other places, not one whieh arises from the mar-
0 Thus, Marshall, J., In Bvans v. riage relation but from "a presump*
Crawford County Ins. Co.# 130 WIb. tion of appointment"
§ 2o8]
THE LAW OF AGENCY
[book I
tween the principal and third persons or between third persons and the
proposed agent. The principal may arrange with a third person that
he will or shall appoint the agent; and the third person may arrange
with the proposed agent that if he becomes such, the third person will
deal with him, or the proposed agent may agree with the third person
that he will secure an appointment as agent.
§ 208. Use of persons as instrumentalities but not as agents — ^Acts
done in the presence of the principal and by his direction.^ — Before
taking up the methods of appointing agents, moreover, it may be ad-
visable to point out that where the question is, not the appointment of
an agent, but the adoption and use of an instrumentality, the ordinary
rules respecting the former subject do not apply. Thus where a per-
son, about to perform a certain act, himself determines upon all of the
elements of it which essentially belong to it, he may avail himself of
any mechanical or ministerial agency which may be convenient in giv-
ing physical form or manifestation to the act. Human instrumentali-
ties may be employed for this purpose as well as inanimate ones.^* If I
10 This principle was applied, for
example, in the following cases in-
volving the signing or execution of
the Instrument named in the paren-
thesis. Lewis V. Watson, 98 Ala. 479,
39 Am. St Rep. 82, 22 L. R. A. 297
(sheriff's deed) ; Clark v. Latham, 25
Ark. 16 (writ of attachment) ; Jansen
V. McCahill, 22 Cal. 563, 83 Am. Dec.
84 (mortgage); Pierce v. Dekle, 61
Fla. 390, 25 A. & E. Ann. Cas. 1355
(subscription list); Ellis v. Francis,
9 Gra. 325 (constable's return of nulla
bona on /I. fa.); Reinhart v. Miller,
22 Ga. 402, 68 Am. Dec. 506 (marriage
contract); Flemister y. State, 48 €ra.
170 (due bill) ; Cunningham y. La-
mar, 51 Ga. 574 (garnishment bond) ;
Brown v. Colquitt, 73 Ga. 59, 54 Am.
Rep. 867 (criminal recognizance);
Wyatt V. Walton Guano Co., 114 Ga.
375 (promissory note) ; Hawes v.
Glover, 126 Ga. 305 (mortgage) ; Han-
dyside v. Cameron, 21 111. 588, 74 Am.
Dec. 119 (promissory note) ; Hender-
son y. Barbee, 6 Blackt (Ind.) 26^
(note); Croy y. Busenbark, 72 Ind«
48 (recognizance); Nye y. Lowry, 82
Ind. 316 (deed) ; Kennedy y. Graham,
9 Ind. App. 624 (note) ; Crumrine y.
Crumrine, 14 Ind. App. 641, 43 N. B.
322 (note) ; State y. Holmes, 56 Iowa,
588, 41 Am. Rep. 121 (order adjourn*
ing court); Currier y. Clark, 145
Iowa, 613 (mortgage); Irvin y.
Thompson, 4 Bibb (Ky.), 295 (power
of attorney); Meyer y. King, 29 La.
Ann. 567 (contract); Frost y. Deer-
ing, 21 Me. 156 (release of dower) ;
Bird y. Decker, 64 Me. 550 (mortgage
deed) ; Loyejoy y. Richardson, 68 Me.
886 (deed); (Gardner y. Gardner, 5
Cush. (59 Mass.) 483, 52 Am. Dec. 740
(deed); Finnegan y. Lucy, 157 Mass.
439 (statutory notice by wife to re-
fuse sale of liquor to husband); Wil-
liams y. Woods, 16 Md. 220 (memor>
andum of contract, signed for vendor
by clerk of his broker) ; Just y. Wise
Township, 42 Mich. 573 (commission-
ers' order on treasurer) ; Johnson v.
Van Velsor, 43 Mich. 208 (deed); Eg-
gleston y. Wagner, 46 Mich. 610
(contract); Hotchkisa y. Cutting, 14
Minn. 537 (summons); Watkins v.
McDonald (Miss.), 41 So. 376 (ap^
pointment of substituted trustees);
State y. Carlisle, 57 Mo. 102 (deposi-
tion) ; Porter y. Paying Co., 214 Mo. 1
(ordinance) ; Bigler y. Baker, 40 Neb.
a2&, 24 L. R. A. 255 (contract) ; In re
Creighton, 88 Neb. 107 (certification
153
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 208
wish to sign my name to a document, I may use a pen, a typewriter, a
rubber stamp, or the hand of a third person indifferently. Inasmuch
as, in such a case, I furnish the consciousness, the volition — the will —
and cause the act to be done under my immediate direction and control,
it is my act whether I employ an inanimate tool to make the visible
mark or an animate one. Such a tool so used is not an agent, and the
rules governing the appointment of agents do not apply to its use;
Hence, the rule, of quite wide application, is, that acts of a merely
mechanical or ministerial nature, done by one person in the presence
and by the direction or assent of another and as a part of some larger
act which the latter is then engaged in performing, are as valid as if
done by the latter in person. This rule applies, as will be seen, even
though the act is one — like the signing of a written instrument or even
an instrument under seal — which if really done by the agent himself
of record) ; Lord v. Lord, 58 N. H. 7,
42 Am. Rep. 565 (attestation of will);
Mutual Life Ins. Co. y. Brown, 30 N.
J. Eq. 193, aff'd 32 N. J. Eq. 809
(power of attorney) ; Thomas v.
Spencer (N. J.), 42 Atl. 275 (pledge
of mortgage) ; Mackay v. Bloodgood,
9 Johns. (N. Y.) 285 (partnership
name to arbitration bond) ; People v.
Smith, 20 Johns. 63 (filling in blanks
on summons); Mallon v. Story, 2 E.
D. Smith (N. y.), 331 (contract);
Harris v. Story, 2 E. D. Smith (N.
Y.), 363 (contract); Fichthom v.
Boyer, 5 Watts, 159, 30 Am. Dec. 300
(firm name to arbitration bond);
Pitzpatrlck v. Engard, 175 Pa. 393
(contract); Haven v. Hobbs, 1 Vt
238, 18 Am. Dec. 678 (note); Jesse v.
Parker, 6 Gratt. (Va.) 57, 52 Am. Dec.
102 (will and attestation); Will of
Jenkins, 43 Wis. 610 (will) ; Mariner
▼. Wiens, 137 Wis. 637 (contract un-
der seal); Ball v. Dunsterville, 4 T.
R. 313 (seal on bill of sale) ; King v.
Longnor, 1 Nev. & M. 576, s. c. 4
Barn, ft Adol. 647 (indenture of ap-
prenticeship); Hudson V. Revett, 5
Bing. 368 (blanks filled in, in deed
for creditors).
Who may make the signature. — Or-
dinarily any person may be used to
make the signature; but, in making
the memorandum under the statute
of frauds, it has been held that the
agent must be some third person,
and cannot be the other contracting
party (Wright v. Dannah, 2 Camp.
203) ; and in Clough v. Clough, 73 Me.
487, 40 Am. Rep. 386, it was said that
a deed, signed by the grantee for the
grantor in the presence of the latter
and at his request, waB not well
executed.
Burden of proof. — The fact that the
execution was in the immediate pres-
ence of the principal must be affirmar
tlvely established by the party who
relies on the rule, that it is the act
of the principal, as an excuse for the
absence of a written or sealed power
of attorney. A mere direction to the
agent is not sufficient, but the pres-
ence must be proved, not merely in-
ferred "from any coincidence between
the date of the deed and the acknowl'
edgment of the principal that it was
executed by his attorney.'* Videau v.
Griffin, 21 Gal. 389.
What meant t>y "in the presence'*
of the principal — This is a question
which has not been very much dis-
cussed, but probably any case which
would satisfy the requirements for
the attestation of wills would be suf-
ficient for this purpose.
In Mackay v. Bloodgood, 9 Johns.
285, a partner saw and approved the
deed and was "about the store*' at the
time of its execution, upon which it
153
§§ 209, 2I0]
THE LAW OF AGENCY
[book I
would require authorization in as solemn a form as the instrument it*
self.
It is not easy to see why this rule should not have a wider applica-
tion, and include any specific act mechanically performed by the direc*
tion of the principal, even though not done in his presence. The reasons
ordinarily given would include such an act. The rule, however, has
not been so extended.
With such distinctions in mind, we may proceed to consider—
I.
HOW AN AGENT MAY BE APPOINTED AND AUTHORIZED.
§ 209. Two persons involved here. — It will be obvious that the
consideration of this question ordinarily involves two aspects: i. What
must be done on the part of the principal ; and 2. What must be done
on the part of the agent. Of these in their order.
1. On the Part of the Principal
§ 210. Only by the act of the principal. — Except in the few cases
already mentioned — which have no further relation to the subject mat-
ter of this treatise — in which the law creates or confers authority, or
it may result from some relation in which the parties stand, it is the
invariable rule that authority to act as agent can arise only at the will
was held that the Jury were justified
111 flndlDg that he was present.
So where a sister directed her
brother through the closed door of
her room to sign her marriage con-
tract, and he signed it In the yard at
the gate post, it was held that it was
not error to instruct the Jury that
she need not see the signing and the
direction to her brother need not be
given within hearing of the witnesses
of the signing, in order to make it her
act rather than an act by her agent.
Reinhart v. Miller, 22 Ga. 402.
Where five bonds had been signed
and the sixth was then signed before
the blanks were filled in so that the
obligor could leave in a hurry, it was
held that his act in "signing the bond,
and directing the sheriff to fill it up
in a particular way, and his leaving,
under the facts shown in the record,
is equivalent to his being present
when the bond was filled out," so that
the jury were justified in finding it
to be his bond. Brown v. Colquitt, 73
Ga. 59.
In State v. Holmes, 56 Iowa, 5S8, 41
Am. Rep. 121, it was held that an or-
der to adjourn court, telegraphed by
the judge, was still his written or-
der, and "by means of the wire and
instruments . . . and the operator,
the judge wrote the telegram which
was delivered to the clerk."
SuffUHency of the signature. — These
cases are complicated by statutes and
rules of construction requiring that
"when the written signature of a per-
son is required by law, it shall always
be the proper handwriting of such
person, or, in case he is unable to
write, his proper mark." For in-
stance it was held in Chapman v.
liimerick, 56 Me. 390, that a warrant
calling a town meeting, signed in the
presence of the constable at his di-
rection, was invalid because in the
IS4
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 211
and by the act of the principal." Except in those cases, the law never
simply presumes that authority exists: its existence is always a fact
to be proved by tracing it to some act of the person alleged to have
created and conferred it.
And not only must the agent be appointed through the act of the
principal, but it must also be by his personal act, except where he has
expressly or by implication authorized some one else to appoint agents
or servants for him.
§ 211. The method to be pursued. — While it is thus true that au-
thority to act as agent can usually arise only at the will and by the act
of the principal, that will and act may find expression in a great
variety of ways. Usually, no particular method or form of expression
case of public officials the personal
act and handwriting of the officers
must be essential. So in Ferguson t.
Monroe County, 71 Miss. 524, slgna*
tures on a local option petition were
ruled out unless in the actual hand-
writing of the voter. But in Finne-
gan y. Lucy, 157 Mass. 489, It was
held that the statute did not apply to
ordinary signatnrea and a notice not
to sell the husband liquor, under a
statute requiring the signature of the
wife, was held sufficient when signed
by another In her presence. There
are other cases accepting this where
the signature of a public official is
required, as indicated in other cases
cited, supra, and in Porter v. Boyd
Paving Co., 214 Mo. 1, it was held
after a very thorough discussion, that
the signature of the mayor, as re-
quired by statute for the validity of
an ordinance, might be written by an-
other in his presence, and that the
statute requiring '^proper handwrit-
ing" or inability to write did not ap-
ply.
Method of expressing direction or
assent, — ^No particular way of author-
izing the signature is required, and
any act or conduct signifying intent
would probably be sufficient. For in-
stance in Grardner v. Gardner, 5 Cush.
(59 Mass.) 483, 52 Am. Dec. 740, the
mother assented by nodding her head
to her daughter's offer to sign the
deed for her. * So in Thomas v. Spen-
cer (N. J.), 42 Atl. 275, where the at-
torney asked his client, a somewhat
illiterate woman, if he should sign
the pledge of a mortgage, and she
nodded her head, it was held that he
was authorized. In Jesse v. Parker,
6 Oratt (Va.) 67, 52 Am. Dec. 102,
the attesting witnesses denied giving
any direction, merely standing by
with knowledge that their names
were being signed, although the agent
testified that he had been verbally
authorized. Upon this evidence, the
verdict of the jury waa upheld, find-
ing that the will had been duly ex-
ecuted and attested. Statutes often
require that a testator's signature be
made by his "express direction."
But this is much more strict than the
requirement of the common law, as
indicated by these words of Gibson,
C. J., in Greenough v. Greenough, 11
Pa. St. 489, 51 Am. Dec. 567, "As sign-
ing by the testator's assent would
have been good at the common law,
the statute was enacted, not to au-
thorize it, but to regulate the evi-
dence of it by requiring more than a
wink or a nod, or a word not less am-
biguous . . ."
11 Pole V. Leask, 33 L. J. Eq. 155,
28 Beav. 562; Stringham v. St Nich-
olas Ins. Co., 4 Abb. App. Dec. (N.
Y.) 315; McGoldrick v. Willits, 52 N.
Y. 612; Roberge y. Monheimer, 21
Misc. 491; Graves v. Horton, 38 Minn.
66; Chicago, etc.. Organ Co. v. Rish-
forth, 24 Ohio Cir. Ct R. & 14 Ohio
Cir. D. 660.
155
§ 212]
THE LAW OF AGENCY
[book I
is essential, and the range of possible forms is ordinarily as wide as
the domain of human action. Thus, an agent may, in a given case, be
appointed by written instrument or by word of mouth. His appoint-
ment may be implied from the conduct of the parties and that conduct
may often be active or inactive, and consciously or perhaps uncon-
sciously directed to that end. The authority need not be previously
conferred, but its lack may be supplied by subsequent approval or
adoption.
Notwithstanding the fact that in the ordinary case the law does not
insist upon any particular form and concerns itself rather with the fact
than with the method, there are two classes of cases — one arising under
the rules of the common law and the other under statutes — in which
the authority fnust be conferred in a particular way. These are:*
1. Cases wherein an instrument under seal is to be executed; and,
2. Cases wherein some statute, usually the statute of frauds, expressly
requires the authority to be conferred by writing. These two classes
of cases will be considered first.
o. Authority to Execute Instruments Under Seal.
§ 212. Such authority must be conferred by instrument under
seal. — It was the settled rule of the common law, and as such it still
prevails, where not changed by statute, that authority to execute an
instrument necessarily under seal could be conferred only by an act as
solemn in its form as that of the act which was to be performed, and
hence that it could be conferred only by an instrument which was itself
under seal." But while this rule is firmly established it is highly tech-
12 Co. Litt. 48b; Combe's Case, 9
Coke, 75, 77; Harrison v, Jackson, 7
T. R. 207; Berkeley v. Hardy, 5 B. &
C. 355, 8. c. 8 D. & R. 102; Elliott V.
Stocks, 67 Ala. 336; Watson v. Sher-
man, 84 111. 263; Johnson v. Dodge, 17
111. 433; Peabody v. Hoard, 46 111.
242; Harshaw v. McKesson, 65 N. C.
C88; Rowe v. Ware, 30 Ga. 278; Mans
V. Worthing, 3 Scam. (lU.) 26; Rhode
V. Louthaln, 8 Blackf. (Ind.) 413;
Reed v. Van-Ostrand, 1 Wend. (N. Y.)
424, 19 Am. Dec. 529; Blood v. Good-
rich, 9 Wend. (N. Y.) 68, 24 Am. Dec.
121; Wells v. Evans, 20 Wend. (N. Y.)
251; Despatch Line v. Bellamy Mfg.
Co., 12 N. H. 205, 37 Am. Dec. 203;
Heath v. Nutter, 50 Me. 378; Hanford
V. McNair, 9 Wend. (N. Y.) 54; Damon
V. Granby, 2 Pick. (Mass.) 845; Ban-
orgee v. Hovey, 5 Mass. 11,. 4 Am. Dec.
17; Cooper v. Rankin, 5 Blnn. (Penn.)
613; Gordon v. Bulkeley, 14 Serg. ft
R. (Penn.) 331; Stetson v. Patten, 2
Greenl. (Me.) 358, 11 Am. Dec. Ill;
Drumright ▼. Philpot, 16 Ga. 424, 60
Am. Dec. 738; Graham v. Holt, 3 Ire-
dell's (N. Car.) Law, 800, 40 Am. Dec.
408; Humphreys v. Pinch, 97 N. C.
303, 2 Am. St. R. 293; Overman y. At-
kinson, 102 Ga. 750; Lobdell v. Mason,
71 Miss. 937; Paine v. Tucker, 21 Me.
138, 38 Am. Dec. 255; Williams v.
Crutcher, 6 How. (Miss.) 71, 85 Am.
Dec. 422; Wheeler v. Nevlns, 34 Me.
54; Baker v. Freeman, 35 Me. 485;
T56
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 213
nical in its nature and confessedly stands upon very narrow ground.
The whole theory of the solemnity of a seal is totally unsuited to the
business methods of the present day and the constant tendency of courts
and legislatures is to ignore the distinctions formerly founded upon its
use."
The rule, moreover, only applies to instruments which are deeds in
fact ; and does not apply to an instrument not a deed but by legislation
given the effect of a deed.^*
§ 213. Authority to fill blanks in deeds and bonds. — Fol-
lowing the rule laid down in the preceding section, and as a necessary
consequence of it, it is held in many cases that authority to fill blanks
Shuetze v. Bailey, 40 Mo. 69; Smith
V. Perry, 6 Dutcher (N. J.). 74; Gage
V. Gage, 30 N. H. 420; Spurr v. Trim-
ble, 1 A. K. Marsh. (Ky.) 278; Mc-
Murtry v. Brown, 6 Neb. 368; Adams
V. Power, 52 Miss. 828; McNaughten
▼. Partridge, 11 Ohio, 223; Smith v.
Dickinson, 6 Hump. (Tenn.) 261;
Mitchell Y. Sproul, 5 J. J. Marsh.
(Ky.) 264; McMurtry v. Prank, 4 T.
B. Monr. (Ky.) 39; Long v. Hartwell,
5 Vroom (N. J.), 116; Piatt v. Mc-
Cullough, 1 McLean (U. S. C. C). 69.
Other formalities. — In some states,
by statute, a power of attorney to exe-
cute a conveyance of land must have
the same formalities, such as acknowl-
edgment, witnesses, etc., which would
be required in the conveyance. Thus
Butterfleld v. Beall, 3 Ind. 203; Oat-
man V. Fowler, 43 Vt. 462. But in
other states this is only necessary to
entitle the power of attorney to re*
cord. See Montgomery v. Dorlon, 6
N. H. 254; Tyrrell v. O'Connor, 56
N. J. Eq. 448. Some cases state the
former to be the general rule. Heath
V. Nutter, supra; Gage v. Gage, supra;
Clark V. Graham, 19 U. S. (6 Wheat.)
577, 5 L. Kd. 334.
Recording, — Statutes in some states
also require the power of attorney to
be recorded (Oatman v. Fowler, 43 Vt
462), often "with the deed" (Rosen-
thal y. Ruffln, 60 Md. 324), but, un-
less required by statute, it la not
essential to validity. Valentine v.
Piper, 22 Pick. (Mass.) 85, 33 Am.
Dec. 715; Delano v. Jacoby, 96 Cal.
275; Tyrrell v. O'Connor, 56 N. J. Bq.
448.
Oral admission of sealed author-
ity. — ^The requirement of an authority
under seal cannot be satisfied by an
oral admission or acknowledgment by
the principal that there was such an
authority existing. Paine v. Tucker,
21 Me. 138, 38 Am. Dec. 255.
Presumption of valid power in case
of ancient deeds. — In the case of an-
cient deeds, purporting to have been
executed by an attorney in fact, a
valid power will often be presumed
to have existed. Renter v. Stuckart,
181 111. 529; Doe v. Phelps, 9 Johns.
(N. Y.) 169; Doe v. CampheU, 10
Johns. 475; Robinson v. Craig, 1 Hill
(S. C), 389.
18 "In modern times," says Champ-
lin, J., in Barton v. Gray, 57 Mich,
p. 634, "the attaching of a seal to a
signature is not regarded with that
reverence which was formerly the
case, and when the legislature en-
acted that a seal or wafer was unnec-
essary, but that a scroll or other de-
vice should be sufficient, the solem-
nity attending the execution of such
contract vanished; and when the leg-
islature further provided that no in-
strument should be held invalid for
want of a seal, and it became under
the statute mere prima facie evidence
of consideration, the affixing of seals,
except to instruments required by
law to be under seal, became of no
practical importance."
14 /n re Whitley Partners, 32 Ch.
Div. 337.
157
§ 214]
THE LAW OF AGENCY
[book I
in deeds and bonds, essential to be filled, can be conferred only by an
instrument under seal.^* This rule, however, like the other, has met
with much disapproval in modem times, and though, if the English
cases be included, it may perhaps still be said to be the general rule,
there has been manifested in the more recent American cases a strong
dispostion to disregard it as based upon what has now become a mean-
ingless technicality.*' To the extent that statutory enactments have
dispensed with the necessity of a seal or have robbed it of its former
significance, the rule itself must be regarded as without foundation.
§ 214. Estoppel — Even though the rule might otherwise
prevail, the principal may by his conduct estop himself from relying
upon it. Thus where a grantor signs and seals a deed or bond, leaving
unfilled blanks, and gives it to an agent with parol authority to fill the
blanks and deliver it, and the agent fills the blanks as authorized and
delivers it to an innocent grantee for valuie and without notice that
the agent thus acted without adequate authority, it is held that the
15 United States v. Nelson, 2 BroclL
64; Williams v. Cnitcher, 6 How.
(Miss.) 71. 35 Am. Dec. 422; Daven-
port V. Sleight, 2 Dev. k Bat. (N. C.)
L. 381, 31 Am. Dec. 420; Humphreys
V. Pinch, 97 N. C. 803, 2 Am. St. R.
293; Blacknall v. Parish, 6 Jones (N.
C), Bq. 70; State v. Boring, 15 Ohio,
507; Lund v. Thackery, 18 S. Dak.
113; Ingram v. Little, 14 Ga. 173, 58
Am. Dec. 549; Burns v. Lynde, 6
Allen (Mass.), 305; Preston v. Hull,
23 Gratt. (Va.) 600, 14 Am. Rep. 153;
Wunderlin y. Cadogan, 50 Cal. 613;
Adamson v. Hartman, 40 Ark. 58;
Upton v. Archer. 41 Gal. 85, 10 Am.
Rep. 266; Hlbblewhite v. McMorlne,
6 M. & W. 200.
i«Thus It is held "that parol au-
thority Is sufficient to authorize the
filling of a blank In a sealed instru-
ment and that such authority may be
given in any way by which it might
be given in case of an unsealed Instru-
ment" State v. Young, 28 Minn. 551 ;
Drury v. Poster, 2 Wall. (U. S.) 24.
17 L. Bd. 780; Cribben v. Deal, 21
Greg. 211, 28 Am. St. R. 746; Palacios
V. Brasher, 18 Colo. 593, 36 Am. St
R. 305; LafPerty v. Lafferty, 42 W.
Va. 783; Swartz v. Ballou, 47 Iowa,
188, 29 Am. Rep. 470; Field v. Stagg,
62 Mo. 6S4, 14 Am. Rep. 485; Van Etta
V. Evenson, 28 Wis. 33, 9 Am. Rep.
486; Schintz v. McManamy, 33 WI3.
299; Thummel t. Holden. 149 Mo.
677; Forster v. Moore, 79 Hun, 472,
aird 156 N. Y. 666; Gtis v. Browning,
69 Mo. App. 326. See also South Ber-
wick V. Huntress, 63 Me. 89, 87 Am.
Dec. 685; Wiley v. Moor, 17 S. ft R.
(Penn.) 488. 17 Am. Dec. 696; Com-
mercial Bank v. Kortrlght, 22 Wend.
(N. Y.) 848, 84 Am. Dec. 317; Wooley
V. Constant, 4 Johns. (N. Y.) 64, 4
Am. Dec. 246; Ex parte Decker, 6
Cow. (N. Y.) 60; Ex parte Kerwln, 8
Id. 118; Humphreys v. Guillow, 13 N.
H. 385, 88 Am. Dec. 499; Gibbe v.
Frost, 4 Ala. 720; Richmond Mfg. Co.
V. Davis, 7 Blackf. (Ind.) 412; Board-
man V. Gore, 1 Stew. (Ala.) 617, 18
Am. Dec. 73; Camden Bank v. Hall,
14 N. J. L. 583.
In Einstein v. Holladay-Klotz Land
ft Lumber Co., 132 Mo. App. 82, It was
held that the deed could lawfully be
delivered in blank to the grantee with
authority to him to fill in either his
own name or that of any other per-
son he might select, relying upon
Thummel v. Holden, 149 Mo. 677,
sfipra. This doctrine is criticised In
8 Columbia L. Review, 662.
158
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 21$
grantor will be estopped from asserting, as against such grantee, that
the agent's authority was insufficient,"
And even though the agent fills the blank in a manner not authorized,
there may nevertheless be cases in which the principal should be held
bound to any person entitled to rely upon it and who in good faith has
relied upon it in ignorance of the facts and under such circumstances
that he will now be prejudiced if the instrument be held invalid. Thus
where the sureties upon a probate bond signed and delivered it in
blank to the principal in the bond, with the understanding that it was
to be filled out with a certain sum, but he filled it with a larger sum
(apparently required by the probate judge) and filed it in the probate
office, it was held that persons entitled to rely upon it as an authorized
bond could recover upon it.^* The court, by Holmes, J., said, "We are
of opinion that, when a bond such as this is intrusted to the principal
for his use, to fill it up and deliver it, the possibility of his being re-
quired by the probate judge to insert a penal sum larger than the
surety directed, and of his doing so, is so obvious and so near, that the
surety must be held to take the risk of his principal's conduct, and is
bound by the instrument as delivered, although delivered in disobedi-
ence of orders, if, as here, the obligee has no notice, from the face of
the bond or otherwise, of the breach of orders."
The same rule has been applied in the case of official bonds, fair
upon their face, but claimed to have been filled and delivered in a
manner not authorized.
§ ai5. How when seal superfluous. — But the common law
rule is generally held to apply only to instruments necessarily under
seal, and hence if a seal was not essential to the validity of the instru-
ment executed by the agent, its presence will ordinarily be treated as a
mere redundancy, and if the agent's authority to execute it, or to fill
blanks in it, if it were without seal, was ample, the seal will be disre-
garded, and the instrument will stand as a simple contract."
17 McGleerey v. Wakefield, 76 Iowa, clal bonds see, for example, City of
529. 2 L. R. A. 529; Ragsdale v. Rob- Chicago v. Gage, 95 III. 593, 35 Am;
Inson, 48 Tex. 379; Palaclos v. Rep. 182; Taylor County v. King, 73
Brasber, 18 Colo. 593, 36 Am. St. R. Iowa, 153. 5 Am. St. R. 666; Rose v.
305; Swartz v. Ballon, 47 Iowa, 188, DonglasB Township, 52 Kan. 461, 39
29 Am. Rep. 470; Phelps v. Sullivan, Am. St. R. 364; McCormlck v. Bay
140 Mass. 36, 54 Am. Rep. 442; Field City, 23 Mich. 457; State v. Potter, 63
V. Stagg, 52 Mo. 534, 14 Am. Rep. 435; Mo. 212, 21 Am. Rep. 440; Belden v.
Van Etta ▼. Evenson, 28 Wis. 33. 9 Hurlbut, 94 Wis. 562, 37 L. R. A. 853.
Am. Rep. 486; Ormsby v. Johnson, 24 See also Humphreys v. Finch, 97 N.
S. Dak. 494. C. 303, 2 Am. St. R. 293.
18 White V. Duggan, 140 Mass. 18, "Wagoner v. Watts, 44 N.J. L. 126;
64 Am. Rep. 487. In the case of offl- Long v. Hartwell, 84 N. J. L. 116; Mor-
159
§§ 215, 2i6]
THE LAW OF AGENCY
[book I
A few cases, however, decline to make this distinction.**
It would, moreover, seem not to be tenable in any case in which,
though the instrument might be valid without a seal, in some other
circumstances, it is now counted or relied upon in such a manner as to
demand a deed to uphold it.*^
§ 216. How when instrument executed in presence of
principal and by his direction. — So, even though the instrument to
be executed is necessarily under seal, yet, in accordance with a prin-
ciple already referred to, if the instrument be executed in the presence
of the principal and by his direction or assent it is sufficient."
The reason given for this rule is that "if the grantor's name is writ-
ten by the hand of another, in his presence and by his direction, it is
his act, and the signature, in point of principle, is as actually his as
though he had performed the physical act of making it." "
This rule quite generally prevails, and it extends to the filling of
blanks in deeds and other instruments when done under like circum-
row y. Higgins, 29 Ala. 448; Dutton v.
Warschauer, 21 Cal. 609, 82 Am. Dec.
765; Worrall ▼. Munn, 5 N. Y. 229, 55
Am. Dec. 330; Wood v. Auburn, etc.,
R. Co., 8 N. Y. 160; Wood v. Wise,
153 N. Y. App. Div. 223; Dlckerman
v. Ashton, 21 Minn. 538; Thomas v.
JosUn, 30 Minn. 388; Adams v.
Power, 52 Miss. 828; Nichols v.
Haines, 98 Fed. 692; MarshaU v.
Rugg. 6 Wyo. 270, 33 L. R. A. 679;
Mcintosh V. Hodges, 110 Mich. 319;
Bless y. Jenkins, 129 Mo. 647, Pur-
cell V. Potter, Anthon (N. Y.) N.
P. 310; Tapley y. Butterfleld, 42 Mass.
516, 35 Am. Dec. 374; Plercy y. Hed-
rlck, 2 W. Va. 458, 98 Am. Dec. 774.
The same rule would apply to the
filling of Immaterial blanks In a
sealed Instrument. Vose y. Dolan,
108 Mass. 155, 11 Am. Rep. 331.
Where one had good oral authority
to sell a chattel the fact that he made
an unauthorized blU of sale under seal
did not affect the passage of the title.
Osborne y. Homer, 33 N. C. 359.
20Rowe y. Ware, 80 Ga. 278; Over-
man y. Atkinson, 102 Qa. 750; Hayes
y. Atlanta, 1 6a. App. 25; Dalton
Buggy Co. y. Wood, 7 Ga. App. 477;
Wheeler y. Nevlns, 34 Me. 54; Baker
y. Freeman, 35 Me. 485; Cummins y.
Casslly, 44 Ky. (5 B. Mon.) 74.
SI See Baker y. Freeman, 9upr€^ an
action of coyenant.
22 Gardner y. Gardner, 5 Cush. 483,
52 Am. Dec. 741; Currier y. Clark, 145
Iowa, 613; Johnson y. Van Velsor, 43
Mich. 208; Harshaw y. McKesson, 65
N. C. 688; Croy y. Busenbark, 72 Ind.
48; BaU y. Dunstervllle, 4 T. R. 313;
King y. Longnor, 1 Ney. ft M. 576; s.
c. 4 Bam. ft Adol. 647; Wood y. Good-
ridge, 6 Cush. (Mass.) 117, 52 Am.
Dec. 771; Jansen y. McCahlU, 22 CaL
565; Mutual Ben. L. Ins. Co. y.
Brown, 30 N. J. £3q. 193; Mackay y.
Bloodgood, 9 Johns. (N. Y.) 285; Mo-
Murtry y. Brown, 6 Neb. 368.
Where an attorney, who has pre-
pared a paper for execution by an Il-
literate woman, asks her if he shaU
sign It for her and she nods her head,
it is sufficient authority. Thomas y.
Spencer (N. J.), 42 Atl. 275.
The doctrine of the text seems to
be denied where the signature pur-
ported to haye been made by an
agent. Semple y. Morrison, 7 T. B.
Mon. (Ky.) 298 — where the alleged
principal was an infant
23 Ante, S 208; Mutual Benefit U
Ins. Co. y. Brown, 30 N. J. Eq. 198.
160
CHAP. V] APPOINTMENT AND AUTHORIZAtlON OF AGENTS '[§ 2I7
Stances.** In Kentucky, however, it- is denied effect underth^ ^atute
of that state gdverning the execiftion of contracts of suretyship**
though often in language applicable to any case. It will be obvious
Aat these are not cases of agency, in the ordinary sense, at- ^IL
§ 317. ' How when principal adopts deed prepared by 'te-
other.— Upon 'somewhat similar grcxmids, it has been held that one
may adopt and make his own a deed signed in his name by another
without any previous authority. Thus where a deed of land was signed
with the name of the grantor (in this case it was signed by th6 grantee
in the presence and by the direction of the grantor) and was then per-
t *
sonally acknowledged and delivered by the grantor, it was held that
the deed was valid as the deed of the latter. Said the court : "If one
acknowledges and delivers a d^ed which has his name ^nd seal affixed
to it, the deed is valid, no matter by whom the name and seal were
affixed, no matter whether with or vrithout the grantor's consent. The
acknowledgment and delivery are acts of recognition artd adoption so
distinct and emphatic that they will preclude the grantor from after-
ward denying thiat the signing and sealing were also his acJts. They
are his by adoption. * * * By taking the instrument in this in-
complete condition and completing it, the grantor makes it his deed in
all its particulars. He adopts the signature and the seal the same as
he does the habendum and the covenants which are inserted by the
printer of the blank. The deed is not sustained on the ground of rati-
fication but adoption. Ratification applies to agency. No question of
agency arises in this class of cases. The validity of the deed' cannot
rest upon the ground of agency or ratification. If such were the case
the authority or ratification would liave to be by instrument under
seal; for authority or ratification must be of as high a character as the
act to be performed or ratified. * ♦ * No matter by whom the
signing and sealing were performed, nor whether with or without the
grantor's consent. By completing the instrument he adopts what had
previously been done to it, and makes it his in all particulars.*' *•
s^HudsoH V. Revett, 5 Bing^. 368;
McMurtry v. Brown, 6 Neb. 368;
Ball V. DuDAtervlUe, 4 T. R. 313;
Mackay v. Bloodgood, 9 Johns. (N.
Y.) 285; People v. Smith, 20 Johns.
€2; Brown v. Colquitt, 73 Ga. 59, 54
Am. R. 867.
29Billington v. Commonwealth, 79
Ky. 400; Dickson v. Luman, 93 Ky.
614; Wilson v. Linville, 96 Ky. 50;
Rasan y. Chenault, 78 Ky. 545.
20 Clough v. Clougb, 73 Me. 487, 40
Am. Rep. 386. Upon suhstaotially the
same grounds proceeds the case of
Rhode ▼. Louthain, 8 Blackf. (Ind.)
413, In which a bond which had been
executed in the defendant's name by
agent without sealed authority was
shown to the principal signed and
sealed and he said that it was aU
right By so saying he was held to
have adopted the signatures and the
II
l6i
§§ 2i8, 219]
THE LAW OF AGENCY
[book 1
§ ai8.
Instrument not good as deed may sometimes be ef-
fective as contract. — So there may be cases in which, although the
instrument may not be valid as a deed, because of the lack of proper
authority in the agent to execute it, it may nevertheless be operative as
a written contract if as such it would be within the agent's authority.
Thus where the principal sent out an agent to sell land, giving him a
deed having the name of the grantee and the amount of the consideration
in blank, and the agent sold the land and filled in die blanks and deliv-
ered the deed, it was held that the instrument, although invalid as a
deed, because the agent's authority was merely parol, yet constituted a
good contract for the conveyance of the land, which would be specifically
enforced in equity. The court said: "We think that there can be no
doubt that the instrument which for reasons above stated could not
operate as a deed, may be regarded as a contract put in writing. It is
in truth a written contract more than ordinarily complete, both in form
and substance, and the only question admitting of any sort of doubt is,
whether it has been signed by the defendant or by any legally autlior-
ized agent. We are of opinion that it cannot be considered as a con-
tract with the plaintiff signed by the defendant himself, independently
of any act of his agent, because, when the defendant p^t his name and
seal to it, no such contract had been made. But we think, that in legal
effect, it was signed for him, and in his name by his properly con-
stituted agent. The failure of the agent to make the instrument operate
as the deed of his principal did not prevent him from causing it to
operate as the simple contract of his principal." "
§ aig. Appointment by corporations. — It was the doctrine of the
common law that a corporation could contract only by deed under its
corporate seal, and that its appointment of an agent could be made
only in the same manner. This doctrine, however, is now quite uni-
seal and the bond as his own. So In
Hudson V. Revett, 5 Blng. (Eng.)
368, where a deed waa completed
after signature, Holroyd, J., was sus-
tained, having told the Jury, "if in
such a case there was that which
amounted to a redelivery, and
showed that the party meant the
deed should he acted on, . . . the
deed would be his in its altered
state." See to the same effect: Nye V.
Lowry, 82 Ind. 316; Currier v. Clark,
145 Iowa, 613; Reed v. Cedar Rapids,
138 Iowa, 365; Nlckerson v. Buck, 12
Cush. (66 Mass.) 332; Just v. Town-
ship of Wise, 42 Mich. 573.
As to the effect of the adoption of
an unsigned deed see American Sav.
Bank v. Helgesen, 67 Wash. 672
(overruling same case, 64 Wash. 54).
Held, not good.
37 Blacknall v. Parish, 6 Jones Eq.
(N. C.) 70, 78 Am. Dec. 239; Godsey
V. Standlfer, 31 Ky. L. R. 44, 101 S.
W. 921; Button v. Warschauer, 21
Cal. 609, 82 Am. Dec. 766; Heinlein v.
Martin, 63 Cal. 321; Tllton v. Cofleld,
2 Colo. 392; Joseph v. Fisher, 122 Ind.
399; Dickerman v. Ashton, 21 Minn.
538; LabdeU y. Mason. 71 Miss. 937
(a lease).
162
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 220
versally abandoned, both in England and in this country, and, in the
absence ci contrary provisions iii its constating instruments or in the
laws of the state, a corporation may confer amhority upon an agent
for the performance of any act within the scope of its corporate powers
by unsealed writing or by parol ; and such authority may also be in>
plied, as in other cases, from the acquiescence of the corporation or
from its adoption or recognition of the act, or the corporation may be
estopped to deny its existence.**
§ 220. To execute deed of corporate realty. — And it is not
•necessary that the authority of the agent even to execute a deed of the
corporate real estate should be under seal. The authority to conyey
may be conferred by a vote of the trustees or other managing officers,*®
and authority to convey carries with it authority to execute suitable
etc., Co., 206 Pa. 481; St. Claire v.
Rutledge, 115 Wis. 583, 95 Am. St. R.
964.
No formal record is Indispensable.
Robiason Reduction Co. v. Jobnson,
10 Colo.App. 135; Jones v. Stoddart,
8 Idaho, 210; President Min. Co. v.
Coquard, 40 Mo. App. 40; Washing-
ton Times Co. v. Wilder, 12 D. C. App.
62; Brown v. British Amer. Mtg. Co.,
86 Miss. 388. See also Turner y.
Kingston Lumber 6 Mfg. Co., 106
Teioi. 1; Smith v. Bank of New Bng*
land, 72 N. H. 4.
2»BurriU v. Nahant Bank, 2 Mete.
(Mass.) 163, 35 Am. Dec. 395; per
Hosmer, Ch. J.» in SavlngB Bank v.
Davis, 8 Coan. 191; Nobleboro v.
Clark, 68 Me. 87, 28 Am. Rep. 22;
Marr v. Given, 23 Me. 55; Fitch v.
Steam Mill Co., 80 Me. 84; Cook v.
Kuhn, 1 Neb. 472. Although it is
often said that there must be formal
meetings and votes (Standifer v.
Swann, 78 Ala. 88, e, a-)y there is
much authority for the proposition
that the informal consent of all thoso
authorised to act in the matter will
suffice. Jordan v. Collins, 107 Ala.
572; National St^e Bank v. Sandford
Co., 167 Ind. 10; Morlsette v. Howard,
62 Kan. 468; Sherman v. Fiteh, 98
Mass. 69; Horton v. Long, 2 Wash.
486, 26 Am. St. H. 867, etc. But this
is a QQestion tn the law of Corpora-
tions and not of Agency.
28Burril] v. Bank, 2 Mete. (Mass.)
163, 35 Am. Dec. 395; Nobleboro v.
Clark, 68 Me. 87, 28 Am. Rep. 22;
Alabama, etc., R. Co. v. South, etc.,
R. Co., 84 Ala. 570, 5 Am. St. Rep«
401; Williams v. Fresno Canal Co.,
96 Cal. 14, 31 Am. St. Rep. 172; San
Diego Water Co. v, San Diego Flume
Co., 108 Cal. 549, 29 L. R. A. 839;
Fitch v. Mill Co., 80 Me. 34; Scofleld
V. Parlin & Orendorff Co., 61 Fed.
Rep. 804; Detroit v. Jackson, 1 Doug.
(Mich.) 106; Jhons v. People, 25
Mich. 499; Taymouth v. Koehler, 35
Mich. 26; Bank of United States v.
Dandridge, 12 Wheat. (U. S.) 64, 6
L. Ed. 552; Yarborough v. Bank of
England, 16 East, 6; Ross v. City of
Madison, 1 Ind. 281, 48 Am. Dec. 361;
Rockford, etc., R. R. Co. v. Wilcox,
66 111. 417; Kiley v. Forsee, 67 Mo.
390; Smiley v. Mayor, 6 Heisk.
(Tenn.) 604; Go wen Marble Co. v.
Tarrant, 73 111. 608; Maine Stage Co.
V. Longley, 14 Me. 444; Peterson v.
Mayor* 17 N. Y. 449. See also Sariol
V. McDonald Co., 127 App. Dlv. 648;
Kelly Co. V. Barber Co., 136 App. Div.
22; Warren v. Ocean Ins. Co., 16 Me.
439, 33 Am. Dec. 674; Southgate v. At-
lantic A Pacific R. R. Co., 61 Mo. 89;
Pennsylvania R. Co.. v. Vandlver, 42
Pa. St. 365, 82 Am: Dec. 520; Colum-
bia, etc., Co. V. Vancouver, etc., Co.,
32 Ore. 632; Hamm v. Drew, 83 Tex.
77; Shea Realty Corp. v. Page, 111
Va. 490; Culver v. Pocono Spring,
163
§§ 221, 222]
THE LAW OF AGENCY
[book I
and proper instruments for that purpose, and to affix the corporate/
seal to an instrument requiring it.'® The same rule extendi lo mutiic'' .
ipal and ^wa^i municipal corporations.'^
b. Authority Required by Statute to be in Wf kingj.
§ 321. Common law rules do not require written authority.-r—Ex-
cept in the cases already considered wherein the common liaw required
authority to be conferred by an instrument under seal which must of
course also be in writing, there is no general rule of the common law
making authority in writing essential. There are, of course, very
many cases in which it is highly desirable as matter of evidence, to
prevent mistake, to secure accuracy, or to enforce limitations, that the
authority shall be conferred by instrument in writing, and in most im-
portant cases writing is resorted to ; but as a matter of law it is not
essential.
§ 222. Statutes often require it, especially for selling or leasing
land — English Statute of Frauds. — The danger resulting from rely-
ing upon word of mouth in certain cases relating tp estates in land
early led to the enactment of statutes requiring authority for a few
purposes to be conferred by writing. Thus section one of the Eng-
lish statute of frauds, of 29 Charles II, declares that "All leases, estates,
interests of freehold * * ♦ made or created by livery and seisin
only, or by parol, and not put in writing and signed by the parties so
making or creating the same, or their agents thereunto lawfully au-
thorized by writing, shall have the force and effect of leases or estates
at will Only," etc. So in section three it is provided that "No leases,
elates or interests either of freehold or terms of years, or any uncer-
tain interest, not being copyhold or customary interest, of, in, to or out
of any messuages, manors, lands; tenements or hereditaments, shall
* ** * be assigfned, granted or surrendered unless, it be by deed or
sofiorrill y. Nahwit Banl^ supra;
Valentine v. Piper, 22 IHek. (Mass.)
85, 33 Am. Dec 716; People: v. Bor-
ing, 8 CaL 407; Hemstreet r. Bur-
dick, 90 IlL 444.
ai Thus it appeared by the records
of the meeting that the inhahitants
of a. town At a legal to^va meeting
choee H "agent to settle vltii the
railroad company aad sell the batt
anoe of the town landing It. he.
thinks it will be for the interest of
the town to do so, and to settle all
other matters with the railroad
company ;'* and It was held that by
this yote, H had authority to sell
the town landing and to execute a
proper deed of cbnveyanee thereof
in behalf of the Jtown. Nobleboro
T. Clark, 68 itfch ^87^ 28 Am. Rep.
22. See also Ross t. City of Madi-
son, 1 Ind. 281, 48 Am, Dec. 361.
164
CHAP. V] APPOINTMENT AN1> AUY&CmiZAtlON OF AGENTS [§ 223
note ia writing,, signed by the party «0 assigning, granting or surren-
dering the same, or their agents thereunto lawfully authorized by
tmfing, Qt by act and operation of faw." Ift tWe fomlli and seven-
teenth aejGtioas, however, the legislatare contented itself with requir-
ing siraply that the agent be "lawfully authorized" without adding "by
writing/'
§ 223. ' American statutes-— Authority respecting lands. —
The Eiiiglish statute either ^ in form or substance has been reproduced
in many of the American states. Thus the statute in Michigan de-
clares that "No estate or interest in lands, other than leases for a term
not exceeding one y^ear^ hor any trust or power over or concerning
landsj or in any mantler relating thereto, shall hereafter be created,
granted, assigned, surrendered or declared, unless by act or operation
of law, or by deed or conveyance in writing, subscribed by the party
creating, granting, assigning, surrendering or declaring the same, or
by some person thereunto by him lawfully authorized by writing." And
"Every contract for the leasing for a longer period than one year, or
for the sale of any lands, or any interest in lands, shall be void, unless
the contract, or some note or memorandum thereof, be in writing, and
signed by tlie party by whom the lease or sale is* to be made, or by
some person thereunto by him lawfully authorized by ztriting" Stat-
utes substantially similar though with more or less variation as to the
period of the lease, are fotmd in Alabama, Califomia, Colorado, Illi-
nois, Minnesota, Montana, Nebraska, New York, North Dakota, Ohio,
Pennsylvania, Rhode Island, South Diaikota, and other states. In Mis-
souri the statute is a close copy of the original.
Not all of the states, however, havfe such statutes. Thus, Wiscon-
sin, for example, while it has a statute identical with the first section
quoted above from Michigan, omits tb^ words "by writing" at the
close of the second one. Indiana, Iowa, Ohio, Texas and West Vir-
ginia do the same. The Kansas statute omits the second clause and
the exception as to leases in the first, Mississippi requires only thai
the memorandum of the contract be signed by the party to be charged
or by an agent lawfully authorized and does not have the further re-
quirement that the agent's authority be in writing.
New Jersey requires that any interest in lands, and any leases be
made in writing and, if through an agent, by an agent authorized in
writing, but of the contract for the sale of lands says only that it must
be in writing signed by the party to be charged or by an agent lawfully
authorized. Substantially the same is the statute in Arkansas.
There are Various distinctions in other states which it is not prac-
i6s
§§ 224-226]
THE LAW OF AGENCY
[book I
ticable to reproduce here. The statute in each case must be consulted,
whenever the general question arises.'*
g 224. — — — Acknowledging or recording power.-^Unless the
statute requires it, it is not essential (though highly desirable and'
proper as a matter of evidence) that the written authority shall be
either acknowledged or recorded,^' but in several states acknowledg-
ment and record are required by statute**^ '
§ 225. Statutes requiring written authority in other cases — Surety-
ship—Written instruments«^-The policy of the law may extend the
requirement of written authority to other cases. Thus, in Kentucky
it is enacted that "No person shall be bound as the surety of another
by the act of an agent unless the authority of the agent is in writing,
signed by the principal." ^°
So in California,*® North " and South Dakota ** and Montana,'*
authority to execute instruments required to be in writing, e, g,, a
promissory note, can be conferred only by authority in writing. In
Georgia the authority of an attorney in fact to make an appeal must
be in writing and filed in court.*®
s2 Where the statute thus requires
written authority, authority granted
for some other purpose cannot be en-
larged or extended by parol so as to
inelude one of the purposes named
in the statute. Minnesota Stoneware
Co. V. McCroBsen, 110 Wis. 316, 84
Am. St. R. 927; Shea v. Seellg, 89
Mo. App. 146.
A contract with an agent to find a
purchaser of land Is not a contract
for the creation of an estate or inter-
est in land, or of a trust or power
over or concerning land within the
meaning of such a statute. See post,
§',233.
tEven although the authority be not
in writing, there may be such aets of
part performance, and the like, as to
make the contract specifically en-
forceable as though made by the prin-
cipal without writing. Rovelsky v.
Scheuer, 114 Ala. 419.
38 Tyrrell v. O'Connor, 56 N. J. Eq.
448; Valentine v. Piper, 39 Mass. 85,
33 Am. Dec. 715; Rownd v. David-
son, 113 La. 1047.
84 See Bourne v. Campbell, 21 R. I.
490, and Qodsey v. Standlfer, 31 Ky.
L. R. 44.
36 See Kentucky Statutes, 1899,
§ 482; Simpson v. Commonwealth, 89
Ky. 412; Bramel v. Byron (Ky.), 43
S. W. 695, 19 Ky. L. Rep. 1440. It is
not enough under this statute that
the act be done in the presence and
by tbe direction of the principal.
BUllngton v« Com., 79 Ky. 400; Com.
v. Belt, 21 Ky. L. R. 339, 61 a W.
431; Dickson v. Luman, 93 Ky. 614;
Wilson y. Linville, 96 Ky. 50; Ragan
V. Chenault, 78 Ky. 545. See also
Wallace ▼. McCollough, 1 Rich. Bq.
(S. Car.) 426.
86 Civil Code, S 2309; Seymour v.
Oelricfas» 156 Cal. 782, 184 Am. St.
Rep. 154.
87 Civil Code, § 4314.
88 Civil Code, 9 1667. See Ballou v.
Carter, — S. Dak. — , 187 N. W.
603; Lund v. Thackeray, 18 S. Dak.
113, and Dal y. Fischer, 20 S. Dak.
426.
3t Civil Code, § 3085; Case v. Kra-
mer, 34 Montana, 142.
40 Civil Code, 8 4457,.
166
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 22/
§ aa6. Emplo3mients for more than one year. — ^Under the fourth
section of the statute of frauds, and the subdivision thereof relating
to "any agreement that is not to be performed within the space of one
year from the making thereof," a contract of employment which is not
to be performed within one year, and with it any authority to act as
agent by virtue of it, may fail unless there be some note or memoran-
dum thereof in writing, and signed by the party to be charged tliereby.**
§ aay. What writing sufficient when writing required. — ^Even in
those cases in which the authority is, by the statute, required to be
conferred by writing, it need not, except when the instrument to be
executed is under seal, be by a formal or a sealed writing." It may
4iEikelman v. Perdew, 140 Cal.
687; Dletrieli v. Hoefelmeir, 128
Mich. 145. See also Buckley v. Buck-
ley» 9 Nov. 878.
But a contract for an entirely in-
definite time of service or for a cer-
tain service whidb may well be com-
pleted witbin one year is not within
the statute. Neal v. Parker, 98 Md.
254; Vocke v. Peters, 68 111. App. 388.
The same is true of a contract for a
season, wbieh may or may not close
within one year from the time that
the contract is made. Bank v. Fin-
nell, 133 Cal. 475; DeLand v. HaU,
134 Mich. 381. The fact that death
within one year may complete a con-
tract to give support for life, or to
refrain from a certain business for
life, lias been held in some jurisdic-
tions, to make such a contract not
within this section of the statute.
Doyle V. Dixon, 97 Mass. 208, 93 Am.
I>ec. 80; Peters v. Westborough, 36
Mass. (19 Pick.) 864, 81 Am. Dec.
142; Lyon v. King, 52 Mass. (11
Mete.) 411, 45 Am. Dec. 219; Hill v.
Jamleson, 16 Ind. 125, 79 Am. Dec.
414.
The same rule, has been applied to
cases of a contract for services for
a time which would extend beyond
one year from the time of making
the contract Bmlth v. Conlin, 26 N.
T. Supreme Ct. (19 Hun) 234; Blake
V. Voight. 134 N. Y. 69, 30 Am. St R.
622. In this case the plaintift had in
November entered into an agreement
with the defendant to serve as the
defendant's, agent for one year from
the first of December, but with an
option to either one to terminate the
contract six months after December
the first. The defendant pleaded the
Statute of Frauds. The contract was
held not to be within the prohibition
of the statute. See contra, however.
Blest V. Versteeg Shoe Co., 97 Mo.
App. 187. In this case the plaintiff
had on February 5, 1900, made a
written contract with the defendant
to serve a^ travelling sales agent for
the defendant for one year to begin
wHh April 1, 1900. By the terms of
the contract Blest was given an op-
tion to terminate It on October 1,
1900, by giving notice by August 1,
1900. The defendant relies upon the
fact that the contract was on its face
incomplete and did not show what
was to be the plaintiff's territory and
upon the Statute of Frauds. The
court allowed the Statute of Frauds
to defeat the plaintiff's recovery for
breach of this contract
This case was approved in the latte
case of Wagniere v. Dunnell, 29 R. Ik
680, 17 Ann. Cas. 205, where other
cases are cited. The late English
case of Hanau v. Ehrlich. [1912J App.
Cas. 39, Ann. Cas. 1912, B, 730, also
adopts the same view.
" Baird v. Loescher, 9 Cal. App. 65.
But a written memorandum referring
to an oral agreement and not incor-
porating its terms is not sufficient
compliance with a statute which re-
quires that a contract be in writing.
Zimmerman v. Zehendner, 164 Ind.
167
§§ 228, 229]
THE LAW OF AGENCY
[book 1
be conferred by letter/* or by telegram,** or by any other iiifiomial
document.
c. In other Cases Authority may be Conferred by Words or Conduct.
§ 228. No fonnal method required. — Except in the cases already
considered of instruments under seal aiid statutes expressly requiring
written authority, no formal or particular method is necessary' to con-
fer authority for the doing of any act lawful tx> be done by agent.*'
While written instruments or express words or fonnal procedure may
at times be desirable, they are not necessary, and parol authority will
suffice.
§ 229. By parol — To sell or lease lands.-^Thua, e^ccept in those
states *® in which the statutes expressly require the authority to be in
466, 3 Aim. Cas. 656. See Keith ▼.
Smltb, 46 Wash. 131, 13 Ann. Caa.
975; Phillips v. Jones, 89 Ind. App.
626.
New Jersey has held under its stat-
ute requiring that the broker must
have written authority, if he ia to re-
cover commissions, that a writing ac-
knowledging the broker's authority,
after he has in fact performed, is
without consideration, and will not
give broker action for commission
for services. See Alpern v. Klein, 76
N. J. L. 53.
43 Thus where the owner of land in
Kansas City wrote from Chicago,
where he resided, to his agent in
Kansas City, "X leave the sate of the
lots pretty much with you; if the
party, or any one is willing to pay
sixty dollars a foot, one-third cash,
and the balance in one and two yeara.
Interest seven per cent, per annum,
ind pay commission of sale, I think
'I am willing to have you make out a
deed, and I will perfect it, hold till
then" — it was held that this author-
ized the agent to make a contract
binding upon the owner for a present
sale of the lots. Smith v. Allen, 86
Mo. 178, citing Stewart ▼. Wood, 63
Mo. 256; Lyon v. Pollock, 99 U. 8.
668, 25 L. Ed. 265; Johnson v. Dodge,
17 111. 441; Lawrence v. Taylor, 6
Hill (N. Y.), 107; Hawkins v. Chace,
19 Pick. (Mass.) 502. In Lyon v.
Pollock, cited by the co»rt, A wrote
to C at San Antonio, Texas, "I wiah
you to manage .my property as you
would your own. If a good oppor-
tunity offers to «ell everything T
have, I would be glad to sell. It may
h% parties will come into Saa An-
tonio who wtU be gUd to purchase
my gas stock and real estate." It-
was held that G was thereby author-
ized to contract for the sale of the
real estate but not to convey it. See
also Brown v. Eaton, 21 Minn. 409;
Newton v. Bronson, 13 N. Y. 587» 67
Am. Dec. 89; Vermont Marble Co. v.
Mead, — Vt. — , 80 Atl. 852; Is-
pbording y. Wolf, 36 Ind. App. 250;
Paris y. Johnson, 156 Ala.' 403; Hol-
liday V. McWiliiams, 76 Neb. 324;
Bradley ft Co. v. Bower, 5 Neb.
(Unotf.) 542; Stadleman v. Fitzger-
ald, 14 Neb. 290.
Where the statute requires that an
agent to sell land or to find a pur-
chaser for land shall be authorized
by writing, a letter informally
giving that authority will suffice.
Longstreth v. Kerb, 64 N. J. L. 112;
Oetzeisohn y. Donnelly, 50 N. Y.
Misc. 164; Holbrook-Blackwelder Co.
v. Hartman, 128 Mo. App. 228; Baird
y. Loescher, 9 Cal. App. 65.
44 Godwin y. Francis, L. R. 5 C. P.
295; Butman y. Butman, 218 111. 104.
«K Story on Agency, § 47; Eweirs
Byans' Agency, 24.
40 As in Alabama, Calffomia, Col-
orado, Illinois, Michigan, Minnesota,
168
CHAP. V] APPOINTMENT. AND AUTHORIZATION OF AGENTS [§ 23O
writing, an agent may be authorized by parol to make a valid contract
for the sale*^ or the leasing** of his principal's lands. Where the
statute excepts leases for not more than a certain period, leases within
that period may be executed witliout authority in writing.** But it
has been said that parol authority to thus charge a principal's realty
ought to be express and clearly established.'^®
§ 33a To purchase land. — ^And so, in the ordinary case,
authority merely to purchase land need not be conferred by writing in
order to make it enforceable against the vendor, unless some statute
expressly requires it.''^ Where, however, the question is whether an
Missouri, Nebraska, New Hampshire,
New Jersey, New York, North Da-
kota, Ohio, Pennsylvania, Rhode Is-
land and West Virginia.
4Y Heard y. PiUey, 4 Ch. App.
Cases, 548; Morrow v. Higglns, 29
Ala. 448; Rutenberg ▼. Main, 47 Oal.
213; Jacobson y. Hendrickfl, 83 Conn.
120 (dictum); Brandon v. Pritchett,
126 Oa. 286, 7 Ann. Cas. 1093; John^
aon V. Dodge, 17 111. 433; Taylor v.
Merrill, 55 111. 52; Watson v. Sher-
man, 84 IlL 263; Rotttnan y. Wasson,
3 Kan. 552; Talbot v. Bowen, 1 A. K.
Marsh. (Ky.) 436, 10 Am. Dec. 747;
Whltworth y. Pool* 29 Ky. L. R. 1104.
96 8. W. 880; Lawson y. Williams
(Ky.), 115 8. W, 730; Hawkins y.
Chaee, 19 Pick. (Mass.) 502; Ulen y.
Klttredge, 7 Mass. 233; Brown y. Ea-
ton, 21 Minn. 409; Dlckerman y. Ash*
ton, 21 Minn. 538; Curtis y. Blair, 26
Miss. 809, 59 Am. Dec. 257; Riley y.
Minor, 29 Mo. 439; Cobban v. Heck*
len, 27 Mont 245; Tyrrell y. (yCon-
nor, 56 N. J. Eq. 448; Lawrence y.
Taylor, 6 HIU (N. Y.), lt>7; McWhor-
ter y. McMahon, 10 Paige (N. Y.),
386; Champlin y. Parish, 11 Paige
(N. Y.), 405; Worrall y. Munn, 5 N.
Y. 229, 55 Am, Dec. 830; Newton y.
Bronson, 13 N« Y. 587, 67 Am. Dec.
89; Moody y. Smith, 70 N. Y. 598;
CombeB y, Adams, IGkO K. C« 64; Huff*
man y. Cartwright, 44 Tex. 296;
Donnell v.-Ourrle,.— - Tex. Ciy. App.
— , 131 8. W. $8; Mustard y. Big
Oreeik DeyeL Co., 69 W. Va. 713;
Dodge y. Hopkins, 14 Wis. 630; Smith
y. Armstrong, 24 Wis. 446; Tafts y.
Brace, 193 Wis. 841;.Biiown.y. Oris-
wold, 109 Wis. 275; Kreutzer v.
Lynch, 122 Wis. 474 (to giye an op*
tion). See also Robinson y. Hathar
way, 2 Ohio Dec. (Repr.) 581, and
Koehler y. Hunt, 8 Ohio Dec. (Repr.)
404.
«8Lafce y. Campbell, 18 111. 106;
McComb y. Wright, 4 Johns. Ch. (N.
Y.) 659.
40 See Mcintosh y. Hodges, 110
Mich. 319; Williams y. MershoA, 57
N. J. L. 242; Gt^riflLn y. Baust, 26 N.
Y. App. Diy. 553; Bourne v. Camp'
bell, 21 R. I. 490; Marshall y. Rugg,
6 Wyo. 270, 33 L. R. A. 679.
»o Union Mutual Life Ins. Co. y.
Masten, 3 Fed. 881; Bosseau y.
O'Brien, 4 Blss. (U. 8. Oir. C.) 395;
Malone y. McCuUough, 16 Colo. 460;
O^Rellly y. Kelm, 54 N. J. BJq. 418;
Degglnger y. Martin, 48 Wash. 1;
Lauer y. Bandow, 48 Wis. 556, 28
Am. Rep. 571; Challoner y. Bouck,
56 Wis. 662; Gilmour y. Simon, 15
Manitoba, 206.
«i It is enough usually that the
statute is satisfied as to the party to
be charged. Harper y. Coldschmidt,
156 Cal. 245, 134 Am. St. R. 124, 28
L. R. A. (N. S.) 689; Ullsperger y.
Meyer, 217 111. 262. 2 L. R. A. (N. S.)
221, 3 A. 6 E. Ann. Cas. 1032; Wiley
y: Hellen, 83 Kan. 5<4; Dayis y. Mar<
tin, 146 N. C. 281; Flegel y. Dowllng,
54 Ore. 40, 135 Am. St R. 812, 19 A.
ft B. Ann. Cas. 1159; Kean y. Land-
rum, 72 8. C. 566; "Wharton y. Tol-
bert, 84 S. C. 197; LeVine y. White-
house, 87 Utah, 260, 24 A. ft E. Ann.
Cas. 407; Armstrong y. Maryland
Coal Co., 67 W. Va. 689; Pain y.
169
§§ 231-233]
THE LAW OF AGENCY
[book ]
agent, so authorized, who has bought the land but refuses to recognize
his principal's rights therein, can be charged as a trustee or other-
wise, other considerations which involve the statute may arise."
§ 231. To deliver deed. — So, notwithstanding the conflict
concerning the execution or completion of deeds, it seems to be agreed
that authority to deliver a deed may be conferred by parol.'*
§ 232. -^— ^— To demand and collect rents. — So firrther, parol
authority is sufficient to authorize a person to act as agent for a lessor
in the collection of rent or in demanding its payment.'*
§ 233. To find purchaser for land — Employment of broker.
Even where, under the statute, authority to make a contract for the
actual sale of land is required to be by writing, the ordinary employ-
ment of a real estate broker or other person "to sell," i. e. to find a
purchaser for lands is not by such statutes required to be by writing.**
Such employments, as will be seen,*^* are not usually deemed to author-
ize the execution of a binding contract of sale.
Flynn, 10 Vict. L. R. 131; Lundy v.
Gardner, 2 Out. W. R. 1104.
&2 This question is considered un-
der the head of Loyalty in Book IV,
Chapter II.
»» See White v. Duggan, 140 Mass.
18, 54 Am. Rep. 437; Lafferty v. Laf-
ferty, 42 W. Va. 783.
B4 Sheets v. Selden, 2 Wall. (U. S.)
177. 17 L. Ed. 822; Ledwith v. Mer-
ritt, 74 App. Div. 64, affirmed iflth-
ont opinion 174 N. Y. 512.
BB Waterman v. Stephens, 71 Mich.
104; Hannan v. Prentis, 124 Mich.
417; Abbott v. Hunt, 129 N. C. 408;
Carsten v. McReavy, 1 Wash. 869;
Monfort v. McDonough, 20 Wash.
710; Gerhart v. Peck, 42 Mo. App.
644; Forsythe v. Albright, 149 Mo.
App. 515; Rice v. Ruhlman» 68 Mo.
App. 503; Johnson v. Haywood, 74
Neb. 157. 5 L. R. A. (N. S.) 112; Grif-
fith V. Woolworth, 28 Neb. 715; For-
rester V. Evatt, 90 Ark. 301; Fox v.
Starr, 106 111. App. 273; Hancock v.
Dodge. 85 Miss. 228; Kepner v. Ford,
16 N. Dak. 50; Wlllaon v. Clark, 35
Tex. Civ. App. 92; Friedman v. Sut-
tle, 10 Ariz. 57, 9 L. R, A. (N. S.) 933
(in which Czarnowskl v. Holland, &
Ariz. 119, which had held the author-
ity of an agent to purchase or sell
real estate for compensation must be
in writing, was overruled). Watson
V. Brightwell, 60 Oa. 212; Monroe v.
Snow, ISl m. 136; Fisher v. Bell»
91 lAd. 248; Flero v. Ftero, 52 Barb.
288; McLaughlin v. Wheeler. 1 S. D.
497. See also White ▼. Curry, 89 U.
C. Q. B. 569; Flegel v. Dowling, 64
Ore. 40; 185 Am. St. R. 812, 19 A. ft
E. Ann. Cas. 1169.
The same doctrine has been said to
apply, where the thing to be sold \9
a lease of lands. Campbell v. Gallo-
way, 148 Ind. 440.
Where the services have been fully
performed and accepted by the prin-
cipal, the principal cannot defeat the
agent's right to commission by show-
ing that the agent was without writ-
ten authority. Huff v. Hardwlick, 19
Colo. App. 416; Trowbridge v. Welh-
erbee, 93 Mass. (11 Allen) 861; Sny-
der V. Wolford, 83 Minn. 175, 53 Am.
Rep. 22; Lesley v. Rosson, 89 Ml8».
368, 77 Am. Dec. 679; Carr v. Leavitt,
54 Mich. 640; Ben^mln v. Zelli 100^
Pac. 33; Bradford v. Laffey, 11 Ha-
waii, 463.
&«See Madone v. McCulIough, 15
Colo. 460. Coiiipare Rosenbaum v.
Belson, ri9O0] 2 Ch.'267; Chick v.
Bridges. 56 Ore. 1; Purkey v. Hard-
ing, 23 8. D. 632; Ross v. Craven> 84
Neb. 520; LawflOn ▼. King, 66 Wash. 16.
170
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 234
In a few states, however, as in California, Indiana, Nebraska and New
Jersey special statutes or special provisions of general statutes require
either that the authority of the broker shall be by writing or that a
written contract shall exist between the principal and the broker.*^
§ 334* ' To grant licenses respecting lands^^Selling stand-
ing timber. — Where the rights or the privileges which the agent is
authorized to grant or transfer do not amount to an estate or interest
in the land, the authority need not ordinarily be conferred by writing.
So in a state where the sale of standing timber was -the sale of an in-
^T California, Civ. Code 1906,
i 1624, 6, declares that an agreement
employing or authorizing: an agent to
purchase or sell real'e. ate sliall be
Invalid uale^ it be in writing signed
by the party to be charged or his
agent thereunto lawfully authorized
by writing. See Tbomy v. Dunphy,
S€ Cai. 689; PlaU v. Butoher, 112
Gal. 634; Jamison v. Hyde, 141 Cal.
109, citing other California cases.
Kennedy v. Merickel, 8 Cal. App. 378.
New York Penal Code, $ 640d, and
Missouri Laws of 1903, p. 161, or Rev,
Stat. 1909, § 4634, made it a misde-
meanor for any person to sell or of-
fer to sell any land without the writ-
ten authority of the owner. But in
Fiaher Co. v. Woods, 187 N. Y. 90,
and in WooUey v. Mears, 226 Mo. 41,
336 Am. St. R. 637, these statutes
were declared unconstitutional upon
the ground that they went beyond
reasonable regulation of a business.
Indiana, Session Laws 1901, p. 504,
Bums' 1901 Compiled Stat. § 6629a,
provides that no contract employing
a person to find a purchaser for real
estate shall be valid unless the same
ahall be in writing, ' signed by the
owner of the real estate or hi^ legally
appointed and duly qualified repre-
aentative. See Zimmerman v. Ze-
hendnen 164 Ind. 466; Phillips v.
Jones, 89 Ind. App. 626.
New Jersey, Statute of Frauds § 10,
provides that no agent selling or ex-
changing land shall be entitled to
commission unless the authority is in
writing. See Somers y. Wescoat, 66
K. J. L. 551.
Nebraska, Act of 1897, ch. 57, com-
piled Statutes 1909, $ 482, provides
that every contract between the
owner of land and any broker or
agent employed to sell the land shall
be void unless the contract Is in writ-
ing and subscribed by both the
broker and the owner, describe the
land to be sold and state the compen-
sation to be allowed by the owner for
the sale. See Covey v. Henry, 71 Neb.
118.
Oregon. See Chick v. Bridges, 56
Ore. 1, Ann. Cas. 1912, B, 1293.
Washington provides that an agree-
ment authorizing or employing an
agent to sell or purchase land shall
be void unless there be a note or
memorandum in writing signed by
the party to be charged or his agent
lawfully authorized. Remington &
Balllnger's General Statutes 1910,
% 5289, and see McCrea v. Ogden, 50
Wash. 495, s. c. 54 Wash. 521.
While the Washington and the Cal-
ifornia statutes are substantially
alike, the California court, Toomy v.
Dunphy, supra, has held that what
is necessary is written employment
or authorization of the agent and
that the writing need not state the
fact that the employment is for com-
pensation, while the Washington
court has held (Foote v. Robblns, 50
Wash. 277) that the written memo-
randum must 'specify the compensa-
tion and its amount. Indiana has
interpreted her statute in the same
way that Washington has hers. See
cases supra.
171
§§ 235, 236]
THE LAW OF AGENCY
[BOOK 1
terest in lands, and req.uir.ed to be in writing, witTi written authority
in any agent who should make such a contract, an agent authorized
by parol to make a contract for sale of standing timber was held to
have adequate authority to give a license to cut timber, and his at-
tempted parol contract of sale was held good as a parol Keeitse.** So
in a state where the sale of standing timber is not regarded as the sale
of an interest in land, the authority of an agent to make such a sale
may be by parol or inferred from the circumstances/*
§ 235. To subscribe for stock. — In the absence of a stat-
ute prescribing some other method, authority to an agent to subscribe
for corporate stock may be given by parol.*®
§ 236. To execute written instruments not under seai-:-
And so, except in those cases in which the authority is by some statute
required to be in writing,** and except where the instrument to be ex-
ecuted is necessarily under seal, authority may be conferred by parol
to execute bills, notes and all other contracts in writing,®*
Under this rule authority may be conferred without writing to ex-
es Antrim Iron Co. v. Anderson, 140
Mich. 702, 112 Am, St.- R. 434.
BO Columbia Land & Min. Co. v.
Tinsley, 22 Ky. L. R. 1082. 60 S.
W. 10.
«o/n re Whitley Partners, Limited,
32 Chan, Div. 337; Ingersoll, etc., Co.
V. McCarthy, 16 U. C. Q. B. 162; and
an unauthorized subscription may be
ratified and made binding by con-
duct. Musgrave v. Morrison, 54 Md.
161; Miss. & Tenn. Ry. Co. v. Har-
ris, 36 Miss. 17; Higglns v. State, 7
Ind. 549; McHose A Co. v. Wheeler ft
Co., 45 Pa. St. 32; McCully v. Rail-
road Co., 32 Pa. St. 25; Sanger v. Up-
ton, 91 tr. S. 56, 23 L. Bd. 220; Mc-
Clelland V. Whlteley. 11 Biss. 444.
01 In California authority to exe-
cute an instrument required to be in
A^riting ^can be conferred only by
writing. Civil Code J 2309; Alta
SUver Min. Co. v. Alta Placer Co., 78
Cal. 629. So in North Dakota, § 4314,
South Dakota § 166^, and Montana
§ 3085. ■ . .
«2 There seems to be an Impression,
easily acquired, but with difficulty re-
moved, that, because authority for
the execution of Infitruments under
seal must be conferred by an insUru-
ment under seal, authority for the
execution of instruments in writing
must be conferred by writing. This,,
however, unless made so by statute,
is not true. Except In the cases al-
ready referred to, authority for the
execution of written instruments may
be conferred witl^out writing. Au-
thority for the execution of negotia-
ble instruments is no exception,
though such an authority is not
easily implied. See Stackpole v. Ar-
nold, 11 Mass. 27, 6 Am. Dec. 150;
Emerson v. Providence Hat Mfg. Co.,
12 Mass. 237, 7 Am. Dec. 66; New
England Marine Ins. Go. v. DeWolf, 8
Pick. (Mass.) 56; Shaw v. Hudd, 8
Pick* (Mass.) 9; Small j v. Owings,
1 Md. Ch. 363; Welch v. Hoover^, 5
,Cranch (U. S. C. C), 444; Webb v.
Browning, 14 Mo. 854; Wagoner v.
Watts, 44 N. J. L. 126; Hammond v.
Hannin, 21 Mich, 374, '4 Am. Rep.
490; Worrall v. Munn, 5 K Y, 229, 55
Am. Dec 330; Fountain v. Book-
staver, 141 111. 461;. Connor v.
Hodges, 7 Qa. App. 153; Fordyce v»
Seaver, 74 Ark. 395.
172
I
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 237-239
• • • *
ecute affidavUs,*^ notices, petitions,** assignments,'*^ T)ills of sale and
mortgages of chattels,'* the memorandum required by the fourth or the
seventeenth section of the statute of frauds," and the like."
§ 337. ' ' ■ To fill blanks in. written instruments. — In further-
ance of the same rule, also, the kind of authority which will justify
the making of the entire instrument may also suffice for completing,
filling blanks in, or otherwise giving final form and effect to instru-
ments iii wrrting (but not under seal) that is to say, a merely oral au-
thority may suffice.
One out of many instances of this sort, is the common case of the
transfer of certificates of stock. These are usually sigfned in blank
(sometimes, but unnecessarily, under seal) and are delivered to the
transferee with an express or implied authority in him or any subse-
quent lawful holder to fill in the blanks and cause a transfer to be
made upon the books of the corporation.'*
§ 238. To buy and sell goods. — Authority to buy or to sell
goods may be conferred without writing.^^ The seventeenth section
of the Statute of Frauds did not, nor do the modem statutes as a rule,
require that the agent referred to therein should be "lawfully author^
ized by writing'* as was required in some Other sections.
§ 239. To "accept and receive" under Statute of Frauds. —
Authority to an agent to accept and receive the goods or some portion
•» Cook V. Buchanan, 86 Ga. 760. wltlwiit authority in writing. Kirk-
s'Tlbbetts ▼. West* etc.» Street Ry. lin v. Atlas Say. ft L.. AsB'n, 107 Oa.
Co., 153 111. 147. 313. An agent may waive a mechan-
•5 Of mortgage: Moreland v. Hough- Ic's Hen by the rerbal authority of
ton, 94 Mteh. 548; of a cause of ac- bis principal. Hughes v. Lansing, 34
tlon: Dingley v. McDonald, 124 Ore. 118, 75 Am. St. 11.574. Or make
Cal. 90. . a parol release of an equity to have
ae Cohen v. OUter, 9 Tex. Civ. App. a mortgage corrected bo as to cover
35; McKee v. Coffin, 66 Tex. 304; more land. Packard v. Delfel, 9
Gouldy V. Metcalf, 75 Tex. 466, 16 Wash. 562.
Am. St, R, 912J Hirsh ft Co. V Bev- « See McNeil v. Tenth Nat. Bank,
erly, 125 Ga. 6&7. 46 N. Y. 335; 7 Am. Rep. 841; Hol-
«T Moore v. Taylor, 81 Md. 644; trook v. NeW Jersey Zinc Co., 57 N.
O'Reilly ▼. Kefm, 54 N. J. Eq. 418; Y. 616; Bridgeport Bank v. New
Roebl V. HatRneaser, 114 Ind. 811; York, etc., R. Co., 80 Conn. 231;
Kennedy v. Ehlen, 81 W. Va. 540. Walker v. Detroit Transit Ry., 47
MA proposition to allow redemp- Mich. 338; Andrews v. Worcester,
tion from a mortgage sale need not etc., R. Co., 159 Mass. 64; Pennsyl-
be authorized by writing. Morrow v. vania R. Co.'s Appeal, 86 Pa. 80.
Jones, 41 Neb. 867. The signing of fo See Wlger v. Carr, 131 Wis. 584,
the roll of members and the bidding 11 L. R. A. (N. S.) 650, 11 A. & E.
in of a loan in a building and loan Ann. Cas. 998.
association may be done by an agent,
173
§§ 240, 241]
THE LAW OF AGENCY
[book I
of them in order to satisfy the requirements of the seventeenth section
of tlie Statute of Frauds may also be conferred without writingj^
So where an oral acceptance of a written offer to sell lands wotild
be sufficient if made by the offeree in person, an acceptance by his
agent authorized without writing, is held to be sufficient.'^
§ 240. Authority may be partly written and partly oraL — Where
the authority is not required to be in writing, it may be partly written
and partly oral. It may be found in several instruments or several
acts or both. It may have been conferred at different times. The
written part may enlarge, restrict or supersede the oral, or tnce versa.
The latest declaration of the principal's intention will ordinarily con-
trol ; so far as it is inconsistent with the former declaration, or is evi-
dently intended to displace it, it must govern." Where the principal
has evidently intended a written declaration, though not necessary, to
be the final repository of his authorization, it will exclude evidence of
prior or contemporaneous oral authority.
§ 241. Authority need not be express — Authority by implication. —
The authority, moreover, need not be expressly conferred. In the
great majority of the cases it is informally conferred, or is presumed
from the acts and conduct of the principal.^* A large portion of the
transactions of the modem business world is carried on by simple and
informal means. A word or look or gesture often suffices to give
assent to great undertakings or to set in motion the complicated ma-
chinery of commerce.^* Little, often, is said or written, but that little
carries with it a train of legal consequences no less certain and definite
71 Alexander v. Oneida County, 76
WlB. 56.
"Fowler v. Fowler, 204 111. 82:
Le Vine v. Whitehouse, 37 Utah, 260,
24 A. A S. Ann. Cas. 407. See also
Briggs V. Chamberlain, 47 Colo. 382,
135 Am. St. R. 223; Rathbun v. Mc-
Lay, 76 Conn. 308; Kean v. Landrum,
72 S. C. 556; Bhrmanntraat v. Robin-
son, 52 Minn. 833 (agent to accept a
lease).
78 See McLaughlin v. Wheeler, 1 S.
Dak. 497.
74 See Dull v. Dumbauld, 7 Kan.
App. 376; Nutti'ng v. Elevated Ry.
Co., 21 App- Div. 72; Roberson v.
Clevenger, 111 Mo. App. 622; Rey-
nolds y. Railway Co., 114 Mo. App.
670; Phillips t. Geiser Mfg. Co., 129
Mo. App. 396; Lindqulst v. Dickson,
98 Minn. 869, 6 L. R. A. (N. S.) 729;
Gambrill v. Brown Hotel Co., 11 Colo.
App. 529; Burnell v. Morrison, 46
Colo. 533; Fail v. Western Union Co.,
80 S. C. 207; Leonard v. Onxstead, 141
Iowa, 485; Fielder v. Camp Construc-
tion Co., 63 W. Va. 459; Brandt T.
Krogh, 14 Cal. App. 39; Anglo-Cali-
Jtornia Bank v. Cerf, 147 Cal. 393;
Lafayette Ry. Co. v. Tucker, 124 Ala.
514.
7» A forcible illustration of this
may be seen upon any Board of
Trade, Where according to local usage
or fixed rule, a nod or the holding up
of one or more fingers, serves to giva
assent to the making of a sale and
the specifying of the quantity. So
the nod of a purchaser at an auction
is sufficient to effect a purchase and
to authorize the entering of his name
upon the memorandum of the sale.
174
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 242-244
than if the whole were included in the spoken or written words. Hence
it is that in many cases the existence of an agency is implied or pre-
sumed from the words or conduct of the parties, although the creation
of an agency was not within their immediate contemplation. V
§ 242. Conferring certain powers by Ae creation of others— Inci-
dental powers. — It must also be kept in mind that one method of
conferring powers may be by the granting of others to which the
former may in some manner be deemed incidental or appurtenant.
Thus the authority of the agent is not necessarily to be deemed to be
confined to the doing of the main act authorized. Every delegation
of power carries with it, by implication, unless the contrary is declared,
the authority to do all those incidental acts, naturally and ordinarily
done in such a case, which are reasonably necessary and proper to
carry into effect the main power so conferred. The principal may, of
course, expressly refuse to extend these incidental powers even though
he thereby makes the authority impossible of execution ; but this is not
to be presumed, and the authority will be deemed to include them un-
less the contrary is brought to the knowledge of the persons with
whom the agent deals.'*
§ 243. Customary powers, — It is also to be assumed, un-
less the contrary is declared, that the principal intends that the author-
ity shall be executed in accordance with the customs which prevail in
transactions of that sort ; and the main power will therefore be deemed
to include the authority to do all those incidental acts which are cus-
tomarily done by such an agent at that time and place, unless the con-
trar>' is made known to the persons with whom the agent deals.'^
Many illustrations of this rule will be seen hereafter, conspicuous
among them, for example, being the case of the agent authorized to
sell a chattel and who is thereby deemed to be authorized to give war-
ranties of quality if such warranties are usually given upon similar
sales of chattels of that sort.
§ 244. Powers established by the course of business. —
The authority of the agent may thus not only include incidental powers
and customary powers, — embracing therein, of course, such powers
as are usually incident to a certain kind of business— but it may also
include powers incident to the business of the particular principal as
76 See Watts v. Howard, 70 Minn, wood, 83 lU. 324, 26 Am. Rep. 892:
122; Murphy v. Columbus Bid. Co., Upton v. Suffolk County Mills, 11
155 Mo. App. 649. Cush. (Mass.) 5S6, 59 Am. Dec. 163;
77 See Pickert v. Marston, 68 Wife. Fritz v. Chicago Ele. Co., 136 Iowa,
465, 60 Am. Rep. 876; Hibbard v. 699; Hopkins y. Armour, 8 6a. App.
Peek, 76 Wis. 619; Corbett v. Under- 442,
§■ 244]
.THE LAW OF AGENCY
[book I
he actually conducts it — ^which may include powers not ordinarily in-
cident to it. Whatever powers, therefore, the ^ven principal may,
by his course of conduct, by his general methods of dealing, by his long
continued acquiescence or tacit approval, have in fact attached either
to the given agent or to such an agent as he is, are to be deemed to
exist when that agent proceeds to do similar acts with persons ignorant
of any actual limitations put upon this authority/^ It is not essential
in this case (unlike the case of estoppel to be hereafter considered)
that the person dealing with the agent shall at the time have known
of and relied upon the facts creating the authority ^* any more than it
TsThug in Martin v. Webb, 110 U.
S. 7, 28 L. Ed. 49» in speaking of the
powers actually exercised by the
cashier of a particillar bank, it Is
said that the authority '*niay be in-
ferred from the general manner in
which, for a period sufficiently long
to establish a settled course of Busl*
ness, he haa been allowed, without
interference, to conduct the affairs
of the bank. It may be implied from
the conduct or acquiescence of the
corporation, as represented by the
board of directors. When, during a
series of years, or in numerous busi-
ness transactions, he has been per-
mitted, without objection, and in his
official capacity, to pursue a particu-
lar course of conduct, it may be pre-
sumed, as between the bank and
those who in good faith deal with it
upon the basis of his authority to
represent the corporation, that he
has acted in conformity with instruc-
tions received from those who have
the right to control its operations."
See also Gale v. Chase Nat. Bank, 104
Fed. 214; Hanover Nat Bank v.
American Dock A Trust Ck>., 148 N.
Y. 612, 51 Am. St. R. 721; Corn Ex-
change Bank v. American Dock ft
Trust Co., 149 N. Y. 174; Corn Ex-
change Bank V. American Dock &
Trust Co., 163 N. Y. 332; Welch v.
Manufacturing Co., 55 S. C. 668;
Blowers v. Ry. Co., 74 S. C. 221.
79 Thus in Columbia Mill Co. v. Na-
tional Bank of Commerce, 52 Minn.
224, where It appeared that there had
grown up and continued for years- a
I
usage on the part of one Heilpera
and his predecessors as bookkeeper
and cashier of the mill company to
endorse with a rubber stamp and de-
posit or get cashed checks drawn.
upon defendant, although the instruc-
tions when the account was opened
were that only the treasurer should
80 endorse, it was said: "And because
one dealing with an agent may show
actual authority in him, — that is,
such authority as the principal in
fact intended to vest in the agent,
although such intention is to be
shown by acts and conduct, rather
than by express words — ^without
showing that he (the person dealing
with the agent) knew when he dealt
wtth him of the acts and conduct
from which the intention Is to be im-
plied, it was competent for defend-
ant to show the course and manner
of conducting business in the office of.
plaintiff, 80 far as the bookkeepers
and cashier had charge of it. The
officers of plaintiff testified that Hell-
pern had no authority to transfer the
checks and receive the money, and
that they never knew of the book-
keeper and cashier doing so with
plaintlifs checks. But the jury were
not bound tQ tUpir testimpny. Such
a manner of conducting the business
in the office might have been proved
as would have justified the* jury in
finding that the officers must have
known of the custom of the book-
keeper and cashier in regard to
checks; andhad that been found, and
that It was- acquiesced in by plaintiff,
76
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 245
is in any other case: if it in fact exists he may avail himself of it in
the same way that a person who at the time really relied, for example,
upon the incompetent assertions of the agent may afterwards show
that custom justified the power though he was then ignorant of the
custom.**
When the authority takes on these characteristics it becomes a case
of actual rather than mere ostensible or apparent authority ; and it is
general as to all persons dealing with the agent rather than confined to
the equities of a particular person.
§ 945. PoMvers resulting from estoppel — Holding out as
agent — Moreover, even where it cannot be shown that a given power
has become generally established by the course of the business, as
stated in the preceding section, it may still appear that a particular
person has been led by the principal's conduct to believe that the au-
thority existed. In such cases the doctrine of estoppel is constantly
applied, and the principal will not be permitted to deny that which by
his words or conduct he has asserted if such denial would prejudice
an innocent third person who has reasonably relied upon such words
or conduct."
The methods by which this assertion of authority may be made are
infinite, but the question does not depend upon particul'ar method but
upon its tendency reasonably to lead to the inference of authority.
Estoppel is always a matter personal to the individual asserting it
and he must therefore show that he was misled by the appearances re-
lied upon.'* It is not enough that he might have been, or that some
one else was, so misled.** It must also appear that he had reasonable
the intention to vest authority might
have heen implied." See also Cami)-
bell V. Upton, 66 App. Dlv. iZ4, afTd
171 N. Y. 644, when the facts were
not known to the plaintiff.
80 Mr. Ewart is of the contrary
opinion. See Article in 16 Harvard
Law Review, p. 186. But see 13
Green Bag, 60; 15 Harv. Law Rev.
324. See also Article by Mr. £. B.
Whitney ip,- 8. Columbia Iaw Review,
395.
81 See pases cited in following sec-
tion.
«2 See Lewis v. Brown, 39 Tex. Civ.
App. 139; First Nat. Bank v. Farm-
ers', eta, Bank, 56 Neb. 149; First
Kat. Bank v, Omaha Nat Bank, 59
Neb. 192; Hazeltine v. Miller, 44 Me.
177.
B8 The elements necessary to es-
tablish "putative or apparent agency"
i. e., agency by estoppel are acts jus-
tifying belief in the agency and re-
liance thereon by the other consis-
tently with ordinary care and pru-
dence. Domasek v. Kluck, 113 Wis.
336; McDermott v. Jackson, 97 Wis.
64. 102 Wis. 419.
Plaintiff must show that he be-
lieved in it, to satisfy the definition
of the California code. Gosll'ner v.
Grangers* Bank, 124 Cal. 225.
Ostensible agency under the Cali-
fornia code cannot be shown by facts
of which the party attempting to es-
12
177
§ 246]
THE LAW OF AGENCY
[book I
cause to believe that the authority existed ; mere belief without cause,
or belief in the face of facts that should have put him on his guard is
not enough.**
§ 246. General rule. — Gathering together all of these ele-
ments, it may be stated as a general rule that whenever a person has
held out another as his agent authorized to act for him in a given
capacity; or has knowingly and without dissent permitted such other
to act as his agent in that capacity ; or where his habits and course of
dealing have been such as to reasonably warrant the presumption that
such other was his agent authorized to act in that capacity ; — ^whether
it be in a single transaction or in a series of transactions — ^his author-
ity to such other to so act for him in that capacity will be conclusively
presumed to have been given, so far as it may be necessary to protect
the rights of third persons who have relied thereon in good faith and
in the exercise of reasonable prudence; and he will not be permitted
to deny that such other was his agent authorized to do the act he as-
sumed to do, provided that such act was within the real or apparent
scope of the presumed authority.**
tablish it had no knowledge. Rodgers
V. Peckham, 120 Cal. 238; Harris v.
San Diego, etc., Co., 87 Cal. 526.
So, generally to establish author-
ity by estoppel. Schoenhofer Brew-
ins Co. v. Wengler, 57 111. App. 184;
Maxey v. Heckethorn, 44 111. 437;
RawBon v. Curtis, 19 111. 456; Heffer-
man v. Boteler, 87 Mo. App. 316;
Hackett v. Van Frank, 105 Mo. App.
384; Joy v. Vance, 104 Mich. 97.
84Winkelmann v. Brickert, 102
Wi^. 50; Ladd v. Grand Isle, 67 Vt.
172.
M See Johnson v. Hurley, 115 Mo.
513; Bush Grocery Co. v. Conely, 61
Fla. 131; Haubelt v. Mill Co., 77 Mo.
App. 672; Johnston v. Investment
Co., 46 Neb. 480; Holt v. Schneider,
57 Neb. 523; Faulkner v. Simms, 68
Neb. 295; Standley v. Clay, etc., Co.,
68 Neb. 332; Lebanon Bank v.
Blanke, 2 Neb. (Unoff.) 403; Blanke
Co. V. Trade Ex. Co., 5 Neb. (Unoff.)
358; Blanke Co. v. Rees Co.. 70 Neb.
510; TroUinger v. Fleer, 157 N. C.
81; Midland Savings Ass'n v. Su{-
ton, 30 Okla. 448; Pursley v. Morri-
son, 7 Ind. 356, 63 Am. Dec. 424; Hooe
V. Oxley, 1 Wash. (Va.) 19, 1 Am.
Dec. 425; Tier v. Lampson, 35 Vt
179, 82 Am. Dec. 634; Hubbard v.
Tenbrook (1889), 124 Pa. 291, 2 L.
R. A. 833; Union Stock Yard Co. v.
Mallory, 157 111. 554, 48 Am. St. Rep.
341; Eagle Bank v. Smith, 5 Conn.
71, 13 Am. Dec. 37; Lyell v. Sanboum,
2 Mich. 109; Thompson v. Bell, 10
Exch. 10; Commonwealth v. Holmes,
119 Mass. 195; Croy v. Busenbark, 72
Ind. 48; Meyer v. King, 29 La. Ann.
567; Thurber v. Anderson, 88 111.
167; Fay v. Richmond, 43 Vt. 25;
Keyes & Co. v. Tea Co., 81 Vt. 420;
Weaver v. Ogletree, 39 Ga. 586; Rim-
mey v. Getterman, 63 Md. 424; Sor-
rell v. Brewster, 1 Mich. 373; Grover
& Baker Sew. Mach. Co. v. Polhemus,
34 Mich. 247; Connecticut Mut. L.
Ins. Co. v. Pulte, 45 Mi'ch. 113; Marx
V. King, 162 Mich. 258; McBroon v.
Cheboygan Co., 162 Mich. 323; Brock-
elbank v. Sugrue, 5 C. & P. 21; Sav-
ings Fund Society v. Savings Bank,
S6 Penn. St. 498, 78 Am. Dec. 390;
Farmers* Bank v. Butchers' Bank, 1&
N. Y. 145; Klley v. Forsee; 57 Mo.
390; Kelsey v. National Bank, 6»
178
CHAF. V] APPOINTMENT AND AUTHORIZATION OF AGENTS (§§ 247, 248
§ 247. Intentsoa to credLte agency.**— Authority is not dependent
upon proof of a conscious intention to confer it. Here as elsewhere
if parties intentiooaUy do certaiaacts and the legal effect of those acts
is the creation of authority, the authority will exist, even though the
parties did not actually contemplate that result.®*^
§ 248. Names not controlling.— ^Here, as elsewhere, too, the ques-
tion of agency or not> is not dependent upon nanies or labels. As has
been seen in earlier sections, parties may call that agency which is not,
and. give some other name to that which is really agency. Where the
latter is the case, the ordinary consequences of agency will eiisue,®^
unless there be some contract fixing another basis of liability, or some
conditions working an estoppel against setting up the facts. Where
Penn. St. 426; St Louis, etc., Co. v.
Parker, 59 111. 23; Vicksl)urg, etc.,
R. R. Ck>. T. RagBdale, 54 Miss. 200;
Summerville y. Hannibal, etc., R. R.
Co., 62 Mo. S91; Walsh* v. Pierce, 12
Vt. 130; Chicago, etc., Ry. Co. v.
Jamea, 22 Wifl. 194; Rice v. Croff-
niann, 56 lio. .434; Columbia Bridge
Co. V. Geisse, 38 N. J. L. 39; Bron-
fion V. Chappell. 12 Wall. (U. S.) 681,
20 L. Ed. 436; Fitzgerald Co. v.
Farmers' Co., 3 Ga. App. 212; Grant
V. Humerick, 123 Iowa, 571; Alabama,
etc., R. Co. V. South, etc., R. Co., 84
Ala. 570, 5 Am. St. Rep. 401; Foss-
Schneider Brewing Co. v. McLaugh-
lin, 5 Ind. App. 415; Haner v. Furuya,
39 Wash. 122; Ruane v. Murray, 26
Pa. Super. Ct 187; Dysart v. Ry. Co..
122 Fed. 228; Brown v. Brown, 96
Ark. 456.
In Johnston y. Investment Co., su-
pra, it was said: "Where a principal
has by his voluntary act placed an
agent in such a situation that a per-
son of ordinary prudence, conversant
with business usagioa and with the
nature of the particular business, is
justified in presuming that such
agent has authority to perform a par-
ticular act; and therefore deals with
the agent, the principal is estopped
aft against such third person from
denying the agent's authority." Ap-
proved: Qeneral Cartage Co. ▼• Cox,
74 Ohio St. 284, 113 Am. St. Rep. 959;
Harrison v. Legore, 109 Iowa, 618.
Tort cases. — The rule extends also
to actions of tort based upon acts
done in reliance upon the holding
out. Hannon v. Slegel-Cooper Co.,
167 N. Y. 244, 52 L. R. A. 429.
M"The intention of the parties, it
la true, must control; but that inten-
tion is to be gathered from what was
actually done or agreed by the par-
ties, not from what they may have
privately meant or supposed they
meant. Agency or not is a question
of law to be determi'ned by the rela-
tions of the -parties as they in fact
exist under their agreements or acts.
If relations exist which will consti-
tute an agency, it will be an agency
whether the parties understood it to
be or not. Their private intention
will not affect it." Bradstreet Co. v.
Gill, 72 Tex. 115, 13 Am. St. Rep. 768,
2 L. R. A. 405.
A land owner who signs a contract
fOr the sale of land, without reading
it, when brought to him by his agent
for signature, is bound by powers
therein conferred upon the pur-
chaser. Liska V. Lodge, 112 Mich.
635.
87 See for example Petteway v. Mc-
Intyre, 131 N. C. 432, where docu-
ments called leases were said by the
court to create agency as matter of
law.
179
§§ 249-25.1]
THE LAW OF AGENCY
[book 1
the former is the case, no agenqr will result,**. unle$fi there ii softtetfcing
to predude an inquiry into the actual situation.
§ 249. When principaFs act becomes effective. — It is difficult, if
not impossible, to lay down any general rule by which to determine
when the principal's act of appointment or'aathorization becomes com-
plete and eflfective. If it be done by any single and specific act, it
must be complete when that act is done.** If it be a matter of infet-
ence from facts and circumstances, it can only be said that it is com-
plete when the inference of appointment or authorization may and has
been legally drawn.
2. On the Part of the Agent-
§ 250. In general. — Having now seen what is necessary to be
done on the principal's part to create the agency, it is next essential to
see what the agent must do. Here quite a different situation is at
once apparent. The common law rule that an authority, in certain
cases, must be conferred by instrument under seal did not require that
the agent accept the agency by an instrument under seal, or in any
other particular manner. The statutes requiring written authority for
various purposes contain no provision as to the manner in which the
agent shall accept the agency. The field is therefore open for the ap-
plication of the general principles of the law.
§ 251. Agent must be notified of appointment. — Notice to the
agent of the fact of his appointment must obviously, in the ordinary
case, be given,®® in order to affect him, at least. It is. of course, en-
tirely possible that, so far as the liability of the principal to third per-
sons is concerned, a principal may incur obligations to other parties
SB See Aesoclate Alumni' v. General
Seminary, 26 App. Dlv. 144 (163 N.
Y. 417) where the parties used the
words "agents'* and "agency" merely
In the sense of an instrumentality by
which a conmion purpose was to be
farthered* and not In the ordinary
legal sense.
»• In Satterthwalte v. Goodyear,
137 N. C. 302, where authorization
was based upon a document sent by
mail, the court said it bound the
principal from the date of the mail-
ing.
•0 In Haggles v. American Gent.
Ins. Co., 114 N. Y. 415, 11 Am. St. R.
674, negotiations for the appointment
of an insurance agent were opened
on October 11, by a letter to the
agent, In which his territory was out-
lined as it Is proposed to be "if your
appointment Is confirmed;'^ on tbe
13th a formal appaftitiiiGnt was
mailed to tlie agent, which' did not
reach him until the 20th; on the IMi
the agent made the contract of insur-
ance in question; on the 19th the
property was burned. Held, that the
agent's authority, which was ac-
cepted, dated from the mailing of the
letter containing the appointment
180
CHAP. V] APPOINTMENT AND AUTHORIZATHDN OF AGENTS '[§ 252
Upon the basis that he has appointed, or will appoint^ 'a certain person
as his agent, even though the latter be entirely ignoraiit of that fact.*'*
If the question arises as between the principal and the agent, and
particularly if ^ny contract is relied upon between them, notice to the
agent and an opportunity to accept the appointment, is indispensable.
As between third persons and the agent, notice to the agent and an
opportunity to accept or reject, are necessary to make him an agent ;
though he may, as wiir be seen, incur obligations ta third persons in
many cases by undertaking to deal with them as an agent, though he
may, in fact, have hb. color of authority.
§ 252. Agent must accept appointment. — And hot only must the
agent be notified in the ordinary case, but he must also, to actually
make him an -agent/ accept the appointment.*? He may, of course,
make himself liable to the principal or to third persons by affording the
ordinary' external evidence of acceptance, though his actual intention
was otherwise.'*
As between third persons and the principal there may, as seen in
the preceding sectson, be cases in which third persons might acquire
rights against the principal based upon his assertion .that he had ap-
•1 See Barr v. Lapsley, 1 Wheat.
(U. S.) 151, i L. Ed. 6S, cltea in a
following aectibn.
92 A.ccepianoe required. — In prose-
cution for eipbezzlemenU there must
be proof that defendant accepted the
agency. State v. Foster, 1 Pen.
(Del.> 289, 2 Pen. 111.
There is no proof of agency where
though it appeared that a person was
named as agent in a power of attor-
ney, he refused to accept or act under
it. Beebe v.^ De Baun, S Ark. 510.
In an action by the principal
against the agent, the burden of
proving acceptance is upon- the prin-
cipal. McCoy V. Weber, 38 La. Ann.
418, relying upon R. C. C. 2990.
Where the principal ib seeking to
charge the ageiH; as a trustee, he
must show acceptance. Amber Pe-
troleum Co. y. Breech (Tex. Civ.
App,), 111 S. W. 668.
In an action by the agent against
the principa], the. agent mpst show
that he accepted the principal's offer.
McDonald v. Boeing^ 4a Mich. 394,
38- Am. Rep. Ifd,
Making a note payable at a bank
cannot make the bank the agent of
the payee to receive paymenjt unless
the officers are disposed to accept the
agency; hence, no agency if they re-
fuse. Pease v. Warren, 29 Mich. 9,
18 Am. Rep. 58.
S3 One who leads another reasona-
bly to suppose that he is accepting
the agency cannot escape its conse-
quences, though he used no express
words and carefully avoided any ex-
press acceptance. Wright v. Rankin,
.18 Grant (U. C), Ch. 625. The mere
understanding or belief of the prin-
cipal is not enough, there must be
something from which it can fairly
be said that the agent undertook the
service. Vickery v. Lanier, 58 Ky.
(1 Mete.) 133. See also Amber Pe-
troleum Co. V. Breech (Tex. Civ.
App.), Ill S. W. 668. Agent may be
estopped by his conduct to deny the
agency (Slers v. Wiseman, 58 W. Va.
340) ; or by his recitals in deeds, etc.
Walters v. Bray (Tex. Civ. App.), 70
S. W. 443.
181
§ 253]
THE LAW OF AGENCY
[book I
pointed or would appoint the agent ; but no rights against the principal
would arise out of dealings with such an agent, after the third persons
had been informed that the supposed agent had not accepted or would
not accept the appointment.**
As between tiie agent and third persons, the same considerations
would ordinarily apply as in the corresponding cases mentioned in the
preceding section.
§ 253- How acceptance establisbed.-^In the ordinary case,
unless required by the terms of the authorization, no particular method
of acceptance is necessary. As said in one case, "To constitute one an
agent there must be consent on the part of the agent either expressed
by words or inferable from something done."'** As against himself,
at least, there could not ordinarily be better evidence than that the
agent had actually undertaken to perform.*'
Where a bilateral contract by mutual promises is sought to be estab-
lished, notice to the principal of the agent's acceptance would ordi-
narily be necessary ; *^ but where the offer of the principal may be ac-
cepted by the doing of the act proposed, no odier notice of acceptance
than performance and notice thereof within a reasonable time would
be required, unless made necessary by the terms of the offer.*'
MSee Barr v. Lapsley, 1 Wheat.
(U. S.) 151. 4 L. Ed. 58. Here the
alleged principals had informed the
other party with whom they were ne-
gotiating that he might conclude the
matter with one McCoun, saying "to
this effect we shall direct Mr. Mc-
Coun, to whom we propose to write
by the next mall." Aa matter of
fact, they never wrote to McCoun.
When the other party approached
McCoun, he disclaimed all knowledge
or authority in the matter, and de-
clined to act. Held, that the other
party, in view of McCoun's dis-
claimer was not justified in proceed-
ing upon the suppositioii that Mc-
Coun was agent.
By accepting the agent becomes
bound to act according to the terms
of the appointment and not accord-
ing to his own discretion. McClana-
han V. Breeding, 172 Ind. 457, 466.
•» First National Bank v. Free, 67
Towa, 11.
o« George v. Sandel, 18 La. Ann.
635; Roberts v. Ogilby, 9 Price, 269.
wLamb v. Prettyman, 83 Pa. Su-
per. 190. Entering upon perform-
ance with the knowledge and consent
of the principal would be suffletent
notice here. Brown v. Smith, 113
Mo. App. 59; Veale v. Green, 105 Mo.
App. 1S2; Smith v. Williams, 128 Mo.
App. 479.
•8 Lamb v. Prettyman, supra ^ Ar-
nold V. National Bank, 126 Wis. 362,
8 L. R. A. (N. S.) 580. Where a
factor is given an order for the pur-
chase of goods, his failure to give
notice of the acceptance of the order
will not discharge the principal
where the order is complied with and
notice of that fact Is given, withfn
a reasonable time. Parkhill y. Im-
lay, 15 Wend. (N. Y.) 431. To same
eftect: Garvey v. Scott, 9 111. App. 19.
But see In re Consort Deep Level
Gold Mines, [1S97I 1 Ch. 676, where
an offer of an underwriter to sub-
scribe for a certain number of shares
"or such less number as may be ac-
cepted by you" and in the event of
his failure to do so autfaorizlttg the
t82
CHAP. Vj APPOINTMEMT AND AUTHORIZATION OF AGENTS [§§ 254-257
II.
EVIDENCE OF APPOINTMENT AND AUTHORIZATION.
§ 254. Purpose of this subdivision. — Some illustrations have al-
ready been given of the nature of the evidence that may be competent
upon the question whether an agency exists or not, and many others
will hereafter appear. But it is necessary to consider here a few of
the general rules which apply to this branch of the subject.
§ 255. Authority must be proved — Burden of proof. — In the first
place it is to be recalled that, except in the few cases already referred
to wherein the law confers authority, the law itself makes no presump-
tion of agency : it is always a fact to be proved ; and the person who
alleges it has the. burden of proving it by a preponderance of the evi-
dence.**
§ 256. Authority under seal or in writing. — In the next place it is
to be observed that where the law requires that the authority shall be
conferred only in a certain way, as by instrument under seal or by in-
strument in writing, no other form of authorization will suffice, and
the evidence tendered must be adequate to establish that the form re-
quired was adopted.
So though authority in writing was not required, it may appear that
the parties nevertheless in the particular case have reduced it to writ-
ing, and when this appears the mode of proof may be affected accord-
ingly.
§ 257. Written authority must be produced — ^When. — Where the
authority appears to have been conferred by a power of attorney or
other written instrument, and where, from the nature of the case, the
other party to subscribe for them In
hib name, was held to require notice
of acceptance. Notice of acceptance
is necessary where that is one of the
terms of the offer. Conklin v. Ca-
banne, 9 Mo. App. 579.
V^here a written appointment of
plafntiff, a corporation, as an agent
contained no express language re<
specting acceptance, but was signed
by the corporation, the court said:
"The signature of plaintiff's name to
that paper was obviously for the pur-
pose of acceptance. The presumptl'on
is that, such signing was done for
some purpose, and no other is ap-
parent If an acceptance, it bound
the plaintiff to perform any acts on
its part necessarily implied either
from those things which defendants
were bound to do or from the situa
tion created by the contract." W. G.
Taylor Co. v. Bannerman, 120 Wis.
189.
eoStratton v. Todd, 82 Me. 149;
Castner v. Richardson, 18 Colo. 496;
Schmidt V. Shaver, 196 111. 108, 89
Am. St. Rep. 250; Jones v. Mansfield
Limi. & Merc. Co., 97 Ark. 643; Mid-
land Savings Ass'n v. Sutton, 30 Okla.
448.
183
§§ 2S8, 259]
THE LAW OF AGENCY
[book I
authority must be in writing, the writing is, of course, the best evi-
dence of its contents and of the existence, nature and extent of the
agency ; and in any case in which any question concerning the authority
as so conferred is directly involved, the writing, in accordance with
familiar rules, must be produced or its absence accounted for.*
§ 258. Collateral inquiry. — But where the fact of the agency is
only collaterally or incidentally involved, it may be proved by the acts,
declarations or conduct of the parties as in other cases, although it Was
conferred by written instrument.^
§ 259. — ^ Unnecessary writing. — And where the law does not
require the authority to be conferred by writing, though in the given
case writing was resorted to, a third person attempting to prove the
agency, against either the principal or the agent, cannot be required
to produce the writing, or account for its absence ; but may show the
existence of the agency by any competent evidence, which is within
his reach, as by conduct, admissions, course of dealing, holding out and
the like.' And even if the writing be produced, it will not necessarily
1 EHiott V. Stocks, 67 Ala. 336; Mc-
NeiU V. Arnold, 17 Ark. 154, 177;
Lee V. Agricultural Ins. Co., 79 Iowa,
379: Neal v. Patten, 40 Oa. 363; Co-
lumbia Bridge Co. v. Geisse, 38 N. J.
L. 39; Emery v. King, 64 N. J. L.
529; Somers v. Wescoat, 66 N. J. L.
551; Schlitz Brewing Co. v. Grim-
mon, 28 Nev. 235; Langbeln v.
Tongue, 26 Misc. 757. See also Mc-
Creery v. Garvin, 39 S. C. 875;
Thompson v. Green River Power Co.,
154 N. C. 13; Reese v. Medlock* 27
Tex. 120, 84 Am. Dec. 611.
2 Columbia Bridge Co. v. Geifese,
supra,
8 What these methods of proof by
conduct, etc., are, will appear in the
following sections.
The same rule prevails in the an-
alogous case of partnership; it is not
necessary for the creditor to pro-
duce the articles or even to prove an
actual partnership inter sese. See
Griffln v. Stoddard, 12 Ala. 783; Rog-
ers v. Suttle, 19 111. App. 163; Hen-
shaw v. Root, 60 Ind. 220; Bryer v.
Weston, 16 Me. 261; Campbell v.
Hood, 6 Mo. 211.
In Walsh v. Pierce, 12 Vt. 130,
Redfleld, J., says: "The agency
claimed i^s not of a character : which
might not sb well be created by mere
words or acts as by writing. In such
cases it is well settled that thd
agency may be proved by 1st, direct
evidence of agency. In this case if
the authority was in writing* it must
be produced and proved. 2 Stark.
Bv. (6 Eld.) 31; Johnson ▼. Mason, 1
Esp. 89; Coore v. Callaway, ib. 115.
In the present case, perhaps, if the
plaintiffs had relied solely upon an
authority conferred upon the agent
by writing, they should either have
produced the writing or accounted for
its absence. But, 2, this agency may
be proved by the habit and course of
dealings between the parties. And,
where one man suffers another to
carry on business upon his credit, he
is bound, I take it, to the fullest ex-
tent by all his contracts within the
apparent scope of that business, with-
out regard to the terms of the par-
ticular contract of agency, unless
brought home to those with whom
the agent has dealings, and in that
184
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 266, 261
be conclusive : the principal will be bound to third pertons by the au-
thority as he has caused it to appear even though that be diflPerent from
or greater than the authority created by the written instrument.*
§ 360. In other cases authority may be proved by parol — By any
competent witness.-^It has already been seen that, except in the
cases whereili the common law requires authority under seal or some
statute requires authority in writing, no particular method of authoriz-
ing is necessary ; and, except in those cases, no particvflar method of
proving the authority need be resorted to. Any competent witness
having knowledge of the facts may be called,' or any lawful rtode of
proof be adopted.* The evidence offered need not be of the same na-^
ture as the act of authorization except in the cases referred to in the
preceding sections. Thus the authority may have been conferred by
express word of mouth and be proved by evidence of recognition ; it
may have been conferred informally but proved by evidence of an ex-
press admission. ,. , .
§ 261. By informal writings — By conduct — ^By facts and circum-
stances.-T-The existence of agency is a fact, and like other facts may
be proved by any evidence, traceable to the alleged principal, and hav-
ease It is for the defendant to show
their limitation to be short of the
apparent extent of the buslnesa."
In Kaskaskla Bridge Co. v. Shan-
non, 6 111. 15, it is said: "Although
the plalntifCs below had constituted
N., their agent by virtue of a power
of attorney in writing, yet it was
competent for the defendants, who
were strangers to that itist rumen t,
to give parol proof of such agency.
A stranger may prove a partnership
by the acts and admissions of the
partners, although written articles of
partnership may exist between them.
The same principle is applicable in
cases of agency." To same effect:
Curtis V. Ingham, 2 Vt 287.
4 Thus in Rawson v. Curtiss, 19 111.
456, 477, it is said: "If the principal
by his declarations or conduct to-
wards the parties dealing with such
agent has authorized the opinion that
he had in fact given more extensive
f)owers to him than were conferred
In terms by the writing, the princi'pal
ought to be and would be bound by
the acts of such agent In his nego-
tiations with such persons at least
to the extent of the authority which
such declarations and conduct have
fairly led them to believe did exist."
0 "The relation of principal and
agent is a condition of which anyone
having personal knowledge may tes-
tify." Ruthven v. Clarke, 109 Iowa,
25; Huesinkveld y. St. Paul Ins. Co.,
106 Iowa, 229; Lough v. Davis, 35
Wash. 449.
Where it is sought to show the
agency of the local operator of a tel<
egraph company, testimony of a wit-
ness that he knew the office, was fre-
quently there, and had seen the al-
leged agent there regularly, receiv-
ing, transmitting and delivering mes*
sages for the company, makes a
prima facie case, Mark ley v. West-
ern Union Tel. Co., 144 Iowa, 105, 138
Am. St. Rep. 263.
« Kansas Loan A Trust Co* v. Love,
45 Kan. 127; Rice, etc., Co. y. Bank,
185 IlL 422.
X85
§ 26l]
THE LAW OF AGENCY
[book f
ing a legal tendency to establish it.'' Informal writings of the alleged
principal, his letters, telegrams, book-entries, and the like arc clearly
admissible.® But it need not be proved by written instruments (ex-
cept in the cases already mentioned) or by express or formal oral lan-
guage. The agency may be shown by conduct, by the relations and
situation of the parties, by acts and declarations, by matters of omis*
sion as well as of commission, and, generally, by any fact or circum*
stance with which the alleged principal can be connected and having a
legitimate tendency to establish that the person in question was his
agent for the performance of the act in controversy.^ Many illustra-
tions of these rules have already been given in the earlier sections of
rThuB In HIU v. Helton, 80 Ala.
528, It l0 said: "Agency, like any
other controvertible fact, may be
proved by circumstances. It may be
Inferred from previous employment
iti similar acts or transactions; or
from acts of such nature, and so con-
tinuous, as to furnish a reasonable
basis of inference, that they were
known to the principal, and that he
would not have allowed the agent so
to act unless authorized. In such
cases, the acts or transactions are ad-
missible to prove agency. But in or-
der to be relevant, the alleged prin-
cipal must in some way, directly or
Indirectly, be connected with the cir-
cumstances. The agent must have
assumed to represent the principal,
and to have performed the acts in
his name and on his behalf."
• Letters purporting to come from
the principal and received by the
agent in due course of mall In reply
to letters sent by him addressed to
the principal are admiteible. Peycke
V. Shinn, 76 Neb. 364. See also Bur-
nell V. Morrison, 46 Colo. 533.
Letters may be sufficient to estab-
lish agency, but, when they are relied
upon, it must appear either from
their face or when read in connection
with the surrounding circumstances,
that agency was intended. tJnibn-
town Grocery Co. v. Dawson, 68 W.
Va.-332.
»Bergtholdt v. Porter Bros. Co.,
114 Cal. 681; Tennessee River Transp.
Co. V. Kavanaugh, 101 Ala. 1; Pull-
man Palace Car Co. v. Nelson, 22 Tex.
Civ. App. 223; Jesson v. Texas L. Co.,
8 Tex. Civ. App. 25; Dull v. Dam-
bauld, 7 Kan. App. 376; In re Zinke»
90 Hun (N. Y.), 127; Mitchum v.
Dunlap, 98 Mo. 418; Ferneau v. Whit-
ford, 39 Mo. App. 311; Castner ▼.
Richardson, 18 Colo. 496; Silver Mt
Mine Co. v. Anderson, 51 Colo. 298;
GambriU v. Brown Hotel Co., 11 Colo.
App. 529; Bull v. Duncan, 9 Kan.
App. 887; V^erth v. Ollis, 61 Mo.
App. 401; Ames-Brooks Co. v. Aetna
Ins. Co., 88 Minn. 346; Indiana, etc.,
Ry. Co. V. Adamson, 114 Ind. 282;
Bonner v. Lisenby, 86 Mo. App. 666;
Watkins v. Edgar, 77 Mo. App. 148;
Minneapolis Threshing Mach. Co. v.
Humphrey, 27 Okla. 694.
In Sheanon v. Pacific Mut. L. Ins.
Co., 83 Wis. 607, where an insured
person had been acdVientally shot
in the spine causing paralysis and
practically complete helplessness, the
beneficial acts of his brother, who
was the only friend or acquaintance
present, in making proofs of loss
and endeavoring to secure a settle-
ment, done with such acquiescence
and consent as the insured in his
helpless condFtlon was able to give,
were held to have been done with the
insured's authority. It "need not be
express, but might be implied from
the uncontradicted evidence as to
the circumstances, and showing the
deplorable situation of the assured.**
i86
CHAP. V] APPOINTMENT ANB AUTHORIZATION OF AGENTS [§ 262
this diapter and many more will appear in various places as the discus-
sion proceeds.
For the purpose of making this pnx)f, a wide range may often be
properly given to* the testimony, provided that that whidi is offered
has a real probative tendency toward the main question in issue. It
is, however, not enoagh that the testtmony offered tends to prove
something: to be competent, it must legitimately tend to prove fhat the
alleged agent had been authorized to act as such, in the transaction in
question, for the alleged principal. As will be seen in a later section,
the question whether testimony offered has any legal tendency to prove
authority, is usually a question for the court; whether the evidence
admitted does prove authority is for the jury.
§ 262. By proof of agency on other occasions. — ^As has been seen,
evidence of agency in a given case may sometimes be supplied by proof
of agency on other occasions. Whether this is true or not, in a given
case, depends upon a great variety of circumstances. The act in ques-
tion may be so closely connected in time or character with the one
proved as to leave no room for doubt. It may appear that the act in
question and the one proved are parts of the same transaction or scries
of transactions. The acts proved may show a course of dealing of
which the act in question is seen to be a part. This kind of evidence
is strengthened as the acts proved increase in number, in likeness and
in contiguity.
On the other hand, where the acts are unlike, where they are few in
number, where they are separated by long periods of time, where they
have no necessary relation to each other, the evidence is very slight
or wanting altogether. The fact that a person was, perhaps formally
and expressly, appointed an agent for a particular purpose on one oc-
casion furnishes often very slight evidence indeed that he was agent
for even a like purpose on a different occasion: " while the fact that
he was thus agent at one time for one purpose furnishes usually no
evidence at all that he was agent at another time for an entirely dif-
ferent purpose.^^ So many contingencies may intervene, so many
10 Owens V. Hughes (Tex. Civ. assist Ball, coupled with the fact
App.), 71 S. W. 783; Rice v. James, that the arrangements for those
193 Mass. 458. loans for Ball's benefit were con-
Tn Nourse v. Jennings, 180 Mass. ducted by Ball, did not clothe Ball
592, where the question was as .to the with an apparent authority to enter
authority of one Ball to make an into agreements in behalf of the
agreement respectllig the mortgaging plaintitF for additional Incumbrances
of plaintiff's property, the court said : on her property."
"The fact that plaintiff had mort- " Duryea y. Vosburgh, 121 N. Y.
gaged her dwelling house on two pre- 57; Molt v. Baumann, 66 N. T. App.
vious occasions to raise money to Dlv. 445; Green v. Hinkley, 52 Iowa,
187
§ 2631
THE LAW OF ACBNCY
I
changes of purpose, of owiverahip, of relatkxiy of confidence, thit to*
deduce authority in the one case from evidence of its existence in an*-
otiier, becomes usually, as is said tn;orie xase, a mere '^matter of guess-
work/' and i& "too shadowy entirely^ to support the inference. of agency *
in! this particular transaction." "
§ 263. By acquiescence in^ or recognition of, similar act8.*^So evi-
deiice of agency is also often found in the fact tliat the alleged prin-
cipal has acquiesced in, recognized or adopted similar ia49ts done on
other occasiohs by the assumed agent ^* (and the considerations will
be similar to those dealt with in the preceding section). Where the
633; Qraves v. Horton, 38 Minn. 66;
Stevenson Vt Hoy, 43 Pa. 191; Stew-
art V. Rounds, 7 Ont. App. 515; Strat-
ton V, Todd, S2 Me. 149; Hazeltlne v.
Miller, 44 Me. 177.
The fact that a person acted as
agent in procuring a loan will not
alone warrant the assumption that
he was, a year later, agent to pay it
Ballard y. Nye, 138 Cal. 588.
Fact that one was agent to sell
goods famishes no evidence that he
was later authorized to collect the
price (Collins v. Crews, 3 Ga. App.
238), and many other cases cited in
the chapter upon Construction of
Authorities,
Fact that one was agent to loan
money is not evidence that he was
later authorized to receive or collect
payments upon it (Trull v. Ham-
mond, 71 Minn. 172), and many other
cases cited in the chapter above re*
ferred to.
Fact that agent was authorized at
one time to collect money does not
justify the inference that he was
later authori*zed to make contracts
involving its expenditure. Hazeltlne
V. Miller, 44 Me. 177.
Fact that one was authorized to
buy coal for use in a boiler upon the
principal's premises, does not justify
an inference that he was authorized
to make contracts for disposing of
steam from the boiler. Union Hos-
iery Co. V. Hodgson, 72 N. H. 427.
i* Duryea v. Vosburgh, supra,
"LyUe V. Bank of Dothan. 121
Ala. 215; Tennessee River Transp.
Co. V. Kavanaugh, 101 Ala< 1; Colum-
bia Mill Co. V. NaUonal BanK, 52
Minn. 224j Wheeler v. Benton, 67
Minn. 298; Pullman Palacef Car Co.
v. Nelson, 22 Tex. Civ. Ai>p. 223;
Bartley v. Rhodes (Tex. Civ. App.),
33 S. W. 604; First Nat Bank v.
Rldpath, 47 Neb. 96; Fruit Dispatch
Co. V. Gillnsky, 84 Neb. 821; Sartol v.
McDonald, 127 App, Div. 648; Laden-
berg V. Beal-Doyle Dry Goods Co.,
83 Ark. 440; Lelpner v. MacLean, 8
Com. L. R. (Austr.) 306.
In Wheeler v. Beaton, supra^ it is
said that "a long course of dealing
by an agent for his principal, during
which his acts have never been <iues-
tioned or in any manner repudiated
by the latter, will, as a jgeneral rule,
raise a presumption that the agent
had actual authority to do what is
done by him in line with- such course
of dealing."
(But not if, in the previous cases,
the agent acted for himself. Wil-
liams V. Stearns» 59 Ohio St. 28.)
ThijB rule applies as well to corpo-
rate principals as to any other.
Tennessee River Transp. Co. v. Kav-
anaugh, sitpra; Pullman Palace CJar
Co. V. Nelson, supra.
The acts relied upon must also be
acts having some constructive tend-
ency and some probative force.
Agency* is not to be inferred from the
doing of acts of a wholly imlifferent
and inconsequential sort, having no
more tendency to prove agency than
any other relation. See Bursoa v.
Bogart, 18 Colo. App. 449.
1S8
CHAP. V] APPOINTMENT. AISTD AUTHORIZATION OF AGENTS [§ ^J
acts SO adopted are ao closely, connected as to constitute a course of
dealing, or to establish a custom, ihere can usually be but little daffi-
culty; neither: can there: be where die a^ts are so numerous or .so
closely related as to reasonably lead to no other conclusion than that o£
a general agfem:y. for the doing o£ acts of that character.^*
They must also ^ Bjub9tantiaUy
flitailar to the act in question. No
inference can ordinarily be drawn of
authority to do one act merely from
previous acqtiieflcence tn doing dl»^
similar acts. StevensoB y. Hoy» 49
Pa. 191.
i^InValiqnettev. Clark Bros. Min.:
Co., 83 Vt. 588, 188 Am. St. R. 1104,
34 L. R. A. (N. S.) 440, defendant's
agent, withoilt authority, had, be*
tween April 16th and JfCay 2l^th,
4rawn three drafts on defendant, two
for $75 each and 'one for |160, to the
order of the plaintiff, and these
drafts defendant had paid. Plaintiff
was a hotel keeper and the agent was
staying at the hotel while engaged
in Bolicttlng trade for deCendant.
The drafts weire drawn partly to pay
the amenta bills at tiie hotel and
partly for eash which plaintiff ad-
ranced to the agent. The agent
claimed to be interested in the de-
fendant corporatiy>n. I>efendant had
written to the agent protesting
against his drawing drafts and after
payment of the third one notified
him that it would, under no circum*
stances, pay any more. It gav^ no
notice to the plaintiff of the agent's
lack of authority. On June 15th the
agent drew a fonrth draft for $250
to the order of plaintiff which plai!n-
tiff cashed as before, applying part
upoa the agent's bill and giving him
the balance in cash. 'Htis draft when
seat forward as before, the defend-
aat refused to pay, and this action is
to recover the amomit. Held, that
defendant's payment of the first three
drafts, wi12iout objection so far as
the plaiBtilf was aware, was suffi-
cient erfdence of a general power in
the agent to draw such drafts, and
that the defendant was liable upon
the one la question. The court dis-
tinguished this case from those
where but one or two acts had been
recognized, upon the ground that here
there w^e repeiated acts of the sanie
sort acquiesced in by the defendant.
One 'judge dissented. Tlie court re-
lied largely upon Munn v. Commis^
si'on Co., 15 Johns. (N. Y.) 44, 8 Am.
Dec. 219, where it- was proved that
one D. whose acceptance was in
question, ''was the general agent of
the defendants, and that be was in
the habit of accepting bills, which
the company afterwards paid, under
the like circumstances;" Weed v.
Carpenter, 4 Wend. <N. Y.) 219,
where defendant had for three or
four years recognized notes made in
his name by another without author-
ity; Barber v. Gingell, 3 Esplnasse
60, where it was proved that the de-
fendant had in fact paid "i^veral
bills" drawn lilce the one in suit;
Lytle V. Bank of Dothan, 121 Ala.
215, where it was said that the giv-
ing of "other, notes" [it does not ap-
pear how many] by the agent at
about the time that those in non-
troversy were given, and defendant's
subsequent recognition of their Ta-
iidity, were circnmstances competent
to be shown in evidence "though
they may have been of slight weight
as bearing on the execution or rati-
fication of plaintiff's notes;" Bryan
v. Jackson, 4 Conn. 288, where, the
fact that a father had paid a bill for
various articles furnished to his son
by the plaintiff "without objecting to
the same or giving any notice to the
plaintiff not to trust his son any fur-
ther," was held sufficient to charge
him for further like articles fur-
nished to the son by the plaintiff:
Watkins v. Vlnce, 2 Stark. 368»
189
§ 263]
THE LAW OF AGENCY
[book I
But where the acts of acquiescence relied upon are few in number^
or separated by long periods of time, different considerationd arise,
and the probative force of tbc circumstances may be very weak or en-
tirely lacking. Where all that can be shown ts recognition of or ac«
quiescence in the performance of a single similar act, tiie: question is
still more difficult. That act may have been remote in time, the cir-
cumstances may have altered and its recognition on that occasion may
have been under protest and coupled with efforts to prevent its repeti-
where in order to charge a father
upon a guarantee signed in his
name by his son, it was proved ''that
he had signed for his father in three
or four instances, and that he had
accepted bills for him;" Gibson v.
Hunter, 2 H. Bl. 288, where on a bill
alleged to have been drawn by an
agent to a fictitious person, the ma-
jority of the court held it competent
to prove that many other bills drawn
in the same way by the agent had
been accepted by the principal,
though there was nothing to show
that he knew the payees to be ficti-
tious. The court distinguished Bank
of Deer Lodge v. Hope Mining Co«,
3 Mont. 146, 35 Am. Rep. 458, on the
ground that there had been but one
previous act, though the court there
said' it would have been dlfferenl if
"repeated acts" like the one in ques-
tion had been shown. Also Cook v.
Baldwin, 120 Mass. 317, 21 Am. Rep.
517; Paige v. Stone, 10 Mete. (Mass.)
160, 43 Am. Dec. 420; and some oth-
ers: Hix V. Eastern Steamship Co.,
107 Me. 357, where agency to ship
horses and agree upon the terms of
shipment was held to be sufficiently
shown by the fact that the same per-
son had made "several prior ship-
ments", in the same way and his au-
thority had never been repudiated or
questioned.
But in Groneweg v. Kusworm, 75
Iowa, 237, evidence that plaintiff had
cashed a draft drawn by an agent
upon his principal to the plaintiff's
order, in order, as the agent stated,
to procure traveling expenses; that
this draft was paid apparently with-
out objection; that four or five
weeks later i^e cashed another whi^h
was also paid, was held to furnish
no evidence upon which the principal
could be held upon another similar
draft drawn about six weeks later
and not paid, the agent in the mean-
time having been discharged by the
principal.
In Baudouine v. Qritaaes, 64 Iowa,
370, a traveling salesman had twice
obtained defendant's indorsement of
a draft of $100 drawn, as he said,
upon his principal to procure travel-
ing expenses. These drafts were
paid. Some time later (the case does
not show how long] and. after he had
in fact been discharged by the prin-
cipal, the same agent again procured
defendant's indorsement of a draft
for $400, again said to be' for travel-
ing expenses. This draft the princi-
pal refused to pay. In an action by
the principal for the price of goods
sold to defendant, he attempted to
counterclaim the amount of this
draft Htld, that he could not do
so« Court said it was matter "of
great doubt" whether the payment of
first two drafts was any evidence of
authority to draw the third one;
that the third one was so large that
it ought to have aroused Inquiry;
but that, as defendant relied upon an
express or In^plled agreement that
plaintiff would reimburse defendant,
and as the agent had never held him-
self out as being authorised to do
more than draw upon his. principal^
— and not to procure an acoomiAoda-
tion endorser — there could be no re-
covery for the amount.
190
-CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 263
tiofi. On the other hand, it may have been so recent, and so coupled
vfidi unequivocal acknowledgment of a continuing authority as to
leave no room for question. Inferring a general or a continuing au-
thority, however, from a single act of adoption or recognition, is usu-
ally subject to all of the dangers which attend, in other cases, upon
attempts to generalize from a single instance ; " and ought not to be
indulged in except in cases showing a clear recognition of the author-
ity.^«
IB Authority not usually Inferable The fact that the agent, upon one
from a single act. Tennessee River
Transp. Oo. v. Kavanaugh, 101 Ala.
1; Duryea v. Vosburgh, 121 N. Y. 57;
Stewart v. Rounds, 7 Ont. App. 515;
Bank of Deer Lodge v. Hope Mfning
Co., 3 Mont 146, 85 Am. Rep. 458;
First Nat. Bank t« Hall, 8 Mont. 341;
Rice v. James, 193 Mass. 458. Es-
pecially where that act was an iso-
lated transaction done more than a
year from the one in question with
no evidence of similar acts in the
meantime. Bartley v. Rhodes (Tex.
Civ. App.), 33 S. W. 604. To same
effect: Green v. Hinkley, 52 Iowa,
€33.
The fact that an agent had on two
occasions signed contracts by hib
principal's direction and in his pres-
ence does not create an inference
that he had independent power to
make contracts. Fadner v. Hibler,
26 111. App. 639.
In an action on a note against two
principals given by an agent with-
out authority, evidence that the
agent had prevlqusly given two
notes, to one of which only one of
the principals assented, and the
other of which for only $4, the prin-
cipals settled after suit upon it, is
not sufficient to show authority to
execute the note now In suit. Paige
V. Stone, 10 Mete. (Mass.) 160, 43
Am. Dec. 420.
Part payment of a note given with-
out authority is not of itself sufficient
to bind the principal to pay the re-
mainder. The part payment may
have been accompanied by a positive
refusal to pay more. Cook v. Bald-
win, 120 Mass. S17, 21 Am. Rep. 517.
prior occasion, had given a note, to
which his principal objected when
he learned of it, and which he paid
only after obtaining security from
the agent, does not justify an infer-
ence that the agent later had au-
thority to give another note. Tem-
ple V. Pomroy, 4 Gray (Mass.), 128.
"It is hardly necessary to discuss
the proposition that the ratification
of one unauthorized act is not a rati-
fication of another and entirely dis-
tinct act; or that the acceptance of
the results of a series of unauthor-
ized acts of the same kind is the
creation of an implied agency to do
an entirely different thing;" there-
fore recognition of acts of agency,
in collecting interest only, justifies
no inference of authority to collect
part or all of the principal sum.
Hoffmaster v. Black, 78 Ohio St, 1,
125 Am. St. R. 679, 21 L. R. A. (N.
S.) 62, 14 Ann. Gas. 877.
Approval of one act on one occa-
sion has no legal tendency to estab-
lish agency "months before and for
purposes of an entirely different
character." Gordon v. Vermont
Loan & Trust Co., 6 N. Dak. 454.
The fact that a mother had, dur-
ing a period of several years, paid
under pressure for three or four
horses which her minor son, "a
spoilt boy," had bought, has no tend-
ency to prove that he is her general
agent to buy horses. Barrett v. Ir-
vine, [1907] 2 Irish, 462.
10 "A single act of an assumed
agent and a clear recognition of his
authority by his principal may be
sufficient to prove his authority fn
191
§§ 264, 26s]
THE LAW OF AGENCY
{book J
It must, moreover, be kept in mind that when authority is deduced
from recognition of certain acts, it must be limited to the performance
of other acts of the same general kind, and cannot be extended to acts
of a wholly different nature."
It must also be kept in mind that one who might otherwise have been
justified in relying upon this appearance of authority, is no longer
justified in doing so if he has inquired of the principal aiid learned
the real facts."
§ 264. Acquiescence to show expired authority continu-
ing.—Acquiescence or misleading conduct may be as potent to show
that an expired authority apparently continues, or that a really special
authority was apparently general, as to furnish evidence of an author-
ity in any other case. In the former case, as will be seen hereafter, a
general authority will ordinarily continue operative as to certain classes
of persons until notice has been given of its tcrmfnation ; " and as to
the second case, while notice of the .termination pf a special authority
is not usually necessary,** yet if the principal knows that an agent
authorized to do a single act is assuming to do other acts of the same
sort, a duty to give notice of the facts may arise which will charge him
with responsibility if it be not performed.*^
§ 265. Acquiescence to construe authority. — Acquiescence,
as will be more fully seen hereafter, may also be as material in show-
ing the nature and the extent of an authority, as in proving its exist-
ence. The fact that the principal, with knowledge, recognizes and
other similar cases.*' Ames-Brooks
Co. y. Aetna Ins. Co., 83 Minn. 346.
"A single act of an assumed agent
and a single recognition of it, may
be of so unequivocal and of so posi-
tive and comprehensive a character
as to place the authority of the agent
to do similar acts for the principal
beyond question." Graves v. Hor-
ton, 38 Minn. 66; Wilcox v. Chicago,
etc., R. Co., 24 Minn. 269. Same:
Quinn v. Dresbach, 75 Cal. 159, 7 Am.
St. Rep. 138; Bryan v. Jackson, 4
Conn. 288; Harrison v. Legore, 109
Iowa, 618.
17 See ante, § 262; Smith v. Georgia
R. Co., 113 Ga. 625; Graves v. Hor-
ton, supra; Stratton v. Todd, 82 Me.
149; Hazeltlne v. Miller, 44 Me. 177;
Robinson v. Nevada Bank, 81 Cal.
106; Mt. Morris Bank v. Gorham, 169
Mass. 519; Robinson v. Nipp, 20 Ind.
App. 156; Bickford v. Meni'er, 107 N.
Y. 490; Gregory y. Loose, 19 Wash.
599. "Ostensible authority for one
purpose certainly does not confer au-
thority for all purposes." Ruddock
Co. V. Johnson, 135 CaL xix, 67 Pac-
680.
18 After inquiry he must rely only
upon what he was told. Norton v.
Richmond, 93 111. 367.
18 See post, S 628.
20 See post, S 629.
21 Where the principal knew, or
was charged with notice, that an.
agent constituted for a single act
was continuing to act In some way
ill the matter, it was held that he
ought to have Inferred that the agent
was continuing to act as he began^
and if the principal objection to this
192
CHAF. Y] appointment AND AUTHORIZATION OF AGENTS [§i ^66, 267
acquiesces in the performance of the authority in a certain manner or
to a certain extent, is ordinarily competent evidence that cimution in
that manner or to that extent was authorsced.^^
§ a66i. By acta ao notorious M to justify inference erf acquie^-
cenc€^-^Uaually, of course, no inference of recognition or acquies*
cence can be drawn unless it appears that the alleged principal had
knowIe(^e of what had thus been assuniedi in his name ot on his ac-
count ; ^ but this knowledge need not be expressly shown : tiie act doue
may have been so puUic or notorious or so closely related to the al*
leged principal that he could not be heard to say that h^ was ignorant
of it.'* As stated in one case,^*^ if the acts "are of such nature and so
continuous as to justify a reasonable inference that the principal knew
of them, and would not have permitted them if unauthorized/ the acts
are competent evidence of ageiKy to be submitted to the jury."
§ 267. By regular and public exercise of office or agency. — ^It is
upon this ground that proof of the agency of those who regularly and
publicly exercise the duties or functions of an agent of a corporation
or individual serving the public, is frequently made. Thus evidence
that a person regulariy and publicly si^ in the place and pierforms the
duties and exercises the functions of the cashier of a bank, the ticket
agent or freight agent of a railroad company, the agent of a telegraph,
or telephone, or insurance company, the clerk of a hotel, and the like
in an almost endless variety of instances, would furnish prima facie
evidence at least of his authority to act as he thus publicly purports to
do«^* Regular and public possession or use of the distinctive pioperty
ho should have given notice. *Quinn
v. Dresbach, 76 Cal. 159, 7 Am. St.
Rep. 138.
Principal charged where he knew
agent was covtlnaing to act in the
matter and made no objeetioa. Har-
rison V. Legore, 109 Iowa, 618; John-
6on V. Brewl!ng Co., 66 Appu Div. 108;
Cosmopolitan Range Co. v. Midland
R. Term. Co., 44 App. Div. 467; Gragg
V. Home Ins. Co., 32 Ky. U Rep. 983.
*^8e9 First Nat. B&Tkk r. Ridpath,
47 Neb. 96; Dodge v. McDonnell, 14
Wig. 563; Lake Shore, etc., R. Co. v.
Foster, 104 Ind. 293, 64 Am. Rep.
319; Grand Pacific Hotel Co. v. Pink-
erton, 217 111. 61; Hagerman v. Bates*
24 Colo. 71.
ss RejmoldB v. CoUinBk 78 Ala. 94.
24 Reynolds v. Collins, 78 Ala. 94;
Hooe V. Oxley, 1 Wash. (Va.) 19. 1
Am. Dec. 425; Indiana, etc., Ry. Co.
V. Adamson, 114 Indw 382; Singer
Mfg. Co. V. Holdfodt, 86 IlL 466, S2
Am. Rep. 43; Neibles v. MSnaeapoUs,
etc., R. Co., 87 Mllin. 161; Black
Uck Lumber Co. v. Camp Oonstrue-
tiaa Co., 63 W. Va. 477.
S8 Reynolds v. Collins, 9upra,
se Reynolds v. Collins, 78 Ala. 94
(caller); 9lnger Mfg. Co. v. Hold*
fodt, 86 IlL 465, 22 Am. Rep. 48
(sewing maehine agent); Curtis v.
Murphy, 63 Wis. 4, 63 Am. Rep. 242
(clerk in hotel); Southern Ehcp. Co.
v. Platten, 93 Fed. 986 (agent of ex-
press company); Blsner v. state, 36
Tex. 524 (barkeeper); Markley v.
Western Un. Tel. Co., 144 Iowa, 106,
138 Am. St. Rep. 268 (agent of tele-
13
193
§§ . 268, 269]
THE LAW OF AGENCY
[book I
of the principal, wearing iiis uniform, or badge, etc., may serve the
same purpose.*^
§ 268. Presumptions based upon ordinary eoonie of conduct^*— An*
swering letters, telephone, etc.* — The ordinary conduct of men, and
the inherent improbability of the given act occurring' if it were not
autliorized, may also furnish prifna fa<cie evidence. Thus if I write to
a business house concerning a matter of business, and receive m due
course a reply to my letter, purporting to be made through a'matiager^
superintendent, or other agent or officer within whose department such
a matter would ordinarily lie, a presumption that he so repKed with
the authority of his principal would arise which would suffice until
evidence to the contrary was offered." If I buy a harvesting machine
under a contract providing that, in case of trouble, I shall notify the
home office and give opportunity for an expert to come to cure the
difficulty ; and I write such a letter and in due course a man appears
who purports to have been sent by the seller in pursuance of my letter,
a similar presumption would arise that he came with the authority of
the seller.^* So, also, it has been held — though there are contrary
holdings — that if I call a busir^ess house by telephone upon a proper
matter of business with it, and receive in due course what purports to
be the authorized response of one in charge, a similar presumption that
the response is authorized attends this transaction.*^
§ 269. By proof of an express authority to which the authority in
question is an incident. — It is, of course, but a restatement of a rule
^dready referred to, to say that proof of atithority to do a particular
act may often be made by showing authority to do some other and
graph company); Smith v. Pulhuan
Co., 138 Mo. App. 288 (railroad agent
acting as agent for sleeping car com-
pany); Pullman Car Co. v. Nelson,
22 Tex. Civ. App. 223 (same); Shea-
Don y. Pac. Mut L. Ins. Co., 83 Wis.
507 (agent of Itisurance company).
rNorrls v. Kohler, 41 N. Y. 42;
Thlry v. Brewing Co.. S7 N. Y. App.
Dlv. 891; Bowman v. Brewing Co., 17
Tex. Civ. App. 446; Foss-Schneider
Brew. Co. v. McLaughlin, 5 Ind. App.
416 (agent in charge of wagon with
prlnclpars name painted on It);
Haghes V. New York, etc., R. Co., 86
N. Y. Super. 222 (man wearing brake-
man's coat and Jacket); McCoun v.
New York, etc., R. Co., 66 Barb. (N.
Y.) 338 (man working on engine in
working attire).
ss Armstrong v. Advance Thresher
Co., 5 S. Dak. 12; Norwegian Plow
Co. V. Munger, 52 Kan, 371; McDon-
ald V. Gilbert, 16 Can. Sup. 700
(partnership).
» See Aultman-Taylor Mach. C^. v..
Rldenour, 96 Iowa, 638.
80 Gilliland v. Southern Ry. Co., 85
S. C. 26, 137 Am. St. R. 861, 27 L,
R. A. (N. S.) Iie6; General Hospital
Co. V. New Haven, etc., Co., 79 Conn.
581, 118 Am. St. R. 178, » A. ft El.
Ann. Cas. 168; Godalr v. Ham Nat.
Bank, 225 111. 572, 116 Am. St. R. 172,
8 A. ft E. Ann. Cas. 447; Wolfe v.
Missouri Pac. Ry. Co., 97 Mo. 473, 10
194
CSAP. y] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ 27O-273
principal' act to which the act in question may fairly be regarded as a
natural and ordinary incident reasonably necessary and proper to be
done under the Circumstances in question.^
§ 27a By proof of a custom covering the case. — It is also only
another form of a rule already referred to and hereinafter often dis-
cussed, to say that proof of authority to do a given act may be made
by showing that it falls within the range of an established general cus-
tom or of a proved particular custom in contemplation of which it is
shown that the parties dealt.**
§ 271. By proof of an established course of dealing.— Equally so,
is the rule that proof of authority to do the act in question may be
made by showing that it is one of a class concerning which the parties
had established a course of dealing which recognized its validity,
whether it would otherwise have been so or not ; or concerning which
there was such a general course of dealing as would justify the con-
clusion that this authority had in fact been conferred.** The doctrine
of estoppel would often enter into the first; the latter would usually
rest wholly upon inferences of fact.
Evidence of an established course of dealing may also, as will be
more fully seen hereafter, be admissible in many cases for the purpose
of showing how the parties had interpreted an authority undoubtedly
conferred.
§ 272. Liability by ratification. — ^The liability of the principal in a
given case may also be established by proof that the agent's perform-
ance of the act in question has subsequently been ratified and approved
by the person alleged to be his principal. Something of the scope and
application of this mode of authentication has been incidentally der
veloped in the preceding pages, but its full treatment will be reserved
for a following chapter.
§ 273. Limitations upon these rules. — But it is not to be inferred,
however, that authority is, in any case, to be implied without reason,
or presumed without cause. The implication must be based upon facts
for which the principal is responsible,** and cannot arise from any
Am. St R. 331, 3 L. R. A. 539; Reed &« In the absence of express author-
V. Burlington, etc., Ry. Co., 72 Iowa, ity, the facts upon which an impli^
166, 2 Am. St. R. 243; Oskamp v. authority is to be based must be
Gadsden, 35 Neb. 7, 37 Am. St. R. traced home to the principal — to hi$
428, 17 L. R. A. 440. conduct, acquiescence, approval, rati-
31 See ante, § 242; post, Book 11, fication. Without this there is no
Chap. I. foundation upon which to build.
«2See ante, § 243; post, Book IT, Gregory v. Loose, 19 Wash. 599;
Chap. T. Kansas ft Tex. Coal Co. v. Millett,
»« See Standley v. Clay, 68 Neb. 60 Mo. App. 382; Stratton-White Co.
832. V. Castleberry, 16 Tex. Civ. App.
§ 274]
TH£ LAW OF AGENCY
[book I
mere argument as to the convenience, utility or propriety of its exist-
ence.'^ - So, too, the facts from whidi it is sought to be implied are to
be given their natural, legal and legitimate effect, and this effect is not
to be expanded or diminished in order to establi^ or overthrow the
agency. And again, when implied, the agency is to be limited in its
scope and operation to the reasonable and necessary requirements of
the case which called it into being. If implied from the ratification or
adoption of acts of a certain kind, its scope is to be limited to the per-
formance of acts of that kind, and it can not be construed as warrant-
ing the performance of acts of a different kind."*
§ 074. What facts sufficientH^Instances/— Illustrations of these
rules are too numerous for complete enumeration. A few, however,
will be gfiven which may be taken as typical of the greater number.
Express or tacit acquiescence is the feature in many of them. Thus
where one stands by and permits another, in his presence, to make a
contract for him as his agent, without disclosing the want of authority,
he will be estopped from denying the authority ; ^ and one who knows
that another is collecting money on his account and does not object,
but ediows him to keep it as a loan, makes him his agent to collect it.'"
140s Bbty^y v. Trnst Co., 199 Pa.
421; Rowland Lumber Ck>. v. Ross,
100 Va. 275.
'•While a principal is bound by his
agent's nets when he Justifies a partr
<leaUng with his agent In believing
that he has given to the agent au-
thority to do those acts, he is re-
sponsible only for that appearan<ie
^ i^ttthority Which is caused by him-
self, and not for that appearance of
conformity to the authority which
is caused only by the agent." Sd-
wards v. JDooley, 120 N. Y. 640.
ssSee Bickford v. Menler, 107 N.
y. 490.
»«See Graves v. Horton, $8 Minn.
66; McAlpin v. Cassidy, 17 Tex. 449;
Gordon v. Loan ft Trust Co., 6 N.
Dak. 454; Gregory v. Loose, supra;
Wikle V. Louisville, etc., R. Co., 116
Ga. 309; Collins v. Crews, 3 Ga. App.
238; St. Louis, etc., R. Co. v. Blocker,
— Tex. Civ. App. — , 138 S. W.
156.
The fact that a principal has per-
mitted an agent to solicit orders
which the principal may accept or
nDt as he chaoses, aa the person who
gives them well knows, Is act evi-
dence of a holding out of the agent
as authorized to make binding con-
tracts or to agree that the in*tnefpal
■will In any ^vent accept orders given. ,
Spooner v. Browning, [1898J 1 Q. B.
528.
»r James v. Rassell, 92 N. O. 114.
But wbdre one who is pot an agent
says to another who is under no ob-
ligation to pay bills contracted by
him, that he will expeet the other
to pay them, th« alienee of the latter
where no one is misled by lt» does
not Justify an inference of assent.
Parker v. Brown, 131 N. C. 264.
Where a man without objection re-
ceives a copy of a contract which on
its face purports to be made by an-
other as his 9igeut and thereafter ac-
cepts from the other contracting
party part performance of the con-
tract he is estopped to deny the au-
thority of him who assumed to act
as agent In negotiating the contract,
Farrer v. Caster, 17 Colo. App. 41.
88 Simon V. Brown, 88 Mich. 552.
196
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§§ XJ^ 276
§ 37s.
NMi#>
Where it was shown that a eon liati for years been
signing his father's name to his own notes to the knowledge of the
father who tocfc no steps to prevent it, and gaye no noti^ that it was
unautborijjed, the son's authority to so bind the father was pre-
sumed ; '^ so where a son had been, to his father's knowledge^ in the
habit of attending the father's store and there selling goods, taking
orders, receiving payment for good* 3oJd and ordering goods from
wbcdesale bouses, the authority of the eon to bind the father by a pur-
chase of goods was inferred, altliough the son appropriated the goods
so purchased to his own use ; ^^ so where a son, acting {or his father in
procuring a mortgage, took upon himself with his father's consult the
whole n/egotiation, examined the title, attended to the execution of the
papers, received the money from his father and delivered it to the mort-
gagor, and in short did everything there was for an agent to do in the
matter, and as much as any agent could have done in a similar nego-
tiation, he was conclusively presumed to have been the agei^t of his
father in the transaction.^^
§ 276. Again where one charged as defendants' agent was
shown to have been for years a clerk in their store, and in many in-
stances as their agent to have done business with the plaintiffs, it was
held that there was sufficient proof of a general' agency ; *' and where
one sent another who desired to purchase lands of him, to his father to
make a bargain, with the statement that whatever bargain they might
make he would agree to, it was held that this authorized the person
One who knowfiagly pwmlta aaotber
to mabe coUectloiii for bim is bound
by payments made to BiiQh otlimr.
Sax V. Dimkib 69 lorwi^ 760; Quiiin v.
Preflbacb, 1% CaL 169« 7 Am. St Bep.
138; WUflOn v. Fones, 09 Iowa, 138;
Qrant v. fiumeriok, 183 Iowa. 671;
Gro80 y. Owen. 86 N. Y. Aupp. 866;
Morgan v. Ne«l, 7 Idalio* 689, 97 Am.
St Rep. 864.
"If in conaoqieneo of % notortoos
agency, the ageut Is in tlie habit of
drawing Mils, aad the priacdpal in
the habit of payi^ng tlihem, this it auoh
an affirmance of hki power to draw
that a purchaser of his bills has a
ri«;ht to expect payment of them hy
the principle and if refused b4 may
coerce it" Hooe v. Oxley, 1 Wash.
(Va.) 19, 1 Am. Dee. 485.
»» Weaver v. Ogletree,. 39 Ga. M6.
See also Brown v. Deloach, 88 Ga.
486.
'M>T|iiirb6r ▼. ▲adersoiu 88 IH. 167;
filaner y. State, 30 Tex. 684. See ttOSo
Watkios T. Tince, 2 Stark. 368.
41 MattsBon y. Blaokmer, 46 Mich.
3^8. same effect: BoHee y. 0«ale,
188 CaL 693. .
In Center t. Euah, 85 Misc. 894, a
father seodintf his sdn away to
•ehool left ttie boy to make the nec-
essary arrangements as to tuition,
jdte.» and the son arranged for aa en-
tire year. JTeld, thai the tetiier was
liable though the son wtthdrew be-
fore the rear was eaded.
4a£agle Bank v. Smith, § Conn.
71, 13 Am. Dec 37.
Where the allce^ed agent imib
shawm to haye been openlr In cbacge
of detondaat's shop, alosie, i)n the
197
§§ 27T, 278]
THE LAW OF AGENCY
[book I
thus sent to regard the father as the son's agent, and bound the sod by
his father's statements.'"
§ 277. — -— . So in an action to charge a married woman for
goods sold and delivered to her husband as her agent, it was held
competent to show that she had paid for similar goods bought by her
husband during the same period within which the goods in question
were bought ; ^ and evidence that a husband who had the management
of certain land belonging to his wife, ordered material for building a
house thereon, and that the wife knew that the house was being built,
and occupied it when finished, was held to warrant a finding that the
husband acted as her agent.**
§ 278. ■ So, where the question was whether an employee,
in case of absence from work, might employ a substitute and it ap-
peared that soon after he was employed he was given permission to be
day in question and there condacted
business for the defendant, there was
held to be prima facie eyidence of
agency. Ingalls v. Averitt, 84 Mo.
App. 371.
43 Reeves v. Kelly, 30 Mich. 133.
Agency by reference. — So If one
party refers another to a third per-
son for information, as authorized to
answer for hftn, he will be bound by
the statements of the person so re-
ferred to. Rosenbury v. Angell, 6
Mich. 508; Beebe v. Knapp, 28 Mich.
63; Beebe v. Toung, 14 Mich. 136;
Marx V. King, 162 Mich. 258; Mc-
Broom v. Cheboygan Co., 162 Mich.
828; Armstrong, Byrd ft Co. v.
Crump, 25 Okla. 452; Prutt Dispatch
Co. V. Glllnsky, 84 Neb. 821.
Where goods are shipped to P with
directions to notify A, this prima
facie makes A agent of P to receive
notice of the arrival of the goods.
Southern Ry. Co. v. Adams Mach.
Co., 165 Ala. 436.
In Haner v. Puruya, 89 Wash. 122,
the plaintiff had sold goods for the
use of a group of men employed by
the defendant to M. who reiM*esented
that he had authority to bind the
defendant. The plaintiff called at
the defendant's place of business and
by the general manager who had au-
thority to pay or to pass upon the
thing was referred to another man
in the place. There the plaintitt was
told that it was all right and that
the defendant would pay. The de-
fendant was held bound by these
statements and was held to pay for
goods supplied both before and after
the visit.
MLiOvell V. Williams, 126 Mass.
489.
M Arnold v. Spurr, 130 Mass. 347.
And see Thomas v. Wells, 140 Mass.
517; Lindquist v. Dickson, 98 Minn.
869, 6 L. R. A. (N. S.) 729; Gillies v.
Oibson, 17 Manitoba, 479; and cases
cited ante, } 171.
Where, after the transfer of the
legal title of a mine from the name
of the father to that of his son, the
father continued to take entire
charge and management; the son
paying no attention to the property,
authority in the father to leaike the
premises may be inferred. Jordan v.
Greig, 38 Colo. 860.
Where lumber was bonght of the
plaintiir by one without authority
from the defendant to pledge defend-
ant's credit, but in the defendant's
name and the defendant accepted
shipment of the lumber to it in its
name and sees* that the following cor-
respondence comes fa defendant's
name and at no time made any ob-
198
CHAP. Vj APPOINTMENT AND AUTH0RI2ATI0N OF AGENTS [§ 279
absent upon supplying a substitute and upon three or four subsequent
occasions he had absented him^f and provided a substitute, with the
knowledge and without the objection of the employw*, it was held that
there was at least sufficient evidence to go to Ac jury that he was
authorized to employ a substitute on the occasion in question.** So
whert the question was whether the agent in charge of a building was
authorized to make repairs thereon and it appeared that the owner was
a non-resident and had left it in charge of the agent, that on more than
one occasion the agent had caused repairs to be- made and had paid
for them out of the principal's mpney without his objection, and that
the agent had funds in his hands from which such repairs could be
made, it was held that there was sufficient evidence to go to the jury
that the agent had authority to make the repairs, at least so far as to
charge him in tort to third persons for injury caused to them by his
failure to make the repairs.*^ Where the question was whether the
agent in charge of a farm had implied power to employ the plaintiff
as manager upon it, evidence that the agent directed the work on the
farm, kept the time of the employiees and paid them their wages, coupled
with the fact the owner later saw the plaintiff upon the farm and made
no objection, was hdd to be suiikieht to justify the jury in finding that
the agent was authorized to employ the plaintiff.*® So where the ques-
tion was whether the father of the defendant had iauthority to assign
to the plaintiff a contract for the sale of land, made by her, and it ap-
peared that the father acted for the defendant in the purchase of the
land, that the daughter left the contract with him, that he sold it for
its full value, that he used the proceeds in erecting a house on other
land belonging to the daughter, and that the daughter appropriated
the house to her own use, it was held that this evidence was sufficient
to make a prima facie case that the assignment of the contract to the
plaintiff had been made by the daughter's authority.**
§ 279. ■■ ■ So where the question was whether the defendant
was justified in purchasing from the agent of the plaintiff certain
checks, drawn to the order of the plaintiff and indorsed by the agent
with the plaintiff's name by means of a rubber stamp, and it appeared
that, although when the account was first opened another agent had
jection, but silently turned things *«Aga r. Harbach, 127 Iowa, 144,
over to the contractor, the defendant 109 Am. St. R. 877, 4 A. ft E. Ann.
was held estopped to deny the con- Cas. 441.
tractor's agency to pledge defend- *t Lough v. Davis, $6 Wash. 449.
ant's credit. Graff Bros. v. Lena *» Trollfnger v. Fleer, 157 N. C. 81
I^umber CJo., 96 Ark. 850. «• Cooper v. Farmers' ft Mer-
chants' Bank, 6S Wash. 810.
199
§ ^
TUB. UAW OF A<S^«CY
[BjQOK I
been designated aa the only one whose signature should bind the plain-
tiff in transactioAs with the bank, yet for a period of two or three years
the agent in question had been allowed, aj^arentiy in the regular courae
of business, to indorse checks vi^th such rubber stamp aM deposit them,
to transfer checks by such indoirsement, and to receive money iqpon
checks indorsed with such stamp or with no indorsement at all, it was
held that the jury were justified in finding that the agent was appar-
ently authorized to deal as he did with the checks in question.'^ Where
a mother, having practically finished o^otiation of a contract to pur-
chase land, then left her son to complete matters and he n^adQ the first
payment by a check upon her bank account, and she kept the contract
so made in her possession for several weeks and then claimed that he
had authority only to take an option, it was held that the evidence
would sustain a finding that the son had authority to make the contract,
and justify a judgment of specific performance.'* Where the evi-
dence showed that the defendant, knowing there was a disagreement as
to the terms upon which she might remove her buildings from the land
she was selling, sent her brother to sign for her a specific contract at
the agreed price and later sought to repudiate it because she was dis-
satisfied with the terms on that point, it was held that "when the de-
fendant directed [the agent] to act for her in executing a specific
contract of sale, the terms of which had not been previously agreed
upon, she necessarily gave him authority to fix such terms." *"
§ 280. So where a person openly and notoriously exer-
cises the functions of a particular agency of a corporation, he will be
presumed to have sufficient authority from the c(Mrporatk)n to so act ; •*
and where a manufacturing company knowingly permitted a person to
80 Columbia Mill Oo. v. National from the fact that such conduct
Bank of Commerce, 52 Minn. 224.
51 Wren v. Cooksey, 147 Ky. 825.
82 Clark V. Pett, 150 Iowa, 707.
BS Singer Mfg. Co. v. Holdfodt, 8$
lU. 465.
Where It appeared that a person
had acted for two or three years as
the agent of corporation la settling
Its obligations, It was held that this
was sufficient prima facie to estab-
li^ his agency. ''From the natural
improbability/' said IXcklnson, J.,
''that one should voluntarily, with-
out authority, assume to act for an-
other, settling his obligations for a
considerable period of time, and
would naturally come to the knowl-
edge of the assumed princfpal, the
fact of agency may be presumed."
Nelbles v. Minneapolis, etc., R. R.
Co., 37 Minn. 151, 33 N. W, 332.
See also Rockford, etc., R. R. Co. t.
Wilcox, 66 111. 417; Reynolds v. Col-
llns« 78 Ala. S4; Summervllle v.
Hannibal, etc., R. R. Co., 62 Mo.
391; Vlcksburg, etc., R. R. Co. v.
Ragsdale, 54 Miss. 200; McCormick
Harv. Co. v. Lambert, 120 Iowa,
181; Southern Express Co. v. Plat-
ten, 93 Fed. 936; Smith T. Bank, 72
N. H, 4.
200
CHAP. V] APPOINTMENT AND AUTHOH^ATtON OF AGENTS [§ 281
sell goods in a store-house with their name over the door, though in a
town distant from their place of business, and there to sell goods of
their manufacture and to buy country {>roduce as their agent, they
were charged as his principals in the purchase of such produce/* So
placing a man in general charge of a retail store i$ such a holding oqt
of him as general agent as to bind the principal for goods purchased
for sale in the store by the agent, although he had agreed with the
principal not to buy any goods without the letter's consent.'* And
where it appears that the alleged agent has repeatedly performed acts,
like the one in question, which tht principal has ratified and ad<^ted,
his authority for the performance of the disputed act may be inferred.'"
§ 281. What facts not suf&eient — ^Instances* — ^The cases upon this
side are also too numerous for detailed statement, and a few must serte
as illustrations for all. Thus, for example,, the mere making a note
payable at a ceitam bank will not make the batdc the agent of the
payee to receive payment unless the note n left there for collection,'^
MGllbraith v. Llneberger. 69 N.
C. 145. But this authority does not
extend to borrowing money or buy-
ing goods for himself. Id,
The fact that one was fn charge
of a truck with defendant's name
upon It and delivered beer from It
with bills and receipts bearing de-
fendant's name, is evidence from
which a jury might infer agency
(Thiry v. Taylor Brewing Co.. 87 N.
Y. App. Dlv. 391); and where a
brewing company furnilshed to one
claiming to be its agent horses and
wagon and a place of storage, there
wag evidence of agency (Bowman v.
Texas Brewing Co., 17 Tex. Civ. App.
446); and so where a brewing com-
pany furnished a person with an ice
house and wagon with Ws name
painted on it as agent (Foss-Schnei-
der Brewing Co. v. McLaughlfn, $
Ind. App. 415). So where the age6t
had the name of his principal
posted in his office to the latter^s
knowledge. Daggett v. Champlain
Mfg. Co., 71 Tt. «70.
"White V. Leighton, iB Neb. 424.
5«Jewett V. Lawrenceburgh, etc.,
R. R. Co., 10 Ind. 53^; Fisher v.
Campbell, 9 Por. (Ala.) 210; Robin-
aon V. Green, 5 Har. (DeL) 116;
Rawson v. Curtisa, 19 111. 466; Em-
erson V. Coggswell, 16 Me. 77; Odi-
orne ▼. Maxcy, 16 Mass. 39; Walsh v.
Pierce, 18 Vt. 130; Downer v. Morri-
son, 2 Qratt. (Va.) 237; Hawkins
V. Windhorst; 77 Kan. 674, 127 Am.
8t R. 445, 17 L. R. A. (N. S.) 219.
•T Ward V. smith, 74 U. S. (7 Wal-
laee) 447, 19 U Bd. 207; Mutual
Ben., etc., Co. v. Miles, 81 Fed. 32;
Glatt V. Fertman, 120 Ind. 3S4;
Cfrldwell V. £)vaBS, 68 Ky. (6 BualL)
88a, 96 Am. Dec. 868; Trowbridge v.
R08B, 105 Mich. 598; St Paul Na-
tional Bank v. CJannon, 46 Minn. 96,
24 Am. St R. 189; Adams v. Hack-
ensaok Imp. Oa, 44 N. J. L*. 638, 43
Am. Rep. 406; Hollinshead v. Stuart
« Co., 8 N. D. 35, 42 h. R. A. 659;
Sank of Montreal v. Ingerson, 106
Iowa, 84^, Bartel v. Brown, 104 Wis.
493. In Cheney v. Llbbeyp 134 U. 8.
68, 83 L. Bd. 818; the bank at which
certain notes were made payable
liad actual control of the notes, but
l^ey had aot been loft tliere for col-
lection. It was held that the de-
posit of money in tlie bank for the
payment of the ncUm did not oper-
ate as payment, that the bank was
not agent of the payee to receive
payment, b«t held the notes for the
payee and the money for the payor.
In Grissom v. Bank, 87 Tenn. 360,
201
§ 282]
THE LAW OF AGENCY
[book I
nor, in any event, unless the officers are disposed to accept the
agency ; ^* nor will the delivery of a subscription list to a person of
itself confer authority on such person to collect the money and dis-
charge the subscribers ; '• nor is authority to collect a debt to be im-
plied merely from the possession by the party claiming the authority,
of a copy of the account**
So an agency will not be presumed from a previous employment in
a similar matter where it does not appear that the former employment
was with the principal's knowledge, although he may have accepted
the advantages resulting from such previous employment.*^
g 282. — •— - The lender of money who asks the borrower to ob-
tain the indorsement of a third person as surety does not thereby make
the borrower his agent so as to be charged with notice if the surety's
signature is forged.*^
And if a debtor employs an agent to carry money to his creditor, the
creditor by accepting the money, does not so make the messenger his
agent that if at any future time the messenger should appropriate
10 Am. St. R. 669, 3 L. R. A. 273,
the bank at which a note was by its
terms payable had a general ac-
count of the surety on the note and
when the note was brought in, paid
it out of this general account with-
out express dlrectiV)ns. In holding
that this was unauthorized on the
part of the bank the court said that
making a note payable at a bank
simply names a place of payment
and does not make the bank agent
for anyone.
If however the note is left at the
bank for collection, the bank Is the
payee's agent, and the incidents of
agency attach. Smith y. Bank, 22
Barb. (N. Y.) 627; Alley r. Rogers,
19 Grattan, 366.
M Pease v. Warren, 29 Mich. 9.
But where a savings bank delivers
to a national bank money drafts,
notes, securities, eta, to pay a cred*
iter, the relation between the debtor
bank and the national bank is that
of prlncl'pal axid agent, until the
creditor assents or acts npon the
transaction; and the assent of the
creditor will not be presumed when
he has no notice or knowledge of It.
Brockmeyer v. Washington Nat
Bank, 40 Kan. 876, 40 Kan. 744.
MAntram y. Thorndell* 74 Penn.
St. 442.
CO Dutcher Y. Beckwith, 45 111. 460,
92 Am. Dec. 232; Swoftord Bros. Co.
Y. Berkowita, 7 Kan. App. 24.
61 Cobb Y. Hall, 49 Iowa, 366. And
see Abrahams y. Weiller, 87 111. 179.
02 Wheeler y. Barr, 7 Ind. App.
881. So where a creditor pushing
for payment was unwilling to take his
debtor's note but suggested that he
could take the debtor's note if en-
dorsed by the defendant and the
debtor went ta defendant and ob-
tained his accommodation endorse-
ment, no agency of the debtor for
the creditor to obtain the endorse-
ment has been established and the
defendant cannot show that his un-
dertaking with the debtor was to
pign for accommodation of the cred-
itor as well as of the debtor. Carter
Y. Goff, 141 Mass. 123. See also, to
the same eltect» Woodward v. Bixby>
68 N. H. 219.
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 283
money so sent, the loss would be that of the creditor and not of the
debtor ; " and if a debtor leaves with A money to pay a note, inform-
ing the creditor of that fact, and the creditor thereupon writes to A to
bring or send the money to him, this does not make A the agent of the
creditor so as to impose upon the latter the loss of the money white in
A's possession.^^
§ 383. — — So the mere fact that, under the terms. of the con-
tract for the sale of goods of which the title is to be retained by the
seller until payment, it is agreed that the buyer shall cause the goods
to be shipped in a certain way in order to protect the seller's interest^
does not make the buyer the seller's agent in making the shipment, so
as to give the seller a cause of action against the carrier, the seller not
appearing upon the face of the contract to be a party to it.*' The fact
that a third person had agreed, as the friend of one employed to sell
chatties, to voudi for the genuineness of the signatures upon notes which
such employee was to procure by way of security for an existing in-
debtedness to his employer, such tiiird person not having any authority
to accept the notes or to do an)rthing with them, does not make him'
the agent of tfa? employer, so as to charge the emplo}rer with notice
whicli such third person had that the employee was practicing a fraud
upon one of the sureties upon the note.^ In an action by plaintiffs to
rescind certain mortgages given by them, upon the ground of fraud, it
appearing that plaintiffs were present and acting for themselves, when
the mortgages were executed, the mere fact that a third person was
present at their request "in order to see that everything was done
right" does not make such third person the agent of plaintiffs, so as
to charge them with his knowledge or bind them by his testimony as to
what was then said and done.'^ Where plaintiff, who had bought land
of another for the latter's accommodation and had agreed that the
latter might have the privilege of reselling it at any time and of re-
taining all that he could obtain for it above a fixed sum, and the latter
employed defendants, who were real estate agents, to assist him in
making a sale, the defendants are not thereby made the agents of the
plaintiff, so as to relieve them from their indorsement of certain drafts
taken in payment of the purchase price and turned over to the plaintiff
in payment of the fixed sum due hinu'* One who bought property
«» Fisher ▼. Lodge, 60 Iowa, 459. . wHardlli r. Chenault, 25 Ky. L.
•* First Nat Bank v. Free, 67 R. 1083, 77 S. W. 192.
Iowa, 11. vrGrewin? v. Minneapolis Thresli.
•B Mills ▼. Abbeville, etc., Ry. Ck>., Mach. Co., 12 S. Dak. 127.
137 Ala. 506. ^s 0'Ck)nnell v. Marvin, 47 Wash. 8.
203
ia84l
THE LAW OF AGENCY
{book i
and had employed a title company to examine the title and had given
an assignable non-negotiable mortgage IxMid to the ti^. company for
money, which under the mortgagor's direction the title company then
applied in paying vendor and in improving the property, and who then
resold the property and delivered the deed and received the purchase
money through the title company, and who without any knowledge
that the mortgage bond had been assigned, allowed the title company
to keep part of the purchase money in satisfaction of the mortgage
bond, has not so made the title company her agent as to be bound by its
knowledge of the assignment and to have her payment def eated.^^ The
fact that one who had made a catalogue of the cattle of a decedent 's^
estate answered plaintiff's letter addressed to the estate, and that he
sold cattle of that herd to plaintiff, making representations as to the
concUtion of the cattle, where the administrators claim that he was not
their agent and that they sold to him, does not make him the agent of
the administrators so as to bind them by his representations.^
§ 2B4. The fact that the mortgagee of a stock of goods is
employed in the mortgagor's store and that while there the mortgagor
buys goods ''as agent," does not tend to show that the mortgagee was
the principal, he not being such in fact and receiving no benefit of the
goods.'* So where a person suggests to a judgment debtor that he
will buy the judgment against him and the latter tells him to do so but
furnishes no money to make the purchase, the buyer is not thereby
made the agent of the judgment debtor in sudi sense that the latter is
afterwards entitled to satisfaction of the judgment upon reimbursing
the buyer for what he paid for it, having bought it at a discount."
The fact that the owner of land gives another an option contract or
a bond for title does not make the latter the agent of the owner even
though they are tenants in common.'*
Nor will the fact that one as a father or friend merely g^ves informa-
tion or advice in reference to a land trade, make such father or friend
the agent of the person to whom such advice or information is given.'*
••Fidelity T. A a V. Co. v. Carr,
24 Ky. L. R. 156, 66 S. W. 990.
TO Newell v. Clapp, 9T Wis. 104.
Thei fact that defandA&t allowed hlB
brotlier to live in and transact bosl-
ness from the defendant's residence
does not constitute a holding out ot
the brother as defendant's agent.
Rowan v. Kemp, 103 N. Y. Supp. 775.
A stockbroker who tells a customer
that he may send him directions
over a certain private wire» does
not make the operator of that wire
his own agent so as to be bound by
his mistakes. Smitli v. Button* 18ft
App. Div. 859.
71 Steele v. Watson, 86 Iowa, 629.
T2 Walton V. Dore. 118 Iowa, 1.
w Alger V. Keith, 105 Fed. 105.
74 McNamara v. McNamars, 62 Ga.
200.
204
CHAP. V] APPOINTMENT AND AUTH0IHZAT1ON OF AGENTS [§ 285
§ 285. Agent's authority cannot be established by his own state-
ments or admittionflk— The authority of an agent, and its nature and
extent where these questions are directly involved, can only be estab-
lished by tracing it to its source in some word or act of the alleged
principal. The agent certainly cannot confer authority upon himself
or make himself agent merely by saying that he is one. Evidence of
his own statements, declarations or admissions, made out of court
therefore (as distinguished from his testimony as a witness), is not
admissible against his principal for the purpose of establishing/^ en-
See also upon this general subject,
Whitehead v. Tuckett, 15 East. 400;
Hazard ▼. Treadwell, 1 Stra. 506;
Burt Y. Palmer, 5 Esp. 145; Peto v.
Hague, Id, 134; Anderson v. Sander-
son, 2 SUrk. 204; Clifford v. Burton,
1 Bing. 199; Fenner v. Lewis. 10
Johns. (N. Y.) 3S; Bryan v. Jack-
son, 4 Conn. 291.
TswllUamaon v. Tyson, 105 Ala.
644; Uanly v. Sperry, 115 Ala. 524;
Drum y. Harrison, 83 Ala. 384;
Tanner Bnglne Co. v. Hall, 86 Ala.'
305; Eagle Iron Co. v. Baugh, 147
Ala. 613; Gould v. Cates Chair
Co., 147 Ala. 629; Smiley v. Hooper,
147 Ala. 646; Oamblll v. Fuqaa»
148 Ala. 448; Union Naval Stores
Co. y. Stewart, 156 Ala. 369; Cohn,
etc., Co. y. Robbins, 159 Ala. 289;
Crone y. Long, 159 Ala. 487; Eu-
banks y. Anniston Ca, 171 Ala.
488; Carter v. Burnham, 31 Ark.
212; Dennis v. Toung, 85 Ark. 252;
Latham v. Bank, 92 Ark. 315; Bell
V. State, 93 Ark. 600; Petterson v.
Stockton, etc., Ry. Co., 134 Cal. 244.
See also Ferris v. Baker, 127 Cal.
520; Santa Crus Butchers' Union v.
I. X. L. Lime Co. (Cal.), 46 Pac.
382; Union Const Co. v. W. U. Tel.
Co., Cal. — , 125 Pac. 242; Mur-
phy y. Gumaer, 12 Colo. App. 472;
Mulford y. Rowland, 45 Colo. 172;
C. 4b C. Electric Motor Co. y. Frlsbie,
66 Conn. 67; Coe y. Kutinsky, 82
Conn. 685; Russell y. Washington
Sayings Bank» 23 App. D. C. 398;
Orange Belt Ry. Co. y. Cox* 44 Fla.
G45; Griffin y. Soclete Anonyme la
Floridienne, 53 Fla. 801; Martin y.
Johnson, 54 Fla. 487; Fla. East
Coast Ry. y. Lassiter, 58 Fla. 234. 19
A. & K Ann. Cas. 192; Cottondale
State Bank y. Burroughs Add. Mach.
Co., 61 Fla. 143; Nelson v. Tumlin,
74 Ga. 171; Amicalota Marble Co. y.
Coker, 111 Ga. 872; Jones v. Harrell,
110 Ga. 373; Grand Rapids Co. y.
Moral, 110 Ga. 321; Almand y.
Equitable Mortgage Co., 113 Ga.
983; Abel y. Jarratt & Co., 100 Ga.
722; Alger y. Turner, 105 Ga. 178;
Harris Loan Co. y. Elliot, etc., Co.,
no Ga. 302; MasslUon Engine, etc.,
Co. y. Akerman, 110 Ga. 570; Ameri-
cus Oil Co. V. Gurr, 114 Ga. 624;
Hood y. Hendrickson, 122 Ga. 795;
Indiana Fruit Co. y. Sandlin, 125
Ga. 222; Franklin Co. Lumber Co. y»
Grady Co., 133 Ga. 557; Becker v.
Donalson. 133 Ga. 864; Southern Ry.
Co. V. Grant, 136 Ga. 303; Georgia
Steel Co. y. White, 136 Ga. 492;
Johnson County Bank y. Richard-
son, 9 Ga. App. 466; Michigan Mut.
Life Ins. Co. y. Parker. 10 Ga. App.
697; Maxey y. Heckethorn, 44 III.
437; Rawson y. Curti^s, 19 111. 455;
Chicago, etc., R. R. Co. v. P^ox. 41
111. 106; MuUanphy Say. Bank y.
Schott, 135 111. 655, 25 Am. St. Rep.
401; Mellor y. Carithers, 52 IlL App.
86; Cleveland, etc„ Ry. Co. y. Jenk-
ins, 75 111. App. 17; Sonnenscheia
y. Max Malter Co., 144 111. App. 183;
Eleyator Safety Co. y. Iron Works^
153 111. App. 313; Columbus, etc.,
Ry. Co. y. Powell, 40 Ind. 37; Blair-
Baker Horse Co. y. Bank, 164 Ind.
77; Wood Mowing, etc., Machine Co.
y. Crow, 70 Iowa, 340; Fritz y. Chi-
«>5
§ 285]
THE LAW OF AGENCY
[book I
eago Elevator Co., 136 Iowa» 699;
Whitam V. Dubuque, etc., R. Co., 96
Iowa, 7S7; Sax y. Davis, 81 Iowa,
692; Sandusky, etc.. Works v.
Hooks, 83 Iowa, 305; Heusinkveld
▼. Ins. Co., 106 Iowa, 229; Scblitz
Brew. Co. v. Barlow, 107 Iowa, 252;
Mentzer f. Sargeant, 115 Iowa, 527;
McManus Y. Chicago G. W. Ry. Co.,
— Iowa, — , 136 N. W. 769;
Streeter v. Poor, 4 Kan. 412; Howe
Machine Co. t. Clark, 16 Kan. 492;
Leu y. Mayer, 52 Kan. 419; Mo. Pac.
Ry. Co. y. Jolinson, 55 Kan. 344; St.
Louis, etc., Ry. Co. v. Kinman, 49
Kan. 627; Ream v. McElhone, 50
Kan. 407; Swofford Bros. Dry Goods
Co. y. Berkowltz, 7 Kan. App. 24;
Kane y. Barstow, 42 Kan. 465, 16
Am. St, Rep. 490; French y. Wade,
35 Kan. 391; Edmlston y. Hurley,
30 Ky. L. R. 557, 99 S. W. 259;
Hensley y. McDonald, 32 Ky. L. R.
1333, 108 S. W. 362; B. & O. S. W.
Ry. Co. y. Clift, 142 Ky. 573; Cren-
shaw y. Ware's Exr., 148 Ky. 196;
Dawson y. Landrcaux, 29 La. Ann.
363; State y. Harris, 51 La. Ann.
1105; Lafourche Transportation Co.
y. Pugh, 52 La. Ann. 1517; Eaton y.
Proyldent Asso., 89 Me. 58; Harker
y. Dement, 9 Gill (Md.), 7, 52 Am.
Dec. 670; Wilson y. Kelso, 115 Md.
162; StoUenwerck y. Thacher, 115
Mass. 224; Mussey y. Beecher, 3
Cush (57 Mass.), 511; Brigham y.
Peters, 1 Gray (67 Mass.), 139;
Nowell y. Chipman, 170 Mass. 340;
Haney y. Donnelly, 78 Mass. (12
Gray) 361; Baker v. (Jerrish, 96
Mass. (14 Allen) 201; Westheimer
y. State Loan Co., 195 Mass. 510;
Deane y. American Glue Co., 200
Mass. 459; Hatch y. Squires, 11
Mich. 185; Kornemann y. Monag-
han, 24 Mich. 36; Reynolds y. Con-
tinental Ins. Co., 36 Mich. 131; Fon-
taine Crossing, etc., Co. v. Rauch,
117 Mich. 401; Grover & Baker S.
M. Co. y. Polhemus, 34 Mich. 247.
See also Bond y. Pontiac, etc., R. R.
Co., 62 Mich. 643, 4 Am. St. R. 885;
Henneberger y. Matter, 88 Mich.
396; Swans trom ▼. Improvement
Co., 91 Mich. 367; Cold.water Nat.
Bank v. Buggie, 117 Mich. 416; Mc-
Pherson ▼. Pinch, 119 M4eh. 36; Lgf-
gan y. Agricultural Society, 156
Mich. 537; Cronk y. Mulyaney, 168
Mich. 346; Memphis, etc., R. Co. y.
Cocke, 64 Miss. 713; Therrell v. Bills,
83 Miss. 494; SumraU y. Kitselman,
— Miss. — , 58 So. 594; Peck v.
Ritchey, 66 Mo. 114; Salmon Falls
Bank v. Leyser, 116 Mo. 51; Murphy
V. Mechanics Ins. Ck>., 83 Mo. App.
481; Mitchum v. Dunlap, 98 Mo. 418;
Waverly, etc., Co. v. St Louis CJooper-
age Co., 112 Mo. 383; National Bank
V. Morris. 125 Mo. 343; Handlan y.
Miller, 143 Mo. App. 101; Groneweg
V. Estes, 144 Mo. App. 418; Ny-
hart V. Pennington, 20 Mont. 168;
Anheuser-Busch Brewing Associa-
tion V. Murray, 47 Neb. 627; Nos-
trum T. Halliday, 39 Neb. 828;
Burke y. Frye, 44 Neb. 223; Nor-
berg y. Plummer, 58 Neb. 410; Rich-
ardson St Boyton Co. v. School Dls-
.trict, 45 Neb. 777; Blanke Tea Co.
r. Rees Co., 70 Neb. 510; Fitzgerald
y. Kimball Bros. Co., 76 Neb. 236;
Warner v: Sohn, 86 Neb. 519;
Schlitz Brewing Co. y. Grimmon, 28
Ney. 235; Bohanan y. Railroad, 70
N. H. 526; Clough v. Rockingham,
etc., Co., 75 N. H. 84; Dowden y.
Cryder, 65 N. J. L. 329; Pederson v.
Kiensel, 71 N. J. L. 525; Broun-
fleld y. Denton, 72 N. J. L. 235;
Ryle y. Manchester, etc., Asso., 74
N. J. L. 840; Standard Oil Co. y.
Linol Co., 76 N. J. L. 294; Nicholas
V. Oram, 77 N. J. L. 220; Yoshimi ft
Co. y. XT. S. Express Co., 78 N. J. L.
281; Schweitser v. Church, • — N.
J. , 78 Atl. 400; Stringham v. St
Nicholas Ins. Co., 4 Abb. App. Dec.
315; Jaeger y. Kelley, 52 N. Y. 274;
Fleming y. Ryan, 9 N. Y. Misc. 496;
Reid y. Horn, 25 Misc. 523; Wana-.
maker v. Megraw, 48 N. Y. App.
Div. 54; Booth y. Newton, 46 App.
Diy. 175. See also Mullen y. Quin-
Ian ft Co., 195 N. Y. 109, 24 L. R. A.
(N. S.) 511; Mitchell y. Gennis, 124
N. Y. SuppL 996; Berry y. Broad*
way Co., 148 App. Div. 159; Willis
2o6
CHAP. V] APPOINTMENT AND AtTTHORIZATION OF AGENTS [§ 285
larging '• or renewing '* his authority ; nor can his authority be estab-
lished by showing that he acted as agent or that he claimed to have the
powers which he assumed to exercise.'" His written statements and
admissions are as objectionable as his oral ones^ and his letters, tele-
Cab. Ck». v. Qeneral Ajnurance Co.»
136 N. Y. Suppl. 100; Taylor v.
Hunt, 118 N. 0. 168; Smnmerrow
▼. Barach» 128 N. Car. 202; Parker v.
Brown, ISl N. Car. 264; Smith v.
Browne, 132 N. Car. 365; Daniel t.
Railway Co., 139 N. Car. 517, 67 Ij. R.
A. 455; Brtttain y. Westall, 137 N.
Car. 30; McConnick ▼. Williams, 152
N. Car. 638; Sutton r. Lyons, 16€
N. Car. 3; €k>rdon t. Tt Loan
A0BO., 6 N. Dak. 454; Piano Mfg. Co.
v. Root 3 N. Dak. 165; General Car-
tage Co. y. Cox, 74 Ohio St. 284, 118
Am. St R. 959; Sloan y. Sloan, 46
Or. 36; Harding y. Oregon-Idaho
Co., 57 Or. 84; Spande y. Western
Life, etc, Co. (Or.), 117 Pac. 973;
Aerne y. Gostlow, 60 Or. 118; Long
y. North British Fire Ins. Co., 137
Pa. 336, 21 Am. St R. 879; Pepper
y. Cairns, 133 Pa. 114, 19 Am. St R.
625, 7 L. R. A. 750; Baltimore Re-
lief Aflso. y. Post 122 Pa. 579, 9
Am. St R. 147, 2 L. R. A. 44; Fee y.
Adams Exp. Co., 38 Pa. Super. Ct
83; New England Mtg. Secur. Co.
y. Baxley, 44 S. C. 81; Martin y.
Suber, 39 S. C. 525; Ehrhardt y.
Breeland, 57 S. C. 142; Gen. Elect
Co. y. Southern Ry., 72 S. C. 251,
110 Am. St R. 600; Seneca Co. y.
Crenshaw, 89 S. C. 470; J. I. Case
Machinery Co. y. Gidley, — S. D.
— , 132 N. W. 711; Page v. Cortejs
(Tex. Civ. App.), 81 S. W. 1071;
Western Industrial Co. y. Chandler
(Tex. Ciy. App.), 31 S. W. 314;
Brady y. Nagle (Tex. Ciy. App.}, 29
8. W. 943; Mills y. Berla (Tex. Civ.
App.), 23 S. W. 910; Sullivan v.
Fant, 51 Tex. Civ. App. 6; Missouri
Bridge Co. v. Ballard, 53 Tex. Civ.
App. 110; Stockton v. Crow, —
Tex. Civ. App. , 132 S. W. 952;
Young y. Robinson, — Tex. Civ.
App. -*T^ 135 S. W. 715; Madeley v.
Kellam, — — Tex. Civ. App. , 135
S. W. 659; Guitar v. McOee, —
Tex. Civ. App. — , 139 S. W. 622;
Cannel Coal Co. v. Luna, — Tex.
Civ. App. — , 144 S. W. 721; Mc-
Comick y. Queen of Sheba, etc.,
Co., 28 Utah, 71; Dickerman v.
Quincy Ins. Co., 67 Vt 609; Prouty
V. Nichols, 82 Vt 181, 72 Atl. 988,
137 Am. St Rep. 996; Fisher v.
White, 94 Va. 286; Hoge y. Turner,
96 Va. 624; Comegys v. Lumber Co.,
S Wash. 661; Gregory v. Loose, 19
Wash. 599; Larson v. Am. Bridge
Co., 40 Wash. 224, 111 Am. St R.
904; Singer v. Guy Invest Co., 60
Wash. 674; Rosendorf v. Poling, 48
W. Va. 621; Garber v. Blatchley, 61
W. Va. 147; McChine v. Badger, 126
Wis. 186; Henderson v. Coleman,
19 Wyo. 188, 115 Pac. 439, 1136;
Empire State Nail Co. v. Faulkner,
56 Fed. 819, affirmed 67 Fed. 913;
Walmsley v. Qulgley, 129 Fed. 583;
W. K. NIver CJoal Co. v. Piedmont
etc., Co., 136 Fed. 179; C. R. I. ft
P. Ry. Co. V. Chickasha Nat. Bank,
174 Fed. 923.
Nofi'declarationa. — Where the
fact of agency is in dispute evi-
dence that the alleged agent made
no declarations that he was such
is not admissible. Moore v. Ran-
kin, 33 N. Y. Misc. 749.
78 Stollenwerck v. Thacher, 115
Mass. 224; Mussey v. Beecher, 3
Cush. (Mass.) 511; Merchants' Nat.
Bank of Peoria v. Nichols ft Shep-
herd Co., 223 111. 41; John Gund
Brew. Co. v. Peterson, 180 Iowa,
301; Superior Drill Co. v. Carpen-
ter, 160 Mich. 262; West v. GroceiT
Co., 138 N. C. 166; Edwards v. Doo-
ley, 120 N. Y. 540.
77 Van Dusen v. Mining Co., 36
Cal. 571, 95 Am. Dec. 209.
7s James v. Stookey, 1 Wash. (U.
S. C. C.) 330; Harker v. Dement^
supra; Grover A Baker S. M. Co. v.
207
§285]
THE LAW OF AGENCY
[book I
grams, advertisements and other writings cannot be used as evidence
of his agency.^* The fact that the agent has since died does not change
the rtde.
Where his authority is in .writing he cannot extend it* scope by bis
own declarations.*® His acts and statements cannpt be made use of
against the principal until the fact of the agency has been shown by
other evidence.**
Polhemjtts, ^upra; Baoon y. John- l^een ghAwn by otiier evidence, it Is,
son, 56 Mich. 182; North v. Metz, 57
Mich. 612; Doonan v. Mitchell, 26
Oa. 473; McDougald v. DawBon, 30
Ala. 553; Coburn v. Paine, 36 Me.
105; Schmidt v. Shaver, ld6 111. 108,
89 Am. St Bep. 250; Fourth Nat
Ba^k V. Frost, 70 Kan. 480; Hart v.
Waterhouse, 1 Mass. 433.
t^ Lettert.-^B^x v. Davis, 81 Iowa,
692; Wiloox v. Sadie, 65 Kan. 459;
Spande v. Western Life Indem. Co.
(Or.), 117 Pac, 973.
TeJeffram. — Manly v. Sperry, 115
Ala. 524.
Newspaper ^^vertisement.-^Qchlitz
Brewing Co. v. Barlow, 107 Iowa, 252.
Sign on wagon, — ^Anheuser Busch
Brew. Ass'n v. Murray, 47 Neb. 627.
Written statement that he had a
power of attorney. Abel v. Jarratt,
100 Ga. 7t2,
Entries in alleged agent's private
books. — ^Boyd v. Jennings, 46 111.
App. 290.
soMapp V. Phillips, 22 Ga. 72.
81 Hatch V. SQuires, 11 Mich. 185;
McClung V. Spotswood, 19 Ala. 165;
South A North Ala. R. R. Co. v.
Henleln, 62 Ala. 606; Peck v.
Ritchey, 66 Mo. 114; Francis v. Bd-
wards, 77 N. C. 271; Gilbert v.
James, 86 N. C. 244; Grandy v. Fere-
bee, 68 N. C. 356; Williams v. Wil«
liamaon, 6 Ired. (N. C.) 281, 45 Am.
Dec. 494; Galbreath v. Cole, 61 Ala.
139; Baltimore & O. Relief Ass'n v.
Post 122 Pa. 579, 9 Am. St Rep.
147, 2 L. R. A. 44.
What meant by showing h^ other
evidence. — ^When it is said that the
agent's statements, admissions and
declarations cannot be made use of
until the fact of his agency has
of course, not meant that there
must first be a separate verdict
found establishing that fact; what
is meant is, that there must first be
some oompe^nt testimoAy offered
tending to prove that fact
Curing error later b^ proper evi-
dence,—Bixt if after the evidence
has been admitted, the agency is
otherwise proved as by the admis-
sions of the principal or tius testi-
mony of the a^eat or seme other
competent witness, the error will
be cured. Rowell v. Klein, 44 Ind*
290, 15 Am. Rep. 235; MoCormick v.
Roberts, 86 Kan. 552; Singer, ete.,
Co.. V. Hutchinson, 184 XU« 169;
Union Guaranty Co. v. Robinson^ 79
Fed. 420; Domasek v. KlaQk, 118
Wis. 336; Singer, etc., v. Christian.
211 Pa. 684; Roux.v. Blodgett etc..
Lumber Co., M Mich. 607; Ea^le
Iron Co. V. Baugh, 147 Ala. 618; Al-
bert V. Mut L. Ins. Co., 122 N. (X 92,
65 Am. St R. 693.
Discretion of court as to order of
proof. — The mere order of proof
upon this subject is usually within
the discretion of the court (Wood-
bury V. Larned, 5 Minn. 339; First
Unitarian Soc. v. Faulkner, 91 U. S.
415, 23 L. Ed. 283; Central Penn.
Tel. ft Supply Co. v. Thompson, 112
Pa. 118; Buiat v. Guice, 90 Ala. 255;
General Hospital Co. v. New Haven,
etc., Ca, 79 Conn. 581, 118 Am. St
R. 173, 9 A. & B. Ann. Cas. 168) ; and
the court may, in its discretion, ad*
mit the evidence upon condition of
the subsequent proof of the agency
(O. ft C. Elec. Motor Co. v. Friesr
bie, 66 Conn. 67); though it is said
that this practice . should not be
2o8
CHAP. V] APPOINTMENT AND AUTHOWZATION OF AGENTS [§§ 286^ 287
§ ate. '■ '■' ' When sdmissible. — His stateiiiMits and admissk)ii3
would, however, in any proper case be admissible against himself.*^
So the fttatenicnts and dealings oi the principal with third persons in
rec€>gnition of the alleged agency are admissible against the princi-
pal.^* And so, of course, in any case if the statement or admission of
the agent was made in the presence of the principal or under such
other drcamstances that the principal may fairly be deemed to have
assented to it, it would be admissible against him as his own state-
ment or admission.^*
§ 287. To show attitude or intention of Jiartie*.'^ Where
the purpose of the admission is not to bind the principal, but merely to
show the attitude of the agent, as, for example, to show tbait he pur*
potted 'to act as agent and not personally, or to show for which of two
adopted except for epeeial reasons
(0«mog78 V. Am- hnm* Co., 8 Wash.
661).
Statements as to Agency after
other Evidence of U is offered. — It
is said ia sereral cases that, after
other evidence of ageney has been
offered, the agent's statements may
then be used in corroboration
(White Sevteg Maeh. do. v. Hoi^
kan, 7 Ga. App. 283); or are harm-
less (Stringfellow v. Brazelton, —
Tex. Civ. App. — , 142 S. W. 937;
Ollliland ▼. Eilison, — - Tex. OlT.
App. , 187 S. W. 168; Robi'n-
son v. Greene, 148 Ala. 434; Chil-
dress V. Smith, etc., Hdw. Co.» 162
Ala. 371; Miller-Brent Lumber Co.
y. Stewart, 166 Ala. 657, 21 Ann.
Gas. 1149; Stewart ▼. Climax Road
Mach. Co., 200 Pa. 611); or may be
received for the purpose of showing
what induced the other party to
deal with tlie agent (Singer Mfg.
Co. V. Christian, 211 Pa. 534).
Where there was evidence of the
former existence of a power of at-
torney which was now apparently
lost, evidence of the agent's state-
ments was admitted as making to-
gether a prima facie case. Mulford
V. Rowland, 45 ColOi 172.
Statements of Agent to disprove
Agency. — ^The statements of the al-
leged agent that he was not such
cannot usiudly be vaed by the al**
leged principal to disprove it Peck
V. Ritchie, 66 Mo. 114; Harrington
V. Bronson, 161 Pa. 296.
Admiuioas of one Agent to prove
Agencff of qnother. — The agency of
one alleged agent cannot be shown
by the admissions, declarations or
recognition of aiiother agent of the
sama principal, unless the latter be
one authorized to make those ad-
missions, etc. Hlrsch T. Oliver, 91
Ga. 554; Heosinkveld r. Ins. Co.»
106 Iowa» 229.
A declaration of an agent to a
third person is inadmissible in be-
half of the principal to prove that
the third person was not his agent
or to support the agent's testimony
that such third person was not an
agent. Short Mt Coal Co. v.
Hardy, 114 Mass. 197.
S2As where principal or a third
person is suing the agent New
Home Sew. Mach. Co. v. Seago, 128
N. C. 158; Blake v. Bremyer, 84
Kan. 708, 35 L. R. A. (N. S.) 165.
ssHaughton v. Maurer, 55 Mich.
323; Ransom v. Dnckett, 48 111. App.
659; Mitchell v. Samford, 149 Mo.
App. 72.
s^Hoge V. Turner, 96 Va. 624;
International Harvester Co. v.
Campbell, 43 Tex. CHy. App. 421.
14
aoa
§§ 288-290]
THE LAW OF AGENCY
[book I
persons he purported to act, it would be admissible,*^ or to show that the
other party understood that he purported to act as agent only ; •• or to
show with whom the other party attempted or purported to deal.*' So
where the purpose is to show the information upon which the other
party acted, statements made to him by the agent as to what the agent
had done upon other occasions would be admissible.**
§ 288. " The mere order of the proof is not vitaU and it is
not reversible error that evidence of the agent's acts was admitted be-
fore proof of his agency had been offered, if it was supplied at a later
stage in the trial.**
§ 289. Or by his own acts only. — ^The agent's authority moreover,
may not be shown merely by proving that he acted as agent*® A per-
son can no more make himself an agent by his own acts only than he
can by his own declarations or statements. If his acts can be con-
nected with the principal in some way, as by showing that the princi-
pal knew of them and assented to them, a different result ensues ; and
where the acts are of such a public or intimate nature, so notorious or
so long continued as reasonably to justify the inference that the prin-
cipal must have known of them and would not have permitted them to
continue if they were unauthorized, evidence of them is admissible as
against the alleged principal.*^
§ 290. Agent's authority cannot be proved by general reputation. —
The authority of a private agent to represent his principal where that
is a fact in issue cannot be established by proof that he was generally
reputed to be so authorized, unless the principal can in some way be
wNowell V. Chipman, 170 Mass.
340; Hirschmann v. Railroad Co.,
97 Mich. 384; White v. Elgin Cream-
ery Co., 108 Iowa, 522. See also
Hine v. Cushlng, 53 Hun (N. Y.),
519; Johnson v. Cole, 178 N. Y. 364;
Siers v. Wiseman, 58 W. Va..340;
Aetna Indemnity Co. v. Ladd, 135
Fed. 636; Parker v. Bond, 121 Ala.
529.
B8 S winner ton v. Argonaut, etc,
Co., 112 Cal. 375; Bergtholdt v.
Porter Bros. Co., 114 Cal. 681.
sTWishard v, McNeill, 85 Iowa,
474.
88 Grant v. Humerlck, 123 Iowa,
571.
89 Childress v. Smith, etc., Hdw.
Co., 162 Ala. 371, and other cases
cited suprct.
80 Reynolds T. Collins, 78 Ala.
94; Richards ▼. Newstlfter, 70 Kan.
350; Fletcher v. Willis, 180« Mass.
243; Jones ▼. Bloomgarden, 143
Mich. 326; Lover in-Browne Co. v.
Bank of Buffalo, 7 N. D. 569.
oiFowlds V. Evans, 52 Minn. 651;
Neibles v. Railway Co., 37 Minn. l-Sl.
See also Best v. Krey, 83 Minn. 32;
Reynolds v. Collins, 78 Ala. 94;
Bradford v. Barclay, 39 Ala. 33;
Gimon v. Terrell, 38 Ala. 208;
Southern Express Co. v. Flatten, 93
Fed. 936; Timpson v. Allen, 7 N. Y.
Misc. 323; Dodge v. Weill, 158 NT. Y.
346; Black Lick Lumber Co. ▼. Con
etruction Co., 63 W. Va. 477.
axo
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§29!
held responsible for the reputation or has acquiesced in it or can be
estopped to deny it.**
§ 291. Agent must be called as a witne6S.-»-If it is deemed essen-
tial to prove the authority by the agent himself, he must be called as
a witness ; his testimony both as to the fact, and as to the itafure and
extent, of his authority, where it rests in parol, being as competent as
that of iany other witness.'^* The rule upon this subject has been stated
•aBlevins v. Pope, 7 Ala. 371;
Central R, Co. v. Smith. 76 Ala. 572,
52 Am. Hep. 353; Graves. v. Horton,
88 Minn. 66; Bartley v. Rhodes
(Tex. Civ. App.), 33 S. W. 604;
Dyer v, Winston, 33 Tex. Civ. App.
412, 77 S. W. 227; Union Trust Co.
V. McKeon, 76 Conn. 508; Thomp-
son y. Laboringman'B Merc. Co., 60
W. Va. 42, 6 U R. A. (N. S.) 311.
»s Parker v. 5ond, 121 Ala. 629;
Beekman Lnmber Co. v. Kittrell, 80
Ark. 22s ; Ayer ft Loond €a v.
Young, 90 Ark. 104; Dierks, etc.,
Co. V. CoflPman Bros., 96 Ark. 505;
McRae v. Land Co. (Cal.), 54 Pac.
743; Kast v. MUler, 159 Cal. 723;
Culver V. Newhart, 18 Cal. App.
614; Wales v. Mower, 44 Colo. 146;
Russell V. Wash. Savings Bank, 23
D. C App. 898; Floumoy ▼. Inter-
state Elect Co., 61 Fla. 216; Aj>
mour V. Ro8B» 110 Qa. 408; Thayer
V. Meeker, 86 lU. 470; St L. 3. Ry.
Co. V. Elgin Condensed Milk Co., 74
III. App. 619, B. c. 175 IlL 557, 67
Am. St R. 238; Phillips T. Poulter,
111 IlL App. 330; Moffltt v. Cressler,
8 Iowa, 122; Van Sickle v. Keith, 88
Iowa, 9; CLeary v. German Amer,
Ina Co., 100 Iowa, SdO; O'Neill v.
Wilcox, 115 Iowa, 15; Fremch v.
Wade, 36 Kan. 891; Aultman, etc.».
Co. V. Knoll, 71 Kan. lOd; Jahren v.
Palmer, 71 Kan. 841; Drununond v.
Kreb8» 8 Kan. App. ISO; Rice v.
Gove, 39 Mass. (22 Pick.) 158, 83
Am. Pec 724; Gould v. Norfolk
Lead Co., 63 Mass. (9 Gush.) 338,
57 Am. Dec 60; De Witt v. Prescott,
51 Mich. 298; First National Bank
V. St Anthony Co., 103 Minn. 82;
Crothers v. Acock, '43 Mo. App. 318;
State Y. Henderson, 86 Mo. App.
21
482; Griswold v. Haas, 145 Mo. App.
578; Nyhart v. Pennington, 20
Mont 158; Nostrum v. Halliday, 39
Neb. 828; Schlitz Brewing Co. v.
Grimmon, 28 Nev. 235; Union Hos-
iery Co. V. Hodgson, 72 N. H. 427;
Clough V. Rockingham Co., 75 N:
H. 84; Joseph v. ShutWr, 25 (N. Y.)
Misc. 173 ; Munin v. Sire, 37 Misc.
807; Stone v. Cronin, 72 App. Dlv.
565; Brown v. Cone, 80 App. Dlv.
418; Norden v. Dvke, 106 App. Dlv.
514; Steuerwald v. Jackson^ 123
App. Dlv. 569; Irvin v. Cohen, 109
N. Y. Suppl. 169; Lefkowitz v. Iba,
114 N. Y. Suppl. 29; Appel v. Lip-
man, 125 N. Y. Suppl. 400; New
Home Co. v. Seago, 128 N. C. 158;
Hill V. Bean, 150 N. C. 436; State v.
Yellowday, 152 N. C. 793; Sutton v.
Iiyons, 166 N. C. 3; Reeves ft Co. v.
Brnening, 13 N. D. 157; Chickasha
Co. V. I«mb, 28 Olila. i276; Wicktor^
witz V, Insurance Co., 31 Or. 569;
Mclnnes v. Rittenhouse, 1 Montag.
(Pa.) 657; Lawall v. Groman, 180
Pa. 532, 57 Am. St. R. 662; Empire
Mfg. Co. V. Hench, 219 Pa. 135;
Brown v. Kirk, 26 Pa. Super. Ct
157; Fee v. Adams Express Co., 38
Pa. Super Ct 88; Connor v. John-
Bon, 69 S. C. 115; Kean v. Landrum,
72 S. C. 556; Am. Tel. Co. v. Kersh,
27 Tei. Civ. App. 127; Rainey v.
Kemp, 64 Tex. Civ. App. 486; Bybee
V. Embree-Mctican Co., — Tex. Civ.
App. — , 136 S. W. 203; Autrey v.
Linn, — Tex. Civ. App. — , 138 S.
W. 197; Cannel Coal Co. v. Luna,
Tex. Civ. App. — , 144 S. W,
721; Liter v. Mining Co., 7 Utah,
487; Bender v. Ragan, 53 Wasb.
521; Singer v. Guy Investment Co.,
60 Wash. 674; Plercy v. Hedrick, 2
§ 293]
THE LAW OF AGENCY
[book I
by a learned judge as follows : ''It is competent to prove a parol agen<^
and its nature and scope by the testimony of the person who claims to
be the agent It is competent to prove a parol aotfaority of amy per-
son to act for another, and generally, to prore any parol authority of*
any kind by the testimony of the person who claims to possess such
authority. But it is not competent to prove the supposed authority of
an agent for the purpose of binding his principal by proving what the
supposed agent has said at some previous time. Nor is it competent
to prove a supposed authority of any kind, as against the person from
whom such authority is claimed to have been received, by proving the
previous statements of the person who, it is claimed, had attained such
authority." •*
§ 292. — — Agent's testimony — ^Effect — ^What the agent is to
testify to is the facts of the case ; he is no more competent than any
other witness to testify to conclusions.*' And his testimony is no more
conclusive tlian that of any other witness ; it is received for what it is
worth ; and the jury may find the fact to be opposed to his testimony.**
He may be called by either party — by the principal to disprove the
alleged agency, as well as by the other party to establish it.*'
After a prima facie case of authority has been made by the agent's
testimony, evidence of his acts and declarations, if they wotdd be
competent under such an authority if established, is admissible as in
W. Va. 458, 98 Am. Dec. 774; Union
Bonlc Co. V. Long Pole Ca, 70 W.
Va. 558, 74 S. B. 674; Somers v.
Oermania Nat Bank, — - Wis. — ,
138 N. W. 713; Aetna Indemnity
Co. V. Ladd, 135 Fed. 636; Joslyn v.
Cadinac Co., 177 Fed. 863.
•♦Valentine, J., In Howe Mach.
Co. V. Clark, 15 Kan. 49^
•5 Where the qnestton of agency
or not is the issue it is not compe-
tent for the witness to express hte
opinion or testify merely to his con-
clusions; he must give the fbcts
upon whfefa he relies. McCornick
y. Queen of Sheba, etc., Co., 23
(Jtah, 71; Stuart v. Asher, 15 Colo.
App. 408; Gkyre v. Canada Life A.
Co.. 119 Mich. 136; McCIuskey v.
Minck, 18 N. Y. Misc. 565; Cotton-
dale State Bank v. Burrotlghs Add.
Mach. Co., 61 Fla. 143.
His teBtlmony however "camtot be
reBtricted to the mere words need by
the principal, but is admissible gen-
erally on the whole tnblect." Lawal)
V. Groman, 180 Pa. 812, 67 Am. St
R. 662.
But see Parker ▼. Bond, 121 Ala.
629, ^ 80. 898.
••Majors t. Ooodrlth (Tex. Civ.
App.), 54 S. W. 919; Jonefl v. Mana-
fleld Lumb. ft Me^c. Co., 97 Ark. €43,
132 S. W. 1064. Where the alleged
agent testifies that he was not agent,
a letter written by him in the aame
transaction and tending to show that
he was agent, may be used to contra-
dict him. Gregg t. Berkshire, 10
Kan. App. 579, 62 Pac 550.
07 Dowell V. Williama^ 33 Kan. 319;
Rope V. Hess, 118 N. T. 668. One
agent is, of course, competent to tes-
tify as to another agent's authority,
if he knows the fkcts. Moyers v.
Fogarty, 140 Iowa; 701.
212
CHAP, V] APPOINTMENT AND AUTJiOWZATlON OF AGENTS [§§ 295-^93
Other casesi*' subject of course to be disregarded if the authority be
finally not proved.
§ 293. How question of i^ency detenninedr^Court or jury. — The
questions, what constitutes agency and what evidence is necessary or
admissible to prpve its existence; whether evidence offered has any
legal tendency to prove agency ; and whether there is any evidence in
the case tending to establish it; are all questions of law to be deter-
mined by the court.'*
Whether, under the evidence, there is agency, is usually a question
of fact, to be determined by the triers of the facts, whether court or
jury ; what the agent may do by virtue of the agency so found, is usu-
ally a question of law>
§ 294. Construction of writing for court.— Whether a cer-
tain writing or a series of writings creates an agency or not, and if so,
what is the nature and extent of the power conferred, the writing be-
ing prodticed, and being couched in such terms as to require no aid
from extrinsic evidence, are questions of law for the decision of the
court.*
§ 295. ■ Effect of undisputed facts to be determined by
court. — And so where the facts are undisputed, and only one infer-
ence can reasonably be drawn from them, the court must determine
whether they create an agency, and if so with what powers and limi-
tations, and this is equally true whether it is sought to establish the
agency by previous authorization or by subsequent ratification.'
•«See ante, § 28B; OTLeary t. Ger- First Nat Bank, 18 N. B. 6f03, 22 L.
man Am. Ins. Co., 100 Iowa, 390. R. A. (N. S.) 509; McCreery v. Gar-
wSec National Mechanics Bank ▼. vln, 39 S. Car. 375; Hackwortli v.
National Bank. 36 Md. 5; New Of- Hastings Industri^al Co., 146 Ky. 387;
leans Coffee Co. v. Cady, 69 Neb. 412; / Atwood ▼. Ros6, 82 OWa. 355.
Trimble v. Mercantile Co., 66 Mo. »Galick v. Grover, 33 N. J. L, 463,
App. 683. 97 Am. Dec. 728; Ryle y. Manchester,
1 Neppaeh v. Oregon, etc., R. Co., etc., Ass'n, 74 N. J. L. 840; Belcher
46 Or. 374; Anderson v. Adams, 43 v. Manchester, etc., Ass'n, 74 N. J. I..
Or. 621; Rumble v. Cummings, 52 838; Savings Fund Society v. Sav-
Or. 203. ings Bank, supra; South Bend, etc.,
« Savings Fund Society v. Savings Co. v. Dakota Ins. Co., 3 S. D. 205;
Bank, 36 Penn. St. 498, 78 Am. Dec. McCornlck v. Queen of Sheba Co.,
290; Reese V. Medlock, 27 Tex. 120, 84 28 Utah, 71; Walsh T. Peterson, 59
Am. Dec. 611; Claflln v. Continental Neb. 645; Franklin Bank Note Co. v.
Works, 85 Ga. 27; ll'^llock v. Cohen, Sfockay, 83 Htfn, &ll,bat see s. a 158
32 Ohio 9t. 514; Slmonds v. Wright- N. Y. 140; Wlllcox v. Hines, 100 Tenn.
man, 36 Or. 120; Williamson v. Lum- 524, 66 Am. St. Rep. 761; Parker v.
ber Co., 88 Or. 560; Tarbox v. Cru- Brown, 181 N. C. 264; Harris v. Pltz-
zen, 68 Minn. 44; State v. Fellows, gerald, 76 Conn. 72; Lest^ v. Sny-
98 Minn. 179; Queen City Ins. Co. v. der, 18 Colo. App. 351; Seehorn v.
213
§2961
THE LAW OP AGENCY
[book I
Within the operation of the foregoing rules, is the question whether
the agency in issue is general or special.^
§ 296. ' In other cases question is for the jtiry.— Where,
however, the authority was not conferred by written instrument and
the facts are in dispute, or if, though the facts are not disputed, there
may fairly be difference of opinion as to the inferences — ^whether of
the existence of authority or of its nature or extent — ^which may rea-
sonably be drawn from them, it is for the jury to determine, under
proper instructions from the court, not only whether agency exists,
but, if so, what is its nature and extent.*
HaH, 130 Mo. 267, 51 Am. St. R. 562;
Michigan Mut. U Ins. Co. v. Thomp-
son, 44 Ind. App. 180; Parr v. North-
ern Elec. Mfg. Co., 117 Wis. 278.
* Wltcher v. Brewer, 49 Ala. 119.
s Savings Fund Soc. v. Savings
Bank, supra; So. ft N. Ala. R. R. Co.
v. Henlein, 52 Ala. 606, 23 Am. Rep.
578; Buist v. Gulce, 96 Ala. 255.
See also Lafayette Ry. Co. v. Tacker^
.124 Ala. 514; Robinson ft Co. v.
Greene, 148 Ala. 434; Birmingham,
etc., R. Co. v. Tenn. Coal ft Iron Co.,
127 Ala. 137; Irving v. Shethar,
71 Conn. 434. See also Union Trust
Co. V. McKeon, 76 Conn. 508; Hyman
V. Waas, 79 Conn. 261; Held v.
Walker, 25 App. D. C. 486; Arnold v.
Adams, 4 Ga. App. 56; Morgan ▼.
Neal, 7 Idaho, 629, 97 Am. St. R. 264;
Cook V. Stimpson, 73 UL App. 483;
Schmoldt Bros. v. Langston, lOG 111.
App. 385; Jewell v. Posey, 119 Iowa,
412; Shenkberg v. Porter, 187 Iowa,
245; Meagher y. Bowling, 107 Ky.
412. 21 Ky. L. R. 1149; Cartmel v.
Unverzaght, 21 Ky. L. R. 1282, 54 S.
W. 965; Groscup y. Downey, 105 Md.
273; Whittier v. Child, 174 Mass. 36;
Heath v. New Bedford Safe Deposit
Co., 184 Mass. 481; Marston v. Rey-
nolds, 2U Mass. 690, 98 N. B. 601;
Roberts v. Pepple, 55 Mich. 367; Wil-
kinson y. Steel ft Spring Works, 78
Mich. 405; Fontaine, etc., Co. v.
Rauch, 117 Mich. 401; dark y. Dill-
man, 108 Mich. 625; Wilhelm y.
V0S8, 118 Mich. 106. See also Bchei-
beck v. Van Derbeck, 122 Mich. 29;
McClure v. Murphey, 126 Mich. 134;
Mail ft Ezpreas Go. t. Wood, 140
Mich. 506. See Bartlesoa v. Vander-
hoff, 96 Minn. 184; Black River Lum-
ber Co. y. Warner, 93 Mo. 374; See-
horn y. HaU, 180 Mo. 267, 61 Am. St
R. 562;. Walsh v. Peterson, 69 Neb.
645; Scull v. Skillton, 70 N. J. L.
792; Crossley y. Kenny, 71 N. J. L.
124; Franklin Bank Note Co. v. Mao*
key, 83 Hun, 511 (but see 0. a 158 N.
Y. 140); Dickinson v. Salmon, 36
Misc. 169; Williams v. Brandt, 90
App. Diy. 607; Delafleld v. J. K.
Armsby Co., 99 App. Diy. 622; Blet^
kel v. Lazard, 114 App. Div. 25;
Ricker National Bank v. Stone, 21
Okla. 888; Mullen y. Thaxton, 24
Okla. 648; McNabb y. Hunt, 28 Okla.
48; Allen y. Kenyon, 30 Okla. 686;
Midland Saving ft Loan Co. y. Sat-
ton, 30 Okla. 448; Mahon v. Rankin,
54 Or. 828; Lawall v. Groman, 180
Pa. 532, 57 Am. St Rep. 662; Singer
Mfg. Co. v. Christian, 211 Pa. 534;
Am. Car ft Fdy. Co. v. Water Co.,
218 Pa. 642, 128 Am. St. R. 749, 16 A.
ft E. Ann. Cas. 641; Stockwell y.
Lioecher, 9 Pa. Super. 241; Buchholta
y. Barrie, 36 Pa. Super. 454; Reid y.
Kellogg, 8 S. D. 696; Willcox y.
Hines, 100 Tenn. 624, 66 Am. St. Rep.
761; McComick y. Queen ot Sheba
Co., 23 Utah, 71; Moore v. Black-
burn, 67 Wash. 117.
The conrt should only take the
case from the Jury when there is no
evidence whatever tending to proye
agency. Buist v. Guice, 96 Ala. 266.
See Osburn ft Co. y. Ringland ft Co.,
122 Iowa, 329.
214
CHAP* V] APPOINtMENT AND AUTHORIZATION OF AGENTS [§§ 297-299
§ 297. ' Under pixq>er instructions from the court — ^The
court, however, in cases of this sort should carefully instruct the jury
as to their function in the matter, and as to the rules of law by which
they are to be guided? That function is not to determine whether the
jury think it miglit be just or desirable or appropriate or convenient
that the alleged principal should be held in the given case, but to de-
cide whether, according to the rules of law, the alleged principal has,
in fact, by word or conduct authorized the assumed agent to perform
the act in question; or has, by conduct rationally and logically tending
to that end, led the other party, who has himself exercised due care
and caution, reasonably to believe that such authority has been con-
ferred and to act upon such belief.
What the legal rules are which govern such situations should be ex-
plained by the court ; and it is the duty of the jury to apply to tlie facts
in the case the rules of law given them by the court. It is not for
juries to make the law of agency.
§ 298. Burden of proof.— •As has already been stated, the burden
of proving agency, including not only the fact of its existence, but its
nature and extent, rests ordinarily upon the party who alleges it.*
Where, however, there was a conceded agency but the principal con-
tends that it has been terminated ; or an otherwise undoubted authority
but the principal contends that it had been limited or restricted ; or an
ostensible authority which the principal contends was not the real one ;
and the like, the burden of proving that the fact was as he contends
and that the other party had notice of it where notice is necessary,
would be upon the principal^
§ 299. Amount of evidence requisite. — It is impossible to lay down
any inflexible rule by which it can be determined what evidence shall be
sufficient to establish agency in any given case. That is a question
which must be determined in view of the facts in each particular case.
Whatever form of proof is relied upon, however, must have a tendency
to prove agency, and must be sufficient in probative force to establish
it by a preponderance of the evidence. It may be said in general
terms, however, that whatever evidence has a tendency to prove the
If there is more than a scintilla, ern Elec. Mfg. Co., 117 Wis. 278.
It should go to the jury. Gates v. See also Bcston v. Amadon, 172
Max, 125 N. C. 139. Mass. 84; Southern Pine, etc., Co. v.
If different minds may honestly Fries, 1 Neb. Unoff. 691.
differ about it, it should ro to the « See ante, § 255.
Jury! South Bend, etc., Co. v. Da- t See Lowry v. Atlantic Coast
lota Ins. Co., 3 S. D. 205; Reid v. Line, — S. C. — , 76 S. E. 278;
Kellogg, 8 S. D. 5^6; Parr v. North- Whalej V. Duncan, 47 S. C. 139.
§ 300]
THE LAW OF AGENCY
[book 1
agency is admissible,* even though it be not full aad sattslactory,* ad it
is the province of the jury to pass upon it So if evidence has first
been introduced tending to prove the agency or to make out a prima
facie case thereof, the admissions and declarations of the alleged
agent, if otherwise competent, may then be shown, and the whole case
be passed upon by the jury.**
§ 300. Whose agent is the agent— ^The question whose agent a
person is, who is undoubtedly the agent of some one of the parties to a
transaction — ^whether, for example, a person clearly the agent of one
or the other of two parties shall be deemed to be the agent of this one
rather than of that on&t—is often a question of no little difHculty. ' A
person who begins a negotiation as the undoubted agent of one party
only may become, in the course of the transaction, the agent of both or
of the other. The auctioneer or the broker often docs this,— he may,
for example, offer the goods as the agent of the seller, but sign a mem-
orandum as the agent of the buyer. Other agents also may act first
for one and then for the other of the parties to a tnEmsactioiL
In the last analysis the question of whose agent the agent was^ be*
comes a question of fact ; and where the question is doubtful all of the
facts must be taken into account in deciding it.** Who set him in mo-
8 South A Nortb AJa. R. R. Co. v.
Henlein, 52 Ala. 606; Buist v. Guice,
96 Ala. 265; Dickinson v. Salmon, 36
N. Y. Misc. 169; Goodman v. Saper^
Bteln, 115 Md. 678.
» Morrison v. Whiteside, 17 Md.
452, 79 Am. Dec. 661; Goodman y.'
Saperstein, Bupra.
10 National Meehanlcs' Bank v. Na-
tional Bank, 36 Md. 5; York Co.
Bank v. Stein, 24 Md. 447; Hender-
son V. Mayhew, 2 Gill (Md.), 393, 41
Am. Dec. 434; Central Penn. Tel. Co.
V. Thompson, 112 Penn. St. 118;
Buist v. GuiVse, iupra,
11 See Ford v. Postal TeL Cable
Co., IH Ala. 400 (where the ques-
tion was whether a person who was
generally the agent of a city could
be deemed to be the agent of the
plaintiff so as to enable the plaintiff
to sue upon a contract with defend-
ant Held, not to be plalntifT's
agent) ; White City State Bank v. St.
Joseph Stock Yards Bank, 90 Mo.
App. 395 (where the question was
whether a person acting under the
direction of the president of a bank
was to be deemed agent of the bank
or of the president persoiMtlly. Held,
the former); Land Mortgage Co. ¥.
GfUam, 49 S. Car. 345 (where the
question was whether a certain per-
son applied to for the purpose of
procuring a loan was to be regarded
as the agent of the borrower or the
lender. Held (by a divided court)
the latter); Staats ▼. Pioneer Ins.
Ass'n, 65 Wash. 51 (similar question
where insurance was applied for);
Fair V. Bowen, 127 Mich. 411 (where
question was ^whether a person who
wrote to a mortgagee that the mort-
gagor wished to pay part of a mort-
gage and get a part release, and ask-
ing the mortgagee to send on such a
release, was to be deemed the agent
of the mortgagee or of the mort-
gagor, so as to locate the loss of
money paid to such person but- not
paid over to the mortgagee. Heldy
to be agent of mortgagor); McMul-
2X6
CHAT* V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 3OO
tion originally? Who gave him his instructions? Whose interests
was he primarily to protect ? Who was to pay him ? Who could com-
plain of his negligence? Will holding him to be the agent of one
party leave the other without a representative present ? — these and sim-
ilar inquiries may throw light upon the situation.
len T. Peotrle'0 Sfeivingv A L. Ass'ii,
57 Minn. 38 (where the Qu«ftti«tt was
whether a bank to wbieh a diebtor
requested the ereditor to send bit
claim for payment, was to be re-
garded as the agent of the debtor or
the creditor; Veld, the former];
I>e Turek ▼. Mafz, 180 Pa. S4Y
(where the question was "^rtietliei*
the general financial agent of ail-
other, having embettled his pMilcl-
pars fttn^ and being deslroM of
eoTering his shortage, and endeaT*
oring to obtain a mortgage for that
purpose under the guise of a loan of
bis principal's money to a borrower,
was to be regarded as the agent of
his general principal or ol this bw
rower, so as to charge one or the
other of them with the consequenees
of his fraud In trying to est the
mortgage without actually advane*
Ing any money upon it. ITeld, that
he was the agent of his general prin-
cipal).
See also, Blaney ▼. Rogers, 174
Mass. 277; Polhemus v. Trust Co., 59
N. J. Eq. 93; Schroeder Lumber (>>.
V. Stearns, 122 Wils. 508.
In Moore v. Blackburn^ 67 Wash.
117, where the question was whether
a broker to secure a loan was the
agent of the borrower or the lender^
the court said the question was to be
decided by determining under whose
direction he was acting, and held
him to be the agent of the borrower,
relying upon Snglemann y, Reuse^
61 Mich. 395; Upman v. Noblit, 194
Pa. 416; Pepper v. Cairns, 133 Pa.
114, 19 Am. Bt R. 625, 7 L. R. A. 750.
In a series of cases in Alabama one
who applies to another to procure
him a loan and promises to pay him
a commission for taking the applica-
tion, conducting the correspondence,
making abstract of title, and secur-
ing and paying over the money. Is
held to be the prlnetpal of tie agent,
«o as to charge the borrower with
the loss If the agent fails to pay
aver the mosiey to the borrower
whoa reeelred by the agent from the
lender. Hamil v. American Free-
hold Land Mortgage Co., 127 Ala. 00;
Land Mtg. Ck>. t. Preston, 119 Ala.
290; American Mtg Co. r. King, 106
Ala. 868; fidinburgh-Am. Mtg. Co. y.
Peoples, 102 Ala. 241; Oeorge y.
New Bagtend Mtg. 0>., 1#9 Ala. 548.
Same effect: Owlngi ▼. Howl>on,
81 Okla. 651. See also, Fatta ▼. Bd-
gerton, 148 App. Dly. 668.
In Morrie MeGmw Woodeaware
Go. y. German Fire Ins. Co,, 126 La.
82, 88 L. R. A. (N. 8.) 614, 20 Ann.
Caa. 1229, where the question was
whether the firm of Rocquet A Co.
were to be regarded as the agents of
the Insurer or the Insured, they not
being the regular agents of the In-
surance companies, but an independ-
ent firm through whom the parties
were brought together, the court
said:
"One of the propositions of plain-
tiff through learned counsel Is that
the intermediary between an Insur-
ance company and a person seeking
Insurance is the agent of the appli-
cant in procuring the policy, but
after the policy has been issued he
ceases to be the ag^nt of the assured
and becomes the agent of the insur-
ance company for completing the
contract, by delivery of the policy
and collection of the premium.
'^e haye found no authority to
sustain the position. There is .pre-
cedent for holding that the local
agency was the agent of the insured;
to be explicit, that In those instances
Rocquet ft Co. were the agents of the
Insured. It looked after the plain-
tiff's insurance business, as before
stated.
217
§ 300]
THE LAW OP AGENCY
[DOOit I
In some cases the inferences of fact may be so clear as to justify the
court in drawing them." Where more than one itiference may rea-
sonably be drawn, the question is usually for the jury.
"In a case wherehi the tacts were
somewhat aimilar, that conclusion
was arrived at in a lengthy opinion.
Stone T. Franklin Insurance Ca.» 10$
N. Y. 543. In another case it was
held that the agency acted as a
broker and exercised some discre-
tion in selecting the companies. It
was the agent of the insured. Dib-
ble y. Northern Assur. Co.» 70 Mich.
1, 14 Am. St. Hep. 470.
"The following is directly in
point: It is unanswerable, we think.
Though a duly appointed agent ot an
insurance company must, as relates
to that company, be regarded as the
agent of the insurer, yet as to other
companies, as in the case In hand
(as to the Rocquet Company) in
which he procures insurance for a
property owner, he may be consid'*
ered as the agent of the insured.
Smith & Wallace Insurance Co. v.
Prussian Mutual Insurance Co., 68
N. J. Law, 674.
"In another decision it wa« held
that one who was intrusted with,
keeping the property insured became
the agent of the insured. Johnson
V. North British Insurance Co., 66
Ohio St. 6.
"An insurance agent, to whom a
request for insurance is made, and
who, acting as broker, procures all
or part of such insurance through
other agents of companies not repre*
sen ted by him, is the agent of the in-
sured. Parrish v. Rosebud Min. Co.,
140 CaL 635.
"Though, under special circum-
stances, a broker may be the agent
of the insurer, it was decided the
mere fact that he receives a com-
mission from the insurer, for plac^
ing the insurance with him, does not
change his character as agent of the
insured. United Firemen's Insur-
ance Co. V. Thomas, 92 Fed. 127, 47
L. R. A. 450; East Texas Fire Insur-
ance Co. V. Brown, 82 Tex. 631; Sea-
mans V. Knapp-Stout A Co., 8» Wis.
171, 27 L. R. A. 362, 46 Am. St Rep.
825; American Fire Insurance Co. v.
Brooks, 88 Md. 822."
Holding the agent to be the agent
of the company. Abraham v. North
Qisrman Ina Co.> 40 Fed. 717; In-
diana Ins. Co.v. Hartwell, .133 Ind.
177; Packard v. Dorchester Mut F.
Ins. Co., 77 Me. 144; Hahn v. Guard-
ian Assur. Co., 23 Or. 576, 87 Am. St
R, 709. There are many others.
IS "Where a debtor delivers
money to a third person for the pur-
pose of paying a note which is not
due, and of which such third person
Is not In the possession, the pre^
sumption is 4^at the person receiv-
ing the money does so mot as the
agent of the creditor but as the
agent of the debtor. This presnmp*
tion can only be overcome, and the
converse established, by enridenoe to
the contrary:" Goodyear v. Wil«
Usms, 73 Kan. 192.
So where the conrt deems that
the facts disclose a case of agency
"so conclusive that It is not possible
to adopt any other view." Pochia v.
Knoebel, 63 Neb. 768.
In Evans v. Pierce, 70 111. App.
457, the court approved a peremp-
tory Instruction that the registrar
of a university to whom was deliv-
ered a check for a professor's salary
was the agent of the treasurer of
the university and not of the pro^
fessor.
In Payne v. Newcomb, 100 111. 611,
39 Am. Rep. 69, where a loan agent
was required to investigate the title
for the lender and was liable to the
lender for any mistake he made in
title or in valuation, the court said
he was the agent of the lender "be-
yond all dispute," although he was
paid by the borrower alone. See
also Figley v. Bradshaw, 35 Neb. 337.
2l8
CHAP. V] APPOINTMENT AND AUTHORIZATION OF AGENTS [§ 3OI
§ 301-
Stipulations declaring — Validity — Testimony of
parties. — ^The question, moreover, is one to be determined by the
law's methods rather than by the mere stipulations of the parties. It
is not uncommon, especially in the case of insurance companies, loan
companies, and the like, to insert stipulations in the printed applications
that the agent conducting the negotiations shall be deemed to be the
agent of the applicant rather than pi the company. Stipulations of
this sort may sometimes be helj^ful, but they cannot change the real
conditions of things, and if, imder all the circumstances, the agent is
really the agent of the company, the stipulation that he shall be deemed
to be the agent of the other party will be unavailing." For similar
One y^o pays a couaty debt to
the deputy cotonty clerk, who Iuhb
neither duty nor authority to re-
ceive It, It boln^ payable to the
county treasurer, but who unidor-
takes to receive It, makes the deputy
hie agent to pay It to the treasurer,
and he must lose If the deputy mis-
appropriates It. Knox Co. y. Gog*
gin, 105 Mo. 182.
Where the defendant, seeking a
loan from a building association,
borrowed Instead from Its agent S,
giving him notes and a deed, with
the understanding that S should en<
deayor later to secure a loan from
the association, it was held that
there was no authority to S to mort*
gage to the association and receive
the money for the defendant; but
that the defendant had contem-
plated getting the money in his own
name to pay his notes and redeem
the land from S. American Bldg. A
Loan Ass'n v. Warren, — Ark. — ,
141 S. W. 766.
Actual agency is not terminated
by the agenfs deception, whereby
he made the plalntlfP think he was a
fellow purchaser, so the real prin-
cipal is liable for his misrepresenta-
tions as to the quality of the land.
Wicks v. German Loan ft Invest-
ment Co., 150 Iowa, 112.
18 ThuB in Union Cent L. Ins. Co. v.
Pappan, — Okla. — -^ 128 Pac. 716,
where the question was whether cer-
tain agents through whom a loan
was made were the agents of the
lender or the borrower, although the
application for the loan undertook
to make them the agents of the bor-
rower, the court said:
"The court had the right to ex-
amine all the evidence for the pur-
pose of ascertaining whose agents
Winne ft Winne were, and If, upon
a consideration of all the evidence,
it appeared that they were the
agents of the company to pay the
money to Pappan, then it was
proper for the court to cancel the
mortgage, notwithstanding the in-
struments purporting to make
Winne and Winne Pappan's agents to
receive the money. No case has
been cited opposing this doctrine.
The cases of McLean v. Flcke, 94
Iowa, 283; Larson v. Lombard In-
vestment Co., 51 Minn. 141; Jensen
V. Lewis Investment Co., 89 Neb.
371; Olmstead v. New England Mtg.
Sec. Co., 11 Neb. 487; New England
Mtg. Sec. Co. v. Addison, 15 Neb.
335; Banks v. Flint, 54 Ark. 40, 10
L. R. A. 459; Travelers' Insurance
Co. y. Jones, 16 Colo. 515; Bates v.
American Mtg. Co., 87 S. C. 88, 21
L. R. A. 340; State y. Bristol Sav-
ings Bank, 108 Ala. 8, 54 Am. St
Hep. 141--su8taln the rule applied
here."
219
§ 30iJ
THli LAW OF AGENCY
[BOOK I
reasons, the testimony of the priocipal or tl)e agent is not conclusive.
The jury may find that the agent was the agent of one party although
he may testify that he was agent of the other.^*
The medical examiner of a Ut»
insurance company is the a£;ent of
the company in making the exami-
nation and writing down the an-
BwerB» and a stipulatkm In the ap-
plication that he shall be deemed
the agent of the applicant is un-
availing. Sternaman v. Metropoli-
Un L. Ins. Co., 170 N. Y. 13, 86 Am.
St. R. 625, 67 L. R. A. 318.
So of the soliciting agent of the
insurance company. Clark v. Union
Mut F. Ins. Co., 40 N. H, 333, 77
Am. Dec. 721, and note collecting
the earlier cases.
So in the case of an Investment
company (Larson v. Lombard In-
vestment Co., 61 Minn. 141; Jensen
V. Lewis Inv. Co., 89 Neb. 371) and
of a loan company (BfeLean v. Ftcke,
94 Iowa, 288; fitato v* BriaUd Sav-
ings Bank, 108 Ala. 8, 64 Am. St
Rep. 141).
The cases upon this subject are
too numereus te dtte exhanstively.
But where such a aUpula|ion Jb as
much in keeping with the facts as
the opposite inference, the court
will not disregard it Oetwilder v.
Heckeniaible, €3 Kan. 627.
Instate ▼. Bristol Savings Bank,
eupra; Stuart T. Aiher, 15 Colo.
App. 408.
220
CHAPTER VI
OP THB Al»POINTMEjrr O^ AOIBNTS BY OTWBR AGENTS, AND HEREIN
OP DfiLBOATtON OP AXTTHORITY
S 302. In general — ^Wliftt Irare In-
dudedt
303. Same subject.
z. OF mxEOAiaoir bt toob aocjit
304. What Included here.
305. Delegatus non potest delegaH,
306. The general rule.
307« 20S» Judgment and dUicr^tioii
not to be delegated.
309. Attorneys may not delegate
personal iinderta(:lng.
310. Arbltratare may not d6le«^4
their duties.
311. Auctioneers, brokers and fac-
tors may not delegate.
312. ESxecutors, etc., may not dele-
^te.
3X3. Same rule applies to munici-
pal corporations and of-
fieers.
31#. B^epti^^ AAd tnfdlAcatlo^s.
315. I. Subagent may be employed
to perform acts which are
moohanical or ministerial
merely.
816, 317. I J. When the proper coq*
duct of the business de-
mands it.
318. IIL Wken juslifted by usage
or course of tra4e-
310. IV. When originally contem-
plated.
320. Y. Whea neeessfty or emer-
gency require it
321. Assistants employed by
servants.
322. yi. Ratifleatlon dt nnantbor-
ised employment
* 828. Care required in mAlEing aur
thorized appointment
324. Re-delegation — Subdelega-
tion.
821. What tbe delegate mar be.
326-3291. Whose agent etc. Is the
subagent
330, 331. Is there privity between
principal and subagent
832. Effect of emi^losrmient-^Sub-
agent is principal's agent,
etc., if employment was au-
thorized.
838. «— ^But hQ is agent's agent
etc, in other -case.
n. or AtTTHOBiTT OF AN AOBNT TO EM-
raor ASKKTS, atBTAHTB AND OTS-
gas Foa woH pmifcxPAL
334. Agents generally have no
such power.
886. Serraats uaually have no
such authority.
336. Independent contractors have
usually ' no such authority.
837. A«ilM>nty to ap|K>int mf^ be
expressly conferrocl.
338. Authority to employ may
arise by Implication.
830. Sudden emergency or speolal
neoessiiy may juatlXy It
340. Authority so arising is a
narrow one.
341. -« — Ermployment of physi-
cians and surgeons In
emergencies.
342. I>rivity between principal
and persons thus employed.
8 302. In generaL — As has already been seen, the appointment
and atrthorization of agents, in the sense in which those terms ar6 used
in this work, result only from some act or omission of the prmcipal.
221
§ 303] THE LAW OF AGENCY [BOOK I
No one can, in general, appoint agents for him, except the principal
himself or some one who acts by his authority, express or implied.
Authority to appoint agents for him, or to employ servants^ contract-
ors, and others, may, however, be given by the principal to some one
else, as agent for this purpose for him, and this may be dcwie either
expressly or by implication. The question to be discussed here is,
when has one agent express or implied authority to appoint other
agents or servants or -contractors' for his principal.
This question will, upon consideration, be seen to involve two as-
pects: L The authority of an agent to employ some one else to do the
very act, or some portion of the very act, which he was originally au-
thorized to do ; and II. The authority of one agent to appoint others
or to employ other persons to do some other act or acts for his princi-
pal.
The first of these acts may take on either of two aspects. The agent
may be permitted to put some one else in his place — a substitute — and
get out of the transaction entirely, which may perhaps be called sub-
stitution; or he may be permitted to have someone under him-J-a sub-
ordinate— either as his agent or as his principal's agent, which may
then be CBUed. delegation. As matter of fact, the latter term is con-
stantly applied to both situations.
The second is a different question, namely, an authority to appoint
other agents for other purposes, either generally or specially. Both
will be considered in the present chapter, and in the order named.
§ 303. — It vrill also be observed that in the cases iti which
the agent is to appoint a substitute and retire, other considerations
may be involved. If he retires, doe$ the. substitute step into the
agent's existing obligations, or does he simply assume new ones on his
own account ? If the former, there may be the ordinary novation; if
the latter, there needs to be a new arrangement with the substitute
and, perhaps, a release of the agent from the obligations of the old
one. If the latter be the situation, then the consent to the substitution
will involve (i) an authority to appoint a new agent for the principal,
and (2) a release of the old agent from any further obligation; If it
be the ordinary novation, there is no difficulty about the consideration.
If it be merely a new appointment, plus the release of the agent, what
is the consideration for the release? If the agent procures the accept-
ance of the new appointment as a consideration for the release, there
is no difficulty. If the new appointee accepts the appointment c»ly
upon condition that the old agent be released there is probably in most
states a consideration. The transaction may possibly take on such a
222
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§ 304
form as to show no coostdenation, This iatber kiod oi novatipn is
called delegation in the dvil la>y.^ :
With this much of ej^planation, perhaps, there will be no difficulty
e2q)erienced in accepting the common nomenclature, and treating the
whole matter under the generic title of delegation.
I.
OF DSLEGATHMK BY THB AGESIT.
§ 304. What here induded-^In dealing with the question of dele-
gation by the agent it is necessary, as has already been suggested, to
distinguish two different situations which are sometimes very distinct
and sometimes more or less similar. One is the power which an agent
may have to appoint other agents for his principal, and tfie other is his
power to appoint sub-agents. An agent may have power, either ex-
pressly or by implication, to appoint other agents for his principal,
and this may, perhaps, be his only power. Such agents are not neces-
sarily in any respect sul)-agents, they need not exercise all or any part
of the power of the appointing agent, but may be appointed to do acts
which he has no power at all to do. In appointing them, he may be, not
delegating his authority, but exercising it, and, perhaps, exhausting it in
the exercise. Such appointment is not the delegation here involved.
In the other case, what the agent is attempting to do is to pass his
own authority on to some one else either wholly or in part, and with or
without retiring on his own part— endeavoring to make a substitution
partially or completely; or, if he is not making a substitution, he is
procuring assistance in the exercise of the power conferred upon him.
These two acts may be more or less unlike — to get a substitute to do
the act may be on^ thing; to get an assistant to aid in doing the act
may be another. Tliey are alike in this, that, whether a substitute or
an assistant, the person employed is . exercising a part or all of the
authority originally conferred upon the agent who appointed him.
There may also be a combination of the two kinds of powers. Thus
an agent may be sent out to collect a claim himself if he can, and, if
he cannot, to appoint an attorney to collect it ; or to do all that a lay-
man may do in a given transaction and to engage an attorney to do
the professional part of it.
What is here to be dealt with under the head of delegation is the
power of an agent to appoint a substitute to do all, or to appoint an
assistant to do part of that which he was authorized to do.
1 See Stewart y. OampbeH, S8 Me. Enc. of Law (Ist Ed.) p. 876; Cas-
489, 4 Am. Rep. 296, 16 Am. A Kng. well v. Fellows* 110 Mass. 52.
n 223
§§ 305, 3o6]
THE LAW OF AGENCY
[book 1
§ 305- Dckgatus non potest ddegari. — The selection of an agent
in any particular case is made, as a rule, becaiise he ?s supposed by his
principal to have some fitness for the performance of the duties to be
undertaken. In certain cases his selection is owing to the fact that he
is considered to be especially and particularly fit. The undertaking
demands judgment and discretion, which he is supposed to possess;
or it requires the skill and learning of an expert, which he assumes to
be ; or personal force and influence are de^rable, and these the agent
is thought to be able to exercise, or honesty or ^en fioancul respon-
sibility is relied upon, and this the agent selected ig supposed to possess.
Here is the delectus persona, and it is obvious that unless the principal
has expressly or impliedly consented to the employment of a substitute,
the agent owes to the principal the duty of a personal discharge (A the
trust.
§ 306. General rule.— Hence it is the general rule of the law that
in the absence of any authority, either express or implied, to employ a
subagentj the trust committed to the agent is presumed to be exclu-
sively personal and cannot be delegated by him to another so as to
affect the rights of the principal.' Putting it into more specific form,
an agent generally has no implied authority either to put a substitute
in his place or to employ assistants on his principal's account.
sAppleton Bank v. McOilvray, 4
Gray (Mass.), 518, 64 Am. Dec. 92;
McCormick ▼. Bmh, 8S Tex. 314;
White v. DaTidson, 8 Md. 169, 63
Am. Dec 699; Lyon v. Jerome, 26
Wend. (N. Y.) 485, 37 Am. Dec. 271;
Wright T. Boynton, 87 N. H. 9, 72
Am. Dec. 319; Smith t. SuUett, 28
Tex. 163; Stoughton v. Baker, 4
Mass. 522, 3 Am. Dec. 236; Lynn T.
Burgoyne, 13 B. Mon. (Ky.) 400;
Loomis y. Gftmpson, 18 Iowa, 632;
Connor v. Parker, 114 Mass. 331;
onus V. BaHey. 21 N. H. 149; Fur-
nas y. Frankman, 6 Neb. 429; Har-
ralson y. Btein, 50 Ala. 847; Spring'
field F. A SC Ins. Co. y. DeJarnett,
111 Ala. 248; Bromley y. Aday, 70
Ark. 351; North American Trust Co.
y. Chappen, 70 Ark. 607; Harris y.
San Diego Flame Ga, 87 Cal. 526;
Dlngley y. McDonald, 124 Cal. 682;
National Cash Register Co. y. Ison,
94 Oa. 463; Fudge y. Seckner Con-
tracting Co., 80 IlL App^ 86; Ruth*
yen y. American Fire Ins. Co., 92
Iowa, 816; Floyd y. Mackey, 112 Ky.
646, 28 Ky. U Rep. 2030; Phimmer
y. areen, 49 Neb. 816; Carroll ▼.
Tucker, 2 N. Y. Misc. 897; Fargo y.
Cravens, 9 S. Dak. 646; Tynan y.
Dullnig (Tex. Civ. App.), 25 8. W.
466; Smith y. Lowther, 86 W. Ya.
800; Rohrbough v. United States
Elxp. Co., 50 W. Va. 148; McKinnon
v. Vollmar, 75 Wis. 82, 17 Am. St
Rep. 178, 6 L. R. A. 121; Kebl y.
Beach, 107 Wis. 409» 50 L^ R. A. 600.
"One who has a bare power of au-
thority from another to do any act,
muet execute It himMlf, and cannot
delegate it to a stranger; for this be-
ing a trust or confidence reposed in
him personally, it cannot be assigned
to one whose integrity or ability
may not be known to the principal,
and who, if he were known, might
not be selected by him for such a
purpose. TIM authority is exolus-
ively personal unless from the sk-
224
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§ 307
The principal may, of course, expressly authorise the appointment
of subagents, the delegation of the authority or the substitution of an-
other in the place of the agent named ; and formal powers of attorney
quite frequently expressly confer "full power of substitution and rev-
ocation," and in terms confirm whatever the attorney named "or his
substitute" may lawfully do in the premises.*
The general rule is, also, as will be seen, subject to be modified by
the peculiar circumstances and necessities of each particular case, from
which or from the usage of trade, a power to delegate the authority
may be inferred ; ^ but in the absence of such express authority or such
circumstances the general rule is fixed, imperative and inflexible, rest*
ing upon ample foundation and constantly enforced by the courts.
The same rule applies to a servant as to an agent. That is to say, a
servant ordinarily has no implied power to get someone else to do the
work or to employ co-servants, suVservants, or assistant servants, on
his master's account.*
The rule, however, is ordinarily one for the protection of the prin-
cipal only, and if he is satisfied With the performance third perscHis
cannot object.*
It must also be kept in mind that there is no delegation where the
act is so done in the presence and by the direction or consent of a
party as to constitute in law his own act.''
§ 307. Judgment and discretion not to be delegated* — ^The rea-
sons for this rule are particularly applicable (though not confined) to
those cases where the performance of the agency requires, upon the
part of the agent, the exercise of special skill, judgment or dis-
prcM language used or from the fair (N. S.) 297; 8t liouis, eie., Ry. Co.
presunnHlons growing out of the par- v. Jonea^ 96 Ark. 558, 87 L. R. A. (N.
ticular transaction a broader power 3.) 418; Hot Springs Railroad Co. ▼.
was intended to be conferred.** Bell,
J., In Wrigltt ▼. Boynton, iupra,
• As in Perles v. Ayclnena, 8 W. ft
8. (Pa.) 64; Hoag v. Graves; 81 Mich.
628; Lockwood v. Abdy, 14 Simons,
487. And many others.
« See post, § 314, et Beq,
• GwilUam v. Twist, [1896J 2 Q. B.
84; Bngelhart v. Farrant. [1897] 1
Q. B. 240; Harris v. Fiat Motors, 22
Times L. Rep. 656; James v. Mueble-
back, 34 Mo. App. 512; Cooper v.
Lowery, 4 Oa. App. 120; Board of
Trade Building Co. v. Cralle, 109 Va.
246, 132 Am. St R. 917, 22 L. R. A.
Dial, 68 Ark. 318; Vassor v. Atlan-
tic Coast Line, 142 N. C. 68, 7 L. R. A.
(N. S.) 950, 9 Ann. Cas. 535; Church
V. Chicago, eta, R. Ca, 50 Minn. 218,
16 Li. R. A. 861; Cooper v. Brie, etc,
R. Co., 136 Ind. 366; Baton v. Dela*
ware, etc., R. Co., 57 N. Y. 382, 15
Am. Rep. 513. See also 8 Michigan
Law Review, 198.
See also po«t, § 835. In cases of
emergency, see poMt^ 9 820.
«See Peterson v. Christensen, 26
Minn. 377; Harralson v. Stein, 50
Ala. 347.
7 See ante, I 208,
15
225
§ 3^7]
THE LAW OF AGENCY
[book I
cretion. Such relations are obviously created because the principal
places special confidence in the particular agent selected, and, there is
abundant reason why the trust should not be transferred to another of
whose fitness or capacity the principal may have no knowledge, with-
out the latter's express consent.*
Thus where an agent had been entrusted with the general adminis-
tration of the affairs of a trading company, but no power to substitute
others in his place had been given him, it was held that no such power
could be implied, because there was evidently a confidence rqx>$ed in
him which the company might not be willing to repose in others,*
And so where one was appointed general agent to conduct the sale of
subscription books in a certain territory under circumstances showing
that the principal "depended upon the experience, skill and energy, as
well as the resources and facilities of the general agent," it was held
that his powers and duties could not be assigned or delegated withot^
the principal's consent.^* For the same reasons the agent who has
been given the important power to bind his principal by the execution of
promissory notes," or to settle disputed claims,** or to adjust losses by
fire,** or to loan money ** or receive or collect money " cannot delegate
the power to a subagent.
• Emerson v. Providence Hat Co.,
IX Emerson v. Providence Hat Co.
12 Mass. 287, 7 Am. Dec. 66; Paul v. tupra; Brewster v. Hobart, 15 Pick.
Edwards, 1 Mo. 30; Lewis v. Inger-
BoU, 8 Abb. (N. Y.) App. Dec. 65;
Sayre v. Nichols, 7 Cal. 535, 68 Am.
Dec 280; Commercial Bank v. Nor-
ton, 1 HiU (N. Y.), 501; Dorchester,
etc.. Bank v. New England Bank, 1
Cush. (Mass.) 177; Planters, etc.,
Bank v. First National Bank, 76 N.
C. 684; Pendall v. Bench, 4 McLean
(U. 8. C. C.) 269; Tltns v. Cairo, etc,
R Co., 46 N. J. L. 393; North Ameri-
can Trust Co. v. Chappell, 70 Ark.
507; Plnmmer v. Green, 49 Neb. 316;
MeConneU v. Mackin, 22 N. Y. App.
Dlv. 537; Carroll v. Tucker, 2 N. Y.
Misc. 397; Smith v. Lowther, 35 W.
Va. 800; Tynan v. DuUnig (Tex. Civ.
App.), 25 S. W. 465; Kohl v. Beach,
107 Wis. 409, 60 L. R. A. 600; Rohr-
bough V. U. S. Bzp. Oo.» 50 W. Va.
148.
• Emerson v. Providence Hat Co.,
supra,
10 Bancroft v. Scribner, 72 Fed.
988.
(Mass.) 802.
12 B>u*go v« Cravens, 9 S. D. 646.
I'Ruthven v. American Fire Ins*
(yo., 92 Iowa, 316.
14 Kohl Y. Beach, 107 Wis. 409, 60
L. R. A. 600.
IK People V. Public Swv. Com.* 148
N. Y. App. Div. 769; McConnell v,
Mackin, 22 N. Y. App. Div. 687;
Dinglej v. McDonald, 184 Cat 682;
Lewis V. Ingenoll, 1 Keyes (N. Y.)»
347; Yates v. Freckleton* 2 Doug.
623; though the authority may be so
restricted as to amount to no more
than a power to do a merely mechan*
ical act, in which event the rule
would not apply. Grinnell v. Bu<^-
anan, 1 Daly (N. Y.), 538; Fellows
V. Northrup, 89 N. Y. 117; Dunlap v.
De Murrieta ft Co., 8 T. U R. 166.
Same rule applies to an agent au-
thorized to locate land (Smith v.
Suvlett, 28 Tex. 168) ; and to an agent
authorized to keep his principars
property insured and to make con-
226
CHAP. Vl] APPOINTMENT .OP AGENTS BY OTHER AGENTS
l§ 308
§ 308.
A batlm<.at of personal property to an agent with
duty to deliver it,^^ or an authority to sell it ^^ also creates a personal
trust which cannot be delegated And so does authority to sell real
estate.^^ So where an agent had been authorized to sell real estate,
but in his absence and without his knowledge, the land was sold by
one falsely assuming to be a subagent, it was held that the sale was
binding neither upon the principal nor the agent, as the principal was
entitled to the judgment and discretion of .the agent in making the
sale.^* For similar reasons, authority to lease real estate cannot be
delcgated.*<>
For similar reasons also, the important duties confided to the agent
of an insurance company of passing upon risks, accepting applications,
making contracts of insurance, cancelling or consenting to the sur-
render of policies and the like fall within the rule against delegation.'^
The agent of a casualty or surety company is within the same rule.**
Within the same principle, also, it is thought by some courts, is the
case of the stockholder in a corporation who undertakes, through the
form of a "voting trust," or otherwise, to surrender the discretionary
power and duty resting upon him to vote for the best interests of the
corporation,**
tracts of insurance, accept policies,
etc. (New v. Germania Fire Ins. Oo.,
171 Ind. 33, 131 Am. St Rep. 245).
i« Murray v. Postal Tel. Co., 210
Mass. 188, 24 Ann. Caa. 1183, where
a dressmaker delivered to a partic-
ular messenger of defendant in
whom she had confidence, valuable
gowns for delivery, and he without
her knowledge or consent turned
them over to another messenger to
deliver.
IT Hunt V. Douglass, 22 Vt. 128;
Drum V. Harrison, 83 Ala. 884; Hod-
kinson v. McNeal Co., 161 Mo.
App. 87.
i« Floyd V. Mackey, 112 Ky. 646, 23
Ky. L. Rep. 2030; Bromley v. Aday,
70 Ark. 361; Williams v. Moore. 24
Tex. Civ. App. 402; Carroll v.
Tucker, 2 N. Y. Misc. 397; Bonwell
v. Howes, 16 Daly (N. Y.), 43; Bo-
cock V. Pavey, 8 Ohio St 270; Poss
Investment Co. v. Ater, 49 Wash.
446; Craver v. House, 138 Mo. App.
261; Chouteau Land Co. V. Chris-
man, 204 Mo. 871; Kllpatrick v.
Wiley, 197 Mo. 123; Oroscup v.
Downey, 105 Md. 273; Lynn v. Bur-
goyne, 62 Ky. (18 B. Mon.) 400; Dog-
gett V. Greene, 264 111. 134.
i» Barret v. Rhem, 6 Bush (Ky.),
466.
20Pairchild v. King, 102 CaL 820.
SI But see the cases cited post,
i 817.
Within the same rule is the agent
to keep his principars property in-
sured in reliable companies. Ins. Co.
of No. Am. V. Wis. Cent Ry. Co., 134
Fed. 794.
«s Cullinan v. Bowker, 180 .N. Y. 93.
«» See Shepaug Voting Trust Cases,
60 Conn. 553; Harvey v. Linville Im-
provement Co., 118 N. C. 693. 54 Am.
St. R. 749, 82 L. R. A. 265; Bridgers
V. First Nat Bank, 152 N. C. 293;
Morel V. Hoge, 130 Ga. 625, 16 L. R.
A. (N. S.) 1136, 14 A ft IBI Ann. Cas.
935; Warren v. Pim, 66 N. J. Bq.
353. Compare Smith v. San Fran-
cisco, etc, R. (>>., 116 Cal. 584, 56
227
§§ 309* 310]
THE LAW OF AGENCY
[book I
§ 309. Attorneys may not delegate personal undertaking.«*-The
appointment of an attorney to argue or conduct a cause, compromise
a dispute, or enforce a claim, creates a personal trust, and he can not'
entrust the performance of this duty to another attorney of his own
selection, or let the case out on shares, or in any other wise delegate
the performance, without the consent of his principal.**
This rule, however, does not demand that the attorney shall per-
form, in person, all of the merely mechanical or ministerial work in-
volved in the case, and he may avail himself of as much assistance of
that nature as occasion may require. As will be seen in a subsequent
section, the performance of such duties through the agency of others
falls under a well recognized exception to the general rule.'^
§ 3x0. Arbitrators may not delegate their powers^r— This rule also
applies with special force to arbitrators. They are selected by parties
who have placed particular confidence in their personal judgment, dis-
cretion and ability, and it would be a palpable injustice if they were to
be permitted to delegate their responsibilities and powers to others.**
Am. St R. 119, 35 L. R. A. 309;
Faulds V. Yates, 57 111. 416, 11 Am.
Rep. 24; Mobile, etc., R. Co. v. Nich-
olas, 98 Ala. 92; Brightman v. Bates,
175 Mass. 105; Carnegie Trust Co. v.
Security L. Ins. Co., Ill Va. 1, 31 U
R, A. (N. S.) 1186; Boyer v. Nesbltt,
227 Pa. 398. There are many other
cases on both sides.
24 Johnson y. Cunningham, 1 Ala.
249; Eggleston v. Boardman, 37
Mich. 14; Crotty v. Blagle, 85 W. Va.
143; Hilton v. Crooker, 30 Neb. 707;
National Bank v. Oldtown Bank, 112
Fed. 726; Sloan y. Williams, 138 111.
43, 12 L. R. A. 496; City of New York
V. Dubois, 86 Fed. 889; Meaney v.
Rosenberg, 32 N. Y. Misc. 96; Reese
V. Resburgh, 54 N. Y. App. Dlv. 378;
Lucas V. Rader, 29 Ind. App. 287;
Sedgwick* V. Bliss, 23 Neb. 617; Dick-
son y. Wright, 52 Miss. 585; Danley
V. Crawl, 28 Ark. 95; King v. Pope,
28 Ala. 601; Ratcliff y. Baird, 14 Tex.
43; Johnston v. Baca, 13 New Mex.
338; Corson y. Lewis, 77 Neb. 446;
Lacher v. Gk>rdon, 127 App. Div. 140.
If he does so, the client may de-
clare the contract at an end, and re-
cover whatever he has given for the
services. Hilton y. Crooker, 8upra,
The client may, however, ratify it
with full knowledge of the facts.
Reese v. Resburgh, supra.
As will be seen in the chapter
upon Attorneys the attorney has no
implied power to employ assistant
counsel at his clients' expense. See
also Chicago & So. Traction Co. v.
Flaherty, 222 IlL 67; Eimblem y.
Bicksler, 34 Colo. 496; Lathrop v.
Hallett, 20 Colo. App. 207.
An attorney has no implied power
to delegate to another his authority
to receive and collect for the benefit
of his client the amount due upon a
Judgment recovered. Mo., etc., Ry.
Co. y. Wright, 47 Tex. Civ. App. 458;
Dickson y. Wright, supra; Hendry v.
Benllsa, 37 Fla. 609, 34 U R. A. 283.
25 See post, S 315; Eggleston v.
Boardman, supra; Co veil v. Hart, 14
Hun (N. Y.), 252.
An attorney has authority to get
another to appear for him In the
eause, and such an appearance is con-
clusive upon the client. Reich y.
Cochran. 105 App. Dlv. 542, 102 N, Y.
Supp. 827, aff*d, no opinion. 139 App.
Div. 931.
to Harley Co. y. Barnefield, 22 R. L
267; Allen-Bradley Co. y. Anderson.
228
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§§ 3II--313
But it is entirely proper for arbitrators, in a case requiring it, to obtain
from disinterested persons of acknowledged skill such information and
advice in reference to technical questions submitted to them, as may be
necessary to enable them to come to correct conclusions, provided that
the award is the result of their own judgment after obtaining such in-
formation.*^ They may also avail themselves of such mechanical or
ministerial assistance as the nature of their duties may require.^
§ 311* Auctioneers, brokers and factors may not delegate. — ^As
will be seen also when these various forms of agency are taken up, the
same rule applies to auctioneers,'* brokers ^ and factors,'^ who are for-
bidden to delegate without the principal's consent the powers confided
to them not merely mechanical or ministerial.
§ 312. Executors, etc., may not delegate personal trusts.— This
principle is, likewise, of frequent application to the case of persons
upon whom the law has devolved discretionary or fiduciary powers,
such as executors, administrators, guardians and public trustees. Such
powers cannot be delegated without express authority."*
§ 313. Rule applies to public and private corporations and officers.
The same rule applies to the powers and duties conferred upon mu-
nicipal corporations and municipal officers. Purely administrative or
ijiinisterial powers may be delegated, but wherever judgment and dis-
etc, Co., 99 Ky. 311; WillianiBon v.
North Pacific Lumlier Co., 43 Or.
337; Blakestoa ¥. Wilson, 14 Man.
271; Lingood v. Bade, 2 Atk. 601;
Proctor V. Williams, 8 C. B. (N. S.)
386; Whitmore v. Smith, 5 H. A N.
824; Little v. Newton, 2 Scott N. R.
509.
Arbitrators have no inherent
power to select an umpire unless
tbey are authorized by the terms of
the submission. Allen-Bradley Co. v.
Anderson, etc., Co., supra.
rr Harley Co. v. Barnefield, supra;
Soulsby V. Hodgson, 3 Burr. 1474;
Caledonian Ry. Co. t. Lockhart, 8
Macq. 808; Anderson v. Wallace, 3
CL A Fin. 26; Eads y. Williams, 4
DeGex, Mac. & Qor. 674.
M Thorp V. Cole. 2 Cr. M. 4 R. 367;
Harvey v. Shelton, 7 Bear. 455;
Moore y. Barnett, 17 Ind. 849.
s»See post. Book V, Chapter on
Auctioneers.
»oSee post. Book V, Chapter on
Brokers.
81 See post. Book V, Chapter on
Factors.
«2Berger v. Duff, 4 Johns. (N. Y.)
Ch. 369; Newton y. Bronson, 13 N.
Y. 587, 67 Am. Dec. 89; Lyon v. Jer-
ome, 26 Wend. (N. Y.) 485, 37 Am.
Dec. 271; Hicks v. Dorn, 42 N. Y. 51;
St. Peter v. Denison, 58 N. Y. 421;
CurUs y. Leavltt, 16 N. Y. 190; Mer-
rill y. Farmers, etc., Co., 24 Hun (N.
Y.), 300; Terrell y. McCown, 91 Tex.
231; Whitlock y. Washburn, 62 Hun
(N. Y.), 369; Gates y. Dudgeon, 173
N. Y. 426, 93 Am. St Rep. 608; The
California, 1 Sawyer, 596; White y.
Davidson, 8 Md. 169, 63 Am. Dec.
699; Stoughton v. Baker, 4 Mass. 522,.
3 Am. Dec. 286; Cheeyer y. Bills, 134
Mich. 645; Williamson y. Robinson,
134 Iowa, 345; Leyara y. McNeny, 5
Neb. (Unoff.) 318; Rice y. Conwill,
35 Tex. Civ. App. 341; Dyer v. Win-
ston, 33 Tex. Civ. App. 412.
229
§§ 314, 315]
THE LAW OF AGENCY
[book I
cretion are to be exercised,— where legislative powers are involved,
where rates are to be fixed, policies determined, and the like — ^thcre
the body or officer entrusted with the duty must exercise it ; it cannot
be delegated or fanned out."
It also applies to the directors and officers of private corporations*
For while the directors may, of course, employ all necessary agents,
and may appoint committees to look after matters of administration,
they may not delegate to others the general duty of management and
control which has been confided to their judgment and discretion,
§ 314. Exceptions and modifications.-*-But the general rule above
given of course gives way before an express power of delegation or
substitution ; and it is also subject, as hafi been stated, to certain ex-
ceptions and modifications growing out of the nature of the authority
or the exigencies and necessities of the case, or based upon the custom
and usage of trade in similar cases. Thus —
§ 315. I. Subagent may be employed to perform acts mechanical
or ministerial merely.— Where in the execution of the authority an
act is to be performed which is of a purely mechanical, ministerial or
B< State v. Hauaer, 63 Ind. 155;
State y. Bell. 34 Ohio St 194; Bird-
sail V. Clark, 73 N. Y. 73, 29 Am. Rep.
105; Brooklyn v. Breslin, 57 N. Y.
591; Matthews v. Alexandria, 6S Mo.
115, 80 Am. Rep. 776; Maxwell v.
Bay City Bridge Co., 41 Mich. 453;
Clark V. Washington, 12 Wheat (U.
S.) 40, 6 Li. Ed. 544; Thompson T.
Schermerhorn, 6 N. Y. 92; Davis ▼.
Read, 66 N. Y. 566; Supervisors v.
Brush, 77 111. 59; Rogers Park Wa*
ter Co. V. Fergus, 178 111. 571, af-
firmed 180 U. S. 624; Thomson y.
BoonvlUe, 61 Mo. 282; State v. Fiske,
9 R. I. 94; State y. Paterson, 34 N.
J. L. 168; Hydes v. Joyes, 4 Bush.
(Ky.) 464; Oakland v. Carpentler, 13
CaL 540; Oallndo v. Walter, 8 Cal.
App. 234, 96 Pac. 605; Ex parte, Orey,
11 Cal. App. 125, 104 Pac. 476;
Whjrte v. Nashville, 2 Swan (Tenn.),
364; Lord v. Oconto, 47 Wis. 386;
Lauenstein v. Fond du Lac, 28 W1&
336; €kile y. Kalamazoo, 23 Mich.
344; Indianapolis y. Indianapolis
Gas Co., 66 Ind. 396; Ruggles y. Col-
lier, 43 Mo. 853; Meuser v. Rlsdon,
36 Cal. 239; Darling y. St Paul, 19
Minn. 389; St Louis y. Clemens, 43
Mo. 395, 8. c. 52 Mo. 183; State y.
Garibaldi, 44 La. Ann. 809; Blair y*
Waco, 75 Fed. 800; People y. Mc-
Wethy, 177 111. 334; Zanesvllle y.
Zanesyille Telephone ft Tel. Co., 68
Ohio St 442; McCrowell y. Bristol,
89 Va. 652; Knight v. Eureka, 123
CaL 192; State v. Ocean Grove Camp
Meeting Ass'n, 59 N. J. L. 110; Har-
court y. Common Council, 62 N. J. L.
158; Lyth y. Buffalo, 48 Hun (N. Y.),
176; Trenton y. Clayton, 60 Mo. App.
586; Edwards y. Kirkwood, 147 Mo.
App. 599; Ramsey y. Field, 116 Mo.
App. 620; Seibel-Suessdorf, etc, Co. y.
Manufacturers' Ry. Co., 230 Mo. 69;
Curran Co. v. Denver, 47 Cola 221,
27 L. R. A. (N. S.) 644; Brummitt y.
Ogden Water Works Co., 38 Utah,
286; Tilford y. Belknap, 126 Ky. 844,
11 L. R. A. (N. S.) 708; Bowling
Green y. Gaines, 29 Ky. L. 1013, 96 8.
W. 852; Biddeford v. Yates, 104 Me.
506, 15 Ann. Cas. 1091; Mayor of
Baltimore y. Gahan, 104 Md. 145;
State ex reL Thurmond v. City of
Shreveport 124 La. 178; Allman y.
City of Mobile, 162 Ala. 226.
230
CHAP* Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ JiS
executive nature, involving no elements of judgment, discretion or
personal skill, the reason for the general rule does not apply, and the
power to entrust the performance of it to a subagent may be implied.**
Thus an agent empowered to execute a promissory note,** or to
bind his principal by an accommodation acceptance,** or to sign his
name to a subscription ag^eement,*^ or to execute a deed,** having
himself first determined upon the propriety of the act, may direct an-
other to perform the mechanical act of writing the note or signing the
acceptance, subscription or deed, and the act so performed will be
binding upon the principal.
So an agent authorized to sell real estate, who exercises his own dis-
cretion as to the price and the terms, may employ a subagent to look
up a purchaser,** or to point out the land to one contemplating a pur-
chase/®
MWlUiams v. Woods, 16 Md. 220;
Choutean Land Go. v. Chrisman, 204
Mo. 871; OrinneU v. Buchanan, 1
Dal7 (N. Y.), 538; BUdrldge v. Uol-
way, 18 IlL 445; Joor y. Sullivan. 5
La. Ann. 177; Grady v. American
Gent Ins. Co., 60 Mo. 116; Newell ▼.
Smith, 49 Vt 255; Lord v. Hall, 8 G.
B. 627.
In Michael ▼. Crawford, — Tex.
Civ. App. — , 150 S. W. 465, a deed
of trust to secure notes provided that
if the trustee named In the deed re-
fused to act, any holder of the notes
misht appoint one. This contin-
gency happened, and the holder
appointed an agent who appointed a
substitute trustee. The court
thought that because the power was
originally conferred upon any
holder, who might be a wholly un-
Icnown person, it could not have
been thought that any personal trust
or. confidence entered into the case,
and that therefore the power might
be delegated.
"Where the act is a signing or writ-
ing for the agent in his presence and
at his request, there is really no
question of delegation, and the act
is regarded as the personal act of
the agent Galhoon v. Buhre, 75 N.
J. L. 439; Worsley v. Ayres, 144
Iowa, 676; White- Wilson-Drew Co. v.
Egelhoff, 96 Ark. 105.
sBSayre v. Nichols, 7 Cal. 535« 68
Am. Dec. 280; Lord v. Hall, supra;
Weaver v. Oarnall, 35 Ark. 108, 87
Am. Rep. 22; White-Wilson-Drew Ga
V. Egelhoff, 96 Ark. 105.
80 Commercial Bank v. Norton, 1
HiU (N. Y.). 501.
»T Norwich University v. Denny, 47
Vt 13; or to an advertising contract,
Calhoon v. Buhre, 75 N. J. U 439.
»« Smith V. Swan, 1 Tex. Civ. App.
115.
•«Renwick v. Bancroft, 56 Iowa,
527 (in which the court thought
that a subagent employed to sell
land to a responsible buyer upon
terms entirely set by the agent fur-
nished was but the instrumentality
through which the agent accom-
plished his service and therefore
held that his appointment was
proper and this contract which he
negotiated binding upon his prin-
cipal); or to sign the principal's
name to a particular contract (Worsr
ley V. Ayres, 144 Iowa, 676); or to
collect rent and if payment was re-
fused to demand possession (Mc-
Croskey v. Hamilton, 108 Ga. 640, 75
Am. St. R. 79).
40McKinnon v. VoUmar, 75 Wis.
82, 17 Am. St Kep. 178, 6 L. R. A.
121 (in which the act of the agent's
elerk when he was sent to point out
the land to be sold, in showing
231
§ 3i6]
THE LAW OF AGENCY
[book 1
So, in a different field, a city council having power to adopt ordi*
nances may adopt a code compiled by the city attorney. "The adop-
tion, not the compilation, was the legislative act." **
§ 316. II. When the proper conduct of the busanesa requires it —
It is obvious, too, that notwithstanding the general rule, there are
many cases wherein from the very nature of the duty, or the circum-
stances under which it is to be performed, the employment of sub-
agents is imperatively necessary, and the principars interests will suf-
fer if they are not so employed* In such cases, although the general
rule might otherwise apply, an exception is suggested based upon the
presumed assent of the principal, and therefore if he has not mani-
fested a contrary intent, the power to employ the necessary subagents
will be implied." The authority of the agent is always construed to
include the necessary and usual means to execute it properly.
Thus if a note be sent to a bank for collection, and for the protec-
tion of the principal it becomes necessary to have the note protested,
the authority of the bank to employ the proper officer will be im-
plied ; ** and so if a note or draft be sent to a bank or other agent,** to
be collected at a distant point, the authority of the bank or other agent
to employ a subagent at the place of collection, and to forward the
note or draft to him there, would be presumed.**
So an agent employed to collect a demand by suit or to do any other
act requiring the services of a lawyer, would have implied power to
wrong land to the purchaser was
held the act of the principal upon
the ground that the duty of show-
ing the land was a merely minis-
terial act and therefore properly
delegated).
41 Western, etc., R. Co. v. Young,
83 Oa. 612; Garrett v. Janes, 66 Md.
260.
4sDeBu8Sche v. Alt, 8 Ch. Div.
286: Dorchester, etc., Bank v. New
England Bank, 1 Oush. (Mass.)
177; Johnson ▼. Cunningham, 1 Ala.
249; RoBsiter v. Trafalgar Life
Assur. Ass'n, 27 Beavan, 377; Ap-
pleton Bank v. McGilvray, 4 Gray
(Mass.), 618, 64 Am. Dec. S2; Mc-
Croskey v. Hamilton, 108 Ga. 640;
Strong v. West, 110 Ga. 882; Lutt-
rell V. Martin, 112 N. C. 593;
Kuhnert v. Angell, 10 N. Dak. 69;
Breck v. Meeker, 68 Neb. 99; Me-
Cants v. Wells, 4 S. C. 381; Can-
field y. Chicago, etc, R. Co., 69 Mo.
App. 364; Tennessee River Transp.
Co. ▼. Kavanaugh, 101 Ala. 1; Rohr-
bough V. U. S. Express Co., 50 W.
Va. 148, 88 Am. St. R. 849; The Guid-
ing Star, 53 Fed. 936.
4» Tiernan v. Commercial Bank, 7
How. (Miss.) 648, 40 Am. Dec 83;
Baldwin v. Bank of Louisiana, 1
La. Ann. 13, 46 Am. Dec. 72; Com-
mercial Bank V. Martin, 1 La. Ann.
344, 45 Am. Dec. 87.
«4 Breck v. Meeker, 68 Neb. 99.
M Whether the bank or other
agent really undertakes to act as
an agent merely or rather as an
independent contractor is a dis-
puted question. See post. Book IV,
Chap. II» where the cases are col-
lected.
232
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 317
employ the necessary attorneys ; *• or if authorized to sell land *^ or
goods,** to employ a necessary broker or auctioneer where this method
was contemplated; or if authorized to charter a vessel, to employ a
vessel broker to assist him in securing the charter."
§ 317. — — So an agent like the general manager of a mercan-
tile business, or the district agent of an insurance company, given
charge of a large territory or of an extensive business in a smaller
territory and expected to accomplish results which could not reason-
ably be demanded of his individual and personal efforts, would ordi-
narily be deemed to have implied power to appoint such subagents and
assistants as the contemplated results reasonably required.*^ The me-
chanical and ministerial parts would, of course, be delegable within
the rule already considered; but even discretionary portions might
also be delegable in such a case upon the ground of an implied autlior-
ity.
«« Commercial Bank v. Martin,
supra; Buckland v, Conway, 16
Masa 396; Davis v. Matthews, 8 S.
Dak. 800.
In Strong v. West, 110 Ga. 382, it
ia said: "If the services of an at-
torney are necessary to execute the
duties of a created agency, the per-
son intrusted with those duties, if
not himself an attorney, is invested
vfith the power to' procure the serv-
ices of an attorney for his principal,
and • ♦ ♦ the attorney so em-
ployed is the attorney of the prin-
cipal and not of the agent"
« Lee V. Conrad, 140 Iowa, 16;
Renwick v. Bancroft, 56 Iowa, 527
<in which it was held that so long
as the agent himself fixed the terms
of the contract he might employ a
fiubagent to find a purchaser and
to make the contract with the pur-
-chaser). May employ auctioneer.
Union Garment Co. v. Newburgher,
124 La. 819. An agent to huy land
vould likewise have implied power
to employ an attorney "to close the
title." Egan y. De Jonge, 113 N. Y.
Supp. 737.
'ts Strong y. Stewart, 9 Heisk.
(Tenn.) 137; Harralson v. Stein,
60 Ala. 347. See also McCants v.
lA'ells, 4 & C. 381.
The rule of course covers the pur-
chase of stocks. See HoogewerfT r.
Flack, 101 Md. 371.
♦•Saveland v. Green, 40 Wis. 481.
BoBodine y. Exchange Ins. Co.,
51 N. Y. 117, 10 Am. Rep. 566;
Arff V. Star P. Ins. Co., 126 N. Y.
57, 21 Am. St R. 721, 10 L. R. A.
609; Deitz y. Ins. Co., 38 W. Va.
526, 25 Am. St. Rep. 908; Grady y.
American Cent Ins. Co., 60 Mo. 116;
Insurance Co. y. Eshelman, 30 Ohio
St. 647; Krumm y. Insurance Co.,
40 Ohio St. 226; Swan y. Insurance
Co., 96 Pa. 87; McGonlgle v. In-
surance Co., 168 Pa. 1; Insurance
Co. y. Thornton, 130 Ala. 222, 65 L.
R. A. 547, S9 Am. St. R 30.
Authority of ordinary local in-
surance agent to delegate, — In Bo-
dine y. Exchange Ins. Co., supra, it
was said: "We know, according to
the ordinary course of business
that insurance agents frequently
haye clerks to assist them; and
that they could not transact their
business if obliged to attend to all
the details in person, and these
clerks can bind their principals in
any of the business which they are
authorized to transact. An insur-
ance agent 'can authorize his clerk
to contract for risks, to deliyer
233
§ 317]
THE LAW OF AGENCY
[book I
For similar reasons an agent whose employment involves the per-
formance of duties at various places may be found to have implied
power to employ assistants because of the physical impossibility of his
performing in person.'*
And, generally, an agent put in charge of a business or a depart-
ment of a business which can regularly and properly be carried on
only by the employment of assistants and subordinates^ would, where
no other arrangement is made, have implied power to appoint them/*
The same rules will apply to the appointment of servants as of
agents.*'
policies, to collect premiumB and to
take payments of premiums in cash
or securities, and to give credit for
premiums or to demand cash; and
the act of the clerk in all such
cases is the act of the agent, and
Dlnds the company Just as effectu-
ally as if it were done by the agent
in person." This rule has some-
times been cited as authority for a
sort of general power in the ordi-
nary insurance agent to employ
clerks who would thereby be vested
with all his powers, discretionary
as well as mechanical. Such a view
is believed to be both unsound and
dangerous unless the insurance
business is to be put upon a dif-
ferent footing from others. See
Waldman v. Insurance Co., 91 Ala.
170, 24 Am. St R. 883; Springfield
F. ft M. Ins. Co. V. De Jarnett* 111
Ala. 248; distinguished in Insur-
ance Co. v. Thornton, 130 Ala. 222,
66 L. R. A. 647, 89 Am. St R. 30;
Ruthven v. American F. Ins. Co., 92
Iowa, 816. See § 1049 et seq. See also
McClure v. Miss. Valley Ins. Co., 4 Mo.
App. 148; Continental Ins. Co. v. Ruck-
man, 127 IlL 364, 11 Am. St R. 121
(here there was evidence of ratiflcar
tion.)
BiThe Guiding Star, 63 Fed. 93ft.
BsBreck v. Meeker, 68 Neb. 99;
Tennessee River Transp. Co. v.
Kavanaugh, 101 Ala. 1; Luttrell v.
Martin, 112 N. a 593; Canfield v.
Chicago, etc., R, Co., 69 Mo. App.
364; McCroskey v. Hamilton* 108
6a. 640; Williams v. Hoore, 24 Tex.
Civ. App. 402; Ladonia Dry Goods
Co. V. Conyers (Tex. Civ. App.), 68
S. W. 967; McCk)nneIl v. Mackin, 22
App. Div. 637. In the last case,
wherein it was urged that an agency
to collect and receive money is one
of personal trust and confidence
and therefore not to be delegated,
the court said, "That rule is ap-
plicable to special authority and
not to a general agency to take
charge of and manage the business
of the principal." See al90 Shep-
herd V. Milwaukee Gas L. Co., 11
Wis. 234; Louisville, etc., R. CJo. v.
Blair, 63 Tenn. (4 Baxt) 407;
Thompson v. Mills, 46 Tex. Civ.
App. 642. So the directors of a
business corporation may appoint
an executive committee to attend
to the corporate business in the
intervals between the meetings of
the directors. First Nat Bank v.
Com. Travel. Asso., 108 App. Div.
78, affirmed, 185 N. Y. 676.
s<That servants may be em-
ployed when usual or necessary or
within the range of the employing
agent's power of management see
Wanstall v. Pooley, 6 CI. ft Fin. 910,
note; Bucki v. Cone, 26 Fla. 1, ft
So. 160; Gleason v. Amsdell, 9 Daly
(N. Y.), 893; Banks v. Southern
E?zpre88 (»., 73 8. Car. 211.
As to the number which may be
employed, see Beaucage v. Mercer,
20e Mass. 492, 188 Am. St R. 401.
As to the liability of a master for
234
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 3X8
WTiose agent the subagent is in these cases — that is whether the
consent is to employ the subagent as the agent of the principal or of
the agent, is considered in a later section.
§ 318. III. When justified by usage or course of trade. — Again,
the employment of a subagent may be justified by the presumed assent
of the principal to a known and established usage or course of deal-
ing.** Parties contracting in reference to a subject-matter concern-
ing which there is such a usage and who indicate no contrary purpose
may well be presumed to have it in contemplation. In contractis tacite
insunt quae sunt maris et consuetudinis, is a maxim of law.'^^
Thus where goods were entrusted by the plaintiff to a merchandise
broker to sell, deliver and receive payment, and the broker deposited
them in accordance with a usage with a commission merchant con-
nected with an auctioneer, taking his note therefor, and. some of the
goods were afterward sold at a less price than the broker was author-
ized to sell them for, it was held that the principal was bound by such
act of the bn^r and that he could not maintain trover against the
commission merchant. Said the court: "Business to an immense
amount has been transacted in this way, and the usage being estab-
lished, it follows that when the plaintiff authorized his broker to sell,
he authorized him to sell according to the usage ; and when the defend-
ants dealt with the broker, even if they had known that the goods were
not his own, they had a right to consider him as invested with power
to deal according to the usage." °^
The power of a bank receiving a note for collection at another place,
to forward the note to a bank at that place for payment, may also be
derived from the same source, as may other powers referred to in the
preceding section."^ Usage, however, will not be permitted to con-
travene express instructions, and if the agent has been denied the
the negligence of persons employed
by a servant to assist him see post,
I 321; 8 Michigan Law Review, 198.
64Buckland v. Conway* 16 Mass.
896; Smith ▼. Snhlett, S8 Tex. 163;
Lynn v. Bargoyne, 13 B. Mon. (Ky.)
400; Moon v. Gnardians, 8 Bing. N.
Oafl. 814; Gray v. Murray, 8 Johns.
(N. Y.) Ch. 167; Darling v. Stan-
wood, 14 Allen (Mass), 604; Johnson
V. Cannlngham» 1 Ala. 249; Breck v.
Meeker, 68 Neb. 99; Rohrbough v. XT.
S. Exp. C!o., 60 W. Va. 148, 88 Am. St
R. 849; De Bnssche v. Alt, 8 Ch. Div.
28&
u See Eweirs Evans' Agency, 58.
B«Lau8att V. Lippincott, 6 Serg. ft
R. (Penn.) 386, 9 Am. Dec. 440. See
also Wallace v. Bradshaw, 6 Dana
(Ky.), 383; Darling v. Stanwood, 14
Allen (Mass.), 504; Jackson v. Union
Bank, 6 H. & J. (Md.) 146; Strong v.
Stewart, 9 Helsk. (Tenn.) 137.
»T Wilson v. Smith, 3 How. (U. S.)
763, 11 Jj. Ed. 820, where the court
speaks of it as an authority fairly to
be implied from the usual course of
trade or the nature of the transac-
tion.
235
§ 319]
THE LAW OF AGENCY
[book I
power of delegation, usage can not confer it" Nor can usdge justify
the agent in violating the fundamental duties which he owes to his
principal or change the intrinsic character of the contract existing be-
tween them.'*
Whose agent the subagent, so employed, is to be deemed to be, wiU
be considered in a later section.
§ 319. IV. When originally contemplated. — ^And so, if the em-
ployment of a subagent was contemplated by the parties at the time
of the creation of the agent's authority, or if it was then expected that
subagents might or would be employed, this would be treated as at
least implied authority for such employment.***
The fact that the employment of subagents was contemplated by
the parties need not be shown by express proof. The nature of the
service, the place at which it is to be performed, the distance between
the place of appointment and the place of performance and similar
circumstances may be taken into account. Thus where the principal
and agent were both residents of California and the agency was to sell
land in Texas the court said, "It is a fair presumption growing out of
the exigencies of the transaction that it was contemplated that a pur-
chaser should be obtained through a subagent." •* So in another case
in which an agent appointed to sell land of small value was a busy man
of large affairs living at some distance from the location of the land,
the court said that the principal "must have known that he cotild not
personally act for her in such unimportant matters" and that therefore
action through a subagent must have been contemplated.**
B8 Barksdale v. Brown, 1 Nott a
McC. (S. C.) 617, 9 Am. Dec. 720;
Bliss V. Arnold, 8 Vt 252, 30 Am. Dec.
467; Hall v. Storre, 7 Wis. 253; Day
V. Holmes, 103 Mass. 306; Parsons v.
Martin, 11 Gray (Mass.), 112; Clark v
Van North wick, 1 Pick. (Mass.) 343;
Leland v. Douglass, 1 Wend. (N. Y.)
490; Catlin v. Smith, 24 Vt 85;
HutchlngB V. Ladd, 16 Mich. 493.
»» Robinson v. MoUett, L. R. 7 H.
L. 802; Blackburn v. Mason, 68 Jm T.
(N. S.) 510; Minnesota Cent R. R.
Co. V. Morgan, 52 Barb. (N. Y.) 217.
•0 Johnson v. Cunningham, 1 Ala.
249; Duluth Nat Bank v. Fire Ins.
Co.. 85 Tenn. 76, 4 Am. St Rep. 744;
National Steamship Co. v. Sheehan,
122 N. Y. 461, 10 U R, A. 782; De-
BuBBche V. Alt, 8 Ch. Div. 286.
«i Eastland v. Maney» 86 Tex. Civ.
App. 147.
«2 Wright V. Isaacks, 43 Tex. Civ.
App. 223. So in Arkadelphia Lumber
Co. V. Thornton, 83 Ark. 403, the court
said, "The land being situated In
Arkansas and Head, the agent, au-
thorized to sell same^ being in Texas,
it may be fairly presumed that the
owners In executing the power of at-
torney contemplated that W. B. Head
would employ a subagent to find a
purchaser, and to perform the other
merely incidental and ministerial acts
necessary to consummate the sale of
the land if made to a purchaser in
this state."
So where an agent in Connecticut
was given tor coUeotioil a note pay-
able in Georgia and secured by a
236
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 320
The cases in which claims are to be collected at a distance and
many others of a similar nature, already referred to in the preceding
sections, might also be embraced within this principle.
As in the previous cases, the question of whose agent the subagent
is to be deemed to be, is reserved for consideration in a following
section.
§ 320. V. When necessity or sudden emergency justifies it. — So
there may be cases in which supervening necessity or sudden emer-
gency may justify the employment of subagents." Thus, for ex-
ample, if a railroad train in transit should suddenly be deprived of its
fireman or brakeman, the authority of the conductor to employ some-
one else to fill the place until the necessity was past or the company
could act would doubtless be sustained,*^* and so it would doubtless be
where the conductor himself was incapacitated and he delegated to
another servant or even to a competent stranger the control of the train
until the exigency was past or the company could act. In England it
is held that the power can not exist if the circumstances are such that
the principal may be communicated with and his instructions procured.
"The impossibility of communicating with the principal," said Smith,
L. J., "is the foundation of the doctrine of an agent of necessity." ^^
trust deed to a Georgia trustee upon
Georgia land it was held that it was
fairly within the contemplation of the
parties that a subagent in Georgia
should be appointed. Davis ▼. King,
66 Conn. 465, 50 Am. St R. 104.
But the reason for the rule does not
exist and the rule does not therefore
apply to a case in which the agent
to sell land, although he does not live
in the place where the land is, has
been in the habit of visiting that
place from time to time in connection
with the management and leasing of
the land. Williams v. Moore, 24 Tex.
Civ. App. 402.
While in Cockran v. Irlam, 2 M. &
Sel. 301, it is said that a broker to
whom goods are consigned for sale
"has no right without notice to turn
his principal over to another of whom
he knows nothing;" it was held in
Bromley v. Coxwell, 2 Bos. & Pul. 438,
that where A entrusts goods to B to
sell them in India, with the under-
standing that what B could not sell
he might return to A, but allowing
B to keep what he could obtain above
a certain sum and to sell them for
what he could get if he could not get
that sum; and B, not being able to
sell them himself in India left them
with an agent to be disposed of and
to remit the proceeds to B in Eng-
land; A cannot maintain trover
against B for so doing. Chambre, J.,
one of the Judges, said: "It seems
therefore that the delivery to his
agent was within the terms of the
agreement."
c« Gwllllam V. Twist, [1895] 2 Q. B.
84; Georgia Pac. R Co. v. Propst, 85
Ala. 203; Sloan v. Central Iowa Ry.
Co., 62 Iowa, 728; Fox v. Chicago, etc.,
Ry. Co., 86 Iowa, 368, 17 L. R. A. 289.
«*So held in Georgia Pac. Co. v.
Propst; Sloan v Central Iowa Ry. Co. ;
Fox V. Chicago, etc., Ry. Co., supra.
Same effect: Louisville, etc., R. Co. v.
Ginley, 100 Tenn. 472.
«« In GwiUiam v. Twist, Bupra. See
also Harris v. Fiat Motors, 22 Times
L. R. 656.
237
§§ 321, 322]
THE LAW OF AGENCY
[book I
This is a salutary principle, though not always recognized in the Amer-
ican cases.
§ 32X. Assistants employed by servants. — ^The doctrine of
the emergency has also been resorted to in several instances to support
the employment by a servant of some one to assist him in some sud-
den exigency arising during the performance of the service.** Thus
in a case ^ in which the master was held responsible for the negligence
of a bystander requested by the driver to assist him in repairing a cart
which had broken down on the street, the court said : "We think that
the act of the bystander must be regarded as the act of the driver.
The cart was out of order and the driver was trying to fix it as he was
bound to do. For that purpose he asked the bystander to assist him.
And in doing so he used the assistance of the bystander as he would
have used a tool or appliance which he had procured and which he
must be regarded as having implied authority to procure under the
circumstances. The fact that the tool or appliance was an intelligent
human being does not affect the matter any more than the fact that
another person held the reins did in Booth v. Mister.** The case is
not one where the servant attempted to delegate his duty to another
as in GwiUiam v. Twist ; •• but a case where the driver needed for a
moment, in the performance of his duty in a sudden emergency, an-
other hand, and found it in the assistance given at his request by a
stranger, and what was done by the stranger was as if done by him-
self." '^
The liability of the master in these cases is considered more fully in
a later section.''^
§ 322. VI. Ratification of an unauthorized etnpl03rment.— And,
finally, even though authority to employ subagents cannot be deduced
by any of the methods already enumerated, it may be found that such
an appointment has subsequently, with knowledge of the facts, been
either expressly or impliedly ratified;'* and here, as in other cases.
••See tbe cases discussed by the
present writer (in 1905) in 3 Mich-
igan Law Review, 198. See also the
discussion post, Book IV, Chap. V.
•THollidge T. Duncan, 199 Mass.
12L
•8 Booth V. Mister, 7 C. ft P. 66 (not
a case of emergency).
•• G William T. Twist, [1895] 2 a B.
84. (Here there was held to be no
emergency or necessity since the mas-
ter was within reach.)
TO The court cites Althorf v. Wolfe,
22 N. Y. S66; Campbell v. Trimble, 75
Tex. 270; Buckl v. Cone, 25 Fla. 1;
Pennsylvania Co. ▼. Gallagher, 40
Ohio St 637, 48 Am. Rep. 689;
James v. Muehlebach, 84 Mo. Appb
512; all of which are more fully con-
sidered later.
Ti See post. Book IV, Chap. V.
T« Haluptzok Y. Great Northern Ry.
Co., 55 Minn. 446; Katxenstein y.
Raleigh, etc, R. Co., 84 N. Car. 688;
238
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§§ 323-326
such a ratification is equivalent to a prior authority. Knowledge of
the facts ^* and voluntary action, however, are as essential here as
elsewhere, and the principal by accepting what he was entitled to from
the agent, in ignorance that a subagent had been employed, does not
ratify his appointments*
§ 323* Care required in making authorized appointment. — ^Where
the employment of a subagent is authorized, the agent appointing him
does not impliedly warrant that the person selected by him will be in
all respects a fit and proper agent. The measure of his duty in that
regard is to exercise reasonable care and skill to appoint a suitable
person."
§ 324. Re*delegatioa •— Sub-delegation. — The same principles
which will admit of delegation in any case may suffice to justify a re-
del^ation or sub-delegation. If, for example, a bill is confided to a
London banker for collection or protest in Los Angeles, it may be
quite within the expected or usual or necessary course that the London
banker will confide the matter to his New York correspondent, who
will send it to his Chicago correspondent, who will send it on to a
San Francisco banker, who will confide it to his correspondent in Los
Angeles, who may in turn employ a local notary to certify the protest.
Formal powers not infrequently expressly provide for substitution,
with authority to the substitute to re*delegate.
§ 335. What the delegate may be. — It is not at all essential that
the delegate shall be an agent in the strict sense. The rules hereto-
fore referred to may apply equally where he is a servant, an inde-
pendent contractor, a public service corporation, or a public officer.
One to whom goods are confided for sale may require the services of
a carrier, a porter, a watchman, as well as of a broker, factor or auc-
tioneer. If it becomes necessary to transport the goods from one
place to another, the question of who may sue the carrier for his de-
fault, for example, may involve the same considerations as though an
auctioneer had been employed.
§ 326. Whose agent, etc.» is the subagent — ^Wherever a subagent,
etc., has been lawfully employed, in pursuance of the foregoing rules,
Teucher v. Hiatt, 23 Iowa, 527, 92 Am. 74 Rice v. Post, 78 Hun (N. Y.), 547,
Dec. 440; Sedgwick v. Bliss, 23 Neb. 61 N. Y. St. Rep. 229.
617; Dewing v. Hutton, 48 W. Va. to Kuhnert v. Angell, 10 N. Dak. 69 ;
576; Bellinger v. Collins, 117 Iowa, Baldwin v. Bank, 1 La, Ann. 13, 46
173; Sergeant ▼. Enilen, 141 Pa. 620. Am. Dec. 72; Tiernan v. Commercial
See also Terrell y. MeCown, 91 Tex. Bank, 7 How. (Miss.) 648, 40 Am.
231. Dec. 83 ; Conwell v. Voorhees, 13 Ohio,
T8 Winkleback v. National Exch. 523, 42 Am. Dec. 206.
Bank, 165 Mo. A pp. 1.
239
§ 327] 1'he; law of agency [book i
he undoubtedly acts so far with the consent of the principal that the
latter is bound by the act of the subagent done within the authority
confided to him and within the scope of the authority conferred upon
the original agent. Whether, however, he is the agent, etc., of the
principal in such sense that there is a privity of contract between
them — ^so that, for example, the principal may or must look to the
subagent for redress if the authority be improperly exercised, or that
the subagent may or must look only to the principal for indemnity or
compensation — is another matter. The principal may, of course, au-
thorize the employment of the subagent on his account and as his
agent and thus create privity of contract between them. But he may
also do less. He may occupy a middle ground. He may clearly be
willing to consent that his agent may perform the duty through a sub-
stitute employed at the agent's risk and expense, when he would not be
willing, at his owfi risk and expense, to have such a substitute em-
ployed.
Thus a principal who has put goods for sale into the hands of an
agent, — ^the agent having no power to delegate his authority and it
being perhaps a wrongful act on the part of the agent to entrust them
to any one else and a wrongful act on the part of the latter to exercise
any control over them, — ^may be willing that his agent may employ a
subagent so far that the entrusting of the goods by the agent to the
subagent, or the exercise of control over them by the latter, or the
latter's sale of them upon the terms prescribed to the agent, may all
be acts done with the principal's consent, and yet not done by a per-
son who stands in any contractual relations to the principal, or who
can look to the principal for compensation, or for whose promises or
conduct the principal would be responsible to third persons.
The familiar case of the independent contractor also furnishes an
analogy. The employer here expects that the contractor will avail
himself of agencies and means selected by himself and for which he is
responsible; but the employer does not expect to answer for the de-
faults of the contractor's servants or to pay them for their services.
The principal may consent to the employment of subagents on such
terms as please him, and where he has consented only upon the ex-
press or implied condition that the subagent shall not be deemed his
agent, that ccmdition, as between the parties, must control.
§ 327. — ^— This distinction has been made in many cases.
Thus it is said by Senator Verplanck in a leading case ^' in New York:
7« Allen V. Merchants' Bank, 22 Wend. (N. Y.) 215, 34 Am. Dec 289.
240
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§§ 328, 329
'There is a wide diflference made as well by positive law as by the
reason of the thing itself between a contract or undertaking to do a
thing, and the delegation of an agent or attorney to procure the doing
of the same thing — between a contract for building a house, for ex-
ample, and the appointment of an overseer or superintendent, author-
ized and undertaking to act for the principal in having the house
built. The contractor is bound to answer for any negligence or de-
fault in the performance of his contract, although such negligence or
default be not his own, but that of some sub-contractor or under work-
man. Not so the mere representative agent who discharges his whole
duty if he acts with good faith and ordinary diligence in the selection
of his materials, the forming of his contracts and the choice of his
workmen."
§ 328. The same distinction is also stated in much the
same way by Mr. Justice Blatchford in the supreme court of the United
States. "The distinction," he says, "between the liability of one who
contracts to do a thing and that of one who merely receives a delega-
tion of authority to act for another is a fundamental one. If the
agency is an undertaking to do the business, the original principal may
look to the immediate contractor with himself, and is not obliged to
look to inferior or distant under-contractors or subagents when de-
faults occur injurious to his interest. * * * The nature of the
contract is the test. If the contract be only for the immediate services
of the agent, and for his faithful conduct as representing his principal,
the responsibility ceases with the limits of the personal services under-
taken. But when the contract looks mainly to the thing to be done,
and the undertaking is for the due use of all proper means to per-
formance, the responsibility extends to all necessary and proper means
to accomplish the object, by whomsoever used." ^'
§ 329. So where the question was as to the liability of a
factor for the defaults of another to whom he had sent the goods for
sale, the latter [the defendant] contended that if plaintiffs [the prin-
cipals] told him to "do with the goods as with his own," or if "the em-
ployment of a subagent was necessary, and that fact was known to
plaintiffs," then, in either ievent, defendant had a right to send the
goods to a factor of good credit, to whom and not to the defendant,
plaintiffs should look for their proper disposition. But the court said,
"We do not think that if the jury had found both of these facts in
favor of defendant it necessarily followed that he would not be liable
TT Exchange National Bank t. Third National Bank, 112 U. S. 276, 2S L.
1B± 722.
16 241
§ 330] THE LAW OF AGENCY [BOOK I
for the default of the person so selected. The inquiry still remained^
was this person selected as the servant of the agent or factor, or did
he become the agent of the principal? It by no means follows, where
produce, for instance, is intrusted to a commission merchant in Du-
buque, and sent forward by him to his correspondent or agent at Chi-
cago or St. Louis, that a privity of contract exists between such cor-
respondent and principal, to the extent that the original factor is
released and the subagent only is liable. Nor does it make any dif-
ference that the principal or consignor knows that it must and will be
sent forward to find a market He has a right to, and is presumed to
repose confidence in, the financial ability and business capacity of the
person so employed, and if such factor employs other persons, he does
so upon his own responsibility; and, having greater facilities for in-
forming himself and extending his business relations, upon him and
not upon the principal should fall the loss of any negligence or default.
If, however, another person has been substituted who, with the knowl-
edge and approbation of the principal, takes the place of the original
factor, or if such substitution is necessary from the very nature of the
business, and this fact is known to the principal, the liability of the
substitute may be direct to the principal, depending upon questions of
good faith and the like on the part of the factor in selecting the sub-
stitute." "
§ 330. Is there privity between principal and subagent — ^The
question whether the subagent has been brought into privity with the
principal and thus made the principal's agent is one not always easy
of determination.''* The statement is indeed found in many cases that
wherever the principal has consented to the appointment of a subagent
privity is thereby created between them; but it is obvious that that
cannot be true as a Universal rule. As has already been pointed out,
the principal may consent to the appointment of a subagent as his
agent or as the agent's agent. It may be urged that the agent does
not need the consent of the principal to the appointment of the sub-
agent as the agent's agent, but however true that may be as to the
T8 Loomis ▼. Simpson, 18 Iowa, 532. relied upon him, It was held that the
Where an I«ngllsh principal em- subagent could not claim commla-
ployed an agent to send goods to the slons from the principal directly.
Amsterdam market and there to Schmaling v. Thomllnson, 6 Tauii-
dispose of them and It was acknowl- ton, 147.
edged that the employment of some to See an interesting article on the
subagent was in the contemplation of question so far as It relates to Dutch-
the parties, but yet that the prin- South African law in 26 South
cipal dealt only with the agent and' African Law Journal, 517.
242
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 331
agent's affairs it is, as has been pointed out, not necessarily true as to
the principal's affairs. Without the principars consent many acts of
the subagent in dealing with the principal's property would simply
amount to a conversion.
It being thus true that the principal may consent to the appoint*
ment of a subagent as his agent or as the agent's agent, it becomes
material to determine which form of consent has been given in a par-
ticular case. The consent may be expressly given and show its extent
by its own terms; but in the ordinary case it is not expressly given,
and its extent must be determined from the facts and circumstances of
the case. In order to justify the inference of an employment as the
principal's agent, the circumstances must be such as to reasonably
warrant the conclusion that the principal has taken the subagent ^as his
agent, and thereby, ordinarily, becoming liable for his compensation,
assuming responsibility for his conduct, accepting the subagent's re-
sponsibility to him, and releasing the original agent from such respon-
sibility.
Whether the principal has done so or not is ordinarily a question of
fact, to be determined by the jury, unless the inference is so clear as to
justify the court in deciding what it is.
§ 331. — — The form in which the question most frequently
presents itself is in determining the liability of a bank for the defaults
of its correspondent banks in the process of collecting checks, notes
and the like delivered to it for collection. Upon this question the au-
thorities, as will be seen, are hopelessly in conflict — not, however, as
to the rule of liability when the nature of the undertaking is deter-
mined but as to the proper constructi<Hi of the facts in deciding upon
the nature of the undertaking.'*
>o See po9t, Book IV, Chap. II, where
the queetlon ie fuUy considered. See
also Exchange 'Nat Bank v. Third
Nat Bank, 112 U. S. 276, 2S L. M.
722; Smith v. National Bank, 191 Fed.
226; Mackersy v. Ramflays, 9 Gh &
Fin. 818; Ayrault v. Pacific Bank, 47
N. Y. 570, 7 Am. Rep. 489; Simpson
T. Waldby, 63 Mich. 439; Bank v.
Bntler, 41 Ohio St 519, 52 Am. Rep.
94; TltuB V. Bank, 35 N. J. L. 588;
Power V. First Nat Bank, 6 Mont.
262; Streissguth v. Nat Bank, 43
Minn. 50, 19 Am. St R. 213, 7 L.
R. A. 363; Campbell y. London,
•etc.. Bank, 1 Roscoe (So. Afr.),
419.' Compare Fabens v. Mercan-
tile Bank, 23 Pick. 330, 34 Am. Dec.
59; Lawrence v. Stonington Bank, 6
Conn. 521; Jackson v. Union Bank,
6 H. ft J. (Md.) 146; Aetna Ins. Co.
V. Alton Bank, 25 111. 243; Stacy v.
Dane County Bank, 12 Wis. 629;
Guellck y. Nat State Bank, 56 Iowa,
434, 41 Am. Rep. 110; Third Nat
Bank y. Vicksburg Bank, 61 Miss.
112, 48 Am. Rep. 78; Daly v. Bank.
56 Mo. 94, 17 Am. Rep. 663; I^nda
V. Traders' Bank, 118 Mo. App. 356;
Bank of LouisyiUe y. First Nat
Bank, 8 Baxt (Tenn.) 101, 85 Am.
Rep. 691; Merchants' Nat Bank y.
243
§ 332]
THE LAW OF AGENCY
[book 1
§ 332. Effect of emplo]mtient — Subagent is principal's agent when
appointment as such authorized. — ^It is not the purpose here to go
minutely into the mutual rights and obligations of the principal, agent,
and subagent. This subject is reserved for subsequent consideration
as each of the various relations shall be taken up. But —
In general, — If, under the circumstances, it appears that the agent
employed the subagent for his principal, and by his authority, ex-
pressed or implied, then the subagent is the agent of the principal ; his
acts and contracts within the scope of the authority of the original
agent and lawfully delegated to him are binding upon his principal.*^
Notice to him is notice to his principal as in the case of other agents."*
Goodman, 109 Pa. 422, 58 Am. Rep.
728; Hyde y. Planters' Bank, 17 La.
560; Irwin v. Reeves Pulley Co., 20
Ind. App. 101. This list does not
purport to be exhauetive.
81 Thus where the appointment of
a subagent to collect a mortgage was
held to be within the implied power
of the agent, payment of the mort-
gage debt to the subagent was pay-
ment to his principal Breck v.
Meeker, 68 Neb. 99.
Payment to a subagent appointed
with the authority of the principal
under the rule stated is payment to
the principal. Hoag v. Graves, 81
Mich. 628.
So where it was held that the gen-
eral manager of a transportation
company had implied power to ap-
point a local agent, the transporta-
tion company was held bound. by a
contract made in the course of his
employment by such a local agent
on behalf of the company. Ten-
nessee R. Trans. Co. v. Kavanaugh,
101 Ala. 1.
Where the appointment of a pur-
chasing agent is within the implied
power of a general manager, the
principal is liable for the price of
goods properly bought by such a pur-
chasing agent Luttrell v. Martin,
112 N. C. 593.
Where an agent to charter a boat
upon a certain condition with the-
knowledge and consent of the prin-
cipal employed a vessel broker that
vessel broker was held to be the
agent of the principal and the prln*
cipal bound by his agreement un-
conditionally to charter the boat.
Saveland v. Green, 40 Wis. 48L
Thus where an agent authorized to-
look at certain pieces of land and to
determine what was best to be done
with the land and if he saw fit to-
sell upon such terms as he should
think wise, viewed the land and in-
vestigated its condition, a contract
made by a subagent authorised by
the agent to sell upon terms abso-
lutely set by the agent was held spe-
cifically enforceable against the prin-
cipals. Renwlck v. Bancroft, 66
Iowa, 527.
«2See Notice to Agent; Merritt v.
Huber, 187 Iowa, 135; Bates v.
American Mtg. Co., 87 S. C. 88, 21
L. R. A. 840; Carpenter v. German
American Insurance Co., 135 N. Y.
298; Bergeron v. Pamlioo Ins. &
B. Co., Ill N. C. 45; Phoenix Ins. Co.
V. Ward, 7 Tex. Civ. App. 18; Goode
V. Georgia Home Ins. Co.. 92 Va. 892,
58 Am. St R. 817, 80 L. R. A. 842.
a44
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 332
He may look to the principal for his compensation,®* reimbursement "
or indemnity, as in the case of other agents. He owes to his principal
the same duty of loyalty and fair dealing as other agents.** He must
account to the principal, if he be called upon ^ and is directly respon-
sible to the principal for his conduct; and if damage results from the
conduct of such subagent, the agent is only responsible to his principal
in case he has not exercised due care in the selection oi the subagent.*^
MThus a lawyer who was em- Tex. 811; Wilson v. Smith, 44 U. S.
ployed by a bank to which a note se-
cured by a mortgage had been sent
for collection, and had rendered eerv-
Ices by which the mortgaged prop-
erty was applied to the satisfaotlon
of the debt was allowed to recoTer
compensation against the owner of
the note. Strong y. West, 110 Oa.
882. To the same effect are Davis v.
Matthews, 8 S. D. 300; Hombeck ▼.
Gilmer, 110 La. 600.
So where one of two Joint owners
of a farm authorised the other one
who was in possession and manage-
ment to sell the 'farm, it was held
within the power of the one author-
ised to sell to employ a real estate
broker, and to bind them both by an
agreement to pay commissions to
such a broker. Lee v. Conrad, 140
Iowa, 16.
•4 80 where a note had been put by
an agent to collect in a bank for col-
lection and the bank with the mis-
taken idea that the amount of the
note had been paid, paid the amount
of it to the agent, the principal was
not allowed, in a suit against him by
the bank to recover the money after
the agent had paid it over, to object
that there was no privity between
them. It was held that they were
not strangers to one another. Apple-
ton Bank v. McGilvray, 70 Mass. (4
Gray) 518, 64 Am. Dec. 92.
M Thus the subagent may not sell
to himself or make secret profits and
If he does he will be liable to the
principal. DeBussche v. Alt, 8
Chan. Div. 286; Powell v. Jones, C. A.
(1905) 1 K. B. 11.
M Commercial Bank v. Jones, 18
(3 How.) 768, 11 L. Ed. 820. See
also Miller v. Farmers', etc.. Bank,
30 Md. 392.
<7 Where It was understood that a
steamship agent was to have sub-
agents, and the agent distributed
tickets among than, he was not lia-
ble in replevin for the tickets in the
hands of subagents after the termi-
nation of his agency, as the sub-
agents were also agents of the com-
pany. National Steamship Co. v.
Sheahan, 132 N. Y. 461, 10 L. R. A. 782.
So where a bank had a note for
collection and placed it in the haads
of a notary chosen with reasonable
diligence, to demand payment and if
necessary proteet the note, it was
held that the bank was not liable for
the notary's failare to do his duty.
Tieiiian v. Commercial Bank of
Natchez, 7 Howard (Miss.), 648, 40
Am. Dec 83. To the same effect:
Baldwin v. Bank of Louisiana, 1 La.
Ann. 13, 46 Am. Dec. 72; Warren
Bank v. Suffolk Bank, 64 Mass. (10
Cush.) 582.
So where an agent to collect a
note was directed to hire an at-
torney to collect the note by suit, and
the owner of the note claimed that
the attorney, who was the one to
whom the agent sent its own busi-
ness and who was thought therefore
to have been chosen with reasonable
care, had unreasonably delayed in
prosecuting the suit to Judgment, it
was held that if that were the fact
the agent would not be liable for the
lawyer's omission to the owner of
the note. €k>nmaerelal Bank v. Mar-
tin, 1 La. Ann. 344, 46 Am. Dec. 87.
245
§ 333]
THE LAW OP AGENCY
[book I
For the torts of such subagent to third persons the agent would not be
liable merely by virtue of his relation, but the principal would be liable
as for the torts of any agent.*'
§ 333. •-*-—— But he is agent's agent in other cases. — ^But if the
agent, having undertaken to transact the business of his principal, em-
ploys a subagent on his own account to assist him in what he has un-
dertaken to do, even though he does so with the consent of the princi-
So where It was held to be within
the implied power of an agent to col-
lect a note secured by a foreign mort-
gage to employ a subagent, it was
held that the agent was not liable In
a suit by the principal for the con*
version of the note» for the act of
the subagent in surrendering the
note and accepting a renewal vote.
Davis V. King, 66 Conn. 466, 60 ASL
St R. 104.
So where with at least the knowl-
edge and approval of the railway
company a station agent had a cadi-
ier and a transfer agent, and the sta-
tion agenfs own time was filled with
other duties it was held that the sta-
tion agent and his sureties were not
liable to the railway company for the
default of one or both of the sub-
agents. Louisville, etc., R. R» Go. v.
Blair, 63 Tenn. 407.
So where one employed a commis-
sion merchant to buy cotton In a for-
eign market, and the commission
merchant had implied authority by
virtue of a known custom of the
trade to employ a broker in that
market, the principal could not have
of the commission merchant dam-
ages for injury consequent upon the
broker's negligence in selecting the
cotton and in preparing it for ship-
ment, where the broker was one se-
lected by the commission merchant
with usual and reasonable care.
Darling v. Stanwood, 96 Mass. (14
Allen) 604.
So where a commission merchant
to ship cotton used "reasonable skill
and diligence" in the choice of a ves-
sel he was held not responsible to
the owner of the cotton for the neg-
ligence of the master. McCants v.
Wells. 4 S. C. 381.
So where a real estate agent au-
thorized to employ a workman to
make repairs used due care in select-
ing him, the agent was not liable to
his principal for the workman's neg-
ligence. Morris v. Warlick* 118 Ga.
421.
8s Where the general manager and
the train despatcher properly em-
ployed a watchman to keep strikers
from the right of way of a railway
and the watchman in the course of
his employment made an improper
assault upon the t>laintiit it was held
that the watchman and the railway
company were liable to the plaintiff
but that the general manager and
the train despatcher were not Can-
field V. C. R. I. A P. By. Ck>., 59 Mo.
App. 364.
So where the owner of land had
directed that his real estate agent
have a fence put upon the land and
the agent used due care in the selec^
tion of a workman, it was held in a
suit against the agent for injuries
sustained by the plaintiCTs horse al-
leged to be due to negligent construc-
tion of the fence, that the agent was
not liable, and it was said that the
workman and the owner would be li-
able. Kuhnert v. Angell, 10 N. D.
69, 88 Am. St. R. 675.
Where the agent, e. g. a factor
brings suit on the contract, he is
then affected so far as the defendant
is concerned by any acts of his snb-
agent which would constitute a de-
fence against any principaL Harral-
son V. Stein, 60 Ala. 347.
246
CHAP. Vl] . APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 333
pal he does so at his own risk, and there is no privity between such
subagent and the principal. The subagent is, therefore, the agent of
the agent only. His acts and contracts would bind the principal only
so far as they could be deemed to be the authorized acts of the original
agent.** Notice to or knowledge in him would not be imputed to the
principal."* His statements or admissions except in so far as they
could be deemed to be the statements or admissions of the agent would
not be binding upon the principal.®^ He could not look to the prin-
cipal for his compensation.*' The principal would have no claim
against him for accounting** which he would not have against any
«• National Bank v* Old Town the compensation of subagents, the
Bank, 112 Fed. 726; Winkleback v.
National Exchange Bank, 155 Mo.
App. 1.
Payment to the agent of the agent
is not payment to the principal un-
less It Is paid over by the subagent
to the agent. Chouteau Land Co. ▼.
Chrisman, 204 Mo. 371.
Sale by unauthorized subagent
does not bind principal. Hodkinson
v. McNeal Mach. Co., 161 Mo. App. 87.
•• Waldman v. Ins. Co., ^1 Ala. 170,
24 Am. St R. 833; Hoover v. Wise,
91 U. S. 308» 23 L.. Ed. 392.
•1 Where without express or im-
plied authority an agent for his own
convenience employs a clerk, the
principal is not bound by the acts or
statements of such clerk. Spring-
field, etc., Ins. Co. v. De Jamett, 111
Ala. 248.
A2ln such a case he must look to
the agent only. Houston Cotton Oil
Mill & Mfg. Co. V. Bibby, 43 Tex. Civ.
App. 100. See also Triplett v. Jack-
son, 130 Iowa, 40S.
In such a case the rights of a sub-
agent to commissions against the
principal would in any case be lim-
ited by the contract which the agent
has made with the principal. Brown
V. Haigh, 118 La. 563.
Where the contract between the
agent and the subagent provides that
the subagent is to look to the agent
for his compensation and the con-
tract between the agent and the prin-
cipal expressly provides that the
principal shall not be responsible for
subagent can acquire no claim
against the principal for compensa-
tion at ' a time or under circum-
stances when the principal would not
be liable to the agent. Union Cas-
ualty Co. V. Gray, 114 Fed. 422.
An agent authorized merely to so^
licit and take orders within the ter-
ritory assigned to him, and to send
them to the company, and who "could
delegate his authority only to the ex-
tent of employing his own salesmen,"
cannot bind his principal by a con-
tract to pay a salesman so employed
for his services. National Cash Reg-
ister Co. V. Hagan, 87 Tex. Civ. Appi
281.
Where It was acknowledged that
the principal must have contem-
plated the employment of some sub-
agent to handle goods at a foreign
market, but where the court thought
that the circumstances were such
that the principal looked fully and
wholly to the agent and to him
alone, it was held that the subagent
could maintain no claim for commis-
sion against the principal. Schmal-
ing V. Thomllnson, 6 Taunton, 147.
MNew Zealand Land Co. v. Wat-
son, 7 Q. B. Div. 374; Lock wood v.
Abdy, 14 Simons, 437; Att'y General
V. Earl of Chesterfield, 18 Beavan,
596; Mawr v. Pearson, 28 Beavan,
196. See also Pinto v. Santos, 1
Marsh. 132; Robbins v. Fennell, 11
Q. B. 248. Where a lawyer author-
ized to collect a debt due to a client
left his business in the hands of a
247
§ 333]
LAW OF AGENCY
[book I
Stranger. He would not be liable to the principal for negligertce/*
except where any stranger would be, but his liability would be to the
agent only,*' while the agent would be responsible to the principal for
the manner in which the business had been done, whether by himself,
or his servant or his agent.**
As intimated above, even though no privity exists between the prin-
cipal and the subagent, yet, if the subagent were employed by the agent
clerk, who received and receipted for
the money due the cUent, it was held
in a suit hy the client against the
clerk that the clerk's duty to account
was to the lawyer only and that the
client could have no action against
him. Stephens v. Badcock, 3 B. ft
Adol. 854.
Where there was a bill for a dis-
covery and for an accounting, it was
held that a man who made a defense
that his only concern with the affair
was as agent of the agent, he was
properly a witness and not an ac-
counting party. Cartwright v.
Hately, 1 Vesey Jr, 292.
Where one part owner of a ship
was entruBted with the management
of the ship and employed to collect
rents one who acted and professed to
act as the agent of the managing
owner and who accounted to such
owner, the other part owners could
not maintain a suit against the sub-
agent for money which he had col-
lected on the ship's account Sims
v. Britten, 1 N. & M. 594.
Where an agent who was em-
ployed to secure a loan employed
a subagent who without the knowl-
edge of either the agent or the prin-
cipal received a commission from
the lender as well, It was held that
he was liable to account therefor
to the principal. The court thought
there was evidence to establish priv-
ity of contract between the princi-
pal and the subagent but it held
that the subagent with or with-
out privity of contract stood under a
fiduciary obligation to the people for
whose benefit he knew he was being
employed not to receive compensa-
tion from the other sida Powell v.
Jones (1905), 1 K. B. 11 (C. A.).
•^That is, for any resulting from
the relation.
•s Subagent liable to agent for
negligence. Pownall v. Balr, 78 Pa.
40S.
»« Cowley V. E^tblen, 204 N. Y. 566.
Where an agent to buy stock with
the consent of his principal appoints
a subagent to make the actual pur-
chase, the agent still owes to his
principal the duty to get the stock
from the subagent or to see that It is
delivered to the principal. See Hoog^
ewerfl v. Plack, 101 Md. 871.
So where an agent without author-
ity to appoint a subagent for his own
convenience employed one to go out
and make offers for the sale of lands
which the agent was employed to
sell, the agent was liable to his prin-
cipal tor fraudulent acts of the sub-
agent by which the principal was
damaged. Barnard v. Coffin, 141
Mass. 37, 55 Am. Rep. 443.
Even though the principal con-
sented to the appointment of the sub-
agent, the agent would be responsi-
ble to the principal for his failure
to properly instruct the subagent or
to communicate to him the limita-
tions placed by the principal upon
the authority of both. Strong v.
Stewart. 56 Tenn. (9 Helskell) 137;
Barnard v. Coffin, supra.
Where an agent to sell goods with-
out authority or custom of the trade
to appoint subagents turned over the
goods to another to sell, his act con-
stitutes a conversion for which he is
liable to his principal. Campbell V.
Reeves, 8 Head (Tenn.), 226.
248
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS [§§ 334, 335
as the latter's agent with the consent of the principal, the acts and
contracts of the subagent done for the agent and in his name within
the scope of the agent's authority and within the field in which the
prinjcipal has consented that a subagent may be employed, would bind
the principal as the agent's acts»®^ But where the subagent is ap-
pointed without any consent of the principal eitlier express or implied,
his acts can only be binding upon the principal where they can be re*
garded as the acts of the agent done through a meclianical or minis-
terial agency .••
11.
OF AUTHORITY OF AN AGENT TO EMPLOY AGENTS, SERVANTS AND OTHERS
FOR HIS PRINCIPAL.
§ 334. Agents generally have no such authority.-— The ordinary
agent, employed to do other acts, has usually no authority whatever
to bind his principal by the employment of other agents, servants or
contractors for him. For obvious reasons, this is a matter which the
principal will ordinarily do in person or through an agent appointed
for that purpose.
§ 335* Servants have usually no such authority.— The ordinary
servant, also, has usually no authority to employ other servants, or
agents or contractors for his principal. The test of the existence of
the relation, as has been seen, is that the servant is not employed to
create contractual relations between his master and third persons.
How far a person, employed by a servant to assist him, can impose
•TThus In Llngenfelter v. Phoenix
Ins. Ca, 19 Mo. Anp. 252, it is said,
"There is no occasion for the applica-
tion or discussion of the maxim, del-
egatus non potest delegare; for it
may be conceded that Hubert had no
power to delegate his agency to an-
other or to sublet it But he may
employ clerks and subagents, whose
acts if done in his name and recog-
nized by him, either specially or ac-
cording to his usual method of deal-
ing with them, will be regarded as
his acts, and as such binding on the
principal." This language is quoted
and approved in Rohrbough v. Ex-
press Ck>., 50 W. Va. 14S, 88 Am. St
R. 849.
»8 In Hope V. Dixon, 22 Grant's Ch.
(Ont) 439, it is held that a contract
of sale made by the elerk of the real
estate agent in the name of the agent
but without his knowledge or con-
sent was not binding on the princi-
pal. The statement in Fry on Spe-
cific Performance (4th Ed. 9 581)
that "the clerks of agents are not
agents for the principal unless the
principal has assented to their act-
ing as such" was cited and relied
upon.
249
§§ 33^^338]
THE LAW OF AGENCY
[book X
liability upon the master for such person's negligence, is a question
which will be found fully treated in a later chapter.**
§ 336. Independent contractors have usually no such authority. —
The independent contractor, also, has usually no authority to employ
agents, servants or other contractors for his employer. It is usually
of the very essence of this relation, as has been seen, that the inde-
pendent contractor is to accomplish the results stipulated for, by the
employment of his own agents, servants and employees, and that the
employer shall not be liable for the negligence or defaults of either
the independent contractor himself or of his servants, agents or em-
ployees.
§ 337- Authority to appoint may be expressly conferred. — ^The
authority to appoint or employ agents, servants, contractors, and the
like may, of course, be expressly conferred; and the authority con-
ferred may be general or special. Persons so employed, in accordance
with the authority, become the agents, servants or employees of the
principal and when so employed the same rules apply to the relation as
though they had been employed by the principal in person.^
How an authority to employ, when conferred, is to be construed,
and what can be done under it, are questions which will be found fully
considered in a later chapter, upon the construction of authorities, in
dealing with the construction of an authority to employ.
§ 338. Authority to employ may arise by. implicaticMi. — The au-
thority to employ agents, servants and others may arise by implication.
Thus the chief executive of a corporation may, by virtue of his posi-
tion, have by implication the authority to employ all the agents, serv-
ants and other employees whom the proper conduct of the business
confided to his charge may reasonably require. The general manager
or general superintendent of a business, corporate or otherwise, may
•> Servant ordinarily no authority
to employ (St Liouis, etc., R. Co. v.
Jones, 96 Ark. 668, 87 L. R. A. (N.
S.) 418; Baton v. Delaware, etc., R.
Co., 67 N. Y. 382, 16 Am. Rep. 613;
Cooper V. Lake Erie, etc, R. Co., 136
Ind. 366); unless there be some
emergency (Georgia Pac. R. Ca v.
Propst» 86 Ala. 203; Sloan v. C!entral
lova Ry. Co., 62 Iowa, 728; Fox v.
Chicago, etc, Ry. Co., 86 Iowa, 368,
17 L. R. A. 289).
Liability 01 employer for negli-
gence of a stranger assisting servant
is discussed in Book IV, Ch. V.
1 Where an agent is sent out to do
work requiring assistants, and his
authority real or apparent is to em-
ploy only so many as are necessary
the unnecessary men would not be
the principal's servants; but if he is
authorized to hire as many as he
thinks necessary or as many aa he
pleases, all the men employed will
be the principal's servants, though
the agent employed an unnecessary
number. Beaucage v. Mercer, 206
Mass. 492, 138 Am. St Rep. 401.
250
CHAF. Vl] APPOINTMENT Or AGENTS BY OTHER AGENTS [§§ 339, 34O
have a similar authority^ and some discussion of this question will be
found in a later chapter when dealing with the implied authority of a
manager of business.
It may also arise in particular instances^ as in the case of a collection
agent who may have implied authority to employ attorneys, and the
like, — a matter hereafter to be considered.
It may also arise from considerations such as those which are con-
sidered in the preceding subdivision on Delegation. Thus the neces-
sary and proper conduct of the business,' the custom or course of
trade, an original tacit understanding, the subsequent acquiescence,'
and the like, may, as mere inference of fact, be found sufficient to
justify it. Many of the illustrations and citaticms there given are
equally applicable here.
§ 339* Sudden emergency or special necessity may justify it. —
So, also, as seen in the preceding subdivision on Delegation, there ma>r
be cases in which a sudden emergency or some supervening necessity
may justify, not simply delegation, but the employment of some one to
perform service on the part of the principal. The illustrations and
citations given there are equally applicable here, and need not be re-
peated. What is there said about the narrow range of this authority
is also equally applicable here.
g 340. Authority arising from emergency or necessity a
narrow one— leases when the emergency t>r necessity ceases. — As
has been well pointed out in a leading English case,* "An authority
to be exercised only in cases of emergency, and derived from the ex-
igency of the occasion, is evidently a limited one, and before it can
arise a state of facts must exist which shows that such exigency is
present, or from which it might reasonably be supposed to be present."
So, also, the authority so derived must cease when the emergency
ceases to which it owes its origin. No authority to act, based upon an
emergency, can arise after the emergency itself has ended and things
have resumed their ordinary course."
2 Banks ▼. Southern Bxprees Co., 73
8. Car. ail (where the company was
held Uable for the negligence ot a
man driving its wagon who had been
employed by the company's local
agent) was put upon the ground that
the proper performance of the busi-
ness required and justified it
• See Haloptaok v. Great Northern
Ry. Co., 55 Minn. 446, 26 L.. R. A. 739
(where an inference of authority
was drawn from acquiescence and
retention); Katsenstein v. Raleigh
R- Co., 84 N. Car. 688 (where for
more than two years the general su-
perintendent knew of the employ-
ment and made no objection).
4 Bank of New South Wales v. Ow-
ston, 4 App. Cas. 270.
BBank of New South Wales v.
Owston, 9upra,
251
§ 341]
THE LAW OF AGENCY
[book I
§ 341-
Emplo)mient of physicians and surgeons in emer-
gencies.—- Upon this ground of emergency, is usually placed the
power, not entirely easy to support, held by some courts to reside in
subordinate administrative agents or servants of railroad companies,
such as station agents, yard masters, conduct<M*s, and the like, to em-
ploy, on the company's account, physicians, surgeons or nurses to care
for injured employees or, perhaps, passengers of the road, when there
is no higher authority upon the ground and immediate action seems
necessary.* (The power of the general manager or the general su-
perintendent or other similar officers to authorize or ratify the employ-
ment in such cases is usually regarded as one of the attributes of
management and is discussed in a later section.^) The same power is
• Terre Haute A IndlanapoUs R.
Co. V. McMurray, 98 Ind. 868, 49 Am.
R 752, in which was Bustained the
conductor's employment upon the
railroad's credit of a physician to
give immediate care to a brakeman
injured in an accident, where there
was necessity for immediate care
and the conductor was the highest
agent of the company on the ground
or within practicable communica-
tion, liouisville, etc., Ry. Co. v.
Smith, 121 Ind. 863, 6 L. H. A. 320,
in which it was held that although
in a case of emergency a conductor
who was the highest agent on the
ground might employ upon the rail-
road's credit necessary medical at-
tention for a brakeman injured in
the line of his duty, still he could
not bind the company to pay for an
additional physician. Arkansas, etc.,
R. Co. V. Loughridge, 66 Ark. 300,
and Toledo, etc., R Co. v. Mylott, 6
Ind. App. 488, are cases to the same
effect and upon substantially the
same state of facts.
Bvansyille, etc., R. Co. v. Freeland,
4 Ind. App. 207, in which a physician
was allowed to recover for services
in caring for an employee of the de-
fendant railroads who was injured
in an accident to a construction
train upon which he was being car-
ried. The physician was called by
the conductor of the oonstruetlon
train to give Immediate service.
Chicago, etc., R Co. v. Davis, 94
III. App. 64, in which it Was held
that where a member of a wrecking
crew was injured about his work,
the conductor of the wrecking train
had authority in and for the emer-
gency to employ a physician to care
for the. injury.
As to poiiengers, see Union Pac.
Ry. Co. V. Beatty, 86 Kan. 266, 67
Am. Rep. 160 (denying the power of
subordinate offltiov, but concedinsr
that it may exist In the higher of-
ficers) ; Patterson v. Consolidated
Trac. Co., 9 Pa. Dlst 362 (conceding
that a street car conductor might
have the power in an emergency, but
denying the emergency).
A physician so employed has no
authority to employ assistants on
the company's account Bond v.
Hurd, 31 Mont 314.
A physician regrularly employed by
a railroad company to render first
aid to the injured has therefrom no
implied authority to bind the oom-
pany by an arrangement with a
hotel keeper to board injured per-
sons or their attendants. Southern
Ry. Co. V. Grant, 136 Oa. 808, Ann.
Cas. 1912, a 472.
7 See post Book 11, Ch. Ill, Au'
thority of Agent Authorised to Man-
age Business.
2S2
CHAP. Vl] APPOINTMENT OF AGENTS BY OTHER AGENTS
[§ 341
extended by some courts to similar agents or servants of other cor-
porations,' and if the power exists in the one case upon the principles
of agency it is not easy to see why it should not exist also in the
others, and also in the case of partnerships and individuals.
These cases proceed upon the theory that, by reason of the injury
and the necessity of immediate help to save life or limb,, an emergency
exists which justifies the highest authority upon the spot in procuring,
upon the principal's account, such medical or surgical aid as the emer-
gency demands. The cases however which go furthest in sustaining
the authority limit it strictly to the emergency presented. The author-
ity, it is said, arises with the emergency and with it it expires.*
Other cases deny that the emergency justifies any such authority,*^
and still other cases hold that, whatever may be the rule respecting
railroad companies, the doctrine cannot be extended to other corpora-
tions and individuals.^^
» Texas Bldg. Co. ▼. Albert, 57 Tex.
Civ. App. 688» In which an incorpo-
rated building company was held
upon a contract which the foreman
made with a physician to care for a
workman injured in handling ma-
terials upon a piece of work being
done at a distance from the defend-
ant's office and under the guidance
and control of this foreman. The
services rendered were the immedi-
ate amputation of the legs.
In Weinsberg v. St Louis Cordage
Company, 135 Mo. App. 553, the same
principles were applied although the
agent who employed the physician
was there the president of the com-
pany.
In Holmes v. McAllister, 123 Mich.
493, 48 L. R. A. 896, the court said
that the rule allowing whatever
agent of the principal was in con-
trol and upon the ground to employ
a physician to attend in an emer-
gency an employee injured at his
work applied to cases "in which the
employment is hazardous, exposing
the employees to dangers and risks
greater than those in the ordinary
pursuits of life/' but it was held that
the owner of a laundry was not
bound by a forewoman's employment
of a physician to care for an injury
to an employee which occurred while
that forewoman was in charge, the
court saying "There is no evidence
in this case that employment in a
laundry is accompanied by any such
dangers."
• Evansville, etc., R. Co. v. Free-
land, 4 Ind. App. 207; Toledo, etc,
R. Co. V. Mylott, 6 Ind. App. 438, cit-
ing and quoting Terre Haute, etc.,
R. Co. V. McMurray, 98 Ind. 358, 49
Am. R. 752.
10 Peninsular R. Co. v. Gary, 22
Fla. 856, 1 Am. St R. 194, In which
it was held that the employment of
a physician to care for a man in-
jured at work upon the track was
not binding on the company when
made either by the roadmaster in
charge of the work upon which the
man was injured or by the conductor
who brought in the injured man,
upon his train. The court does not'
discuss the matter of emergency
but cites Terre Haute, etc., R. Co. v.
McMurray, ante, with express disap-
proval.
iiQodshaw v. Struck Bros., 109
Ky. 285, 51 L. R. A. 668; New Pitts-
burgh Coal, etc., Co. v. Shaley, 25
Ind. App. 282 (coal yards); Chaplin
V. Freeland, 7 Ind. App. 676 (an un-
incorporated factory for the manu-
253
§ 34^] THE LAW OF AGENCY [bOOK X
§ 342. Privity between principal and persons thus employed. —
The difficult question, considered in the preceding subdivision, of
privity of contract between the principal and the persons employed by
tlie agent of the principal authorized for that purpose, does not arise
here. By the hypothesis, the person employed under the circumstances
now contemplated, is, if properly employed, employed by the express
or implied authority of the principal. He becomes therefore the agent
or servant of the principal, privity of contract is created between them,
and all the rights, duties and liabilities attach as though the employ-
ment had been made by the principal in person.
facture of buggies); Spelman v. 6. a third person, has no implied au-
C. M. ft M. Co., 26 Mont. 76, 55 L. R. thority tp employ a physician at his
A. 640, 9i Am. St. R. 402. father's expense to care for the in-
A minor son who takes out his fa- Jured person. Habhegger ▼. King*
ther's automobile for his own pleas- 149 Wis. 1, 89 L. R. A. (N. S.) 881.
ure and who, while using it, injures
254
CHAPTER VII
OP RATIPICATIO
$ 843, S44. Purpose of this chapter.
I. WHAT IB MEANT BT RATinOATION
345. In generaL
346. FlctitiouB character of the
doctrine.
347. Ratification defined.
348. Ratification not a form of au-
thorization.
1I49. Ratification differs from es-
toppel.
360. Ratification not a contract
361. No new consideration re-
quired.
362. Ratification wholly optional
with princlpaL
n. WHAT ACTS MAT BB BATIFOED
363. In general.
364. The general ryle.
365. What acta need ratification.
366. — Waiver rather than rati-
fication.
357. Torts may be ratified as well
as unauthorized contracts.
368. Void acts cannot be ratified —
Voidable acts may be.
369. Illegal acts cannot be made
legal by ratification.
360. Forgery.
361-363. ^Ratification.
364. Estoppel.
m. WHO MAT BATUT
365. Qeneral rule.
366. State may ratify.
367. Municipal corporations.
368. Private corporations.
369. Partners.
370. Infants.
371. Insane persons — ^Persons un-
der duress.
372. Married women.
873. Executor, admfuistrator, etc.
374. When agents may ratify.
375. Subagents.
IT. CONDITIONS OF BATIFICATION
376. Certain conditions must be
satisfied.
377. 1. Principal must have been
identified.
378. 2. Principal must have been
in existence.
379. — ^ Administrator, assignee,
etc.
380-383. Corporations subse-
quently organized.
384, 3. Transaction must still
stand.
385. 4. Principal must have pres-
ent ability.
386-392. 5. Act must have been
done as agent
393-396. 6. Principal must have
Icnowledge of material f^ts.
397. What facts are material
within this rule.
398-402. Illustrations.
403. ^^ Actual knowledge re-
quired.
— Wilful ignorance.
— Presumption of knowl-
edge.
Knowledge Inferred
from facts.
— Imputed knowledge-H
404.
405.
406.
407.
Knowledge of agents — Of
the particular agent.
408. Duty to inquire.
409. Effect of ratification
without knowledge.
410. 7. No ratification of part of
an act only.
411. Responsibility ' for in-
strumentailities employed.
^55
THE LAW OF AGENCY
[book I
412, 413. Limitations— Collat-
eral contracts.
414. Ck)llateral stipulation
which makes whole con-
tract Illegal.
415. Divisible acts— Involun-
tary receipt, etc.
416. Intention to ratify.
T. WUAT AMOUNTS TO A BATIFIGATION
417. Importance of question.
418. Written or unwritten — ^Ex-
press or Implied.
1, Expre8$ Ratification
419. General rule.
a. By Instrument under Seal
420. Deed at common law ratified
only by Instrument under
seal.
421. Rule relaxed in partner-
ship cases.
422. Massachusetts rule.
423. — — Modern rule more lib-
eral.
424. "trnnecessary seal may be
disregarded.
425. ^— By power of attorney
subsequently granted.
h. By Instrnment in WHting
426. Where authority must be con-
ferred by writing, ratifica-
tion in writing necessary.
427. Contracts for sale or
leasing of land.
428. Written ratification not other-
wise required.
429. "Lawfully authorized" under
statute of frauds.
f. Implied Ratification
430. In generaL
431. Variety of methods.
482. 1. By declaring approval.
483. 2. By proceeding to perform.
484. 8. By aocepting benefits.
485. Must take benefits with
'burdens.
486. — Duty to restore what he
has received.
437.
438.
439.
440.
441-
444,
446.
447,
449.
450.
451.
452.
458.
454,
456.
457.
458.
459,
461,
463.
464.
465.
466.
467.
468.
469.
470.
47L
— Principal must have re-
ceived proceeds — Money ap-
parently free from trust.
— Knowledge of facta in-
dispensable.
— Acceptance and receipt
must have been voluntary
and confirmatory.
— Mere eftorts to avoid loss
no ratification.
443. Illustrations of gen-
eral rule.
445.
Other instances.
4. By bringing suits based on
validity of agent's act
448. lUastrations.
Suits based on invalidity
of agents act no ratifica-
tion.
'— - Delay In suing to dis-
affirm.
5. By aequiesoence.
— - What meant by acquies-
cence.
- Mere silence or failure
to repudiate.
455. How differs from es-
toppel.
Elements of estoppel
may be present
Other statements of the
rule.
Relations of the parties.
460. Failure to dissent as be-
tween principal and agent
462. As between princi-
pal and the other party.
Principal must act within a
reasonable time.
Same rules apply to private
corporations.
And to municipal and
quasi-municipal corpora-
tions.
How when assumed agent Is
a mere stranger.
The contrary view.
; The true rule.
Silence does not ratify
if stranger acts in his own
name.
How when former agent
continues to act
Acquiescenoe coupled with
256
• VII ]
RATIFICATION
conduct inooiiBtsteiit with
dlsapfifovaL
i7S-«74. niiwtrationi of nitification
by aequfa8eenc&
475. Retalnifig in employment as
ratiflcatloti.
476. Rule of ratiflcatiMi by acqul-
eKMnce api^ies only to prin-
YL MARnvaTATIOM OF BATIFICATIOir
477. Manifestation necessary.
478. To whom.
VII. PBOOF OF THB .RAXmCATIOlT
479. Burden of proof.
480. Amount of proof — ^Liberal in-
terpretation of facts.
481. Court or jury.
Vm. THE RESULTS OT KATinOATION
482. What for this subdivision.
1. In General
482. Hnally equivalent to prece-
dent authority.
484. Scope and duration.
485. May be so alleged in
pleadings.
486. Cannot aftect iBteryening
rights of third persons.
487. Defenses, conditions,
rights to cancel.
488. Law of what place governs.
489. Ratification irrevocable —
Changing repudiation to
ratification.
2. Am betvDeen Principal and Agent
49(K. In general.
491. General effect to release
agent, etc.
492, 498. Limitations.
494. Methods of ratification.
495. Ratification of entire act
496. Knowledge of the facts.
497. Agent's motives unim-
portant.
498. Uberal interpretation.
499. Acts of subagent.
600. Gives agent claim for compen-
sation, reimbursement, etc.
601. BSntltles principal to benefits
as against agent
17 257
S. As between Principal oiuf other
Party
502. In general.
a. Other Party against Princlpai
503. What considierations involved.
504. 505. 1. In contract cases.
506. 2. In tort cases.
507. Unique character of doc-
trine.
h. Principal Against the Other Party.
508w What considerations ftnvolTed
here.
609, 610. 1. In contract — ^May prin-
cipal ratify and enforoe nii-
autherised eondract?
611, 512. If agent and other party
have previously consented
to cancel the contract
618. If other party has attempted
to withdraw from the con-
tract.
614. If agent and other party have
dcme nothing to cancel the
contract
616. The Wisconsin cases —
Dodge V. Hopkins.
616-618. The Bnglish cases —
Bolton V. Lambert
619-521. American cases.
522. Rules compared — The
weight of authority.
623. Applications of the mla
524, 625. Ratification by in-
sured of insurance effected
for his benefit
— Defence based on ratifi-
626. —
cation.
627. 2. In tort cases.
628. 8. Other acts creating rights
or duties*
529. Actions, ratification of
unauthorized.
630. Assignment of cause of
action.
531. Adding parties to exist*
ing actions.
— Attachment afildavits and
532.
538.
bonds.
Declaration of maturity
to accelerate action.
§§ 343»
344] THE LAW
534. -
— Demand of payment, de-
livery, etc
535. -
— Notice of abandonment.
536. -
— Notice of dishonor.
537. -
— Notice to quit
638. -
— Options.
539. -
— Stoppage in transit
>F AGENCY [book I
542. Ratification releasee agent In
contract cases.
543. — Limitations — Ratifica-
tion after salt begun—
Change In condiuons.
644. Failure of the ratifica-
tion.
645. Ratification releases agent on
4. A3 Between Agent and Other justifiable trespass.
^ Party. 646. In tort case ratification does
not release agent but
540, 541. In generaL charges prlnclpaL
§ 343. Purpose of this chapter. — ^The matters thus far dealt with
have been those which relate to the creation of authority before an act
is done. Cases, however, not infrequently arise in which a person has
done an act as agent for another which proves to be unauthorized,
either because the authority was not broad enough to include it, or
because though it once existed it had expired, or because, perhaps,
there was no semblance at any time of authority and the act was based
upon a mere gratuitous assumption of authority. In all of these cases,
of course, the supposed .principal is not bound and may repudiate the
act when brought to his attention.
Suppose, however, on the other hand, that, when the act is brought
to his attention, he approves of it, and would be glad, or at least willing,
to have it regarded as an act done on his account; or, without ex-
pressly deciding upon it, proceeds to treat it as authorized; or, still
further, that he is so indifferent towards it that he simply does nothing,
leaving the matter in such a condition that an inference of approval
is just as legitimate as the inference of disapproval, or, perhaps, is
stronger. What is now the legal situation? May an unauthorized
act be subsequently approved, either expressly or by implication, so as
to give it legal effect ; and if so what are the nature and effect of such
approval ?
§ 344' It would seem, at first view, that such a question
must be answered in the negative. If the act be a contract, and the
principal was not in fact a party to it, for lack of authority, when it
was made, how can any act on his part alone later make him a party
to it ? Are not the rights of parties to contracts ordinarily determined
when the contract is made, and by mutual consent ? Can a new party
be added by his own act alone, when that was not provided for by the
original agreement? If the act be a tort, and the alleged principal
was not liable for it when it was done, how can any later act of his, short
258
CHAP. VII ] RATIFICATION [§ 345
of some express assumption of liability for a consideration, operate to
make him liable? Is a man liable for a tort, merely because he after-
wards approves of it?
To these questions, the law gives no uncertain answer. The lack of
prior authority, however anomalous it may seem, may often be sup-
plied by subsequent approval, so as to give to the act the same effect,
for many purposes, as though it had been originally authorized. This
act or fact of approval is termed ratification, and the existence of this
doctrine of ratification is one of the peculiar facts, heretofore referred
to, which serve to give to agency, as a distinct subject, a place in the
body of the law.
To consider this peculiar doctrine is the purpose of the present chap-
ter. For convenience of treatment the matter may be arranged under
the following heads.
I. What is meant by ratification; II. What acts may be ratified;
III. Who may ratify ; IV. Conditions of ratification ; V. What amounts
to ratification ; and VI. The results of ratificatioiL
WHAT IS MEANT BY RATIFICATION.
§ 345. In general. — ^The doctrine of ratification presents at once one
of the most unique and characteristic chapters in the law of agency,
and also one of the most important. The idea that one who was not
actually a party to a contract — though he was one nominally, — may
actually become one by some subsequent act of his own without new
consideration or the assent of the other party ; or that one who was not
really a participant in a trespass or other wrong — though it was done
on his account — may become responsible for it subsequently merely by
assenting to it, would, as has been stated, seem very strange if it had
not become so familiar.
It is, however, a very old idea. The Roman law had manifestations
of it It appears at an early date in our English law. The French
Civil Code * and the German Civil Code * recognize and to some ex-
tent regulate it. In Scotch law it is usually termed homologation.*
In the early statements of the doctrine ratification was a thing an-
alogous or comparable to authorization. "Ratihabitio mandato conv-
paratur," was usually the form, but since Coke's time it has taken on
1 See the translation by Wright. • See Krsklne's Principles of the
sSee the translation by Wang or Law of Scotland, (20th ed.) par. 11;
LK>ew7. Bell'B Principles, (10th ed.) par. 27.
359
§§ 346, 347]
THE LAW OF AGENCY
[boor I
a Stronger aspect ; it has become equivalent and "nuiihdato aequiparatur^*
is now the almost universal form. Its retroactive force is now also
equally emphasized, and the established maxim has become *'Ofnnis
ratihabUo retrotrakUur, et mandata priori (tequiparaiur'*
§ 346. Fictitious character of the doctritw.— *Two passages from
opinions given in a recent case, in the House of Lords,* may serve to
still further emj^a&ize the extraordinary character of this doctrine, if
further emphasis is needed. Said Lord Macnaghten, ''As a general
rule, only persons who are parties to a contract, acting either by them-
selves or by an authorized agent, can sue or be sued on the contract.
A stranger cannot enforce the contract, nor can it be enforced against
a stranger. That is the rule, but there are exceptions. The most re-
markable exception, I think, results from the doctrine of ratification
as established in English law. That doctrine is thus stated [quoting
from Tindal, C ]., in Wilson v. Tiimman *] . And so by a wholesome
and convenient fiction, a person ratifying the act of another, who,
without authority, has made a contract openly and avowedly on his
behalf, is deemed to be, though in fact he was not, a party to the con-
tract." Said Lord Lindley, "The mere statement of the general nature
of what is meant by ratification shows that it rests on a fiction. Where
a man acts with an authority conferred upon him, no fiction is intro-
duced; but where a man acts without authority and an authority is
imputed to him, a fiction is introduced, and care must be taken not to
treat this fiction as fact."
§ 347. Ratification defined. — Ratification may briefly be defined as
the subsequent adoption and affirmance by one person of an act which
another, without authority, has previously assumed to do for him
while purporting to act as his agent.*
*Kelghley v. Durant, [1901] Ap.
Oas. 240, 1 Br. Rul. Cas. 351. Some
exception could be taken to Lord
Maenaghten's statement for It tfl
clear that, if the proper conditions
exist to make the contract ratifiable,
the assumed principal can scarcely
be regarded as an entire stranger
to it
B 6 M. ft (i. at p. 242.
«S>ee Kelghley r. Durant, [1901]
App. Cas. 240, 1 Br. Rul. Cas. 351;
McCracken ▼. San Francisco, 16 Cal.
591; Zottman v. San Fraacisco, 20
Cal. 96, 81 Am. Dec. 96; Smyth v.
Lynoh, 7 Colo. App. 583; Jameson v.
ColdweU, 25 Oreg. 199; Steffens v.
Nelson, 94 Minn. 365; Minnich v.
Darling, 8 Ind. App. 539.
"Ratlflcathm means the adoption
by a person, as binding upon him-
self, of an act done in such relations
that he may claim it as done for
his benefit although done under
such circiunstanceB as would not
bind him, except for his subsequent
assent, as where an act was done by
a stranger having at the time no
authority to act as his agent, or by
an agent not having adequate au-
thority." Ansonia v. Cooper, 64
Conn. 536
260
\
CHAP. VIl]
RATIFICATION
[§§ 348, 349
§ 34S. Ratification not a form of authorlntion.«-Proiceeding now
to consider the question more fully, it may, in the first place, be ob-
served, that, although frequently said to be such, ratification is not a
form of authoriaation. It is rather a cufe for the lack of authoriza-
tion, or a substitute for authorisation. It piresupposes that there was
no authority ; and there can, in the nature of tlie case, be no authority
to do an act given after the act is done. The utmost that is then pos-
sible is to do something to cure that defect, or to provide some method
of now dealing with the situation as though authority had been given.
§ 349. Ratification differs from estoppeL^^Ratification, moreover,
diflFers from estoppel, though they are often very dosely associated.
Est(^)f>el requires that the party alleging it shall have done something
or omitted to do something, in reliance upon the other party's con-
duct, by which he will now be prejudiced if the facts are shown to be
different from those upon which he relied Ratification requires no
such change of condition or prejudice: if the principal ratifies, the
other party may simply avail himself of it. As soon as ratification
takes plate, the act stands as an authorized one, and not merely as one
whose effect the principal may be estoppel to deny.^ If there be rati-
fication, there is no occasion to resort to estoppel. There may, how-
ever, be cases in which one may be estopped to deny that he has rati-
fied..
The difference in effect may be striking: ratification is retroactive,
estoppel operates upon that done after the act and in reliance upon it ;
Ratification is a subseaae&t act
A contract cannot be ratified before
it is made. Atlanta, etc., Ass'n v.
Boninger, 63 Ark. 213.
T See Steffens v. Nelson, 94 Mlna.
^65; Stiebel r. Halgney, 134 App.
Div. 516; Thompson v. Mannfactnr-
ing Co., 60 W. Va. 42, 6 L. R. A.
(N. S.) 311; Welch v. Brown, 46
Colo. 129; Blood v. La Serena Land
k Water Co., 118 Cal. 221.
In f*orsyth v. Day, 46 Me. 176, it
is said: "The distinction between
a contract intentionally assented to,
or ratified in fact, and an estoppel
to deny the validity of the contract,
is very wide. In the former case
the party is bound, because he in-
tended t6 be; in the latter he is
bound notwithstanding no such in-
tention, because the other party wiU
be prejudioed an^ defrauded by his
conduct, unless the law treat him
as legally bound. In the one case,
the party is bound because tkis eon-
tract contains the necessary in-
gredients to bind him, including a
consideration, ia the other, he is
not bound for these reasons, but be-
cause he has permitted the other
party to act to his prejudiee under
such circumstances, that he must
have known, or be presumed to haTe
known, that such party was acting
on the faith of his conduct and acts
being what they purported to be,
without apprising him to the con-
trary."
Howerer, in St Louis Qtmning
Adr. Co. ▼. Wanamaker, 116 Mo.
App. 270, the ceurt seems to be of
the opinion that the question of
261
§§ 3SO-352]
THE LAW OF AGENCY
[book I
ratification makes the whole act good from the beginning* while es-
toppel may only extend to so much as can be shown to be affected by
the estopping conduct,^
§ 350. Ratification not a contract. — ^Ratification is an approval of
a previous act or contract, which thereby becomes the act or contract
of the person ratifying. It is not a contract to assume such liability.
In the case of contracts, ratification is an affirmance of a contract al-
ready made, as it was made, and as of the date when it was made ; and
it is neither the making of a new contract to be bound by the old one,
nor the making of a new contract in the terms of the old one.
§ 351. No new consideration required. — It therefore requires no
new consideration to support it or the contract ratified. If the con-
tract ratified was upon a sufficient consideration, it is enough.*
§ 352. Ratification wholly optional with principal. — ^Ratification is
ordinarily a matter which is wholly optional with the principal. An act
has been done which, by the hypothesis, was unauthorized. The prin-
cipal may ratify it or he may repudiate it. The choice ordinarily is his
only. No matter how advantageous ratification might be to himself
or to the other party or to the agent, the principal is under no legal
duty to ratify the act.^*
ratification is always cne of estoppel.
Doughaday v. Crowell, 11 N. J. Bq.
201, seems to hold the same view.
8 Thus see Stiebel v. Haigney,
tupra. The defendant had bought,
on speculation, certain stock through
the plaintiffs, and had left it in the
plaintifTs hands for further manip-
ulation. All directions for buying
and selling were given to the plain-
tiffs by one Ryan, through whom the
defendant first opened his account
Ryan gave many of the orders with-
out authority from the defendant
But each time as soon as the
direction was complied with, the
plalntifts had sent the defendant no-
tice thereof and the defendant had
never made any objection. Finally,
after there was a considerable bal-
ance due to the plaintiffs, they ren-
dered an account to the defendant to
which he assented. The suit was
upon that account, and for the in-
terest that had accrued upon it The
defendant claimed that, even al-
though he had in conversation di-
rectly with the plaintiffs fully ad-
mitted the account, yet, inasmuch
as the plaintiffs' action was all prior
to the conversation, there could be
no estoppel. This, the court ad-
mitted was true, but held that there
was in the particular conversation
a ratification^ which would be good
when made after all of the plain-
tiffs' actions were complete,
0 Grant v. Beard, 60 N. H. 129;
Montgomery v. Crossthwait, 90 Ala.
553, 24 Am. St R. 832, 12 L. R. A.
140; Drakely v. Gregg, 8 Wall. (U.
S.) 242, 267, 19 L. Ed. 409; Pearsoll
V. Chapin, 44 Pa. St 9, 17; Lynch
v. Smyth, 25 Oolo. 103; McLeod v.
Morrison, 66 Wash. 683, 88 L. R. A.
(N. S.) 783.
10 Principal may repudiate unau-
thorized act even though it would
be beneficial to him. Williams v.
Storm, 46 Tenn. (6 Coldw.) 203.
262
CHAP. VIl]
RATIFICATION
l§§ 3S3-3SS
If the prindpal decides to repudiate, he is not obliged to allege rea-
sons for doing so; and, if he gives a reason which afterwards proves
to be unfounded, the giving of such untenable reason cannot, in the
absence of something to work an estoppel^ be construed as a ratifica-
tion.
11
WHAT ACTS MAY BE RATIFIED.
§ 353- In general. — The power to ratify an act done for and in be-
half of another, necessarily presupposes in that other the power to do
the act himself, both in the first instance " and at the time of ratifica-
tion ; ^" it also presupposes the power in that other to have authorized
the doing of the act in the first instance and also to authorize its doing
at the time of ratification.^*
§ 354- The general rule. — It is, therefore, the general rule that one
may ratify the previous unauthorized doing by another in his behalf,
of any act whidi he might then and could still lawfully do himself, and
which he might then and could still lawfully delegate to such other to
be done."
§ 355. What acts need ratification. — It must be borne in mind that
the only cases, in which a resort to ratification is necessary, are those
in which everything which was done before or contemporaneously
with the act in question, and all inferences which may properly be
drawn from the things so done, are insufficient to support the act as an
authorized one. The various elements which go to make up authority,
the distinction between real limitations and secret instructions, the doc-
trine of apparent powers or of estoppel, the rules of construction, the
distinctions between general and special agents, and the like,^* must
all have been exhausted before there is any occasion to resort to rati-
fication. What can be deemed to be authorized under any of these
rules does not require ratification.
The persons involved must also be kept in mind. For it is very
clear that there are cases in which, from the standpoint of third per-
- "Brown v. Henry, 172 Mass. 559.
12 Davis y. Lane, 10 N. H. 156.
xsCook V. TuUiB, 18 WalL (U. S.)
332, 21 L. Ed. 933.
i*P09i, § 385,
isZottman v. San Francisco, 20
CaL 96, 81 Am. Dec. 96; McCracken
V. San Francisco, 16 Cal. 619; Brady
V. Mayor, le How. (N. Y.) Pr. 432;
O'Conner v. Arnold, 53 Ind. 205; Ar
mitage v. Widoe, 36 Mich. 124; Su
pervlsors v. Arrighi, 64 Miss. 668
Taymouth v. Koehler, 35 Mich. 22
Clarke v. Lyon Co., 8 Nev. 188
Etheridge v. Price, 73 Tex. 597
Moore v. Hupp, 17 Idaho, 232.
i« See post, Book 11, Chapter I, on
the Nature and Extent of Authority.
263
§§ 356> 357] T^^ ^^^ ^^ AGENCY [book I
sons, the principal may be bound without recourse to ratification, when
he would not be if the question arose between the agent and himself."
The distinction between a real absence of or departure from author-
ity, and a mere irregularity or informality in tlie exercise of a con-
ceded authority, must be observed. For while this distinction is not
always an easy one to draw, it is perfectly clear that not every slight
irregularity or departure from instructions will invalidate an act, so as
to make resort to ratification pecess^ry.^®
§ 3S6. Waiver rather than ratification. — It seems also pos-
sible to say that, what is needed in some cases, is not so much ratifica-
tion as waiver, however much one may hesitate to use that uncertain
and unsatisfactory expression. An act wholly or essentially unauthor-
ized requires ratification; but there may be irregularities in the per-
formance of an authorized act so insignificant that they may be ignored ;
and there seem also to be cases in which, in the exercise of an admitted
authority, there may be irregularities, deficiencies or excesses, not so
insignificant that they may be ignored, nor yet so material as to really
require ratification of the act as an unauthorized one, but as to which
there may be such acquiescence, condonation or disregard as to entitle
one to say that they have been waived. It seems very clear also that,
as an act progresses, there may, from time to time, be such waivers of
conditions or requirements that the act may be valid at completion
without the aid of ratification.
§ 357* Torts may be ratified as well as unauthorized contracts. —
It is immaterial whether the unauthorized act arises from contractual
dealings, or results in or is founded upon a tort. Whoever, with
knowledge of the facts, adopts as his oVvm, or knowingly appropriates
the benefits of, a wrongful act which another has, without authority,
assumed to do in his behalf, will be deemed to have assumed the re-
sponsibility of the act.** Ratification, of course, can not render valid
acts which, when done, were so far illegal in themselves that they could
not be lawfully authorized ; but an act which is a trespass, simply be-
cause it was not authorized, may be ratified by the subsequent approval
» See P08t U 492, 493. wold v. Haven, 25 N. Y. 595, 82 Am.
18 See post, Book III, Cliapter I, on Dec 380; I^e v. West, 47 Qa. 311;
tlie EzecutioQ x>f Authority in Gen- National X<lfe Ins. Co. v. Mlnch, 53
eral. N. Y. 144; Lane v. Black, 21 W. Va,
i^Dempsey v. Chambers, 154 Mass. 617; Tucker v. Jerrls, 75 Me. 184;
330, 26 Am. St Rep. 249. 13 L. R. A. Judd v. Walker, 216 Mo. 812 (af-
219; Wilson v. Tumman, 6 Man. ft firming 114 Mo. App. 128); Levy v.
O. 242; Brewer v. Sparrow, 7 B. & Abramsohn, 39 Misc. 781 (a case of
C. 310; Morehouse v. Northrop, 33 partnership). See also Crockett ▼.
Conn. 880, 89 Am. Dec. 211; Oris- Sibley, 3 Ga. App. 554.'
264
N
CHAP. VIl]
RATIFICATION
[§§ 3S8, 359
of the person whose authority was needed ; a^ bo a person may as-
sume liability by the adoption of an act which Mother has done in his
behalf and as his agent, and which proves to be a trespass or other tort
because, while it might lawfully be done under some circumstances, it
was not lawfully done in the case in question.
S 35^* Void acts cannot be ratified-^Voidable acts may be. — ^An
act which was absolutely void at the time it was done cannot be ratified.
If the principal himself could not lawfully have done the act, and cer-
tainly if it could not lawfully have been done by anyone, no subse-
quent ratification or confirmation can give it force or effect.*® If,
however, the act were voidable merely it can, of course, be rendered
valid."
This rule is of constant application to the contracts of private and
public corporations. Thus if a contract cannot lawfully be made at
all, or can be made only upon certain statutory conditions which have
not been com^rfied with, it cannot be rendered valid by subsequent
ratification ; '^ and it has been held to be immaterial that the statute,
which rendered the contract void, has since been repealed.** But if
the contract be neither immoral nor illegal, and is such as the corpora-
tion might lawfully make under proper circumstances, the only defect
being in the power of the agents who made it^ it may lawfully be
ratified as in the case of a private individual.*^
§ 359* Illegal acts cannot be ratifiedr»-It is but a re-statement of
the same rules to say that an act done in violation of law or in contra-
vention of public policy, the performance of which, as has been seen,
toAnnitage v. Wldoe, 86 Mich.
124; Chapman v. Lee, 47 Ala. 148;
Henry v. State Bank, 181 Iowa, »7;
Day V. McAllister, 15 Gray (Mass.),
433; Workman v. Wright, 88 Ohio
St 405, 31 Am. Rep. 646; Decuir v.
Liejeune, 15 La. Anh. 569; Harrlsoa
T. McHenry, 9 Gkk« 164, 62 Am. Dee.
435; Milford Borotigh v. Water Co,,
124 Pa. 610, 8 L« R. A. 122; Rawlings
V. Neal, 126 N. O. 271; Woodcock v.
Merrimon, 122 N. C. 781; Christiam
B. ft L. Ass'n V. Walton, 181 Pa. 201,
58 Am. 8t Rep. 636.
SI Pearson v. Chapin, 44 Pa. St 9;
Negley v. Lindsay, 67 Pa. St 217, 5
Am. Rep. 427.
vsgpence v. Wilmington Cdtton
Mills, 116 N. C. 210; La France Fire
Eaglfae Go. V. Syracuse, 38 Ml&c.
(N. T.) 616; Packard v» Hayes, 94
Md. 288; Thompson v. West, 59 Neh.
677^ 49 L. R A. 387; Handy v. Globe
Pnh. Ck>M 41 Klnn. 188, 4 U R. A.
466, 16 Am. St R. 695; Rue v. Mo.
Paa Ry. Co^ 74 Tex. 474, 16 Am. St
R. 852; Savage v. Springfield, 88 Ma
App. 828; Markey v. School District
68 Neh. 479; Superviaors v. Anrighl,
64 Miss. 668; Smith v. Newburg^, 77
N. Y. 180; AldricOi v. CoUins, 3 S.
Dak. 164; Baldwin v. Travis County,
40 Tex Civ. App. 149; Plattsmouth
V. Murphy, 74 Nefo. 749.
ssSee Spence v. Wilmlagion Cot-
ton Mills, su^pfXi,
24 See poatt S 867.
265
§ 36o]
THE LAW OF AGENCY
[book 1
could not lawfully be delegated to an agent,=*' cannot be ratified so as
to give it legal effect.*^
But liability for a merely unlawful but -not legally void act may be
incurred by ratification, as is frequently done in the case of trespasses
and other torts.
§ 360. Forgery. — ^Whether a forgery is capable of ratification is a
question upon which there is much conflict of opinion. In every for-
gery there are two parties interested, — ^the state in its efforts to detect
and punish it as a crime ; and the person whose responsibility has been
pledged without his authority.
So far as the right of the state to pursue and punish tlie forger as a
criminal is involved, it is certain that a subsequent ratification by the
individual sought to be charged, will be unavailing to defeat it*^ Any
undertaking to suppress the crime would, as has been seen, be con-
trary to public policy and void.**
From the standpoint of the individual, however, different considera-
tions apply. So far as the act may be regarded merely as the act of
an unauthorized agent, there is no doubt that it may be ratified like
any other unauthorized act. If at the time of the signing, therefore,
the persc»i doing so purported to act as agent, the act might doubtless
be ratified ; *• but such a case is not a case of forgery — it is simply a
case of a profession of authority which does not exist, and, altliough it
may be so made as to render the actor responsible for some other of-
fense, it does not ordinarily constitute forgery.**
28 See ante. Chap. III.
tft State ▼. Matthis, 1 Hill (S. C),
87; Turner v. Phosnlx Ins. Co., 55
Mich. 237; Harrison v. McHenry,
supra. See Willoughby v. Allen, 26
R. I. 531; Hlnaey v. Supreme Lodge,
138 111. App. 248.
ST In McKenzie y. British Linen
Co., 6 App. Cas. 82, Lord Blackburn
says: "I wish to guard against be-
ing supposed to say that if a doou-
ment with an unauthorized signa-
ture was uttered under such cir-
cumstances of intent to defraud that
it amounted to the crime of forgery,
it is in the power of the person
whose name was forged to ratify it
BO as to make a defense for the for^
ger against a criminal charge. I do
not think he could. But if the per-
son whose name was without au-
thority used chooses to ratify the
act, even though known to be a
crime, he makes himself ciyilly re-
sponsible Just as if he had originally
authorized It It Is quite immaterial
whether this ratification was made
to the person who seeks to avail
himself of it or to another." See
also Williams v. Bayley, L. R. 1 H.
L. 200; Howell v. McCrie, 36 Kan.
636, 59 Am. Rep. 584. So in case of
embeaszlement State v. Frisch, 45
La. Ann. 1283.
s« See ante. Chap. III.
s«See Harper y. Devene» 10 La.
Ann. 724.
so Rex v. Arscott, 6 C. & P. 408;
Reg. y. White, 2 C. & K. 404, 2 Cox
C. a 210; Hellbonn's Case, 1 Park.
Cr. Cas. (N. Y.) 429; Mann v. Peo-
ple, 15 Hun (N. Y.), 165; People v.
266
CHAP. VII ]
iLVTIPICATION
[§361
§ 361.
Ratification. — ^The chief difficulty in applying tlie
doctrine of ratification to the case of actual forgery appears to lie in
the fact that, in such a case, the forger usually neither intends nor pur-
ports to be acting as agent at all. The success of the forgery depends
usually upon its appearing to be the personal act of the one whose
name is signed. As will be seen in a later section'^ the doctrine of
ratification can only apply where the act was done as agent; in some
states it is not essential that he shall have purported to act as such ; in
England and in other states it is essential.
In Massachusetts, for example, where it is said to be not essential
that the assumed, agent shall have purported to act as such, it is held
that there may be ratification of a forgery," In England, on the other
liann, 75 N. T. 484, 31 Am. Rep. 482;
Ck)in. y. Foster, 114 Mass. 311, 19 Am.
Rep. 353; State v. WUson, 28 Minn.
52.
SI Post § 386 et aeq,
31 Greenfield Bank v. Crafts, 4
Allen, 447; Wellington v. Jackson,
121 Mass. 157; Central Nat Bank v.
Copp, 184 Mass. 328.
In Greenfield Bank v. Crafts, the
court, after calling attention to the
nnquestioned fact that a merely un-
authorized signing might be ratified,
proceeds: "It is, as It seems to us,
equally competent for the party, he
knowing all the circumstances as to
the signature and intending to adopt
the note, to ratify the same, and
thus confirm what was originally an
unauthorized and illegal act We
are supposing the case of a party
acting with full knowledge of the
manner in which the note was
signed, and the want of authority
on the 1[)art of the actor to sign his
name, but who understandlngly and
unequivocally adopts the signature,
and assumes the note as hie own. It
is difficult to perceive why such
adoption should not bind the party
whose name is placed on the note
as promisor, as effectually as if he
had adopted the note when executed
by one professing to be authorized,
and to act as an agent as Indicated
by the form of the signature, but
who In fact had no authority. It is
however urged that public policy for-
bids sanctioning the ratification of a
forged note, as it may have a ten-
dency to stifle a prosecution for the
criminal offense. It would seem,
however, that this must stand upon
the general principles applicable to
other contracts, and is only to be
defeated where the agreement was
upon the understanding that If the
signature was adopted, the guilty
party was not to be prosecuted for
the criminal offense."
That there may he ratification. —
See also, Bartlett v. Tucker, 104
Mass. 336, 6 Am. Rep. 240; Welling-
ton V. Jackson, 121 Mass. 157: Scott
V. Bank, 23 Can. Sup. Ct 277; Hef-
ner V. Vandolah, 82 111. 483, 14 Am.
Rep. 106; Livings v. Wiler, 32 111.
387; Chicago Edison Co. v. Fay, 164
111. 323; Fay v. Slaughter, 194 111.
157, 88 Am. St R. 148, 56 L. R. A.
564; Thorn v. Bell, Lalor's N. Y.
Suppl. (Hill ft Den.) 430; Howard v.
Duncan, 3 Lans. (N. Y.) 174. [See
also Trustees v. Bowman, 186 N. Y.
521; Commercial Bank v. Warren,
15 N. Y. 577] ; Campbell v.<Jampbell,
133 Cal. 33; Montgomery v. Cross-
thwalt, 90 Ala. 553, 24 Am. St. R. 832,
12 L. R. A. 140, semhle; First Na-
tional Bank v. Gay, 63 Mo. 33, 21
Am. Rep. 430; Cravens v. GiUllan,
63 Mo. 28 [but contra Kelchner v.
Morris, 75 Mo. App. 588. See also
Dow v. Spenny, 29 Mo. 886; Ferry
267
§362]
THE LAW OB. AGENCY
[book I
hand, where it is essential that he shall have purported to act as agent,
it seems to be held that there may be no ratification of a forgery .♦•
In the same line, it is said in Indiana, ''One who commits the crime of
forgery, by signing the name of another to a promissory note, does
not assume to act as the agent of the person whose name is forged.
Upon principle, there would seem to be no room to apply the doctrine
of ratification or adoption of the act in such a case." ^*
§ 36a. — p— If the real meaning of the rule, that the act must
have been done as agent, were that the assumed agent should have
purported to bind another and not himself, then the requirement would
be satisfied- in the most emphatic way in the case of the alleged for-
gery. The person committing the alleged forgery certainly does not
intend to bind himself; what he puts forward purports to be the act
and signature of the assumed principal ; if the signing had been done
in the same way with authority, it would clearly bind the principal
(since, while common, it is npc essential that an authorized agent shall
add anything to the signature of his principal to show that it was
made by an agent) ; the difference between the authorized act and the
forgery amounts then merely to an absence of authority, and it is the
chief function of ratification to supply the lack of authority.
V. Taylor, 33 Mo. 323; Harrla ▼.
Tinder, 109 Mo. App. 563]; Fltz-
patrick ▼. School CommisBioners, 7
Humph. (Tenn.) 224, 46 Am. Dec.
76; Ofen&tein v. Bryan, 20 App. D.
C. 1.
8s Brook y. Hook, L. R. 6 Ezch. 89;
but see M'Kenzle ▼. British Liaen
Co., 6 App. Cas. 82, especially per
Lord Blackburn.
That there rnay not he ratiftoor
tion, except where estoppel is in-
volved or there is a new considerar
tion. McHugh v. Schuylkill County,
67 Pa. 391, 5 Am. Rep. 446; Shisler y.
Vandike, 92 Pa. 447, 37 Am. Rep.
702; Christian B. & L. Ass'n ▼. Wal-
ton, 181 Fa. 201, 59 Am. St Rep.
636; Shroyer v. Smeltzer, 38 Pa.
Super. 400; Workman v. Wright. 33
Ohio St 405, 81 Am. Rep. 546; Cor-
ser v. Paul, 41 N. H. 24, 77 Am. Dec.
753; Woodruff v. Munroe, 38 Md.
146; Henry v. Heeb, 114 Ind. 275, 6
Am. St Rep. 613; Howell t. McCrie,
36 Kan. 636, 59 Am. Re^). 584. The
latest case on this side of the ques-
tion is Shinew v. First National
Bank, 84 Ohio St 297, 36 L. R. A. (N.
S.) 1006.
A mere promise to pay a forged
note does not constitute a ratifica-
tion where there was no duty, no
consideration, and nothing to work
an estoppel. Barry v. Kirkland, 6
Ariz. 1, 40 L. R. A. 471; Owsley v.
Phillips. 78 Ky. 517, 39 Am. Rep. 258.
No ratification without full knowl-
edge. Trustees v. Bowman, 136 N.
y. 521; First Nat Bank v. Martin.
56 Kan. 247. No ratification where
statements were equivocal. Smith v.
Tramel, 68 Iowa, 488.
There can be no ratification so as
to give the forger himself an action
on the instrument Wilson v. Hayes,
40 Minn. 531, 12 Am. St Rep. 754,
4 L. R. A. 196.
S4 Henry v. Heeb» 114 Ind, 275, 5
Am. St Rep. 613.
268
CHAP. VII ]
RATIFICATION
[§§ 353> 364
If the requirement of the rule were, that the act should have been
done in the name and as the act of the alleged principal, then that re-
quirement would be satisfied in the case of forgery. It is only when
so made, that the forgery has any prospect of success.
If the requirement be, that the act shall purport to have been done
by an agent, then the case fails, for the disclosure of that fact would
usually defeat the forger's purp(tee. Moreover, merely signing as
agent without authority, as has been already stated, is usually not a
forgery.*"
§ 363. ■ To the objection that to permit ratification is to en-
courage the compromise of crime — that, in the words of the court in
Indiana "it is impossible in such a case to attribute any motive to the
ratifying party but that of concealing the crime and suppressing the
prosecution," "• it may be replied in the language of the supreme court
of Massachusetts, "that this must stand upon the general principles
applicable to other contracts, and is only to be defeated where the
agreement was upon the understanding that, if the signature was
adopted, the guilty party was not to be prosecuted for the criminal
offense." •'^
§ 364. — Estoppel. — But whatever may be regarded as the
true rule as to ratification, in the abstract, it is certain that the princi-
pal may, upon the discovery of the forgery, so conduct himself, as by
permitting the paper to be taken upon the strength of his assertion of
its g^iuineness ; or by inducing the holder to diatig e his position or
intermit some remedial proceeding upon an assurance of its validity or
a promise of protection; or, generally, by remaining silent as to its
invalidity when in equity and good conscience he ought to have spoken,
as to estop himself from asserting that it is not binding upon him.^®
The elements of estoppel, however, must be ffresent, and if the party
complaining has in no way been prejudiced by the conduct of the other
no estoppel will result.**
•" Ante, § S60 and casei cited.
MIn Henry v. Heeb, iupra,
ST In Greenfield Bank y. Crafts, 4
Allen (Mass.), 447.
S8 M'Kenzle v. Brltiflli Linen Co., 6
App. Cas. 82 (but see Ogllvle v.
West Australian Mtg. Co., [1896] A.
C. 257); Casco Bank v. Keene, 53
Me. 103; Union Bank t. Middle^
brook, 33 Conn. 95; Forsytb y. Day,
46 Me. 176; Buck v. Wood, 85 Me.
204; Crout T. DeWolt, 1 R. I. Z9Z;
Rudd Y. Matthews, 79 Ky. 479, 42
Am. Rep. 281 (see alao Forsythe
Y, Bonta, 6 Bnsh (Ky.), 647); Coben
Y. Teller, 93 Pa. 123 ; Fall Rlyer Nat
Bank Y. Bufflngton» ^7 Mass. 498;
Hefner y. Dawson, 63 111. 463, 14 Am.
Rep. 128; Continental Nat Bank y.
National Bank, 50 N. Y. 575; Lynch
Y. Rlchter, 10 Wash. 486.
8* Second Nat. Bank Y. Wentzel,
151 Pa. 142; Smith y. Trunel, 68
Iowa, 488; Dean Y. Grail, 98 Mich.
269
§§ 365-367]
THE LAW OF AGENCY
BOOK I
III.
WHO MAY RATIFY.
§ 365. The subdivisions of this chapter are so intimately connected,
that much which is applicable to on^ is equally true of another. Thus,
carrying out the line of the last subdivision, it may be said to be the —
General rule, that whoever was capable of doing an act or entering
into a contract which another, unauthorized, has assumed to do or
make for him as his agent, and who is still capable of doing or enter-
ing into it, is capable of ratifying that act or contract, thereby render-
ing it good from the beginning, and the same as though he had himself
originally done or made it.**^
§ 366. State may ratify. — ^Thus, beginning with the highest grade
of organization known, it is settled that the state not only may have
agents, binding it by virtue of a previous authorization, but it may also
incur liability subsequently by ratifying acts and contracts made on its
behalf."
§ 367. Municipal corporations. — ^The rule extends also to munici-
pal and ^Moyi-municipal corporations, which may ratify all those acts
and contracts, — and, as has been seen,^^ those only — which they might
and can lawfully authorize."
591, 89 Am. St. R. 571; Traders' Nat
Bank ▼. Rogers, 167 Mass. 315, 57
Am. St R. 458, 36 L. R. A. 539.
♦owUflon V. Dame, 58 N. H. 392;
Williams V. Butler, 35 III. 544; In-
dianapolis, etc., R. Co. y. Morris, 67
111. 295; Pollock v. Cohen, 82 Ohio
St 514; Sentell v. Kennedy. 29 La.
Ann. 679; McCracken v. San Fran-
cisco, 16 Cal. 591.
41 State V. Torinus, 26 Minn. 1, 37
Am. Rep. 395; Jewell Nursery Co. ▼.
State, 4 S. Dak. 213; State v. Sliaw»
28 Iowa, 67; State v. ETzr. of Buttles,
3 Ohio St 309.
But the st^te, unlike the Indi-
vidual may ratify a portion of the
act only, or forgive certain viola-
tions of duty, without aCCectlng all.
State V. Buchanan (Tenn.). 52 S. W.
480. Where the governor has em-
ployed an expert without authoilty,
but the legislature makes an appro-
priation to pay him, this does not
ratify the c<mtract of employment.
Young V. State, 19 Wash. 634.
4>See ante, § 358.
48 Moore v. Hupp, 17 Idaho, 232;
Ft Wayne v. Lake Shore, etc, R.
Co.. 132 Ind. 558, 32 Am. St R. 277,
18 L. R. A. 367; Union School Furn.
Co. V. School District, 50 Kan. 727,
20 L. R. A. 136; Mound City v.
Snoddy, 53 Kan. 126; School District
V. Aetna Ins. Co., 62 Me. 830; Pack-
ard v. Hayes, 94 Md. 233; Taymouth
V. Koehler, 35 Mich. 22; Highway
Commissioners v. Van Dusan, 40
Mich. 429; Wheat v. Van Tine, 149
Mich. 314; True v. Commissioners,
83 Minn. 293; Supervisors v. Arrlghl,
54 Miss. 668; Savage v. Springfield,
83 Mo. App. 323; Markey v. School
District 58 Neh. 479; Omaha v.
Croft, 60 Neb. 57; Qreen v. Cape
May, 41 N. J. L. 45; Smith v. New-
270
CHAP. VIl]
RATIFICATION
[§368
§ 368. Private corporations.^-And this rule is as true in the case
of a private corporation as of an individual. An act not within the
corporate powers of the corporation cannot be rendered operative by
ratification,** but if the act were one which the corporation might law-
fully have done or authorized in the first instance, its unauthorized
performance, in its behalf, may be ratified in the same manner and
with the like effect as by an individual.**
So, as in the case of an individual, it is not necessary that there
should be a direct proceeding, with an express intention to ratify. It
may be done indirectly, and by acts of recognition or acquiescence, or
by acts inconsistent with repudiation or disapproval.**
burgh* 77 N. Y. 180; CKBrien v. City
of Niagara Falls, 66 Misc. 92; Hague
▼. Philadelphia, 48 Pa. St 527;
Silsby Mfg. Ck). v. Allentown, 158 Pa.
319; In re Shlloh St., 165 Pa. 886,
44 Am. St. R, 671; Willoughby v.
Allen, 26 R I. 631; Aldrich v. Col-
lins, 8 S. Dak. 164; Denlson y.
Poster (Tex. Civ. App), 28 S. W.
1062; Coxtimerclal EHect Co. v. Ta-
coma» 20 Wash* 288, 72 Am. St R.
103; Koch v. Milwaukee, 89 Wis.
220; Findlay v. Pertz, 13 C. C. A.
669, 66 Fed. 427, 29 L. R. A. 188.
**"A contract which a corporation
has no power to make. It has no
power to ratify." Park Hotel Co. v.
Fourth Nat Bank, 86 Fed. 742, 30
C. C. A. 409 (citing California Bank
V. Kennedy, 167 U. 8. 862, 42 L. Ed.
198; Union Pac. Ry. Co. v. Chicago,
etc., Ry. Co., 163 TJ. S. 564, 41 L. Ed.
265; Central Transp. Co. v. Pullman
Car Co., 139 U. S. 24, 35 L. Ed.
65; JacksonTllle, etc., Ry. Co. v.
Hooper, 160 U. S. 514, 40 L. Ed. 515) ;
Wheeler v. Home, etc., Bank, 188 111.
34, 80 Am. St Rep. 161; National,
etc., Ass'n v. Home Sav. Bank, 181
111. 35, 72 Am. St. R. 245, 64 L. R. A.
899; Buckeye Marble Co. v. Harvey,
92 Tenn. 115, 36 Am. St R. 71, 18
Li. R. a. 252; Thompson ▼. West, 59
Neb. 677, 49 L. R. A. 837; Downing
V. Mt Washington Road CJo., 40 N.
H. 230; Bangor Boom Corp. v. Whit-
ing; 29 Me. 128.
^•KelBey v. National Bank, 69 Pa.
426; Fleckner v. U. S. Bank, 8
Wheat (U. S.) 363, 6 L. Ed. 631;
Salem Bank v. Gloucester Bank, 17
Mass. 1, 9 Am. Dec. Ill; Bulkley v.
Derby Fishing Co., 2 Conn. 262, 7
Am. Dec. 271; Peterson v. Mayor,
17 N. Y. 449; Baker ▼. Cotter, 45 Ma
236; Despatch Line v. Bellamy
Mfg. Co., 12 N. H. 206, 37 Am. Dec.
203; Whitewell v. Warner, 20 Vt
426; City of Detroit v. Jackson, 1
Doug. (Mich.) 106; Church v. Ster-
ling, 16 Conn. 388; Planters* Bank
V. Sharp, 4 Smedes ft 11 (Miss.) 75,
43 Am. Dec. 470. See also Schles-
singer v. Forest Products Co., 78 N.
J. L. 637, 188 Am. St R. 627, 30 L.
R, A. (N. S.) 847; Keenan v.
Lauritsen Malt Co., 67 Wa^sh. 367.
*• Singer Mfg. Co. v. Belgart, 84
Ala. 519; Tabler ▼. Sheffield, etc.,
Co., 87 Ala. 305; Indianapolis, etc.,
R. R. Co. V. Morris, 67 111. 295; Cairo
St St Louis R. R. Co. V. Mahoney, 82
111. 73, 25 Am. Rep. 299; Wolf Co. v.
Bank of Commerce, 107 111. App. 58;
Pacific R. R. Co. V. Thomas, 19 Kan.
256; Sherman Center Town Co. v.
Morris, 43 Kan. 282, 19 Am. St R.
134; Brown v. WInnlslmmet Co., 11
Allen (Mass), 326; Sherman v.
Fitch, 98 Mass. 59; Lyndeborough
Glass Co. V. Mass. Glass Co., Ill
Mass. 315; Arlington v. Peirce, 122
Mass. 270; Taymouth v. Koehler, 35
Mich. 22; Scott V. Methodist Church.
271
§§ 369, 37o]
THE LAW OF AGENCY
[book I
The rule extends to torts " as well as contracts, and to frauds, mis-
representations and deceits practiced in the course of the business.^'
§ 369. Partners. — Partners, also, are undoubtedly competent to rat-
iiy what they might previously have authorized, and, within the same
limits, one partner may ratify for the firm, and tlie ratification by the
whole partnership may be implied from acquiescence after knowledge
brought home to one, under such circumstances as to make the knowl-
edge and approval of one the knowledge and approval of all/^
§ 370. Infants.-*-In the case of the infant, the expression "ratifica-
tion" seems often to be unconsciously used in two different senses.
One, the approval by a farmer infant, after attaining majority, of acts
which during his infancy were voidable because he was an infant ; and
the other, the one now here involved, the questk>n of ratification of
what one as his agent has assumed to do without authority. As has
been seen,^^ it is usually held that, as an infant cannot appoint an agent.
60 Mich. 529; Hitchcock v. Qriffln ft
SkeHey Co., 9d Mieh. 447, 41 Am. St
R. 624; Washington SavlngB Bank v.
Butchers' Bank. 107 Mo. 133, 28 Am.
St R. 405; Thomas v. City Nafl
Bank, 40 Neb. 601, 24 L. B. A. 263;
German Nat'l Bank v. First Nat'l
Bank, 59 Neb. 7; Bennett y. MlUviUe
Imp. Co., 67 N. J. L. 320; Hoyt T.
Thompson, 19 N. Y. 207; Scott v.
Mlddletown, etc., R. R. Co., 86 N. Y.
200; Dupignac v. Bematrom, 37
Misc. (N. Y.) 677, aflBrmed 76 App.
Dlv. 106; Moyer v. East Shore Ter-
minal Co., 41 S. Qar. 300, 44 Am. St
R. 709, 25 L. R. A. 48; Taylor Co. v.
Balnes Co., 31 Tex. Civ. App. 385;
North Point, etc, Co. v. Utah, etc.
Canal Co., 16 Utah, 246, 67 Am. St R.
607, 40 L. R. A. 851; Dexter Horton
& Co. v. Long, 2 Wash. 435, 26 Am.
St R. 867; Moody Co. v. Leek, 99
Wis. 49; Law v. Croas, 1 Black (U.
S.), 533, 17 L. Ed. 185; Gold Mining
Co. V. Nat'l Bank, 96 U. S. 640, 24
L, Ed. 648; Augusta, etc., R. Co. v.
Kittel, 52 Fed. 63, 2 a C. A. 615;
Nebraska Farm Loan Co. v. Bell, 58
Fed. 326, 7 C. C. A. 253; Prentiss
Tool Co. V. Godchaux^ 66 Fed. 234,
13 a C. A. 420; Central Truat Co. v.
Ashvllle Land Co., 72 Fed. 361, 18 C.
C. A. 590; American Exch. Nat'l
Bank ▼. BMrst Nat'l Bank, 82 Fed.
961, 27 a a A. 274; McKenzIe v.
Poorman Silver Mines, 88 Fed. Ill,
31 C. C. A. 409; G. V. B. Mining Co.
▼. First Nat'l Bank, 95 Fed. 23, 36
C. C. A. 633; Kessler v. Ekisley Co.,
123 Fed. 546.
47 Nims V. Mt Harmon School, 160
MasA. 177, 39 Am. St R. 467, 22 L.
R. A. 364 (following Dempsey v.
Chambers, 154 Maas. 330, 26 Am. St
R. 249, 18 L. R. A. 219).
*a Flaherty v. Atlantic Lumber
Co., 58 N. J. Eq. 467; Garrison ¥.
Electrical Works, 55 N. J. Eq.. 708.
49 Forbes v. Hainan, 75 Va. 168.
See Chouteau v. Goddln, 39 Mo. 229,
90 Am. Dec. 462; Baldwin v. Leon-
ard, 39 Vt 260, 94 Am. Dec 324;
Cassidy v. Saline Co. Bank, 14 Okla.
532 (by one partner of the other's
unauthorized act); Guthell ¥. Gil-
mer, 27 Utah* 496; Rosenthal v. Has-
berg, 84 N. Y. Supp. 290; Levy v.
Abramsohn, 39 N. Y. Misc. 781 (one
partner's ratification of the other
partner's act on behalf of the firm) ;
Taylor y. Herron, 72 Kan. 652 (same
kind of case); CUppinger v. Starr,
130 Mich. 463.
so See ante, | 142; Armltage v.
Wldoe, 36 Mich. 124; Fonda v. Van
Home, 15 Wend. (N. ¥.) 631« 3a Am.
Deo. 77.
272
CHAP. VIl]
RATIFICATION
[§§ 37h 372
he cannot, of course, while still an infant, ratify the act of one who has,
unauthorized, assumed to act for him. But as the reason for this hold-
ing is, as has been seen,*^^ believed to be unsound, the true rule will
doubtless be held to be that an infant, like any other person, may ratify
what he might authorize, and with the same effect. Under the older
rule, the appointment being void, there could be no ratification after
he became of age ; *^ under the modern rule there could undoubtedly be.
§ 3^71. Insane person— Person tioder duress. — Upon the same prin-
ciples which govern the creation of agency in the first instance, there
can be no ratification of the unauthorized act of an agent if, at the time
of the alleged ratification, the principal was insane.^* On the other
hiand, one on whose behalf an act has been done during his insanity,
may after his sanity is restored, ratify the act.'^ So likewise where a
man's consent to an act on his behalf is obtaiiled through duress, there
can be no ratification while he is under the same duress.*^'
§ 372. Married women. — It has been seen that, at common law» a
married woman <tould not act by ag^nt,'* and she had clearly no capac-
ity to bind herself by ratffication. Under the modern statutes, how-
ever, which more or less completely remove her. common law disabili-
ties, she may, like any other person, ratify what she might have
authorized. This rule is of very constant application in cases wherein
her husband has assumed to act for her, and she has approved of his
acts with full knowledge of the &cts.'^ But, as in any other case, she
cannot thus do indirectly what she could not do directly, and no amount
of alleged ratification can validate that which it was beyond her capac-
ity to authorize.'*
*i See ante, I 148.
MTrueUo<34 V. Trueblood, 8 lad.
195, 65 Am. Dec 756; Waplds v.
HastlngiB^ 8 Hafr. (Del) 468. But see
Ward V. Steamboat, 8 Mo. 368.
Bswnke T. Wackershaufler, 148
Iowa, 107.
0* Bliun V. Schwarz, 177 N. Y. 252,
101 Am. St. R. 806, aff'g 68 App. Div.
25.
M Henry v. State Bank, 131 Iowa«
87.
s8 See ante, § 148.
fiTReed v. Morton, 24 Neb. 760, 8
Am. St JR. 247» 1 JL. R. A. 73^; Me-
CUntock v. South Pena Oil Co., 146
Pa. 144, 2S Am. SL R. 785; Royal
Society T. Campbell, 17 K L .402, 18
Ii. R. A^ 801; Ferguson v. Harrts, 39
S. Car. 328. 39 Am. St. R. 731;
Schloee y. Solomon, 97 Mich. 626;
Hoene v. Pollak, 118 Ala. 617, 72 Am.
St. R. 189; Buchanan v. Hubbard,
119 Ind. 187; Pattlson v. Babcock,
130 Ind. 474; Edwards v. Barnes, 55
111. App. 38; Haar v. Benefit Ass'n,
71 Hun (N. Y.), 554; Klrkpatrlck v.
PesM, 202 MO. 471. There are many
others. Knowledge of the facts la
here, as elseavhere, essential Post,
S 893; Brown v. Wright, 58 Ark. 20.
21 L. R. A. 467; Brown v. Rouse, 104
CaL 672.
M MeFarland v. Helm, 127 Mo. 327,
48 Am. St. R. 629. See also Raw-
lings ▼. Neal, 126 N. a 271.
18
273
§§ 373, 37^1
THE LAW OF AGENCY
[book 1
Where acts done by her during coverture are merely voidable, they
doubtless may be ratified by her after that disability is removed; but
where contracts made by her during coverture are void, acts done when
she becomes discovert must, in order to amount to a ratification, be
practically equivalent to a new contract.'*
§ 373. Executor, administrator, etc. — ^An executor or administra-
tor has usually no power to bind the estate by executory contracts, or
to subject it to liability for his torts ;*^ and cannot therefore usually
ratify acts done in the life time of the deceased,'* but where acts have
been done for the deceased or his estate, which the representative
might have authorized, and which he deems beneficial to the estate, he
may ratify and enforce them,'* and where he has power to bind the
estate he may doubtless do it by ratification when the necessary con-
ditions of knowledge and the like are present, but not otherwise."
§ 374« When agent may ratify. — ^An agent cannot ratify his own
unauthorized act ; '* nor can one of two joint agents ratify the act of
his coagent ; •' but where the act, which when done by one agent was
unauthorized, is within the general power of another agent of the same
principal, the doing of the act by the first agent may be ratified by the
second."
"Ratification by an agent," it is said,'^ "depends upon certain facts
which must aflSrmatively be made to appear: i. The agent ratifying
must have had general power to do himself the act which he ratifies.
2. They must both be agents of the same principal, and the agent whose
act is in question must have professed to act as agent of the common
principal."
69N€sbitt V. Turner, 155 Pa. 429;
Brown v. Bennett, 75 Pa. 420;
Buchanan v. Hazzard, 96 Pa. 240; See
Dempsey v. Wells, 109 Mo. App. 470.
«oSee II Woerner'8 Am. Law of
Administration, 756-7.
«iBundoora Park Estate Co. v.
Fisher, 20 Victorian L. R. 460, 16
Australian L, Times, 107.
«« if oBter V. Bates, 12 Mees. & Wels.
226; Beaver v, Weston, 163 Mass.
202. But see Whiting v. Mass. Mut
L. Ins. Co., 129 Mass. 240, 37 Am.
Rep. 317.
«» Weber v. Bridgman, 113 N. Y.
600; Reeves v. Bray ton, 36 S. Car.
384.
04 Trudo V. Anderson, 10 Mich. 357,
81 Am. Dec. 796; Hotchin v. Kent, 8
Mich. 526; Bi-Spool Sew. Mach. Co.
r. Acms Mtg. Co., 153 Mass. 404;
Lyndon MUl Co. v. Lyndon Lit k
Bib. Institution, 63 Vt 581, 26 Am.
St R. 783; Britt v. Gordon, 132 Iowa,
431; Driflcoll v. Modern Brothei^
hood, 77 Neb. 282; Young v. Inman,
146 Iowa, 492.
M Penn v. Evans, 28 La. Ann. 576.
••Mound City Mutual L. Ins. Co.
V. Huth, 49 Ala. 680; Whitehead v.
Wells, 29 Ark. 99; Dorsey v. Abraras.
85 Pa. 299; Palmer v. Cheney, 35
Iowa, 281. See also Piatt v. Fran-
cis, Mo. , 152 S. W. 332.
cT Ironwood Store Co. v. Harrison,
76 Mich. 197. See also Hartman Steel
Co. V. Hoag, 104 Iowa» 269.
274
CHAP. VIl]
RATIFICATION
[§§ 375-377
This doctrine is frequently applied to the ratification of the acts of
subordinate agents by tlie superior agents of corporations.*^
§ 375- ■ ■ Subagents. — ^An agent who has the power to ap-
point a subagent and give him authority may ratify his act (if within
the agent's authority) and thereby make it binding on the agent's
principal.*'
So where an agent, who has not authority to employ subagents for
his principal, has employed one, — who thereby becomes the agent of
the agent and for whose acts the agent is responsible, — ^acts of such
subagent in excess of the authority given him by the agent may be
ratified by the latter so as to make him liable for them to the principal.^^
IV.
CONDITIONS OF RATIFICATION.
§ 376* Certain conditions must be satisfied. — ^In order to effect a
ratification, certain conditions must be satisfied. The following are
the hiost important: —
§ 377. I. Principal must have been identified. — ^The act to be rati-
fied must have been done by one claiming to represent the person rati-
fying or persons of his description.''^ It is not necessary that the in-
tended principal be known to the agent at the time, but it is necessary
that the person for whom the agent professes to act must be a person
w^ho is then capable of being ascertained. He may be one of a class
of persons, as where the agent acts for the "owners" of certain prop-
erty, or eifects insurance "for the benefit of those concerned," although
he does not know the particular persons who answer this description.''^
••Thus see Cairo, etc., R. Co. v.
Mahoney, 82 111. 73, 25 Am. Rep.
299; Toledo, etc., R. Co. v. Rodrlgues,
47 111. 188, 95 Am. Dec. 484; Toledo,
etc., R. R. Co. V. Prince, 50 111. 26;
Darst V. Gale, 88 111. 136; Wood v.
Whelen, 93 111. 155; Reich wald v.
Commercial Hotel Co., 106 111. 439;
Ballston Spa Bank ▼. Marine Bank,
16 Wis. 129; Anglo-Californian Bank
V. Mahoney Mining Co., 5 Sawy. (U.
S. C. C.) 255. Fed. Cas. No. 392, s. c.
104 U. S. 192, 26 L. Ed. 707; Sher-
man y. Pitch, 98 Mass. 59; Walworth
Co. Bank v. Farmers' L. 6 T. Co., 16
Wis. 629; Hoyt v. Thompson, 19 N.
T. 207; First National Bank v. Klm-
berlands, 16 W. Va. 555; Burrill v.
Nahant Bank, 2 Mete. (Mass.) 163,
35 Am. Dec. 895; Chouteau v. Allen.
70 Mo. 290; Lsmdeborough Glass Co.
y. Mass. Glass Co., Ill Mass. 315;
Olcott V. Tioga R. R. Co., 27 N. Y.
546, 84 Am. Dec. 298; Union Mutual
Life Ins. Co. v. Masten, 3 Fed. 881;
Pacific R. Co. V. Thomaa, 19 Kan.
256.
«» Newton v. Bronson, 18 N. Y, 687,
67 Am. Dec. 89.
TO Cowley v. Fabien, 204 N. Y. 566.
" Foster v. Bates, 12 M. A W. 226.
7*Hagedorn v. Ollyerson, 2 M. &
Selw. 485; Routh v. Thompson, 13
East, 274; Lueena v. Craufurd, 1
Taunt. 325; StiUwell y. Staples, 19
N. Y. 401.
275
§§ 37^380] THE LAW OF AGENCY [BOOK 1
So, also, where the agent acts for the administrators of A's estate,'*
or for the heirs of B,'* though he does not know who these persons are,
his act may be ratified by the persons so described. Neither is it nec-
essary that the person represented should have been specifically named
but there must be such a description of him as shall amount to a rea-
sonable designation of the person intended to be bound.'*
§ 378. II. Principal must have been in existence. — ^It follows nec-
essarily from the doctrine of the preceding section, as well as from the
retroactive effect of ratification, that the principal must also have been
in existence, either actually or in contemplation of law, at the time the
act to be ratified was done.'*
§ 379. Administrator, assignee, etc. — In the case of the
administrator, who is appointed and ratifies after the act,'' the conclu-
sion may be justified by the doctriae of relation, which causes the grant
to operate frqm the date of the decease. And the same doctrine ap-
plies in the case of the assignee of bankriy)ts, and the like.''*
§ 380. Corporations subsequently organized. — The ques-
tion whether a corporation, subsequently organized, may ratify acts
and contracts done or made in its behalf, before its organization, has
given much difficulty, and led to confusion in the authorities. The
English courts have carried the doctrine to its logical conclusion, and
hold that there can be no ratification as such,'* though "it does not
follow from that," said Jessel, M. R., "that acts may not be done by the
company after its formation which make a new contract to the same
effect as the old one, but that stands on a different principle." •• The
distinction here indicated is sustained by the weight of authority. The
79 Foster y. Bates. 8uprQ. and administrators, whose tlUe, for
7« Lyell T. Kennedy, 14 App. Cas. the protection of the estate, vests by
437. relation. TJie case of an executor
7 (^Watson v. Swann, 11 G. B. (N. requires no such ratification, inas-
S.) 766, 771; Kelner v. Baxter, L. R. much as he takes from the wilL"
2 C. P. 174. 7» Kelner v. Baxter, L. R. 2 C. P.
70 Kelner v. Baxter, L. R. 2 C. P. 174; Scott v. Elmry, L. R. 2 C. P.
174. 256; Melhado y. Railway Co.. L. R.
77 Foster y. Bates, 12 M. A W. 226. 9 O. P. 603; In re Empress Bngi-
TtThus in Kelner y. Baxter, supra, ueering Co., 16 Ch. Diy. 125; Jn re
ft is said by Willes J.: "Ratification Northumberland Aye. Hotel Co., 83
can only be by a person ascertaisked Ch. Diy. 16; Howard y. Patent Jyory
at the time of the act done,— by a Mfg. Co., 38 Ch. Diy. 156; Natal
person in existence either actually Land Co. y. Pauline Colliery Ca,
or in contemplation of law; as in [1904] App. Cas. 120.
the case of assignees of bankrupts «o/« re KmfreaB Bog. Co^ suyra.
276
CHAP. VIl]
RATIFICATION
[§§ 381, 382
corporation cannot, by its subsequent act of approval, make itself a
party to the very contract made,** so as to be bound by it from the date
of its making.
§ 381. Novation. — ^There may undoubtedly, in such a case,
be a novation. That is, the corporation and the parties to the contract
may mutually agree that die corporation shall be substituted in place
of the promoter; and this may doubtless be done by implication as
well as in express terms. The difficulty in most cases is to find any
evidence of such a novation.
§ 38a. — Adoptioii^-^It is also said, that though there can not
be ratification, in its proper sense, of the contract, the corporation may
nevertheless "adopt" that contract as its own from the date of the
adoption, even though the contract so adopted imposes liabilities dat-
ing from the time it was made." This "adoption" it is said, need not
be made formally or expressly, but may be effected in any way in
which such a contract might be made originally by the corporation.
81 Abbott V. Hapgood, 160 Mass.
248, 16 Am. St H. Ids, 6 L. R. A.
5S6.
9^ Thai there may he raUficatioik.
Oak«B V. Oattarauguf Water Oo.. 143
N. Y. 480, 26 L. R. A. 544; Meslaeer
V. Meslnger Bicycle Saddle Co., 44
N. Y. App. Dlv. 26; Stanton v. New
York, etc, R. Oo., 69 CMin. 272, *21
Am. St R. 110; Whitney v. Wyman.
101 U. S. 392, 25 U Ed. 1050;
Schreyer ▼. Turner Flour Co., 29
Ores. 1.
That there may l>e adoption Jmt
not ratification. — McArtbur v. Times
Printing Co., 48 Minn. 319, 31 Am.
St R. 653; Battelle v. N. W., etc,
PaYing Co., S7 Mian. 89; 8mitl^ v,
Parker, 148 Ind. 127; Grape Sugar
Co. V. Small, 40 Md. 395; Wasser v.
Western Land Co., 97 Minn. 460;
Richardson v. Graham, 45 W. Va.
134; Pittsburg, etc., Mia. Co. y.
Qulntrell, 91 Tenn. 693; Huron
Printing Co. r. Klttlesoa, 4 8. Dak.
620; Weatherford, etc., R. Co. v.
Granger, 86 Tex. 860, 40 Am. St R.
837; Colorado Land Co. v. Adams,
5 Colo. App. 190; Robblns v. Bangor
Co., 100 Me. 496, 1 L. R. R. <N. B.)
963; Dubuque Female College v. Dis-
trict Township, 13 Iowa, 656.
Other theories. — Liability may be
assumed by taking benefits. Bells
Gap R. Co. V. Christy, 79 Pa. 64, 21
Am. Rep. S9; Paxton Cattle Co. v.
First Nat Bank, 21 Nah. €21, 59 Am.
Rep. 852; Low v. Conn., etc., R. Co.,
45 N. H. 370; BufBngton v. Bardon,
80 Wis. 636; Robblns r. Bangor Co.,
9upra; where they are the b^iefits
of the particular contract and are
received under circumstances rea-
sonably Justifying an inference of
consent to be bound. Weatherford
R. Co. V. Granger, 86 Tex. 350, 40
Am. St. R. 837.
May assume liability by express
agreement Retchwald y. Commer-
cial Hotel Co., 106 111. 439; Wood v.
Whelen, 93 111. 153; Rockford, etc.,
R. Co. ▼. Sage, 65 111. 328, 16 Am.
Rep. 587.
Cannot ratify or adopt but may
make new contract on same terms.
Pennell ▼. Lathrop, 191 Mass. 857',
Koppol v. Massachusetts Brick Co.,
192 Mass. 223.
That it is Immaterial whether It
be called ratification or adoption.
Schreyer v. Turner Flouring Co., 29
Oreg. 1.
277
§" 383]
THE LAW OF AGENCY
[dook r
It may, therefore, it is said, "be inferred from acts or acquiescence on
the part of the corporation, or its authorized agents, as any similar
original contract might be shown." ^^
"But the liability of the corporation under such circumstances," it is
said in one case,** "does not rest upon any principle of the law of
agency, but upon the immediate and voluntary act of the company.
Although the acts of a corporation, with reference to the contracts
made by promoters in its behalf before its organization, are frequently
loosely termed 'ratification,' yet a 'ratification,' properly so called, im-
plies an existing person on whose behalf the contract might have been
made at the time. There cannot, in law, be a ratification of a contract
which could not have been made binding on the ratifier at the time it
was made, because the ratifier was not then in existence. What is
called 'adoption' in such cases is, in legal effect, the making of a con-
tract of the date of the adoption, and not as of some former date."
The chief difficulty in the way of the acceptance of this doctrine of
adoption, rather than ratification of the contract, lies in the fact that
there seems not to be any such doctrine known to our law.
§ 383. Continuing offer. — It has also been suggested that
the proposal of the other party may be regarded as a continuing offer,
wliich may be accepted by the corporation when it comes into exist-
ence, and thus create a real contract with the corporation. This ac-
ceptance may be express or may be implied from conduct
Two difficulties present themselves 'in connection with this . view.
One, that to treat the so-called contract with the promoters as a con-
tinuing offer to the corporation, is, in many cases at least, contrary to
the facts ; and, second, the conduct from which acceptance of the offer
is inferred seems often to have been too liberally construed in order
to accomplish the result. Nevertheless, this theory is, perhaps, the
most satisfactory one which has been suggested.
The proper solution of the difficulty, however, seems not to be a
question in the law of agency.
That the contract may be express-
ly or by implication upon the term
or condition that the promoter or
a^ent shall be deemed to be released
when the corporation comes into
existence and he transfers and the
corporation assumes the benefit of
the contract. Heckman's Bstate, 172
Pa. 185; Chicago Building Co. v. Tal*
botton Creamery Co., 106 Qa. 84;
Shields v. Clifton Hill Land Co., 94
Tenn. 12S, 45 Am. St R. 700. 26 L.
R. A. 609; Case Mfg. Co. v. Soxman,
138 U. S. 431, 34 L. Ed. 1019.
«8 McArthur v. Times Printing Co.,
supra; Schreyer v. Turner Flouring
Co., supra.
84 McArthur t* Times Printing
Co., supra.
278
CHAP. VII ]
RATIFICATION
[§§ 384, 385
§ 384. III. Transaction must still stand. — The transaction must also
still stand, and be open to ratification, — there must be something to
ratify. Hence if, before the principal has ratified a contract, the agent
and the other party have rescinded what had been done,®" or, — al-
though the authorities differ as to this,** if the other party has with-
drawn from the proposed contract, there can be no effective ratifica-
tion. Thus, where an agent without authority made a payment, but
the payee discovered that the payment was unauthorized and returned
the money, it was held that no subsequent ratification could defeat an
action to recover the debt from the principal.®'. And so where a mere
volunteer had negotiated insurance, it was held that he might cancel
and surrender the policies before the assumed principal knew of and
ratified them.®* After ratification, however, the agent has no right to
return to the other party money received by him by virtue of the con-
tract ratified."
§ 385. IV. Principal must have present ability. — ^As has been seen,
the power to ratify presupposes a present ability in the principal to do
the act himself or to authorize it to be done.*® If, therefore, for any
reason, the principal has become, since the doing of the act to be rati-
fied, incapable of doing the act himself and of authorizing it to be done,
he is incapable of ratifying it.*^
And so if third persons acquire rights after the act is done and be-
fore it has received the sanction of the principal, the ratification cannot
ordinarilv operate retrospectively so as to overreach and defeat those
rights.
93
8s Walter v. James, L. R, 6 BSol
124; Stniwell v. Staples. 19 N. Y.
401. See also Cookerham v. Perot,
48 La. Ann. 209.
8«See post, § 614 et seq.
«T Walter v. James, supra.
M Stillvell V. Staples, supra,
•• Montgomery v. Pacific Coast
Land Bureau, 94 Cal. 2S4, 28 Am. St.
Rep. 122.
»ozottman v. San Francisco, 20
Cal. 96, 81 Am. Dec. 96. ''Ratifica-
tion can only be made when the
principal possesses at the time the
power to do the act ratified. He
must be able at the time to make
the contract to which, by his ratifi-
cation he gives validity." Field. J.,
in McCracken v. San Francisco, 16
Cal. 691. See also Grogan v. San
Francisco, 18 CaL 690; McDonald ▼.
McCoy, 121 Cal. 56; Marsh v. Fulton
County, 10 WaU. (U. S.) 676, 19 L.
Ed. 1040; Davis v. Lane, 10 N. H.
168.
»i Cook V. Tullis, 18 Wall. (U. S.)
832, 21 L. Ed. 933; Dobbs v. Atlas
Elevator Co., 22 S. D. 226 (where the
plaintiff seeks to recover past rents
which she claims as assignee of a
principal lease, and can show no
previous authority to the agent who
made the lease on behalf of the
lessor, and ratification by the lessor
only after the lessor has already
conveyed the premises even to the
plaintiff, she has failed to show a
good lease or a cause of action) but
see 8. o. on rehearing 26 S. D. 177.
02 Wood V. McCain, 7 Ala. 800, 42
Am. Dec. 612 (where before ratifica-
tion of an unauthorized assignment
279
§•386]
THE LAW OP AGENCY
[book I
An exception to the rule is found in the case of the ratifics^tion of
insurance effected for the benefit of a principal: he may ratify even
after knowledge of the loss, though he could not then himself cifect
insurance.®*
§ 386. V. Act must have been done as agent — Since the effect of
ratification is to confirm the act as done, it is indispensable, in order to
have an act of agency, that the act ratified must have been done by the
assumed agent as agent and in behalf of a principal. If the act was
done by him as principal and on his own account, or on account of
some third person, it cannot thus be ratified.**
of an account, the debtor had been
served with garnishment process at
the suit of the principal's creditor) ;
Stoddart*s Case, 4 Ct of CI. 5li (rat-
ification of the purchase of cotton by
an agent without authority, after
it had been seized by the U. S. gov-
ernment as enemy's goods, is too
late to give the principal a claim
against the government under the
statute). See also po8t, § 486.
•B Williams V. North China Ins. Ca,
1 C. P. Dlv. 757.
MKelghley v. Durant. [1901] A. C.
240, 1 B. Rul. Gas. 351, (overruling
Durrant v. Roberts, [1900] 1 Q. B.
629) ; Wilson v. Tumman, 6 M. ft O.
236; Morris v. Salberg, 22 Q. B. Dlv.
614; Marsh v. Joseph, [1897] 1 Ch.
213; Fraser v. Sweet, 13 Manitoba
L. R. 147, 2 Br. Rul. Cas. 254; Smith
V. Varawa, 5 Comw. L. R. (Anstr.)
68; Croader v. McAllster, [1909]
Queensland S. R. 203; Lonwrens v.
Clulee, 1 So. Afr. L». R. (Prob. Dlv.)
192; Ferris v. Snow, 180 Mich. 2S4;
Mitchell V. Minnesota Fire Ass'n, 48
Minn. 278; Schlesslnger v. Forest
Products Co., 78 N. J. L. 687, 188 Am.
St R. 627, 80 L. R. A. (N. 8.) 847.
See also Pnget Sound Lumber Go. ▼.
Kmg, 80 Cal. 287; Ilfleld v. Ziegler,
40 Colo. 401; Russo v. Maresca, 72
Cona. 51; Balloch ▼. Hooper, 6 Mack.
(D. a) 421, aiTd 146 U. S. 863, 86
U Bd. 1008; Florida, etc., R Co. t.
Varnedoe, 81 Qa. 176; Linn ▼. Ala*
meda, etc., Co., 17 Idaho, 46; Gotlins
V. Waggoner, Breese (1 IlL), 26; Bev-
eridge v. Rawson, 61 111. 504; Grand
v. Van Vleck. 69 111. 478; Roby v.
Cossltt, 78 111. 638; Merrltt v. Ke-
wanee, 175 111. 537; Western Pub.
House V. Rock Tp., 84 Iow*i, 101; Wy-
coft V. Davis, 127 Iowa, 399; Harri-
son V. Mitchell, 13 La. Ann. 260;
Tallafero v. First Nat'l Bank, 71 Md.
200; Allred v. Bray, 41 Mo. 484, 97
Am. Dec. 288; Herd v. Bank of Buf-
falo, 66 Mo. App. 643; Vanderbllt v.
Turnpike Co., 2 N. Y. 479, 51 Am.
Dec 350; Bralnerd ▼. Dunning, 36
N. T. 211; Qarvey t. Jarvia. 46 N. Y.
310, 7 Am. Rep. 335; Haralln v.
Sears, 82 N. Y. 327; Collins v. Suau,
7 Robt. (80 N. Y. Super. Ct.) 623;
Travis v. Seriba, 12 Hun (N. Y.),
391; Stanton v. Granger, 125 App.
Dlv. 174; Ramsay v. Miller, 135 App.
Dlv. 503 (there is a dictum to the
contrary in Johnson v. Doll. 11 Miso.
(N. Y.) 346): Rawlings v. Neal, 12S
N. C^r. 271; Williams T. Stearns, 69
Ohio St. 28; Johnson ▼. Insurance
Co., 66 Ohio St. 6; Backhaus v.
Buells, 48 Or. 666; PitUburg, etc.,
R. Co. V. Gku:zam, 82 Pa. St 340;
Minder, etc.. Land C!o. v. Bmstuen.
24 S. D. 637; Fish, etc., Co. v. New
Eng. Homeetake Co., 27 S. D. 221,
180 N. W. 841; Oommerclal Bank v.
Jones, 18 Tex. 811; Etheridge ▼.
Price, 78 Tex. 697; Virginia Poca-
hontas Coal Co. V. Lambert, 107 Va.
868, 122 Am. St R 860, 18 Ann. C^b.
277: Shumaa v. Steinel, 129 Wis. 422^
116 Am. St R. 961, 7 L. R A. (N. S.)
1048, 9 Ann. OaSv 1664; In re Roar
noke Furnace Oo.r 166 Fed. 944.
280
CHAP. VII ]
RATIFICATION
I§386
And not only must the assumed agent have intended to act as agent
for the person ratifying, but, as declarefl by the House of Lords after
J
The fact thut a man purported to
act as agent may be shown by l^is
own declarations at the time of the
act Landgrof y. Tanner* 1&£ Ala.
511. See also cages cited ante, I 2$7.
In Durant v. Roberts, overruled in
Keighley y. Durant, supra, Roberts,
having been authoriaed by Keighley
MazBted A Ca to buy wheat on Joint
account of himnell and them at a
fixed price, made a purchase of the
plaintiillB in excess of his authority
at a higher price, and signed a con*
tract in his own name, giving the
plaintiffs no indication that he was
dealing as agent for anyone, though
he intended that the purchase
should be on Joint account At a
subsequent interview with Roberts,
the manager of Kaighl^f Maxsted
and Co. told him to take the wheat,
as he thought it was worth it This
the plaintiffs claimed to be a valid
ratification, and the Court of Appeal
so held. Collins, L. J., pointed out
in his opinion that the doctrine of
ratlfloation had been adopted from
the Roman l^aw, where the contem-
plation or Intent of the agent at the
time of the act was considered the
essential point In reviewing the
Einglish caaes he undertakes to show
that this idea was, always present
though the phrases always used re-
late to the two extreme cases, where
he purports to be the agent of the
ratifier or purports to be the acent
of some one else. Where no disclos-
ure at all is made, the situation of
the third party is the same as in the
case of an uadisclosed principal, and
the judgen in the Court of Appeal
held that atnce a prior command
would have been effective 'Whether
the agent had contracted in his own
name or in terms on behalf of the
principal*" therefore if there be con-
ceded an 'Untgption existing in the
mind of the would-be agent It seems
impossible to suggest any reason
why • • ♦ avowal of it to the other
contracting party should be essen-
tial." But this view was entirely
overruled by the House of Lords,
where It was decided that the Ro-
man Law, whatever it might be»
would give no support to the Court
of Appeals, that the doctrine of un-
disclosed principal was so far an
anomaly in English law that there
was no ground fqr extending it to
analogous cases. Lord Lindley there
pointed out that by the principle df
ratification validity is given to ' an
act already done, though done with-
out authority, and that "the doctrine
of ratification as hitherto applied In
this country to contracts has always
^ * * in faot given effeot in sub-
stance to the real intentions of both
contracting psirties at the time of
tbe contract as shown by their^
language or conduct It has never^
yet been extended to other cases."
In Fraser v. Sweet, IS Manitoba
L. R. 147, 2 Br. Rnl. Caa. 254, supra,
where a partner bought goods in the
name of a new firm which he ex-
pected to organize, under the expec-
tation that the old partnership
would be dissolved, which goods
were used by the old partnership, it
was held that there could be no va-
lid ratification by the old firm since
there was no indication to the seller
that the partner was acting in be-
half of the old partnership, and
since "it has long been established
that no ratification is effectual un-
less the act has been done by the
agent on behalf of the party who
ratifies."
In Ferris v. Snow, 180 Mich. 254,
supra, where two of the defendants
gave Snow parol authority to buy
land, in which they were to have
equal interests, it was held that they
oonld not ratify the aot made os-
tensibly by Snow for his own bene-
fit Hooker, C. J. said: "No consent
281
§386]
THE LAW OF AGENCY
(book I
most elaborate consideration ** and according to the weight of author-
ity in the United States,*' he must have professed to act for a princi-
pal, though it is not necessary that he should have disclosed who that
principal was if he be capable of identification within the rule already
laid down.®^ It is not essential that the assumed agent shall have de-
clared himself such in express terms. As stated by Lord Robertson,
"Whether the unauthorized agent be marked out as an agent by what
he says, or by what he wears, is, of course, a mere matter of circum-
stance and of evidence ; but an agent he must be known to be, and as
agent he must act." •• The contrary rule is laid down in Massa-
chusetts : "It is necessary in order to a ratification that the act should
have been done by one who was in fact acting as an agent, but it is
not necessary that he should have been understood to be such by the
party with whom he was dealing." ••
by C to step into the place of A, who
has assumed to make a contract
with B, on his own hehalt would es-
tablish privity of contract between
B and C, unless based on new con-
sideration. It is different when A
assumes to contract with B on be*
half of C. In such a case the con-
tract is not changed in its terms,
but is vitalized by a ratification of
the unauthorized act of the agent."
In Mitchell v. Minnesota Fire
Ass'n, 48 Minn. 278, supra, where a
firm of insurance adjusters had as*
Bumed, with no claim or pretension
of authority, to act for the de-
fendants in appraising a fire loss,
and the defendants had repudiated
their action, it was held that there
was no evidence of authority or rat-
ification which should have gone to
the Jury, and no evidence that the
defendant had waived the conditions
of the policy.
•0 Keighley v. Durant, [1901] App.
Cas. 240, 1 Br. Rul. Cas. 351, over-
ruling Durant v. Roberts, [1900] 1
Q. B. 629.
It seems, moreover, to be sufilcient
that he professed to act as agent,
though he had a fraudulent purpose
to really take the benefit on his own
account In re Tiedemann, [1899] 2
Q. B. Div. 66. See also Hamlin v.
Sears, 82 N. Y. 327.
o«See Ferris v. Snow, 130 Mich.
254; Mitchell v. Minnesota Fire
Ass'n, 48 Minn. 278, and other cases
cited in note 94.
What is said in Clews v. Jamieson,
182 U. S. 461, at p. 483, 45 L. Ed.
1183, is believed not intended to be
contrary. The person acting was
known to be a broker though at the
time it was not known for whom he
was acting.
9tAnte, § 877.
»8 In Keighley v. Durant, supra,
••Hayward v. Langmaid, 181
Mass. 426 (citing Sartwell v. Frost,
122 Mass. 184; Ford v. Linehan, 146
Mass. 283; New England Dredging
Go. V. Rockport Granite Ck>., 149
Mass. 881; Schendel v. Stevenson,
153 Mass. 351, no one of which, how-
ever, really involved the question.
The allusion ot Holmes J., in Demp-
aey v. Chambers, 154 Mass. 380, 26
Am. St. Rep. 249, 13 L. R. A. 219,
to the "requirement that the act
should be done in the name of the
ratifying party" is slgntflcaat It is
believed that the Massachusetts
court will not be found irrevoca-
bly committed to this view). See
also Leavitt v. Fairbanks, 92 Me. 521.
282
CHAP. VIl] RATIFICATION [§§ 387-389
§ 387, What the prevailing rule amounts to, when reduced
to its lowest terms, is, that the act or contract to be ratified shall pur-
port to have been done or made not merely on the agent's behalf but,
by the agent, in the name and on the account of the alleged principal,
so that when ratified, as it was done or made, it shall be capable of
being enforced by and against that principal as an act or contract to
which he was a party. The rule makes impossible a ratification by
an undisclosed principal, although, as will be seen,^ it is held that an
undisclosed principal may, in general, enforce, and be held liable upon,
contracts really made for him by his agent, notwithstanding there was
no disclosure even of the existence of a principal at the time the con-
tract was made. It is urged that, if this be the rule where there really
was authority, it is denying the ordinary effect of ratification to refuse
to permit the lacking authority to be supplied by ratification.^ To this
contention the House of Lords replies, in the language of Lord Davey,
"The rule which permits an undisclosed principal to sue and be sued
on a contract to which he is not a party, though well settled, is itself
an anomaly, and to extend it to the case of a person who accepts the
benefit of an undisclosed intention of a party to the contract would be
adding another anomaly to the law, and not correcting an anomaly.'' '
§ 388. — — Where the assumed agent has in fact purported to
act as such in the execution of a written contract made in the name of
the principal^ it does not seem to be essential that the fact that he does
so purport to act shall be recited or declared on the lace of the con-
tract itself.
Whether there may be ratification where one, who in fact intends to
act as agent, conceals that fact and assumes to himself the name or
characteristics of the principal and makes the contract in the princi-
pal's name, seems not to have been considered, except incidentally in
the forgery cases. It would seem that, in such a case, there could be
no enforcement of the contract by the principal after ratification where
personal considerations were involved, or except subject to such de-
fenses as the other party may have, based upon the assumed identity of
the person who acted and the real principal.
g 389, — — An act may doubtless, sometimes have been done **as
agent" though done in the name of the agent, especially in the case of
informal dealings. It would seem to be possible also though the con-
tract were in writing; because, as will be seen hereafter, — sealed and
iPo«< Book IV, Ch. V, Ch. VII. K. C. Ooddard In 2 Michigan Law
s8ee the able article of Professor Review, 25.
8 In Kelghley v. Durant, supra.
283
§ 39ol
THE LAW OF AGENCY
[book I
negotiaUe instruments excepted, — an authorized contract may often
be deemed the contract of the principal although the agent used per-
sonal terms only. And so in this case, if the assumed agent purports
to act for the principal, there may be a ratifiable contract (with the
same exceptions) even though the agent in making it, inadvertently
used language which might ordinarily have been appropriate to bind
himself.* Of course, as already pointed out, if the agent intended to
act for himself and did not purport to act for a principal, this rule
would not apply.
§ 390. — — Although the alleged agent may have purported to
act as agent for a principal, still if in fact he was acting for himself
only, and did the act in his own name, the purported principal can not
by ratification acquire the benefit of the act' Unless he can work an
estoppel against the pretended agent or can charge him as a trustee,
he would be without remedy.*
4 Young y. Inman, 146 loWa, 492;
KoBtopolos V. Pezzatti, 207 Mass. 277.
In Eobinson v. Lincoln Savings
Bank, 85 Tenn. 263, one of several
debtors, acting for a part of them
whose land had been 8etzed> made
an arrangement with the defend-
ant bank to obtain money with
which to redeem the land and to ob-
tain an eztensioB of time. He acted
in his own name, but his relation to
the others and their interest in the
matter were fully known. Held that
these others could enforce the con*
tract against the bank. Although
the syllabus speaks of ratification,
there was apparently no question of
ratification In the case. The agent
apparently acted with authority, and
it was at most merely a case of un-
disclosed principal.
B In ^Ntfvey v. Jarvin, 4^ N. T. S14^
7 Am. Rep. 335, one M held a Judg^
ment against G and another for over
12,000. He offered to G that he
would discharge it for $500. O did
not then accept the offer. Later one
R (through whom Jarvis claims)
who was a stranger to G, by falsely
representing that he was a friend of
G and came for him, Induced M to
assign the Judgment to him, R, and
R then undertook to enforce the
judgment for its full amount against
G. Sel^ that G could not by ratifl-
cation claim the benefit of the as-
signment as one made to him. "The
essential element ik waiting that
the act m«st be dona for another.
Here it was not so done. The most
that can be claimed is that the de-
fendant said he wa0 aeting for the
plalnUff, Which was false. He paid
his own money, and, in fact, acted
for himself. He was a stranger to
the plaintlit and of coarse under no
obligation to act for him, and he de-
prived the plaintiff of nothing to
which he was entitled."
Followed in the similar case of
Virginia Pochahontas Coal Oo. v.
Lambert, 107 Va. 368» 122 Am. 8t R
860, 13 Am. & Eng. Ann. Gas. 277.
But where he purports to act in
the name aM for tk6 beaefft of a
principal, but h«« a frawdulent in*
tention of performing the contract
on his own account, the named prin-
cipal may ratify. In re Tledemann
ft Ledermonn Freres, [1899] 2 Q.
B. 66.
• In Garvey ▼. Jarvis, supra, it
was held that the alleged agent
could not be charged as a trustee ex
maleficio.
284
CHAP. Vll] RATIFICATION [§§ 39I-393
§ 391. ■ ' As has been seen, the agent of one party may become
the agent of the other also with the knowledge and consent of the first
party, or perhaps without it if the agent were merely a mechanical go-
between. Where the agent of one party may thus act as the agent of
the other^ and purports to do so, the latter may ratify his act as in any
other case. And even though, in a case in which A and B are opposite
parties, the agent of B ought not to tmdertake to act as the agent of A
also» yet if he does purport to do so, and A with knowledge ratifies the
act, A cannot afterward hold B responsible for the act upon the ground
that it was the act of B's agent^
§ 39a. ■ There may of course be other cases in which, by con-
firmation or adoption, results more or less similar to those following
upon ratification may be reached, but which are not really cases of
ratification at all, since they do not purport to adopt the transaction as
done, but rest upon the basis of some new and further dealing. Thus
it is said in one casei ''One may wrongfully take the property of an-
other, not assuming to act as his agentj and sell it in his own name and
on bis own account, and in such case there is no question of agency,
and there is nothing to ratify. The owner may subsequently confirm
the sale, but this he cannot do by a single ratification. His confirma-
tion must rest upon some consideration upholding the confirmation or
upon an estoppel*" '
There nnay also be other cases. Suppose, for example, that a prin-
cipal directs his agent to buy goods in the principal's name and upon
the pifincipars credit, but the agent buys in his own name and upon his
own credit. He then brings the goods to his principal, tells his prin-
cipal bow they were acquired, and the principal accepts them as his
own goods acquired through his agent. Is the principal liable as an
undisclosed principal to the seller ? He may be if this can be regarded
as an authorized purchase, made merely in an unauthorized form, but
as to which the departure from instructions has been condoned or
waived. Or if it be regarded merely as a breach of secret instructions,
the principal would be liable to the seller, although he would have a
remedy against the agent unless he had waived the irregularity or rati-
fied the act.
§ 393- VI. Principal must have knowledge of material facts. — It
will be .seen hereafter that the ratificati<m of an unauthorized act may
, In Virginia Pochahontas Coal Oo. t HamSay v. MlUefr, 202 N. Y. 72.
T. Lambert, supra. It was held that « Hamlin v. Seam, 82 N. Y. 327. cit-
he might be so charged. See also ing Workman v. Wright, 83 Ohio St
Rollins y. Mitchell, 62 Minn- 41, 38 406, 31 Am. Rep. 54«.
Am. St R. 619.
28s
§§ 394» 395] THE LAW OF AGENCY [bOOR I
be express or implied. It may be the intentional act of the principal,
and it may also be, in a measure, an unintentional act. Upon learning
of the unauthorized act of his agent, the principal, deeming the act to
be to his advantage, may expressly ratify it and avail himseFf of its
benefits; or, deeming it to be to his detriment, he may expressly re-
pudiate it ; or, as is more often the case, he may take no decisive step
in either direction, but tacitly leave his intention to be determined by
his subsequent acts. He is under no obligation to expressly aflSrm,'
but if he decides to do so, he may fully inform himself of all the ma-
terial facts, or he may intentionally assume the risk without inquiry,**
or he may deliberately ratify upon such knowledge as he possesses
without caring for more." If he determines expressly to repudiate
the contract he must either ascertain the facts or incur the risk of
having the contract subsequently shown to be within the agent's powers
and enforced against him, notwithstanding his attempted repudiation.
§ 394- But by far the most numerous and troublesome class
of cases is that wherein it is attempted by third persons to hold the
principal liable upon the basis of an implied affirmance. The princi-
pal may in fact have had a positive intention not to ratify the contract,
and yet he may have so conducted himself with reference to third par-
ties that he will be presumed to have ratified it. What shall amount
to a ratification and what shall be deemed to be sufficient evidence
thereof, are questions reserved for consideration hereafter ; the question
here is the necessity of knowledge. Ratification means the affirmance of
that which the party was at liberty to reject. It involves the idea of
choice between alternatives. It presupposes knowledge of the obliga-
tions to be assumed or rejected. However freely a party may voluntarily
assume liabilities of which he is not fully advised, the law ought not to
force upon a man responsibility for the acts of another, unless it ap-
pears that, with full knowledge of those acts, he has done something
reasonably indicative of an intention to assume them as his own.
§ 395* General rule. — It may therefore be stated as the gen-
eral rule, that, except in tliose cases in which the principal intentionally
assumes the responsibility without inquiry, or deliberately ratifies, hav-
ing all the knowledge in respect to the act which he cares to have,** any
• Combs V. Scott, 12 Allen (Mass.), Hunt v. Pitts Agricultural Works, 69
493. Minn. 539; Phosphate of Lime Ck>. v.
10 Lewis V. Read, 13 M. & W. 834. Green, L. R. 7 C P. 43; Wilder ▼.
11 Kelley v. Newburyport Horse R. Beede, 119 Cal. 646.
R, Co., 141 Mass. 496; Anderson v, 12 Lewis v. Read. 13 M. & W. 884;
Creston Land Co., 96 Va. 257; Bhr- Kelley v. Newburyport Horse R. R.
mantraut v. Robinson, 62 Minn. 333; Co., 141 Mass. 496; Anderson v. Cres-
286
CHAP. VIl]
RATIFICATION
l§ 39S
ratification of an unauthorized act or contract, in order to be made
effectual and obligatory upon the alleged principal^ must be shown tc
have been made by him with a full and complete knowledge of all the
material facts connected with the transaction to which it relates ; " and
ton Liand Co., 9upra; Ehrmantrattt ▼.
Robinson, supra; Marsh y. Joseph,
[18d7] 1 Ch. 213.
i» Brown v. Bamberger, 110 Ala.
342; Moore v. Ensley, 112 Ala. 22S;
Wheeler v. McOulre, 86 Ala. 398, 2
L. R. A. 808; McGlassen v. Tyrrell,
5 Ariz. 51; Valley Bank of Phoenix
V. Brown, 9 Ariz. 311; Martin v.
Hickman, 64 Ark. 217; Snow y.
Grace, 29 Ark, 131; Mitchell v. Fin-
nell, 101 Cal. 614; Dupont v. Werthe-
man, 10 Cal. 354; Billings y. Mor-
row. 7 Cal. 171, 68 Am. Dec. 235;
Miller y. Board of Education, 44 Cal.
166; Field y. Small, 17 Colo. 386;
Union Gold Mln, Co. v. Rocky Mt
Nat. Bank, 2 Colo. 665 (affirmed 96
U. S. 640); Schollay y. Moffltt-West
Drug Co., 17 Colo. App. 126; Dean y.
Hipp, 16 Colo. App. 637; Hale y.
Goodell. 49 Colo. 95; Lester y. Kinne.
37 Conn. 9; Beyin y. Conn. Mut L.
Ins. Co.. 23 Conn. 244; Hardeman y.
Ford, 12 Ga. 206; Mapp y. Phillips,
32 Ga. 72; Turner v. Wilcox, 54 Ga.
593; Findlay y. Hlldenbrand, 17
Idaho, 403. 29 L. B. A. (N. S.) 400;
International Bank y. Ferrite, 118
111. 465; Mathews y. Hamilton, 23
111. 470; Reynolds v. Ferree, 86 111.
570; Kerr y. Sharp, 83 111. 199; Stein
y. Kendall, 1 111. App. 103; Silver-
man y. Bush, 16 111. App. 437; Bens-
ley V. Brockway, 27 111. App. 410;
Manning y. Gasharie, 27 Ind. 399;
Eggleston y. Mason, 84 Iowa, 630;
Beebe y. EquitablB Mut. L. Ass'n, 76
Iowa, 129; Tidrick y. Rice, 13 Iowa,
214; Sehrt-Patterson Milling Co. y.
Hughes, 8 Kan. App. 514; Bohart y.
Oberne, 36 Kan. 284; Fletcher y. Dy-
sart, 9 B. Monr. (Ky.) 413; Bank of
Owensboro y. Western Bank, 13
Bush (Ky.), 526, 26 Am. Rep. 211;
Delaney y. Leyi, 19 La. Ann. 251;
Bryant y. Moore, 26 Me. 84, 45 Am.
Dec. 96; White y. Davidson, 8 Md.
169, 63 Am. Dec. 699; Penn. Steam
Nay. Co. y. Dandridge, 8 Gill &
John. (Md.) 248, 29 Am. Dec. 543;
Adams Exp. Co. y. Trego, 35 Md. 47;
Bannon y. Warfleld, 42 Md. 22; Man-
ning v. Leiand, 153 Mass. 510; Dfck-
inson y. Conway, 94 Mass. (12 Allen)
487; Combs v. Scott, Id. 493; Price
y. Moore, 158 Mass. 524; Hurley y.
Watson, 68 Mich. 531; Deflenbaugh
v. Jackson Paper Co.. 120 Mich. 242;
Cowan y. Sargent Mfg. Co., 141
Mich. 87; Pittsburgh, etc.. Mining
Co. y. Scully, 145 Mich. 229; Thiel
Detective Service Co. v. Seavey, 145
Mich. 674; Godfrey v. New York
L. Ins. Co., 70 Minn. 224; Woodbury
v. Lamed, 5 Minn. 339, GiL 271;
Humphrey v. Havens, 12 Minn. 298,
Gil. 196; Hunt y. Pitts Agricult.
Works, 69 Minn. 539; Gund Brew.
Co. v. Tourtelotte, 108 Minn. 71;
Meyer y. Baldwin, 52 Miss. 263;
Steunkle v. Chicago, etc., Ry. Co., 42
Mo. App. 73; Pitts y. Steele Mer-
cantile Co., 75 Mo. App. 221; Citi-
zens Savings Bank v. Marr, 129 Mo.
App. 26; Tecumseh Nat. Bank v.
Chamberlain Bank, 63 Neb. 163, 57
L. R. A. 811; McCormick y. Peters,
24 Neb. 70; Henry v. Halter, 58 Neb.
685; O'Shea v. Rice, 49 Neb. 893;
Nebraska Wesleyan University y.
Parker, 52 Neb. 453; Cram v. Sickel,
51 Neb. 828, 66 Am. St. Rep. 478;
Fitzgerald v. Kitaball, 76 Neb. 236;
Hovey v. Brown, 59 N. H. 114; Bo-
hanan v. Boston A Me. Ry. Co., 70
N. H. 526; Dowden v. Cryder, 55 N.
J. L. 329 ; Campbell v. Nat Bank, 67
N. J. L. 301, 91 Am. St. R. 438; Rus-
sell v. Erie R. Co., 70 N. J. L. 808,
67 L. R. A. 433, 1 A. & E. Ann. Cas.
672; Seymour v. Wyckofif, 10 N. Y.
213; Brass v. Worth, 40 Barb. (N.
Y.) 648; Roach v. Coe, 1 E. D. Smith
287
§§ 402, 403
THE LAW OF AGENCY
[bCX)K I
by the principals that the subagent had been employed on their bdialf
was material to effect a ratification of the agent's agreement that the
subagent should be paid ; *^ where an agent with no written authority
made a lease for a term for which the statute of frauds required writ-
ten authority, and the principal allowed the tenant to go into posses-
sion and received rent under the lease, knowledge of the length of the
term was held material.'*
§ 402. On the other hand in a case •• often cited in which a
lease had been executed under a power of attorney perhaps not suffi-
cient to justify it, but there was also an additional circumstance con-
nected with its execution which would have justified the principal in
repudiating the lease, but of which she was ignorant, the court held
that, by accepting the rent for several years without protest or objec-
tion, she ratified the lease as completely as she could have if she had
known of two grounds upon which to disaffirm instead of only one.
"Two grounds could not make the right any more effectual than one.
If she had the right at all, the number of grounds upon which she could
justify its exercise is unimportant. Her ratification was none the less
complete, because, being unwilling to run the risk of a doubtful ques-
tion of law, she did not at once act as she would have acted if she had
known all of the facts."
The conclusion reached in this case however seems questionable.
Grant that the additional fact is material, — ^and there could be no ques-
tion about it in this case, — it would seem that the principal is entitled
to knowledge of all the material facts, and certainly that, by not choos-
ing to risk a repudiation upon a doubtful point, he should not be de-
prived of the right to repudiate upon an unquestionable ground, when
he discovers it.
§ ^03. Actual knowledge required. — It must be kept in
mind also that, where the law thus requires knowledge, it is ordinarily
actual knowledge, and not merely the opportunity for acquiring knowl-
s7 Servant v. McCampbell, 46 Colo.
292.
B8 Clement v. T 0 u n g-M c S li e a
Amusement Co., 70 N. J. Eq. 677, 118
Am. St. R. 747.
Where defendant is sought to be
bound on the ground of ratification
of the unauthorized act of a real es-
tate broker In assuming to make a
binding contract, knowledge that he
had signed a written agreement and
received a part payment, is indis-
pensable. "It could become an ex-
isting and binding contract only
upon the defendant's approval, not
of a part, but of the entire instru-
ment" Cohen v. Jackson, 210 Mass.
828, citing !New Bngland Dredg. Go.
T. Rockport Granite Co., 149 Mass.
881; Revere Water Co. v. Wfnthrop,
192 Mass. 455.
«• Hyatt V. Clark, 118 N. Y. 663.
294
CHAP. VII ]
RATIFICATION
[§ 403
edge, which is demanded.*® As stated in one case/* "knowledge — not
the existence of circumstances which would, by the exercise of due
care result in knowledge — ^is essential to the ratification of an act."
The principal, where nothing has occurred to put him on his guard, is
not bound to distrust his agent; he has the right to assume that the
agent will not exceed his authority or practice fraud or commit crime ;
and he is not obliged, before accepting the benefit? of an authorized act,
to inquire whether, in performing it, the agent has not in some way
violated his trust.''* Mere careless ignorance, or mere negligence in
not discovering the departure from authority, where there is nothing to
suggest it, is not enough.**
Neither is the principal to be charged with mere constructive notice.
He is not, for example, obliged to search the public records for evi-
dences of his agent's defaults, and he is not charged because such rec-
ords would disclose that the agent was performing unauthorized acts.**
4« Combs V. Scott, 12 Allen
(Mass.), 493; Brown v. Bamberger,
110 Ala. 842; Has well v. Standrlng,
162 Iowa, 291; Sehrt-Patterson Mill-
ing Co. V. Htighee, S K!an. App. 514;
Oxford Lake Lrine ▼. First Nat
Bank, 40 Fla. 349; OolHns v. Dur*
ward, 4 Tex. Civ^App. 339; Iron CltT
Nat Bank ▼. Fifth Nat Bank (Tex.
ClY. App.), 47 S. W. 613; Johsflon T.
Ogren, 102 Minn. 8; Oimd Brewing
Co. ▼. Tonrtekytte, 108 Minn. 71, 21
L. R. A. (N. S.) 210; Heinserling ▼.
Agen, 46 Wash. 390.
^1 Iron City Nat. Bank v. Fifth Nat
Bank, supra. So in Combs v. Scott
supra, it is said: "We do not mean to
say that a person can be willfully
ignorant or purposely shut hia eyes
to means of Information within his
own possession and control, and
thereby escape the consequences of a
ratification of unauthorized acts into
which he has deUberateiy entered;
but our opinion is that ratification of
an antecedent act of an agent which
was unauthorissed cannot be held
valid and binding, where the person
sought to be charged has misan[nre-
hended or mistaken material facts,
although he may have wholly omitted
to make inquiries of other persons
concerning them, and his ignorance
sad misapprehension might have
been enlightened and corrected by
the use of diligence on his part to
ascertain tham."
What might have been discovered
opon inqatry where there was no
duty to make it can not bind the
principaL St John ft Marsh Co. v.
Cornwell, 62 Kan. 712.
But in PhilUps ▼. PhiUips (Cal.>,
127 Pae. 346, knowledge of facts suffi-
cient to put a prudent person upon
inquiry was held constructive notice,
under § 19, Civil Code.
«i Combs V. Scott, 12 Allen (Mass.),
493; Shepard St Morse Lumber Gik v.
BIdridge, 171 Mass. 516, 68 Am. St R.
446, 41 L. R. A. 617; Haswell V.
Standring, 162 Iowa, 291; Oxford
Lake Line v. First Nat Bank* 40 Fla.
849; Llghtfoot v. Horst (Tex. Civ.
App.), 132.8. W. 606; Valley Bank of
Phoenix v. Brown, 9 Ariz. 811; Gxmd
Brewing Ca v. Tourtelotte* 108 Minn.
71, 29 L. It A. (N. S.) 210.
48 Brown v. Bamberger, 110 Ala.
342; Valley Bank of Phoenix v.
Brown, supra; Mcintosh v. Battel, 68
Hun (N. Y.), 216; Schmidt v. Gar-
field Bank, 64 Hun, 298 (affirmed 188
N. Y. 681).
«4 As where the records would dis-
close that the agent had made unau-
29s
§§ 404, 40S]
THE LAW OF AGENCY
[book I
§ 404.
Wilful ignorance. — ^At the same time, however, the
principal cannot be justified in wilfully closing his eyes to knowledge.
He cannot remain ignorant where he can do so only through int'en*
tional obtuseness. He cannot refuse to follow leads, where his faihtre
to do so can only be explained upon the theory that he preferred not to
know what an investigation would have disclosed. He cannot shut his
eyes where he knows that irregularities have occurred.*' In such a
case, he will either be charged with knowledge, or with a voluntary
ratification with all the knowledge which he cared to have.**
g 405. Presumption of knowledge. — ^The facts, moreover,
may be so patent that for the principal to profess ignorance would
merely be to stultify himself. They may be so obvious that the prin-
cipal, as a reasonable man, cannot be heard to say that he was ignorant
of them.*' The duty to know them may be so interwoven with the
thorised transfers by virtue of a
power of attorney (BUlings v. Mor-
row, 7 Cal. 171, S8 Am. Dec. 236; Ool-
Una V. Durward, 4 Tex. Civ. App.
339) ; or had attempted to bind tbe
principal by an unautborlsed assump-
tion of a mortgage. Blass v. Terry.
166 N. Y. 122. There iB an Ifitimar
tlon to the contrary in Latham v.
First Nat Bank, 40 Kan. 9; Mulford
y. Rowland, 46 Colo. 172.
M Where the principal knows that
his agent has exceeded his authority
he cannot eaeape the cohsequences of
knowledge by failing to inqnire as to
the nature or extent of the excoEs.
Neimeyer Lumber Co. t. Moore, 55
Ark. 240; Pope v. Armsby Co., Ill
CaL 159; Johnson v. Ogren, 102 Minn.
a. In PhiUips T. Phniips, — Cal.
— *-*, 127 Pao. 346, certain facts known
to the principal were held by the
court to be "cireuiustanees which
were suficlent to put a prudent per-
son upoA inquiry" and therefore to
constitute "constructive notice." Un-
der Civil Oode« 8 19*
4« Where the principal learns of
the material facts* e. g,, that his
name has been signed to a bond by
an assumed agent without authority,
it is enough. "He may not have
known its exact terms, or the extent
of his liability thereon, but after
knowledge of the material facts, he
cannot escape the consequences of his
silence by remaining wilfully igno-
rant, or purposely closing his eyes to
means of information regarding de-
tails within his eontrol." Lynch v.
Smyth, 25 Colo. 103. "Where a prin-
cipal, knowing that an unauthorized
contract had been made by an agent
in his behalf for th^ use and occupa-
tion of ceitaHi premises, enters into
possession and enjoys their use with-
out knowing or ascertaining what the
terms ol tiie lease were, he must be
held to have deliberately determined
to ratify the contract whatever it
may be." Bhrmanntraut v. Robinson,
52 Minn. 833. To same effect: 'Rus-
sell V. Waterloo Threshing MaclL
Co., 17 N. Dak. 24$.
«T See, for example, Ballard v. Nye,
138 Cal. 588; Scott v. Mlddletown,
etc., R. Co., 86 N. T. 200; Swisher v.
Palmer, 106 111. App. 483; Bartlesoa
V. Vanderhoir, 96 Minn. 184.
In Johnson v. Ogren, 102 Minn. 8,
the court says that the principal can-
not be permitted "to shut his eyes to
the means of information in his pos-
session and control," the means re-
ferred to being that "the whole
transaction was entered in his ac-
count books, the money credited to
his bank account which he exclusive-
ly controlled, and he personally
296
CHAP. VIl]
RATIFICATION
[§406.
proper condDct of the pritlctpars bustoess that he must, as an ordiiiary
business man, be presumed to know them. This latter rule is con-
stantly applied in the case of the directors of corporations, e$peciany of
banks, who are ordinarily presumed to know that which the proper
performance of their duties would disclose.**
§ 406. Knowledge inferred from facts. — It must also he
kept in mind that the existence of actual knowledge may be found h^
inference like any other fact. This is not ''imputed" knowledge or
"presumptive" knowledge ; but the fact of knowledge may be found,
like any other fact, either from direct evidence, or from the existence
of other facts and circumstances from which the fact of actual knowl-
edge may properly be inferred, as in other cases.** Any duty of the
agent to inform his principal might be taken into account in determin-
ing the fact.
signed the diiecks whereby the money
was drawn from the bank and used
in paying his bills." "If he had exer-
cised such care and oversight of his
business as a person of ordinary pru-
dence should or would have exer-
cised, he would have had full and
complete knowledge of every and all
of such transactions."
In Bllven v. Lydecker, 130 N. Y.
102, the court says that such "notice
as would cause a prudent person to
make inquiry" is enough. But com-
pare Brown y. Bamburger, 110 Ala.
342; Helnierling y. Agen, 64 Wash.
390.
41 Thus there are many cases in
which it is held that the corporation,
from lapse of time, general notoriety,
and course of business, must be pre-
sumed to have knowledge. See Scott
V. Middleton Ry. Co., 86 N. 7. 200;
Central JR. Co. v. Cheatham, 85 Ala.
292, 7 Am. St. B. 48; Kelsey v. Na-
tional Bank, 69 Pa. 426. So in Mar-
tin V. Webb, 110 U. S. 7, 28 L. Ed.
49, it is said: "DireotOES cannot, in
justice to those who deal with the
bank, shut their eyes to what is go-
ing on around them. It is their duty
to use ordinary diligence in aacer-
taining the condition of itp business,
and to exercise reasonable control
and ■upervlsion of its officers. They
have something more to do than,
from time to time, to elect the of-
ficers of the bank and to make dec-
larations of dividends. That which
they ought, by proper diligence, to
have known as to the general courp^
of business in the bank, they may be
presumed to have known in any con-
test between the corporation an^
those who are Justified by the cir-
cumstances in dealing with its of-
ficers upon the basis of that course of
business." Followed in Hanover Nat
Bank v. American Dock & Trust Co.,
148 N. Y. 612, 51 Am. St R. 721;
Spongberg v. First Nat Bank, 18
Idaho, 524, 31 L. R. A. (N. &) 736.
But a failure to discover that
which inspection with ordinary care
would not have discovered, wlU not
work a ratification. Campbell ▼.
Manufacturers' Nat Bank* 67 N. J. L.
301, 51 Am. St R. 438.
40 Thus, for example, la Raid ▼.
Miller, 205 Mass. 80, it was said that
the jury might infer knowled|^e froqi
the facts shown, where it appeared
that the husband of the alleged prin-
cipal, with whom she was living in
the ordinary way, was acting as the
manager of her property and affairs.
"There la a broad field for legitimate
Inference by a >ury frpm facta like
these," said the court
297
§' 407]
THE LAW OF AGENCY
[book I
§ 407-
Imputed knowledge — Knowledge of agents —
Knowledge of the particular agent. — The knowledge which shall bind
the principal may also, of course, be the knowledge possessed by some
other agent having a general authority in the matter, and which may
be imputed to the principal in accordance with the general rule making
notice to an agent notice to his principal.** But the knowledge of the
particular alleged agent himself of his own unauthorized act cannot
thus be imputed to the principal, in such manner as to satisfy the re-
quirement of knowledge by the principal ; for, as to the matter in ques-
tion, the person acting is not agent until ratification, and it cannot be
said that the principal has ratified with knowledge at the time of rati*
fication, simply because the person who thus becomes agent had knowl-
edge.*^ A fortiori is this true where tlie alleged agent was a mere
stranger, not an agent for any purpose.
So in COonnell v. Casey, 206 Mass.
520, tlie same point is held, and it
was said that the Jury were at lib-
erty to refuse to credit the testimony
of the parties that the wife was not
told of the fact in controversy.
In Curry v. Hale, 15 W. Va, 867, It
Is said: "It is not necessary that
such Knowledge shall he shown by
positive evidence; It may be deduced
or Inferred from the facts and cir-
cumstances of the case." Many other
cases are to the same effect.
BO As where notice comes to an
agent or officer of a corporation who
for this purpose may be regarded as
the corporation itself. Union Mining
Co. V. Rocky Mt. Nat. Bank, 2 Colo.
248; Beacon Trust Co. v. Souther, 183
Mass. 413; Hartford Deposit Co. v.
Calkins, 109 111. App. 579.
«i In Thomson v. Central Pass. Ry.
Co., 80 N. J. L. 328, it is said that
the doctrine of Imputed notice rests
upon a legal fiction, whicb might
suffice In certain other cases but not
here. "Knowledge as a fact is the
basis of implied acquiescence or rati-
fication." See also Britt v. Gordon,
132 Iowa, 431; Reeves v. Lewis, 25
S. Dak. 44, 29 L. R. A. (N. S.) 82. In
Adams Elzpress Co. r. Trego, 35 Md.
47, 68, it is said: ''It is true, notice
to an agent of facts arising? from and
grrowing out of the subject matter of
his agency, Is constructive notice to
the principal. But this rule bas no
application to the case where the
question is, whether the act relied
on to bind the principal, was done
within the limits and scope of the
agent's authority or not ♦ • *
It is true, the act of the agent, though
unauthorized at the time, may be-
come binding upon the principal by
ratification and adoption. But to
make such ratification effectual It
must be shown that there was previ-
ous knowledge on the part of the
principal of all the material facts
and circumstances attending the act
to be ratified."
In Long V. Poth/ 16 N. Y. Misc.^86,
It is said: "True, It will be presumed
that an agent discloses to his prin-
cipal within a reasonable time all of
the material facts tbat come to his
knowledge while acting within the
scope of his authority (Hyat;t v.
Clark, 118 N. Y. 563, 570; Krumm v.
Beach, 96 Id. 398, 404. 405; Bank v.
Davis, 2 Hill, 451), but this rule can-
not be extended to imply that a special
agent whose powers are limited to
making a lease for one year informed
Ills principal that he had' transcended
298
CHAP. VII J
RATIFICATION
[§ 407
It has been held, however, that where an agent authorized to do a
certain act, or to do it in a certain way, has deviated from his instruc-
tions, there is a presumption that^ in reporting to his principal, he will
advise him, as, it is said, would be his duty,'* of this deviation, and
that the principal who then takes the benefit of his act must be deemed
to have knowledge.'* This, however, if sound, can be no more than a
presumption of fact, and may therefore be rebutted by evidence to the
contrary." In the great majority of the cases, the presumption is in
fact rebutted by evidence showing that the principal did not know the
circumstances.
his authority, and made two leases
in violation of duty for longer terms.
Adams Express Co. v. Trego, 25 Md.
47."
In Welsser ▼. Denlson, 10 N. Y. 68,
61 Am. Dec. 731, quoted In Henry r.
Allen, 161 N. Y. 1, 36 L. R. A. 658»
the court emphasizes the fact that
the knowledge Imputed to the prin-
cipal does not Include the agent's
own knowledge of his wrongful acts.
Especially will the notice not be
Imputed where the agent had an ad-
verse Interest Post, Book IV, Chap.
V, under the head of Notice to Agent
First Nat. Bank v. Foote, 12 Utah,
157; Barnett y. Daw, 65 N. Y. App.
Dlv. 202.
Contrary statements. — It Is true
that statements opposed to the rule
giren In the text are occasionally to
be met, e. g. In Hyatt v. Clark, 118
N. Y. 563; Meehan v. Forrester, 52
N. Y. 277; St Louis Refrigerator Co.
r. Vinton Washing Mach. Co., 79
Iowa, 239, 18 Am. St R. 366; TTnlted
States Fidelity Co. v. Shirk, 20 Okla.
576; Klckland ▼. Menasha Wooden
Ware Co., 68 Wis. 84, 60 Am. Rep.
831; Windsor v. St. Paul, etc., R, Co.,
37 Wash. 166, 3 A. ft E. Ann. Cas. 62,
bat these statements are probably
either mere dicta or inadvertent ex-
pressions. The general adoption of
this view would practically abolish
the entire requirement of knowledge
in ratification, and It Is inconsistent
with a large number of cases, as is
pointed out In Adams Express Co. v.
Trego, supra; and in an article by
Mr. Arthur L. Corbln In 15 Yale Law
Journal, 331.
The statements concerning "con-
structive notice" in Andrews v. Rob-
ertson, 111 Wis. 334, 87 Am. St R.
870, 54 L. R. A. 673, are doubtless
mere inadvertent expressions.
»* In the ordinary case of imputing
notice, an exception is made of the
case in which the agent is acting
adversely to his principal, upon the
ground that the law will not pre-
sume that the agent will do what
the circumstances show that it is
certain he will not do. Post, Book
IV, Ch. V. Is this a different case?
Bs Meehan v. Forrester, supra;
Hyatt V. dark, supra (State Bank v.
Kelly, 109 Iowa, 544, puts thje case
upon the principal's duty to inquire).
The case of Francis v. Litchfield, 82
Iowa, 726, doubtless goes upon this
ground.
If this is to be deemed a conclusive
presumption, it is, of course, only an-
other form of reaching the same con-
clusion as by imputing the knowledge
directly.
" Long V. poth, 16 N. Y. Misc. 85,
supra,
•In Meehan v. Forrester, 52 N. Y.
277, supra, an attorney who had been
employed to collect a claim and who
had obtained a judgment upon it,
brought to his principal a deed of
lands, absolute upon its face, run-
ning from the debtor to the prin-
cipal, and delivered it to the prin-
299
§'4o8]
THE LAW OF AGENCY
[book I
In controversies between the principal and the agent, the presump-
tion would doubtless not be invoked in the agHit's favor.
§ 408. Duty to inquire.— And, filially, where the alleged
agent was a mere volunteer, not then agent for any purpose, — in this
respect differing from the cases mentioned in § 403, — who has assumed
to act for the alleged principal, it is said to be "the duty of the princi-
cipal who accepted it, apparently sup-
posing it was in payment of the debt.
As matter of fact, the attorney had
received it upon parol understanding
that it should be a security merely
and subject to redemption. Som^
time later the principal sold the land
to a hona fide purchaser. Five years
later the debtor sought to redeem,
and finding that redemption was im-
possible because of this sale, sought
to recover the excess in value from,
the principal. The court said that It
was the duty of the client to inquire
and of the attorney to communicate
what were the conditions upon which
the deed was received and "in the
absence of any evidence to tho con-
trary, the presumption is that these
duties were performed." Presumptive-
ly, then, the principal knew the con-
dition; but, apparently, he might
have shown that he did not; and, in
that event, apparently a different
conclusion would have been reached.
In Hyatt v. Clark, 118 N. Y. 563,
Mrs. Hyatt, who was going abroad)
had given to her brother, one Lake,
a formal power of attorney to man-
age and conduct her property and
afPairs in the United States, to sell
and dispose of real or personal prop-
erty and convey the same, etc. Dur-
ing her absence Lake proposed to
lease certain of her land to Clark for
a five year period, with right in the
lessee to renew for two more five
year periods, at increased rent. The
lease was written and signed by Lake
as agent, and then some question
arose as to Lake's authority under
this power of attorney to make
leases. Pending a communication
with Mrs. Hyatt, the leaae was put
into Clark's hands, but he did not ac-
cept delivery of it and postponed the
decision of the question until Mrs.
Hyatt should be heard from. Some
days later a cable message came from
Mrs. Hyatt cancelling thd power of
attorney, and directing Lake to sign
no leases. Lake showed this to Clark,
and requested a cancellation of the
lease. Clark, however, refused to
cancel the lease, but said he would
take any risk there might be about
it, recorded the lease and took poB-
session of the premlseJB. Later Mrs.
Hyatt returned and was told by Lake
that the lease had been signed before
her message was received, and that
it was- valid and could not be can-
celled. He did not tell her of the
conditional delivery or of any of the
other circumstances attending it.
She made no effort to cancel the
lease upon the ground that the power
of attorney did not authorize It, and
received the rents for four years or
more, and until Clark demanded a
renewal, when, learning of the facts
attending the original delivery of the
lease, she brought an action for its
cancellation. The court held that
she had ratified the lease, that it was
Lake's duty to give her notice of the
facts, that she was charged with his
knowledge, and "after the lapse of
sufficient time, therefore, she is pre*
sumed to have acted, with knowl-
edge of all the acts of her agent in
the line of his agency." It will be
observed that this case makes the
presumption practically a conclusive
one, and applies it in the face of the
conceded facts that she was not in*
formed upon her return, or until she
attempted to secure cancellation, of
the fact that the lease had never
been unconditionally delivered ajad
had been kept by Clark in face of
her revocation of Lake's authority.
300
tflAF. Vll]
RATIFICATION
[§§ 409. 410
pal, or the person who becomes so by adopting the contract made in
his name and for him, to make all needed inquiry and investigation into
the factB, acts and representations of the person, who without authority
has assumed to act for him, before he adopts the contract as his own/' •*
Certainly if he makes no such inquiry, but blindly accepts the proceeds
as his own, there is strongf evidence that he has voluntarily ratified,
having all the knowledge which he cared to have.*^'
The same rule has also been applied where the principal of an agent
having certain authority, is advised that the agent has acted in excess
of it : he is bound to ascertain the nature and extent of that excess or
assume the responsibility of voluntary ignorance."
§ 409. Effect of ratification without knowledge.— Finally
it must be borne in mind, though it seems often to be overlooked, that
the effect of ratification without knowledge is usually to defeat the en-
tire ratification, and not to make it good as to all matters except that
as to which there was no knowledge. And also, as will be seen in later
sections, that though the principal at the outset had no knowledge, he
cannot later, when he acquires it, insist upon retaining or securing the
fruits of the unauthorized act and rejecting the residue.
§ 410. VII. No ratification of part of act.-*-It is a fundamental rule
that, if the principal elects to ratify any part of the unauthorized act, he
must, so far as it is entire, ratify the whole of it. He cannot avail
himself of it so far as it is advantageous to him, and reject it as to the
residue. He cannot take the benefits and repudiate the obligations;
and this rule applies not only when his ratification is express but also
when it is implied,** if the requirement of knowledge is satisfied.
88 BuBch V. Wilcox, 82 Mich. S36. 21
Am. St Rep. 563, cited with approval
in State Bank v. Kelly, 109 Iowa,
644: Wilder v. Beede, 119 Cal. 64G.
B«Meehan y. Forrester, 52 N. T.
277; B^ie t. Ashbaugh, 44 Towsu
519: Deerlng ft Co. ▼, Grundy Nat
Bank, SI Iowa, 222; Pope y. Armsby
Co., Ill CaL 169.
BYNeimeyer Lumber Co. y. Moore,
65 Ark. 240; Pope v. Armsby Co., Ill
Cal. 159, 4S Pac. 5S9; Aultman
Threshing, etc., Co. y. Knoll, 71 Kan.
109; PhllUps y. PhlUlps, — Cal. — ,
127 Pac. 346, is to much the same ef-
fect
Bs See posU I , iZi, et seq.: Craw-
ford y. Barkley, IS Ala. 270; Daniels
y. Brodte. 54 Ark. 216, 11 L. R. A.
81; Mulford y. Torrey Exploration
Co., 46 Colo. 81; Hodnett y. Tatum^
9 Ga. 70; Southern Express Co. y.
Palmer, 48 Ga. 85; Mercier y. Cope-
Ian, 73 Ga. 636; Dolvin y. American
Harrow Co., 126 Ga. 699, 28 L. R. A.
(N. S.) 785; Burke, etc., Co. y. Wells:
Fargo ft Co., 7 Idaho, 42; Henderson
y. Cummings, 44 111. 325; Barhydt y.
Clark, 12 III. App. 646; Swisher y>
Palmer, 106 111. App. 432; Krlder r.
Western College, 31 Iowa, 547; Key
y. Nat'l Ufe Ins. Co., 107 Iowa, 446;
McKinstry y. Citizens* Nat. Bank, 57
Kan. 279; Aultman Thresh., etc.^ Co*
V. Knoll, 71 Kan. 109: Wells v.
Hickox, 1 KatL App. 485; Loomia
301
§ 412]
THE LAW OF AGENCY
[book I
same whether the instrumentality employed was fraudulent, or merely
^ matter of warranty or promise.*'*
{§ 412. ->-*^— Limitation»«~<!!o]lateral conttact8,«-*But this rule is
not to be applied without limitation. Thus it is said in a leading case/^
though it is probably somewhat too wide, "even this responsibility for
instrumentalities does not extend to collateral contracts made by the
agent in excess of his actual or ostensible authority, and not known to
the principal at the time of receiving the proceeds, though such col-
lateral contract may have been the means by which the agent was en-
abled to effect the unauthorized contract, and the prindpal retain the
proceeds thereof after knowledge of the fact."
Goodell, 66 Iowa, 692; Badie t. Ash-
baugta. 44 Iowa, 619; Dcerlng Co. v.
Qmndy Nat Bank, 81 Iowa, 222; Os-
tem ft 00. ▼. Jordan, 62 Nob. 465;
Dresher v. Becker, 88 Neb. 619;
PhlUiMi, etc., Mfg. Oo. V. Wild, 144
JUa. 646; Walling v. Poulsen, 160
Mich. 392; Fraternal Army of Amer-
ica V. Evans, 216 111. 629; Morse v.
Whltcomb, 64 Or. 412, 136 Am. St R.
832; Western Mfg. Co. v. Cotton, 126
Ky, 749, 31 Ky. L. It 1130. 12 L. R. A.
(N. S.) 427.
Contra: Nichols v. Bruns, 6 Dak.
28.
MRackemann v. Rlverbank Im-
provement Co., 167 Mass. 1, 57 Am.
St 427 (citing Udell v. Atherton, 7
H. ft N. 172; Brady v. Todd. 9 C. B.
(N. S.) 692; Western Bank of Scot-
land y. Addle, L. R. 1 H. L. (Sc.)
145; Houlds worth v. Glasgow Bank, 6
App. Cas. 317; Kennedy v. McKay, 43
N. J. L. 288, 39 Am. Rep. 681; Titus
V. Cairo, etc., R. Co.* 46 N. J. L. 893,
420; Krumm v. Beach. 96 N. Y. 398;
Eberts y. Seloyer, 44 Mich. 519. 38
Am. Rep. 278; Knappen y. Freeman,
47 Minn. 491).
^ The leading case in this connec-
tion is Smith v. Tracy, 36 N. Y. 79.
Here the owner of bank stock put it
into the hands of the president of the
bank for sale. The president sold It
to the plaintiff making representa-
tions concerning its value which he
had no authority to make but whksh
be believed to be true. He paid the
proceeds to the owner saying noth-
ing about the representations he had
madOb The seller died* apparently In
Ignorance of the making of the rep-
resentations; the representations
proved to be untrue, and the pur-
chaser more than two years after the
sale and without any previous effort
to undo the transaction brought this
action against the seller's executor to
recover damages, The plaintiff
claimed that power -to warrant would
be implied, but, if not, that the retaa-
tlon of the proceeds of the sale was
a ratification of the warranty. It
was held that no power to warrant
would be implied and that the re-
ceipt of the proceeds was no ratifica-
tion. "The receipt of the proceeds of
the sale, in ignorance of any such un-
dertaking, is neither an assent to the
breach of duty nor an extension of
the authority of the agent" But sup-
pose that the purchase price had not
been paid and the owner were suing
the buyer for the price. Would the
court then have held that he oould
recover the price without regard
to the representations? Oondit v.
Baldwin, 21 N. Y. 219, 78 Am. Dec
187, is also to the ssme effect Hare
it was held that a principal who
gives money to an agent to loan at
legal rates does not by receiving the
securities ratify an illegal exaoUen
by the agent (rf a bonus making the
loan usurious, the principal being Ig-
norant of it. But three Judges dla-
3<H
CHAP. VIl]
RATIFICATION
[§ 4t2
The principal here, it is said, has authorized his agent to make a
certain contract. The agent makes that contract but also makes an
additional one; The latter, as the person dealing with the agent is
bound to know, is not binding unless authorized or ratified. It was
not authorized : was it ratified? All that can be shown is that the prin-
sented. Wheeler r. Northwestern
Sleigrh Co., 39 Fed. 347 (Jenkins and
Gresham, JJ.) Is also an important
case. The owner of stock in a corpo-
ration upon which a dividend had
been declared but not paid, author-
ised an agent to sell the stock at a
certain price, expressly reserving the
dividend. The agent made a sale at
the price named by promising to
throw in the dividend. He paid the
price to the principal but did not tell
him of the agreement respecting the
dividend. It does not appear when
the principal learned of the promise
respecting the dividend. The agent
denied that he made any such prom-
ise, but the finding was against him
on this point Neither party had ot-
tered or demanded a disaffirmance of
the sale. It was urged, by the pur-
chaser, that by so receiving and re-
taining the proceeds of the sale the
principal ratified the contract that
the dividend should be included, but
this was held not to be true. "The
plaintiff received as avails of the
stock the exact amount for which he
had authorized his agent to dispose
of his stock. He had no reason to
suppose that any false representation
had been made, or that his agent had
assumed to dispose of any other proj^
erty than the stock as the considera-
tion for the money paid by the pur-
chasers and received by him. Under
such circumstances, the retention of
the money oannot be held to be a
ratification by him of the unauthor-
ised acts of the agent because it was
retained without knowledge of the
facts," citing Bell v. Cunningham, 3
Pet 69, 7 L. Ed. 606; Hastings V.
Bangor Houfle Proprietors, IS Ma
436; Bryant v. Moore, 26 Me. 87^ 45
Am. Dec. S6; Thaehel* ▼. Pray, 113
Mass. 291, 18 Am. Rep. 480; Naviga-
tion Co. V. Dandridge, 8 Q. A J. (Md.)
248, 29 Am. Dec 643; Smith v. Tracy,
supra; Baldwin v. Burrows, aupra;
Smith V. KIdd, 68 N. Y. 130, 23 Am.
Rep. 157; Reynolds v. Perree, 86 111.
570; Roberts v. Rumley, 68 Iowa,
301; Bohart v. Oberne, 36 Kaar284;
Aetna Insurance Co. v. N. W. Iron
Co., 21 Wis. 458.
Roberts v. Rumley, 68 Iowa, 801,
cited supra, is also of interest. The
defendant who lived in Indiana held
certain notes against a resident of
Iowa upon part of which one Roberts
was a surety. Rumley put the notes
into the hands of attorneys in Iowa
who took Judgment upon them. Rob-
erts proposed to the attorneys that
he would get the principal debtor to
secure payment by a mortgage upon
his homestead if certain extensions
and privileges off payment were
granted. The attorneys reported this
to Rumley who instructed them to
accept if a certain sum should also
be paid to apply on fees. Roberts
paid this sum and the attorneys with-
out the knowledge or consent of
Rumley agreed that it should be ap-
plied in a different way and that the
mortgage should be pro tanto as-
signed to Roberts. Rumley acoepted
the mortgage, which was silent as to
this agreement, and afterwards be-
gan foreclosure, whereupon Roberts
began the suit in question to secure
the performsjice of the agreement
claiming that Rumley by accepting
the mortgage and payment ratified
this contract It was held (distin-
guishing Badie V. Ashbaugh, 44 Iowa,
510, and Beidman v. Qoodell, 60 Iowa,
692) that his claim could not be en-
forced. *'To hold that the principal
Is bound by agreements between the
20
305
§ 4^3] THE LAW OF AGENCY [bOOK I
cipal, in ignorance of tlie additional contract, received, and has re-
tained, what appeared to be the legitimate proceeds of the authorized
contract. "It cannot, surely, be said that under such circumstances the
retention of the money was an act of affirmance,** declares Jetikins, J.,
in a case already cited.®* "To so hold would place every principal at
the mercy of his agent with respect to matters as to which he had con-
ferred no apparent authority. So that if one should authorize his
agent to sell his house for $20,000, and the agent selling the house for
that sum should include in the sale certain bank stock which he was
not authorized to sell, and of which he had no possession, the principal,
by the mere receipt and retention of the sum which he had authorized
to be taken for the house, and in ignorance of the fact that the bank
stock was part of the consideration running to the purchaser, would
be bound to deliver the stock. I cannot yield assent to such doctrine,"
§ 413. M This is not to say, however, that if the prinoipal had
been seeking by action to enforce the contract as he understood and
authorized it, he could have done so. The defendant in that event
could show that he never consented to that contract Nor does it fol-
low that the principal would have been able to retain the proceeds if the
other party, returning what he had received, had demanded restoration
upon the ground that the minds of the parties had oever met upoB any
proposition.
The situation appears to be this: The principal has authorized his
agent to make or accept a certain offer, or an offer upon certain terms.
The agent in fact has made or accepted a different offer, or an offer
upon different terms. The result is that the minds of the principal
and the other party have never met ; no valid contract has resulted ;
and, subject to a possible right of the principal to force a ratification,*'
either party is at liberty to" withdraw from the negotiations. As soon
as the principal learns the facts, it would, in general, be incumbent
upon him, unless he wishes to affirm the contract, to offer to restore
what he may have received under tfie negotiations and of the other
party likewise to restore what he has received.**
speelal agent and the person with -within his special authority, wouI4
wlunn he oontracta, not authorized require the principal to ioQuire, at
by the agent's appointment, and of his peril, whether the agent bad gone
which he had no knowledge when he beyond It" (But compare State
accepted the benefits of the contract, Bank v. Kelly» 109 Iowa, 544.)
would, be entirely subvursive of the M Wheeler, -v. Northwestern Sl^h
whole doctrine of special agency, and Co., aupra,
instead of requiring the person deal- «< As to which see pot4 8 ^l^ ^
ing with the agent to ascertain, at »eq,
las peril, that the acent has k^ .«« See poai, £ 436.
306
CHAP. VI I ]
RATIFICATION
[§ 414
If now the principal takes the initiative and endeavors to enforce the
contract or secure rights under the contract, he must take the contract
as he finds it, because that is the only contract or appearance of cpn-
tract that has been made and to which the other party has assented.
If there are unauthorized provisions in the contract, still> since they
are terms jn the only^ contract tlier«,is, th^ principal who would eniorce
that contract must be bound by them. If there are conditions or rep-
resentations affecting this contract, which would equally affect an
authorized contract, the principal must take subject to them.
Now, turn it about. Until the principal has done something to rat-
ify, he is not bound. He is the only party who can ratify. Until he
has ratified, the other party can not hold him upon the contract or upon
any of the con4itions or representations accompanying it. If the other
party claims that the principal has ratified the contract, he has the bur-
den of proving that the principal with knowledge has done so.*"^ If
he can establish that, he may succeed. The refusal of the principal to
disaffirm liipon a proper request would doubtless often be a ratification,
though it is not necessarily so.'*
If the principal does not ratify, either by seeking to enforce or other-
wise, the transaction stands like any other ineffectual dealings. Dis-
affirmance and restoration are the ends to be arrived at. If this can
not be accomplished, and there are no gwoji-contractual remedies avail-
able, any loss sustained must either be made good by the agent who
caused it, or be left to He where it has fallen.
§ 414. Collateral stipulation which makes whole contract
illegal. — ^A distinction may also be drawn in the case in which the col-
lateral stipulation is one which would, as the other party who now in-
sists upon it knows, make an otherwise lawful contract illegal. He
has no right to suppose that such a stipulation was authorized, or will
be approved. He himself ought to be supposed to have intended to
make a lawful contract and not an illegal one. He is certainly entitled
MThuB in Lester ▼. Kinne, 37
Conn. 9, specific performance waa de*
nied to a buyer to whom the defend-
ant*s agent, authorized to seU lot A,
had without authority agreed to con-
vey lot B also for the price fixed for
A aloney there being no evidence
of ratification except that the princi-
pal had received the consideration,
which he supposed waa for lot A
only, in ignorance of the fact that
the agent had agreed to include let B
Also.
«« Although it is Bometimes sMd
that the refusal of the prlnoipal to re-
turn what he has received or pay for
it, is a ratification, this is, of course,
not necessarily so. Not every benefit
received nxust be paid for. It is not
always possible to restore it Bene-
fits thrust upon another cannot usu-
aUy be made the basis of recovery.
There can usually be no liability for
refusing to return what one has the
right to retain. See post, 8ft 435, 436
and. notes^
307
§§ 415* 4i6J
THE LAW OF AGENCY
[book I
to very little consideration in endeavoring to set up against an actually
innocent principal who is seeking to enforce an apparently lawful con-
tract, an illegal provision to which he was a voluntary party artd which
will make the whole transaction illegal ; and it has been held that he
will not be permitted to do it.*^
§ 415. Divisible acts — Involuntary receipt^ ^tc.— More-
over, by the terms of the rule, it does not apply to the ratification of
wholly severable and disconnected parts of a general transaction. Nor,
as will be seen hereafter, to the case in which something to which the
principal is entitled independent of the act in question, is so bound up
with that as to make separation impossible.**
§ 41G. Intention to ratify. — ^The statement is sometimes made that
there can be no ratification unless the principal intended to ratify.**
If by this is meant that there must always be a conscious, deliberate
purpose to ratify, it is, of course, unsound. Where particular acts,
alleged to be acts of approval, are relied upon, the question whether
they were meant to be acts of approval or of disapproval, or whether
•7 Thus In Terry v. International
Cotton Co.» 138 6a. 656, a special
agent sent out witb a printed form
of contract to make contracts for the
purchase of cotton took from the de-
fendant and delivered to his princi-
pal an apparently regular and lawful
contract upon one of the forms so
furnished for the sale of defendants
cotton to the plaintifT. On seeking
to enforce it, plaintiff Is met by de-
fendant's contention that the con*
tract was really made upon the
terms that the cotton should not in
fact be delivered, but should be setr
tied by paying differences in value.
Such a contract would be a gambling
contract, illegal under the statutes of
the state, and one which the agent
had no authority to make. Heldf
that this collateral stipulation could
not be set up. The court cites as
analogous, the cases of alleged usury,
where the agent and the borrower
have agreed upon a total rate which
would make the loan usurious. As
will be seen in a later section, it is
held in many cases, though not with-
out dissent, that a collateral stipula-
tion or act of this sort, not included
in the very contract upon which the
principal sues, cannot be set up to
invalidate the loan. See Condlt v.
Baldwin, 21 N. Y. 219, 7S Am. Dec.
137; Hall v. M&udlin, 68 Minn. 137,
49 Am. St. R. 492; Nye v. Swan, 49
Minn. 431; Richards v. Bippus, 18
App. D. C. 293; Franzen v. Ham-
mond, 136 Wis. 239, 128 Am. St R.
1079, 19 L. R. A, (N. S.) 399; Mc-
Lean V. Gamak, 97 6a. 804; Clarke v.
Havard, 111 Ga. 242, 51 L. R. A. 499.
OS See post, i 489.
69 Thus, for example, a statement
in Ansonia v. Cooper, 64 Conn. 536,
that "the acceptance of the results of
the act with an intent to ratify and*
with full knowledge of all the ma-
terial circumstances, is a ratifica-
tion"— ^which is of course a perfectly
true statement — ^becomes the cited
authority, in Russell v. Brie R, Co.,
70 N. J. L. 808, 67 L. R. A. 483. 1 A.
ft E. Ann. Cas. 672, for the statement
"that in order to constitute a ratifi-
cation there must he an acceptance
of the results of the act with an in-
tent to ratify and with full knowl-
edge of all the material circum-
stances," which is obviously quite a
different proposition.
See also Trustees r. Bowman, 136
N. Y. 621; Reld r.' Warner, [1907)
Transv. L. R. (Sup.) 961.
308
CHAP. VII ]
RATIFICATION
[§§ 417-419
an inference of approval may or may not reasonably be drawn from
tfaem, or whether they may not be as consistent with some other con-
clusion as with that of approval, and the like, may well require a con-
sideration of the intent or purpose with which the acts were done.'*
But it is perfectly settled that, in the creation of agency or of part-
nership or like situations, where the question is what inference the law
draws from given facts, the matter of the actual intention of the par-
ties is not conclusive. If they voluntarily intend to do the acts from
which, as a legal consequence, agency, or partnership, or contract, or
the like, results, that consequence can not be defeated because the par-
ties may not have consciously intended to produce that result It can
not be otherwise with ratification,'^
V.
WHAT AMOUNTS TO A RATI FI CAT 10 1^.
§ 417. Importance of question. — ^It is obvious tliat this is the most
important question to be considered in this chapter, and that within it
are embraced, to a greater or less degree, all of the preliminary topics
that hav€ just been considered. Given the proper parties and the right
conditions, does this writing, this conduct, this speaking, this silence,
amount to a ratification of this unauthorized act or contract, is the
vital question to which all the preliminary considerations lead.
§ 418. Written or unwritten-^Express or implied.— As has been
seen and will hereafter be more clearly seen, the ratification of an un-
authorized act is deemed to be equivalent to a prior authority to per-
form it ; and as that prior authority may have been conferred in a great
vari^y of ways — may have been written or unwritten, express or im-
plied,— so this ratification may be eflFected in the same way.'*
i. Express RatiAcation.
§ 419. General rule. — It is the general rule that the act of ratifica-
tion must be of the same nature as that which would be required for
TO This is, doubtleoB, what ie nieaAt
in such caseB as Breanz v. Sarvole^
Z9 La. Ann. 248, and WllHams Y.
Pullman Car Co., 40 La. Aim. 87, 8
Am. St R. 612, by the ptatement
"that the acts from which the rati*-
flcatlon of a oontraot is sou^t to bo
deduced mint evinoe such iBtentlon
clearly and nnequlvocally* None
will be inferred where those acts can
De otherwise explained.**
TiThus In Hazard T. Bpears, 4
Keyea (48 N. Y<), 469, 2 Abb. Dec.
853> whore this question was in-
Tolved, it ift said: "The law paeaoB
its Judgment upon, and giyes le^l
effect to, what is said and done. In-
tentions, except as they are maul-
fested by the acts and statements of
the parties, are of no avail."
, 78 Goes y. Stevens, 82 Minn. 472;
Post, Subd. 1 and 2; Taylor v. Con-
ner, 41 Miss. 722, 97 Am. Dec. 419.
309
§' 420]
THE LAW OF AGENCY
[book t
conferring the authority in the first instance/* If, therefore, sealed
authority would have been indispensable, then, as a general rule, sealed
ratification must be shown ; and if written authority would have been
required, written ratification must appear.
Each of these methods will be separately considered.
a. By Instrument Under Seal.
§ 420. Deed at common law ratified only by instrument under
seal. — ^As authority to execute an instrument under seal could only be
conferred by authority under seal,''" it was the doctrine of the common
law that the unauthorized deed of an agent — meaning by deed, of
course, any instrument to whose validity a seal was essential — could
only be ratified by an instnmient under seal.'''
As a rule of the common law, this generally still prevails where not
changed either by express statute or as the result of general statutory
provisions respecting the significance or necessity of seals.
T4 "A ratification of an act done by
one assuming to be an agent relates
back and is equivalent to a prior an*
thorlty. When therefore the adop-
tion of any particular form or mode
is necessary to confer the authority
In the first instance there can be no
valid ratification except in the same
manner." Parker. C. J. in Despatch
Line V. Bellamy Mfg. Co., 12 N. H.
205, 37 Am. Dec. 203.
Where a city could authorize a
given contract only by ordinance it
can ratify only by ordinance. Ar-
nott V. Spokane, 6 Wash. 442; Kroffe
V. Springfield, 86 Mo. App. 530; Mul-
ligan V. Lexington, 126 Mo. App. 716;
Penn v. Laredo (Tex. Civ. App.), 26
S. W. 636.
7B Ante, § 212.
7« Despatch Line v. Bellamy Mfg.
Co., aupra; SpofTard ▼. Hobbs, 29 Me.
148, 48 Am. Dec. 521; Bellas v. Hays,
5 Serg. ft R. (Pa.) 427, 9 Am. Dee.
386; Stetson v. Patten, 2 OreenL
(Ma.) 358, 11 Am. Dec 111; Blood v.
(Goodrich, 9 WeM. (N. T.) 68, 24 Am.
Dec. 121; McDowell v. Simpson, 8
Watto (Pa.), 129, 87 Am. Dee. 888;
Heath v. Nutter, 50 Me. 378; Paine v.
Tucker, 21 Id, 138, 38 Am. Dec. 255;
Hanford v. McNalr, 9 Wend. (N. Y.)
64; Taylor v. Robinson, 14 Cal. 400:
Ingram v. Little, 14 Ga. 173, 58 Am.
Dec. 549; Drumrlght v. Phllpot, 16
Oa. 424, 60 Am. Dec. 738; Pollard v.
Gibba, 65 Oa. 46; Neely v. Stevens,
138 Ga. 305; McCalla v. American,
etc., Mtg. Co., 90 Ga. 113; Grove v.
Hodges, 65 Penn. St. 504; McCracken
V. San Francisco, 16 Cal. 5^1; Kirk-
Patrick V. Pease, 202 Mo. 471; Skir-
vin V. O'Brien 43 Tex. Civ. App. 1,
but see and cp. Bastham v. Hunter,
102 Tex. 145, 132 Am. St R. 854; Ox-
ford V. Crow. [1893] 3 Ch. 585.
But a parol acknowledgment by
the principal that an agent possessed
an authority under seal Is suflicient
Blood V. (Goodrich, 12 Wend. (N. Y.)
525, 27 Am. Dec. 158.
And a few cases seem to ignore the
rule stated in the text. See Donason
V. Barbero, 230 111. 138; Finch v. Gill-
espie, 122 App. Dlv. 858; Mulford v.
Rowland, 45 Colo. 172; Bastham V.
Hunter, iupra.
MO
CHAP. VIlJ
RATIFICATION
[§§ 421-424
§4««
Rule relaxed in partnership cases.— *This rule has
been greatly relaxed in partnership cases, and it is now quite univer-
sally held that the act of one partner in executing, in the name of the
firm, an instrument under seal, may be ratified by the other partner by
parol. Said Breese, C. J» : "We think it may be safely said that the
modem rule is that one partner may, in furtherance of the partnership
business and for its benefit, execute a deed under seal which will be
binding on the other if he has foreknowledge, or subsequently ratifies
it, and this may be proved by acts and circumstances or by his verbal
declarations and admissions/' "
§ 422. — — >- Massachusetts rule. — ^And in Massachusetts the
court has gone still further, and it is said that the law is settled in that
commonwealth that the unauthorized execution of a deed in the name
either of a partnership or of an individual may be ratified by parolJ'
§ 423. Modem rule more liberal. — As has been already
stated, the tendency in modern times is to attach less importance to
the presence of a seal, and to mitigate the severity of those technical
rules of the common law which were based upon reasons no longer
applicable to the conditions and methods of the present day. In many
of the states statutes have been enacted by which the absence of a seal
from an instrument formerly requiring it is declared to be immaterial,
or by which all of the old distinctions between sealed and unsealed in-
struments are swept away."'* Where such statutes prevail, the tech-
nical rule requiring a ratification under seal has no force.**®
§ ^24. Unnecessary seal may be disregarded. — Moreover,
in accordance with rules previously referred to,*^ if the instrument
executed by the agent, though under seal, be one upon which no seal is
" Peine t. Weber, 47 111. 46; and to
the same effect are Mclatyre v. Park,
11 Gray (Mass.), 102, 71 Am. Dec.
690; Cady v. Shepherd, 11 Pick.
(Mass.) 400, 22 Am. Dec. 379; Skin-
ner y. Dayton, 19 Johns. (N. Y.) 513,
10 Am. Dee. 286; Holhrook v. Cham-
berlain, 116 Mass. 155, 17 Am. liep.
146; Russell t. Anaable, 109 Ma^s. 72,
12 Am. Rep. 665; Kendall v. Garland,
6 Cush. (Mass.) 79; Swan v. Sted-
man, 4 Mete. (Mass.) 552; Dillon v.
Brown, 11 Gray (Mass.), 179; Palmer
V. Seligman, 77 Mich. 305; Fox v.
Norton, 9 Mich. 207.
7s.Gray« GL J. in Holhrook y. Cham-
berlain, 116 Mass. 155, 17 Am. Rep.
146; Mclntyre v. Park, 11 Gray
(Mass.), 102, 71 Am. Dec, 690.
T» Provisions more or less com-
plete of this nature are found in Ar-
kansas, California, Colorado, Dakota,
Indiana, Iowa, Kansas, Michigan,
Mississippi, Montana, Nebraska, Ten-
nessee, Texas, Washington and prob-
ably in other states.
80 Rutherford v. Montgomery, 14
Tex. Civ. App. 319; Smyth v. Lynch,
7 Colo. App. 383; McLeod v. Morri-
son, 66 Wash. 683. 38 U R. A. (N. S.)
783.
81 Ante, S 215*
3ir
§§ 425, 426]
THE LAW OF AGENCY
[book I
required, the seal may be disregarded and the iastniment ratified as a
simple contract.^*
§ 425. By power of attorney subsequently granted.— The
unauthorized execution of a deed may be expressly ratified by a power
of attorney subsequently executed, authorizing its execution and dated
back prior to the date of the deed. Thus, where an attorney appointed
by parol, executed a bond in the name of his principal, and afterwards
his principal gave him a power of attorney dated prior to the bo^d and
authorizing its execution, this was held to be a good ratification of the
bond and that the principal was estopped to assert that the power of
attorney was, as a matter of fact, executed subsequently to the bond.^
\ So a letter from a principal authorizing certain acts, but received after
the performance, will be a ratification.®*
But a mere power to do acts in the future will not operate as a rati-
fication of acts already done.**
b. By Instrument in Writing.
§ 426. Where authority must be conferred by writing, ratifica-
tion in writing is necessary .^It has been seen in preceding sections
that in a few cases some statute, usually but not always the statute of
frauds, requires that authority for certain purposes shall be conferred
by writing. Where this is true, ratification must also be by writing."
82 Bless V. Jenkins, 129 Mo. 647;
Qoldring v. Reid» 61 Fla. 250; Adams
V. Power, 62 Miss. 828 [citing Wor-
rall V. Munn, 5 N. Y. 229, 55 Am. Dec.
330; Lawrence v. Taylor, 5 Hill (N.
Y.), 113; Randall v. Van Vechten. 19
Johns. (N. Y.) 60, 10 Am. Dec. 198;
Evans T. Wells, 22 Wend. (N. Y.)
340]. And to the same effect are
State y. Spartansburg, etc., R. R. Co.,
8 S. C. 129; Hammond t. Hannin, 21
Mich. 374, 4 Am. Rep. 490; Smyth y.
Lynch, 7 Colo. APP. 383.
But, contra^ Rowe y. Ware, 80 Oa.
278; Pollard y. Olbbs, 65 Oa. 45;
Hayes y. City of Atlanta, 1 Ga. App.
25; Dalton Buggy Co. y. Wood, 7 Ga.
App. 477; Neely y. Stevens, 188 Ga.
305.
s^Mllliken y. Coomlum 1 Greenl.
(Me.) 343, 10 Am. Dec 70; XTnlted
States Express Co. y. Rawson, 106
Ind. 215; Riggan y. Grain, 86 Ky. 249.
e«Rlce y. McLarren, 42 Me. 157.
But in Moore y. Lockett, 2 Bibb
(Ky.), 67. 4 Am. Dec. 683, it was held
that a letter giying an agent power
to seU but written subsequently to
an unauthorized sale under an insuf-
ficient power, did not ratify the prev-
ious sale. Certainly not where the
letter names different terms. Still-
man v. Fitzgerald 37 Minn. 186.
M Britt v. Gordon, 182 Iowa, 431.
8« Hawkins v. McGroarty, 110 Mo.
646; Salfleld v. Sutter, etc., Ck>., 94
Cal. 546; Borderre v. Den, 106 Gal.
85; Miller v. Drexel, 87 111. App. 462;
594; Long y. Poth, 16 Misc. (N. Y.)
Vaughn y. Slatei", 147 HI. App. 441:
Lawler y. Armstrong, 63 WaiAi. 664:
Moots y. Cope, 147 Mo. App. 76 (in
which the court entirely refused to
allow the proof of a contract for sale
of realty without accompanying
written authority or ratillcation) ;
Matteson y. U. S. Land Co., 112 Minn.
190.
Where a statute requires that the
authority of an agent to make con-
312
CHAP. Vll]
RATIFICATION
[§§427-429
§ 4^7-
Contracts for sale or leasing of land. — ^Thus, as has
been seen, in many oi the states, authority to make contracts for the
sak or leashag (for mcH-e than a certain term) of land of the principal
is required to be in writing " and it has, therefore, been held in these
states that the unauthorized making of such contracts can subsequently
be ratified only by writing.**
In other states^ however, written authority for these purposes is not
required, and therefore written ratificaition is not necessary.*^
§ 428. Written ratification not otherwise required.«^Except in
these cases wherein ratification by sealed instrument is required, or
where ratification in writing is required because some statute demands
authority by writing, it is the general rvAt that ratification, though it be
express and formal, need not be in writing. Any words in any form
clearly indicative of an intention to ratify will suffice. As will be seen
in the following subdivisions, even express or formal ratification is not
necessary ; but, even if it were, it would not need to be in writing, un-
less some statute made it so, or unless instruments under seal were
involved.
§ 429. ''Lav^ulfy authorized" under Statute of Frauds.— Thus it
has been held sufficient to satisfy that provision of the Statute of Frauds
tracts of suretyship idiould be ta
writing, a subsequent parol ratifica-
tion Is Insufficient Ragan v. Cben-
ault, 78 Ky. 546; Engllsli v. I>ycus, 8
Ky. L.. R 381.
Where the statute requires that
the agent have written authority,
the writing may be a preylous au-
thority, or may be made at aay sub-
sequent time. In re Balfour ft Qar-
rette, 14 Cal. App. 261.
The making of a simple agreement
to pay money, not a promissory note,
is not required by the CaUfornla
statute (Civ. Code fi 2309), to be in
writing, and It may therefore be rat-
ified without writing. Goetz v. Qold-
baum (Cal.), 37 Pac. 646.
In Mercantile Trust Co. v. Nigge-
man, 119 Mo. App. 56, under a statute
requiring the authority of an agent
to sell real estate to be in writing, it
was held that the execution of a
deed and Its delivery in pursuance
of a contract negotiated by an agent
without written authority, is a good
and binding ratification. And in
Kirkpatrick v. Pease* 202 Ma 471, it
was held that there might be ratifi-
cation of a contract for the sale of
land made by an agent acting under
parol authority, by the acceptance of
the price and its retention for the
period of a year.
•7 See ante, § 223 et aeq.
at Hawkins y. McGroarty, 110 Mo.
i;46; Miller y. Drexel, 37 111. App.
462; Kozel v. Dearlove, 144 111. 23, 36
Am. St Rep. 416; Long y. Poth, 16
Misc. (N. Y.) 86; McDowell v. Simp-
son, 8 Watts (Pa.), 129, 27 Am. Dec.
838; Zlmpelman y. Keating, 72 Tex.
318; Clement y. Young-McShea
Amusement Co., 70 N. J. Eq. 677, 118
Am. St. R. 747; Hammond y. Han-
nin, 21 Mich. 374, 4 Am. Rep. 490, is
centra but the cases cited in It do
not sustain It upon this point
s» See ante, | 229.
Authority to accept a lease need
not be in writing and there may
therefore be ratification without writ-
ing. Ehrmanntraut y. Robinson, 52
Minn. 333.
313
§§ 430-43^] THE LAW OF AG£NCY [bOOK X
which requires that the oontract shall be in writing, signed by fiie
principal or by some one thereunto by him lawfully authorised, to
show a subsequent parol ratification of the act of the agent in signing
such a contract'*
2. Implied Ratification.
§ 430, In general. — But since, as has been seen, authority for the
doing of any lawful act, — except in those cases in which an authority
in writing or under seal is expressly required,*-Kaui be conferred by
parol, and since the existence of such authority may be inferred from
the conduct of the parties, so also, with the same exceptions, the un-
authorized doing of any such act may be ratified by parol/ and the fact
of such ratification may likewise be inftrred from the conduct -of the
parties.'^ In this case also, as in the other, it will be found that this is
the most usual method by which the result is effected.
Ratification, like authorization of which it is the equivalent, is gen-
erally the creature of intent, but that intent may often be found by the
law in cases where the principal, as matter of fact, either had no ex-
press intent at all, or had an express intent not to ratify.^'
The acts, words, silence of the principal which are relied upon are
sometimes spoken of as in themselves a ratification. As a rule, how-
ever, this is not strictly accurate. They are rather the evidence of a
ratification, than the ratification itself.
§ 431. Variety of methods.— The methods by which an implied rati-
fication may be effected are as numerous and as various as the complex
dealings of human life. It is impossible to state them all. But cer-
tain forms that have often been judicially passed upon may be grouped,
and instances be given which may furnish a rule for future cases.
§ 432. I. By declaring approval.— Ratification being a matter of
assent to and approval of the act as done on account of the person
ratifying, any words or acts which show such assent and approval are
ordinarily sufficient. Thus clearly, where the principal, when in-
formed of the act, agrees to it,** or says that he is glad it is done,** or
says that it is "all right/' and directs that the matter be proceeded
90 McLean v. Dunn, 4 Blng. 722; 02 Campbell v. Millar, «ii(pra.
Soames v. Spencer, 1 Dowl. & R. 32. »3 Smith y. Schlele, 93 CaL 144.
91 Campbell v. Millar, 84 111. App. See also Central Texas Grocery Co. v.
208; O'Reilly v. Kelm, 54 N. J. Eq. Qlobe Tobacco Co., 46 Tex. Civ. App.
418; Dixon v. Bristol Sav. Bank, 102 199.
Ga. 461, 66 Axsl St R. 193; Flant ▼. »« Blakeley ▼. Cochraiw 117 Mich.
Campbell, 8 Okl. 586; Hartloye t. 394. See also Lowman t. Nye, etc.
Fait, 89 Md. 254. Bank, 31 Nev. 306.
CHAP. VI I ]
RATIFICATION
l§ 433
mth,^ or declares that he will assume the unauthorized contract," or
agrees to pay the price stipulated for,*^ or promises to perform on his
part,** or directs that the transaction be completed,** and the like ; *
there is evidence of ratification.
On the contrary, where the principal distinctly repudiates the con-
tract, there is no ratification though he accompanies the repudiation
with tfie offer of a different contract.^
So, clearly, if the principal distinctly repudiates the contract, but
later voluntarily does something to mitigate the other party's loss, no
ratification of the contract can be inferred.*
§ 433. II. By proceeding to perform. — So approval and ratification
are usually clearly shown where the person, on whose behalf the act
was done, voluntarily recognizes it as binding upon him, and proceeds,
with knowledge of the facts, to perform the obligations which it im-
poses. Thus, where the alleged principal voluntarily executes and de-
livers the deeds called for by an unauthorized contract for the sale of
land,* or delivers material in pursuance of an unauthorized contract
for its sale,* or makes partial payments upon an unauthorized contract,*
or otherwise proceeds to act upon and perform it,^ there is strong evi-
dence of ratification.
MHess y. Baar, 14 Misc. (N. Y.)
286; Brown r. Wilson, 45 8. Oar. 519,
55 Am. at. Rep. 779. So also Cameron
V. Mut U A T. Co., 121 Iowa, 477.
MPope V. Axmsby Co., Ill CaL
159; Canfleld t. Johnson, 144 Pa. 61.
•7 Taylor v. Bailey, 169 111. 181.
••Prlne ▼. Syverson, 37 Neb. 860;
Fenn ▼• Dickey, 178 Pa. 268; Porter
T. Raleigh, etc., R. Co., 132 N. C 71.
But not where the man who promises
Is not the one for whom the agent
purported to act Roby v. Cossltt, 78
m. 688.
MTlnsley v. Dowell (Tex. Civ.
App.), 24 S. W. 928.
iThUB where the principal nego-
tiates the sale of a chattel mortgage
executed without authority he rati-
fies It (Iowa State Nat Bank y. Tay-
lor, 98 Iowa, 681) ; or endorses a note
executed without authority (Wash-
ington Times Co. ▼. Wilder, 12 App.
D. a 62; Mitchell v. Flnnell, 101 C^.
614) ; or gives his daughter a blank
check with which to pay for goods
bought her her. Brown v. Relman, 48
App. Dlv. (N. Y.) 295.
2 Hardwick v. Rlrwan, 91 Md. 285.
*Thus In Flndlay v. Hildenbrand,
17 Idaho, 408, 29 L. R. A. (N. S.)
400, the principal, when he was In-
formed of the unauthorized contract,
advised the other party that It was
unauthorized, and warned him not
to proceed. The oth^ party never-
theless did so. Later the principal
offered to pay the other party what
the principal thought was the fair
measure of any benefit conferred
upon him. Held, no ratification of
the entire contract
^Townsend v. Kennedy, 6 S. D. 47;
Short V. Stephens, 92 Mo. App. 151;
Van Name v. Queen's Land & T. Co.,
180 App. Dlv. 857.
ftOanda v. Casey, 14 Misc. (N. T.)
822.
<»Manne v. Siegel-Cooper Co., 20
Misc. (N. Y.) 592.
1 See Taylor v. Albemarle Steam
Nav. Co., 106 N. C. 4S4; Welker v. Ap-
315
I§ 434. 435]
THE LAW OF AGENCY
[
§ 434. III. By accepting benefits. — There is, further, ordinarily 00
more certain and satisfactory a method of manifesting approval of ap
act than by voluntarily and knowingly taking the benefits which flow
from its performance ; and it is a general ri^le, of constant application
in the law of agency, that he who, voluntarily and with knowledge of
the facts, accepts the benefit of an act purporting to have been done on
his account, by his agent, thereby ratifies it and makes it his own. ^s
though he had authorized it in the beginning.
§ 435- Must take burdens with benefits. — ^It is, moreover,
as has been seen, a rule of quite universal application that he who
would avail himself of the advantages arising from the act. of anofther
in his behalf must so far as it is entire also assume its responsibilities.
If the principal has. knowingly appropriated and enjoyed the fruits and
benefits of an agent's act he will not afterwards be heard to say tliat
any portion of the act was unauthorized. One, therefore, who. vol-
untarily accepts the whole or any part of the proceeds of an act done by
one assuming, though without authority, to be his agent, must ordi-
narily be deemed to ratify the act and take it as his own with all its
burdens as well as all its benefits. He may not ordinarily take the
benefits and reject the burdens, but must either accept them or reject
them as a whole.*
pieman, 44 Ind. App. 699. See also
Anhenj v. Young, 62 Wash. 235;
Smith V. Cologan; 2 T. R. 188, n; Tate
▼. Aitken, 5 Cal. App. 605; Garlick r.
Morley, 147 Wis. 397.
A principal who puts the tenant
Into poBsession and receives rent un-
der an unauthorized lease, ratifies it.
Christopher v. National Brew. Co., 72
Mo. App. 121. Where one left in
charge of a repair shop but without
authority took in a bicycle to be re-
paired and shipped to the owner, If
the proprietor repairs the bicycle, he
ratifies the contract and is bound by
the agreement to ship it as directed.
Rollins T. Cycle Co., 84 App. Di7. (N.
Y.) 287.
8 Florence, etc., Co* v. Louisville
Banking Co., 188 Ala. 588, 100 Am.
St Rep. 50; Philips, etc., Mfg. Co. v.
Wild, 144 Ala. 645; Snow v. Grace, 29
Ark. 131; Levy v. Wolf, 2 Cal. App.
491; Brown v. Holloway, 47 Colo.
461; Witcher v. Ql bson, 16 Colo. App.
168; Dunn ▼. Hartford, etc., R. R.
Co., 43 Conn. 434; Haney School
Fum. Co. y. Hightown Baptist Insti-
tute, 113 Ga. 289; Dolvin v. Amer.
Harrow Co., 126 Oa. 699, 28 L. R. A.
(N. S.) 785; Aurora Ag. Soc. t. Pad-
dock, 80 lU. 263; Union Mutual L.
Ins. Co. V. Kirchoff, 183 111. a68; Fra-
ternal Army v. Evans, 216 111. 629;
Hurd y. Marple, 2 111. App. 402;
Hauss y. Niblack, 80 Ind. 407; Al-
bany Land Co. y. Rlckel, 162 Ind.
222; Hunt v. Llstenberger, 14 Ind.
App. S20; American Quarries Co. y.
Lay, 37 Ind. App. 386; Reeves y. Mil-
ler (Ind. App.), 91 N. E». 812; Ea-
die y. Ashbaugh, 44 Iowa. 619; Na-
tional Imp: Co. y. Maiken, 103 Iowa,
118; Casady v. Manchester Fire Ins.
Co., 109 Iowa. 539; Des Moines Natl
Bank v. Meredith, 114 Iowa, 9; John-
son y. School Corp., 117 Iowa. 319;
German Savings Bank y. Des Moines
Nat'l Bank. 122 Iowa. 737; Whitaker
y. Hicks, 123 Iowa, 733; Continental
316
CHAP, VIl]
RATIFICATION
[§ 435
Like all other general rules however, this is one which must be re-
ceived with caution, and applied with discrimination ; for it is perfectly
clear that there are many cases in which one may receive a benefit
without incurring any obligation either to return or to pay for it.® It
InB. Co. r. Clark. 126 Iowa, 274; Ze-
lenka v. Port Huron Mach. Co., 144
leva, 592; Ormsl^y T. Johngoii, 24 8.
D. 494; Watersoix v. Rogers, 21 Kan.
529; Ehrsan v. Mahan, 52 Kan. 245;
Aultman Thresh, etc., Co. v. Knoll, 71
KaiL 109; Watt v. Railway Co., 82
KaiL 458; Qerman Ins. Co. v. Km-
porla Ass'n, 9 Kan. App. 803; B7. T.
Kenny Co. v. Anderson, 26 Ky. L. R.
367; Western Mife. Co. v. Cotton ft
Long, 126 Ky. 749, 12 L. R. A. (N.
S.) 427; Perkins v. Boothby, 71 Me.
91; Hastings ▼. Bangor House,
18 Me. 436; Judlk y. Crane, 81 Md.
6!0: Swindell Bros. v. J. L. Gilbert
ft Bro., 100 Md. 399; Cushman v.
Iioker, 2 Mass. 106; Narragansett
Bank v. Atlantic Co., 3 Mete. (Mass.)
282; Ely v. James, 123 Mass. 36;
Golding V. Brennan, 183 Mass. 286;
Bacon v. Johnson, 56 Mich. 182; Bots-
ford V. Plummer, 77 Mich. 31; Ripley
V. Case, 86 Mich. 261; Sokup v. Letel-
ller, 123 Mich. 640; Schmid v. Frank-
fort, 141 Mich. 291; Hansen y. Roll-
son, 156 Mich. 83; Walling v. Poul-
sen, 160 Mich. 392; Sherrod v. Duffy,
160 Mich. 488, 136 Am. St. Rep. 451;
Payne v. Hackney, 84 Minn. 195;
Johnson v, Ogren, 102 Minn. 8; Rug-
gles V. Washington Co., 3 Mo. 496;
Matthews v. French, 194 Mo. 553;
Kirkpatrick v. Pease, 202 Mo. 471;
Davis V. Krum, 12 Mo. App. 279;
Judd V. Walker, 114 Mo. App. 128;
Rich V. State Nat'l Bank, 7 Neb. 201,
29 Am. Rep. 382; Hughes v. Ins. Co.,
40 Neb. 626; Johnston v. Milwaukee,
etc., Inv. Co., 49 Neb. 68; Low ▼.
Conn., etc., R. R. Co., 46 N. H. 284;
Looschen Piano Case Co. v. Stein-
berg, 76 N. J. L. 130, 68 AtL 1072;
Bodlne ▼. Berg (N. J. L.), 82 Atl.
901, 40 L. R. A. (N. S.) 65; Clement
V. Young-McShea Amusement Co., 69
N. J. Eq. 347; Fowler v. N. Y. Gold
Exchange, 67 N. Y. 138; Clark v.
Hyatt, 118 N. Y. 563; Falrchttd r.
Mcltfahon, 189 N. Y. 290, 36 Am. St
R. 701; Smith v. Barnard, 148 N. Y.
420; Cod wise v. Hacker, 1 Caines
(N. Y.), 526; Moss v. Rossie Co., "5
Hill CN. Y.), 137; Pfthnerton v. Hnx-
ford, 4 Denlo (N. Y.), 166; Houghton
V. Dodge, 5 Bosw. (N. Y.) 326;
Farmers', etc.. Bank v. Sherman, 6
Bosw. (N. Y.) 181, affd 33 N. Y. 69;
Hobkirk y. Green, 26 Ml»c. (N. Y.)
18; Budd v. Howard Thomas Co.,
40 Misc. (N. Y.) 52; SlfC v. Forbes,
63 Misc. (N. Y.) 319; Nutting v.
Kings Co. Elev. Ry., 21 App. Dlv.
(N. Y.) 72; West v. Banlgan, 51 App.
Dlv. 328, (aff'd without opinion, 172
N. Y. 622); Rosenthal v. Hasberg, 84
N. Y. Supp. 290; Brittain v. West-
hall, 135 N. C 492; Morris v, Ewlng,
8 N. Dak. 99; Stete v. Perry, Wright
(Ohio), 662; U. S, Fidelity Co. T.
Shirk, 20 Okla. 576; McLeod v. Des-
pain, 49 Greg. 536, 124 Am. St R.
1066, 19 L. R. A. (N. S.) 276; Mun-
dorff V. Wickersham, 63 Pa. St 87,
3 Am. Rep. 531; Welch v. Clifton
Mfg. Co., 55 S. Car. 568; Union Trust
Co. v. Phillips, 7 S. Dak. 225; Evan»-
Snlder-Buel Co. v. Hilje (Tex. Civ.
App), 83 S. W. 208; Watkins Land
Mtge. Co. V. Thetford, 43 Tex. Civ.
App. 536; Mayfleld Woolen Mills Co.
V. Long (Tex. Civ. App), 119 S. W.
908; Guthell v. Gilmer, 27 Utah, 496;
State V. Smith, 48 Vt 266; Collins v.
Fidelity Trust Co., 33 Wash. 136;
Klrwin v. Wash. Match Co., 37 Wash.
285; Irwin v. Buffalo Pitts Co., 39
Wash. 346; Reid v. Hibbard, 6 Wis.
175; Parish v. Reeve, 63 Wis. 316;
Schlffer v. Anderson, 76 C. C A. 667,
146 Fed. 457; Sutherland v. L C. Ry.
Co., 81 C. C. A. 620, 152 Fed. 694;
Jefferson Hotel Co. v. Brumbaugh, 94
C. C. A. 279, 168 Fed. 867.
» See, for example, Weatherford,
etc., R. Co. Y. Granger, 86 Tex. 350,
317
§ 436]
THE LAW OF AGENCY
[book I
is also generally true that one cannot have benefits thrust upon him, to
be afterwards made the basis of a liability.**
§ 436. Duty to restore what he has received. — ^When the
principal discovers that there has come into his hands the proceeds of
an unauthorized act done by one who assumed therein to act as his
agent, to voluntarily retain such proceeds is ordinarily to ratify the
act. If he would repudiate the act in such a case he must, ordinarily,
so far as it is possible, restore or offer to restore what he has received "
(subject, of course, to a correlative obligation on the part of the other
party to restore what he has received). And this he must do within a
reasonable time.**
The voluntary retention being in these cases the evidence of ratifica-
tion, an involuntary retention would not be so cogent. Hence, if re-
turn is not possible, as where it cannot be done without substantial
40 Am. St. R. 837; In re Rotherham,
etc., Co., 50 L. T. Rep. (N. S.) 219
(where It Is said: "It Is said that
[the claimant] has an equity against
the company, because the company
had the benefit of his labor. What
does that mean? If I order a coat
and receive it, I get the benefit of the
labor of the cloth manufacturer, but
does any one dream that I am under
any liability to him? It is a mere
fallacy to say, that because a person
gets the benefit of work done by
somebody else, he is liable to pay the
person who did the work.")
10 See, for example, Foote v. Cot-
ting, 195 Mass. 55, 15 L. R. A. (N. S.)
693; Arey v. Hall, 81 Me. 17, 10 Am.
St R. 232; Spooner v. Thompson, 48
Vt. 259; Eggleston v. Mason, 84 Iowa,
630, where the principal was held not
to be liable merely upon showing
that he had unwittingly received the
benefit of plalntifTs money, procured
without authority by an agent.
Compare Perkins v. Boothby, 71
Me. 91; McDermott v. Jackson, 97
Wis. 64; First Nat. Bank v. Badger
Lumber Co., 60 Mo. App. 255.
"First Nat. Bank v. Oberne, 121
111. 25; Harding v. Parshall, 56 IlL
219; National Improvement Co. ▼.
Maiken, 103 Iowa, 118; Hlgbee v.
Trumbauer, 112 Iowa, 74; Deering it
Co. T. Grundy Nat Bank, 81 Iowa.
222; Johnston t. Milwaukee, etc..
Invest Co., 49 Neb. 68; McDermott ▼.
Jackson, 97 Wis. 64; American Nat
Bank v. Cruger, 91 Tex. 446; Piano
Mfg. Co. V. Nordstrom, 63 Neb. 123;
Pike T. Douglass, 28 Ark. 59.
After the principal had repudiated
unauthorized acta of his brokers, the
fact that he did not return an ac-
count of the sale which they sent
him, was held no ratification. Bur-
horn V. Lockwood, 71 App. Div. 301.
In Cole v. Baker, 16 S. Dak. 1,
where this rule was sought to be ap-
plied because the principal had re-
ceived and retained certain papers. It
was held that what he had thus re-
ceived was practically nothing and
furnished no foundation for a ratifi-
cation.
Where the other party persistently
refu&es to dlsaflirm or to restore
what he has received from the prin-
cipal's agent, a formal tender of res-
toration by the principal is not nec-
essary before bringing replevin for
his property. Roberts v. Francis, 123
Wis. 78.
12 McDermott v. Jackson, 97 Wis.
64.
He is also entitled to a reasonable
time In which to determine his
course. McDermott v. Jackson, s^ipra.
318
CHAP. VIl]
RAMIFICATION
[§ 436
injury," or where what has been received has been disposed of," or
has been consumed in the expected way, before notice of the act ; or
where what was received was personal services accepted before no-
tice ; ^' and the like, the rule would not apply. There being no evi-
dence of ratification in such a case any recovery which may be had
must be had upon a ^Mo^i-contractual basis.^^
IS See post, I 439. A principal does
not ratify the unauthorized act of
his agent by accepting the proceeds
or fmita thereof, if knowledge of it
did not come to him In time to
enable him to repudiate the entire
transaction without substantial in*
act does not result In such a case.
It is the wrongful keeping of an-
other's property which creates Habll-
ity to him."
So, where the property can not be
distinguished. Schutz v. Jordan, 32
Fed. 55, afTd 141 U. S. 213. See Pratt
Jury. Clark v. Clark, 59 Mo. App. ^r, Bryant, 20 Vt 383.
532; Humphrey v. HaYenB,12 U^xui.
298; Bryant v. Moore, 26 Me. 84, 45
Am. Dec. 96; Baldwin v. Burrows,
47 N. Y. 199. In Cooley v. Perrlne,
41 K. J. L. Z22, 32 Anu Rep. 210^ the
court states the rule stlU more broad-
ly thus: "If, when he acquires knowl-
edge, he cannot, in justice to himself,
disavow the whole of his agent's con-
tract, be Is entitled to stand upon
what he authorised, and repudiate
the rest; the purchaser who dealt
with a special agent without noting
the bounds of his power, must suffer
rather than the innocent prlnclpaL"
So in the case of unauthorized re-
pairs or additions to property of such
character that they cannot be re-
moved and restored without serious
injury. Forman v. The Ltiddesdale,
[1900] App. Cas. 190; Young v. Board
of Bducation, 54 Minn. 386, 40 Am.
St R. 840; MUls v. Berla (Tex. Civ.
i4>p.), 23 S. W. 910; Davis v. School
District, 24 Me. 349.
In Arey v. Hall, 81 Me. 17, 10 Am.
St. R. 232, it is said: "It is well
settled, as a general rule, that a per-
son who has received the benefit of
the money or property of another, is
not liable to such person therefor, in
the absence of contract between the
parties, if there be any ground upon
which the money or property or its
benefit may be rightfully retained by
its possessor without accounting to
the owner. Ratification of another's
14 Martin v. Hickman, 64 Ark. 217;
Bryant v. Moore, supra; Thacher v.
Pray, 113 Mass. 291, 18 Am. Rep. 480;
Baldwin v. Burrows, supra.
In Tinun v. TImm, 34 Wash: 228, it
is said that tiie duty to maJce res-
toration is greatly modified in equita-
ble proceedings, where remedies are
more fiexible.
IB Swayne v. Union Mut L. Ins.
Ca (Tex. Civ. App.), 49 S. W. 618.
In Crawford v. Insurance Co., 100 111.
App. 4&4, affirmed, 199 111. 367, the
receipt by the insured after a loss
had occurred, and a claim had be-
came fixed upon a policy of insur-
ance, of the proceeds of a previous
unauthorized surrender of the policy,
was held not to be a ratification of
the surrender. The Insured then had
a larger claim against the company.
It was not possible to restore the
parties to their original situation,
and the retention of the smaller sum
was not a waiver of the larger sum
unless so agreed.
In Dempsey v. Wells, 109 Mo. App.
470, this rule was applied to a contract
for a lawyer's services in saving
property, made by a married woman
before any statute had given her au-
thority to contract, but when she re-
tained the property after the statute
had given her contractual ability.
19 The distinction between a liabil-
ity upon the contract Itself by ratifi-
cation, and a liability quoii e» con-
319
§ 437]
THE LAW OF AGENCY
[book I
If the principal attempts to restore the thing received he must, it is
held, unless this is waived, return it to the other party at the place
where it was received."
This duty to return, moreover, may, when it exists, be made the
ground of affirmative action by the other party. Thus if the principal
repudiates the undertakings which, though unauthorized, formed the
substantial basis of the transaction in question, the other party may
maintain an action to rescind."
§ 437* Principal must have received proceeds — Money ap-
parently free of trust. — But this rule presupposes that the principal
has in fact received the proceeds. If they were never intended to come
into the hands of the principal himself but of some third party, it is
held not enough.^* So if they hsrve come no further than into the
hands of the very agent himself, this will not be enough, unless they
stop there with the knowledge and acquiescence of the principal.**
iractu for the benefit receivedp Is
often of importance and frequently
overlooked. In some cases there
would be no practical dilference in
result, but in other cases the dif"
ference might be great Many of the
cases, in which ratification is said to
be the reason, were cases really de-
cided upon equitable principles. They
were often actions for money had and
received — ^which is often equitable in
its scope — or its code equivalent
That this was the basis is expressly
recognized in some of the cases. See,
for example, Fay v. Slaughter, 194
IlL 157, 88 Am. St R. 148, 66 L. R.
A. 664; Foote v. Cottlng, 195 Mass.
65, 15 L. R. A. (N. S.) 693.
There is discussion of the question
in Keener on Quasi Contract, pp. B26*
384; Woodward on Quasi Contract,
SS 72, et seq,
IT National Improvement Co. v.
Maiken, 103 Iowa, 118; Lunn v.
Quthrie, 115 Iowa, 601.
Where the principal attempts to re-
store, and tenders back part of what
was receivedt and is met wilh an un-
conditional refusal to accept a disaf-
firmance, the fact that the residue
was not tendered does not defeat the
principal's right Bromley v. Aday,
70 Ark. 361.
isRackemann v. Rtverbank Im-
provement Co., 167 Mass. 1, 57 Am.
St R. 427. See also Knappen v.
Freeman, 47 Minn. 481.
i»Thu8 in Gullck v. Qrover, 38 N.
J. L. 463,. 79 Am. Dec. 728, Where the
principal was without authority,
Joined as a known accommodation
maker on a note, and the proceeds
of it did not and were not intended to
come to him, bat to the principal
maker, it waa held that the prineipal,
on repudiating the note> was not
bound to return the prooeeds, whieh
he had never received.
So in Korthwestem Life Aas'n v.
Pindley, 29 Tex. Civ. App. 494, where
a small sum had been paid Ui settle*
ment of a life insurance policy, but
it had all been used to pay the debts
of the deceased for which the beuelk*
claries were not liable, it waa held
that the beneficiaries, upon repudiat-
ing the settlement, were not obliged
to return this sum.
so See, fer example. Railroad Nat
Bank v. City of Lowell, 109 Mass.
214, where a city treasurer, who was
already an unknown defliulier, had
assumed to have authority to borrow
money for the city, had received it
put it in with other money which he
held for the city, and disbursed prao*
3^0
CHAP. VIlJ
RATIFICATION
I§ 437
Thus, for example, if an agent without authority borrows money and
wrongffully appropriates it to his own use, the principal cannot be
bound to restore it before he can repudiate the act. A rule which
would practically make performance by the principal of an unauthor-
ized contract a condition precedent to its disaffirmance, is obviously not
a rule which furnishes much protection to him.
Moreover where what is received is current money, it must be re-
ceived by the principal as the proceeds of some act of agency, and not
hi some other distinct capacity in which the principal would have the
right to receive and retain it. Thus it has been held that where an
agent, who is indebted to his principal, brings money to him and pays
it, the principal acting in good faith, the latter is not bound to restore
it when he later learns that it was the proceeds of some unauthorized
act which the agent liad assumed to do upon the principal's account.
The reason assigned for this is the absolutely negotiable character of
mortey and its freedom from "ear-marks'' or evidences of trust.*^
ttcally all of It fbr tbe elty's aoconnt.
Under the statutes, be did not hold
city funds as agent or servant of the
city, but as an Independent account-
tog ofiScer. Held, tbat the receipt of
the money by him was not such a re-
ceipt by the city as to charge It with
liability.
See also First Nat Bank v. Oberne,
iSl III. 25, where the principals were
held only to the extent of the pro-
ceeds which actually came to their
business.
So In Baldwin v. Burrows, 47 N. Y*.
199, it is said that, if liable at all,
the principal could be held only for
what he had received.
Where the money, through the
agent's manipulations, has merely
passed through the principal's ao*
count, there can not be deemed to be
any benefit conferred. Fay v. Slaugh-
ter, 194 111. 157, 88 Am. St R. 148, 56
L. R. A. 664 (in which, the court
refused to extend the doctrine of
First Nat Bank v. Oberne, supra).
siThacher v. Pray, 113 Mass. 291,
18 Am. Rep. 480; Penn. Oo. v. Dand-
ridge, 8 GUI ft J. (Md.) 248, 29 Am.
Dec 543; Gulick v. Grover, 33 N. J. L.
463, 97 Am. Dec. 728; Sanborn v.
First Nat Bank, 115 Mo. App. 50;
Case T. Hammond Packing Co., 106
Mo. App. 168; Baldwin 7. Burrows*
47 N. Y. 199.
In Russ V. Hansen, 119 Iowa, 875,
where the question was whether the
principal was liable for a sum of
money received by him from his
agent Lund, it was said; "We think
it must be conceded, under the au-
thorities, that if plaintiff received
this f3,000 from Lund as Lund's-
nloney, In payment of Lund's debts,
such receipt would not be a ratifica-
tion of any transaction of Lund's
which was without authority, so as
to bind the plaintiff thereby. Plaintiff
would not be bound, when he discov-
ered tbat this money was received
through fraud or by reason of an un-
authorized act, to return it. There
was no trust attached to the money
itself, for it was paid to Lund as
Lund's own money [citing cases].
On the other hand, if plaintiff was
chargeable with knowledge of the
fact that this money was transmitted
by Lund, as the result of some trans-
action by Lund as plaintiff's agent
then, although plaintiff had no knowl-
edge at the time of the nature of the
transaction, or that Lund bad ex-
ceeded his authority, yet when he
21
321
§§ 438, 4391
THE LAW OF AGENCY
[book I
So if lan agent obtains money, with which to pay his debt to his
principal, by disposing of his principars property as though it were his
own, the principal before reclaiming his property is held not to be
obliged to restore the money so paid to him.*^
§ 438. -T Knowledge of the facts indispensable. — But here,
as in other cases, it is indispensable that the principal should have had
full knowledge of the material facts, or that he should have intention-
ally accepted the benefits without further inquiry than he chose to
make. Otherwise, the receipt and retention of the benefits of the un-
authorized act, is no ratification of it.*'
§ 439* — — Acceptance and receipt must have been voluntary
and confirmatory.— So, as has been stated, the acceptance and receipt
of the benefits must, to work a ratification, have been voluntary, and
must find their warrant in rights flowing from the act. For if the
principal had no choice — if the benefits could not be separated from
something to which he was in any event entitled,'^ or if his act was
not confirmatory, as where he would have been entitled to the same
benefit independently of the act in question, the acceptance and receipt
under such circumstances would not constitute a ratification.'*
became aware that it was the result
of an act in excess of authority, by
which he was not willing to be bound,
it was his duty to return the money
to the party from whom it had been
received by Lund.**
saWycoff v. Davis, 127 Iowa, 399.
The wrongful act of the agent in sell-
ing his principal's property, is not
ratified by the receipt of the money
for two reasons: It was not done as
agent, and there was no knowledge.
23Bohart v. Oberne, 36 Kans. 284;
Foote v. Cotting, 195 Mass. 55, 15 L.
R. A- (N. S.) 693; Spooner v. Thomp-
son, 48 Vt. 259; Eggleston v. Mason,
84 Iowa, 630; First Nat Bank v.
Foote, 12 Utah, 157; Fargo v. Cra-
vens, 9 S. Dak. 646; Knapp v. Smith,
97 Wis. Ill; Holm v. Bennett, 43
Neb. 808; Doll v. Ilennessy Mercan-
tile Co., 33 Mont. 80; Schutz v. Jor-
dan, 32 Fed. 56; Kelley v. Newbury-
port Horse R. R. Co., 141 Mass. 496;
Combs V. Scott, 12 Allen (Mass.), 493;
Phosphate of Lime Co. v. Green, L.
R. 7 C. P. 43, and cases cited in pre-
ceding note.
**Anie, { 435. Thus there is no
ratification where the owner of a
building or a ship to which unau-
thorized repairs have been made>
uses or sells the property* the repairs
not being of a character to be re-
moved and restored without substan-
tial injury. Forman v. The Llddea-
dale, [1900] App. Cas. 190; Young v.
Board of Bducation, 54 Minn, 385;
Mills V. Beela (Tex. Civ. App), 23 S.
W. 910. So the use of a "skidway,"
built without authority, at a mill,
where it was so located that its use
was unavoidable in the proper use of
the mill, is not necessarily a ratifica-
tion. Ayer, etc., Co. v. Young, 90
Ark. 104.
See also Swayne v. Union Mut L.
Ins. Co. (Tex. Civ. App), 49 S. W.
518; Clark v. Clark, 59 Mo. App. 532;
Humphrey v. Havens, 12 Minn. 298.
26 Thus a person who takes and re-
tains property of his own, to the pos-
session of which he is entitled, will
not thereby ratify an unauthorized
agreement of an agent in procuring
the property. Baldwin Fertilizer Co*.
322
CHAP. Vll]
RATIFICATION
l§ 440
So, as between the principal and the agent, the fact that the principal
performs, and receives performance under, a contract made without
actual authority but within such apparent authority that he was ob-
liged, so far as third persons were concerned, to carry it out, will not
necessarily be such a ratification as will release the agent from liabil-
ity to his principal for making the contract without authority." And
if the principal, e, g,, an insurance company, performs in such a case,
as by paying the amount of a policy upon which it was legally liable,
though issued in violation of the agent's instructions, the principal is,
as against the agent, entitled to have and retain the fruits of the other
party's correlative performance, and may therefore demand the pre-
mium from the agent without ratifying his act.^^
§ 440. Mere efforts to avoid loss, no ratification. — So, as
between principal and agent, the mere effort of the principal, having
knowledge of the agent's deviation from his instructions, to avoid loss
thereby or to make the loss as small as possible, will not necessarily
constitute such a ratification as will release the agent.^* Thus where
an agent for the collection and transmission of a sum of money, who
was given specific instructions by his principal to remit it by express,
purchased a check drawn by parties then in good standing and credit
in New York and sent the same to his principal who forwarded it to
New York for collection, but before it was so forwarded, the drawers
had become insolvent and the check was dishonored, it was held that
the agent having violated his instructions in regard to the mode of
sending the money was liable to the principal for the loss sustained, and
that the sending of the check to New York for collection in igfnorance
of the drawers* insolvency and when the retention of it might constitute
laches, was not an absolute ratification of the act of the agent in trans-
mitting the money in that way.** So where a seller of goods instructed
his agent to sell only to people of imdoubted credit, and the agent sold
goods to, and accepted notes from, people notoriously insolvent, the
T. Thompson, 106 Oa. 480. See also
Orooker y. Appleton, 21 Me. 131;
White V. Sanders, 32 Me. 188; For-
man v. Llddesdale, [1900] App. Cas.
190.
2« Mechanics' & Traders' Ins. Co. v.
Rlon (Tenn. Ch.), 62 S. W. 44.
^ Continental Ins. Co. v. Clark, 126
Iowa, 274.
MTrigga T. Jones, 46 Minn. 277.
See also Brown v. Foster, 137 Mich.
35.
«» Walker v. Walker, B Helsk.
(Tenn.) 425.
But, under ordinary circumstances,
the unconditional acceptance of such
a check will constitute a ratification.
Rathbun V. Citizens* Steamboat Co.,
76 N. Y. 376, 32 Am. Rep. 321, dis-
tinguishing Walker v. Walker, supra
323
§'44i]
THE LAW OF AGENCY
[booic I
principal was held not to have lost his claim ag;ainst tlie agenti by suing
upon the notes and attempting to realize something upon them.'*
§ 441. Illustrations of general rule. — ^These general prin-
ciples iSnd almost countless illustrations in the decided cases, from
which a few may be chosen to serve as examples of them all. Thus a
principal who, with full knowledge of the facts, receives and appro-
priates to his own use without objection, the purchase price or rent of
land or other property sold or rented by one assuming to act on his
behalf as his agent, ratifies the act.** The receipt and retention of the
proceeds of an unauthorized levy with knowledge of the facts, is a rati-
fication of the act;" but the mere receipt of a portion of the money
realized from an unauthorized sale by a sheriflF, where the property was
not subject to the writ and the party was entitled to it all, will not iiat-
ify the sale ; '* nor will the receipt of money ratify the sale where the
principal would have the right to receive the money without ratifying
the sale ; •* nor if the principal demand from the agent, money which
the agent has misapplied, will such demand ratify the misapplication."
But where the owner of a judgment with knowledge of the facts re-
tains the proceeds of an unauthorized assignment of it, he will be as-
sumed to have ratified the assignment.*® And so where the owner of a
mortgage voluntarily accepted the proceeds of an unauthorized dis-
charge of it, the discharge was held to be ratified." And again, where
the principal knowingly accepts a mortgage or other security taken
soHobinson Machine Works T.
Vorse, 62 Iowa, 207.
•iLindroth ▼. Litclifleld, 27 Fe<L
Rep. 894; Reynolds v. Davison, 34
Md. 662; Abbott v. May, 50 Ala. 97;
Snow V. Grace, 29 Ark. 181; Turner
V. Wilcox, S4 Qa. 59S; Seaso v. Mar-
ten, 6 Heisk. (Tenn.) 308; Roby t.
CJossltt, 78 111. 638; Warden v. Bich-
banm, 3 Grant (Penn.) Cases, 42;
Lyman v. Norwich University, 28 Vt
660; Pierce v. O'Keefe, U Wis. 180;
Robinson v. Bailey, 19 R. I. 464; Rip-
ley V. Case, 86 Mich. 261; Deerlng &
Ck). V. Grundy Nat. Bank, 81 Iowa»
222; Auge v. Darlington, 185 Pa. Ill;
Kelly V. Carter, 55 Ark. 112.
Collecting a check with knowledge
that it was the proceeds of a sale
made by the agent, ratifies the sale.
Nicholson ▼. Doney, 37 111. App. 531.
Allowing an agent to sell, on the
principal's behalf, property purchased
for him without * authority, ratifies
the purchase. Russell ▼. Waterloo
Machine Co., 17 N. D. 248.
See also Walworth, etc., Banic v.
Farmers,' etc., Co., 16 Wis. 629; Pow-
ell V. Gossom, 18 B. Monroe (Ky.),
179 ; Baines y. Burbridge, 15 La. Ann.
628; Breithaupt v. Thurmond, S Rich.
(S. C.) 216; Harris v. Simmerman,
81 111. 413.
«2 Cole V. Edwards, 62 Neb. 711.
38 Harris v. Miner, 28 111. 135.
84 White V. Sanders, 32 Me. 188.
•5 Blevlns v. Pope, 7 Ala. 371.
«« Wallace v. Lawyer, 90 Ind. 499.
And where a bank appropriates to Its
own use, bonds purchased by its
cashier without authority, it cannot
afterwards repudiate the cashier's
act Logan County Bank y. Towu-
send (Ky.), 3 8. W. 122.
97 Tooker v. Sloan, 30 N. J. Bq. 394.
324
CHAP. VIl]
RATIFZCATIOK
[§ 442
by an ageat io purstiance of an arrangement made wiih a debtor, the
arrangement so made wUl be deemed to be ratified ; " and so the volim-
tary acceptance of the avails of a compromise made by an agent will
ratify the compromise/* and the vduntary retention of a conveyance of
lands which an agent has taken from a debtor in payment of a debt,
will sanction such payment*^ So where a principal shipped cotton to
his brdcer with instructions not to sell at less than a certain price, and
the broker sold for less than that ratis and immediately notified his
principal, it was held that the principal by drawing the proceeds of the
sale without objection, ratified the act of the broker in selling at the
smaller price.** And where the instructions are to sell property for
cash only, but the agent sells for part cash and part credit, the princi-
pal by knowingly receiving and retaining the cash payment ratifies the
sale as made.**
§ 442. An insurance company which accepts, and issues a
policy upon, an application taken by an unauthorized person, thereby
makes that person its agent in procuring the application.*' So the acts
and representations of the agent of the insured in obtaining policies,
are ratified where the insured, with knowledge, insists upon retaining
and enforcing the policies.** A lease executed by an agent without
authority is ratified where the principal for several years accepts and
retains the rent, and allows the tenant to make repairs without dis-
••Keeler v. Salisbury, 33 N. Y. 64S;
Sokup V. Letellier, 123 MIcIl 640;
Hartley State Bank y. McCorkell, 91
Iowa, 660; Donovan Real Estate Co.
V. Clark, 84 Mo. App. 163.
w Straseer v. Ccmklin, 64 Wis. 102;
West V. Banlgan, 61 N. Y. App. Div.
328; Flelschman v. Ver Poes, 111
Iowa, 322; Dowa^ac Mfg. Co. v. Hel-
lekson, 13 N. Dak. 267; Warshawsky
V. Bonewur, 130 N. Y. App. Div. 260.
Wh«re tlie prinolpal accepts and re*
taloB the proceeds of a check known
to have been received by his agent
In full aettlemeut of a dis-
puted claim, he ratifies the settle-
ment, even though he informs the
other party that he does not approve
it and proposes to apply the proceeds
of the check merely upon account
Stetson-Preston Co. v. Dodson (Tex.
ClT. App.), 103 8. W. 686.
See also Flelschman A Ca r. Ver
Does, 111 Iowa, 322.
40 Miles V. Ogden, 64 Wis. 673.
41 Meyer v. Morgan, 61 Miss. 21, 24
Am. Rep. 617.
42 Horst V. Lightfoot, 103 Tex. 643,
132 S. W. 761. Where an agent was
authorized to buy for cash and the
principal received and used goods
bought upon credit, the purchase ou
credit will be deemed to be ratified,
unless the principal can show that
he was without knowledge of the
facts and will be prejudiced by be-
ing compelled to pay for them. Brit-
tain r. Westhall, 136 N. C. 492.
4aGermanla Ins. Co. v. Wingfield,
22 Ky. Lr. Rep. 466; Farmers', etc.,
Ins. Co. v. Wlard, 69 Neb. 461;
Terry v. Provident Fund Society, 13
Ind. App. 1, 66 Am. St R. 217.
*4 Davis Lumber Co. v. Hartford F.
Ins. Co., 96 Wis. 226, 70 N. W. 84;
Samo v. Fire Ins. Co., 26 Up. Can. C.
P. 406; Hughes v. Ins. Co., 40 Neb.
686.
^2%
§ 443] THE LAW OF AGENCY [bOOK I
sent.** Payment to an agent, not authorized to receive it, becomes
effectual as payment to the principal upon the appropriation by him,
with full knowledge of the facts, of the money so paid.**
So where an agent made a loan without authority, but the principal
for several years received the interest, it was held that the act was
ratified ; *^ and so where an agent, without authority, borrowed money
and gave the principal's notes for it, but the latter with full knowledge
received and used the proceeds, there was held to be ratification.**
And where judgment creditors attended an unauthorized execution sale
and bought a portion of the property, it was held that they had ratified
the sale.*'
So where an agent had collected money without authority, but the
principal took security from him for a portion of it, and made claim
against his estate for the residue, it was held that the payment to him
was ratified.*® But where one without authority collected money, tlie
fact that the principal tried to obtain the money by a draft upon the
man who collected it, does not ratify his act in collecting and make the
payment to him a good discharge.**
§ 443. Where an agent sold his principal's property with-
out authority and embezzled the proceeds, and the principal, Mrith full
knowledge of the facts, took from the agent something in satisfaction
of the wrong, it was held that the principal had ratified the sale made
by the agent, and could not afterwards pursue the property sold.**
But where a principal without full knowledge of the facts, took from
an agent secririty for money collected by the agent from debtors of the
principal, and wrongfully appropriated to his own use, it was held that
this would not ratify the payments to the agent because, done without
full knowledge of the facts ; ** and for the same reason where one who
was in the possession of the plaintiff's horse sold it without authority
to the defendant, receiving in payment therefor a check which he in-
4« Clark V. Hyatt, 118 N. Y. 568. To* received the money, afterwards eaw
Uke effect: Burkhard v. MitcbielU 16 the paper, examined it, and made no
Colo. 376. objection to its form. Ward v. Wil^
4e Payne v. Hackney, 84 Minn. 195. llama, 26 IlL 447, 79 Am. Dec. 385.
To same effect: Ladenburg» etc^ Co. 49 streeter v. Johnson, 23 Nev. 194.
v. Beal-Doyle Dry Goods Co., 83 Ark. aoBisaell v. Dowling, 117 Mich.
440. 646, 76 N. W. 100.
«7 Angel V. Miller, 16 Tex. Civ. App. 01 Missouri, etc., Ry. Co. v. Wright,
679. 39 S. W. 1092. 47 Tex. Civ. App. 458.
4s Bank of Lakin v. National Bank, •< Ogden v. Marchand, 29 La. Ann.
57 Kan. 183, 45 Pac 587. So wh«« 61.
an agent, authorised to give his prin- u Smith y. Kidd, 68 N. Y. 130, 23
cipaTs note, made the paper in form Am. Rep. 167; Day v. MUler, 1 Neb.
of a bill and the principal who had Unof. 107.
326
CHAP. VIl]
RATIFICATION
[§ 444
dorsed and gave to the plaintiflF in payment of a debt he owed him, but
did not inform him of its origin, it was held that the plaintiflF by col-
lecting the check, and applying the proceeds to the payment of the debt,
without knowledge of the sale of the horse, had not ratified such sale.'*
And where the principal accepted from his agent who had violated
his instructions, a transfer voluntarily made by the agent of his own
property to secure the principal against loss, it was held that such ac-
ceptance did not constitute a ratification.^^'
§ 444. ■ Other instances.— So where one, on whose account
an agent has bought goods without authority, with full knowledge of
the facts, accepts, uses and sells them, he will be deemed to have rati-
fied the purchase and will be liable for the price.'* In such a case the
court said : "If one purchase goods for another without authority, and
the person for whom they are purchased receives them and uses or
sells them on his own account, after being informed that they were
purchased for him, this is an implied ratification of the agency. And
if, on receiving the goods, and being informed that they were pur-
chased in his name, he merely informs the seller that the purchase was
unauthorized, this is not enough. He should either restore the goods
to the seller or pay for them if he converts them to his own purpose." '^
MThacher v. Pray, 113 Mass. 291,
18 Am. Rep. 480. And to the same
effect are Penn., etc., Co. v. Dand-
ridge, 8 Gill ft John. (Md.) 248. 29
Am. Dec 643; Oullck v. Grover, 83
N. J. L. 468, 79 Am. Dec. 728; Bald-
win V. Burrows, 47 N. Y. 199; San-
bom ▼. First Nat. Bank, 116 Mo. App.
50; Case v. Hammond Packing Co.,
105 Mo. App. 168. See also Russ v.
Hansen, 119 Iowa, 375. Compare
Johnston v. Milwaukee Investment
Co., 49 Neb, 68.
ssLazard v. Merchants' ft Miners'
Tran&p. Co., 78 Md. 1, 26 Atl. 897.
Where the agent has made a sale
upon unauthorized terms, the efforts
of the principal to compromise and
settle the matter with the third per-
son, do not operate as a ratification
of the agent's acts as between the
principal and the agent Brown v.
Foster, 137 Mich. 35.
09 Pike V. Douglass, 28 Ark. 59; Mc-
Dowell v. McKinzie, 65 Ga. 630;
Hastings ▼. Bangor House, 18 Me.
436; Moffitt-West Drug Co. v. Lyne-
man, 10 Colo. App. 249; Smith v.
Holbrook, 99 Ga. 256. See also Miu-
nich V. Darling, 8 Ind. App. 539.
67 Pike V. Douglass, supra. See also
Ketchum v. Verdell, 42 Ga. 534,
where it was said by McKay, J.,
"The general rule, as I understand
it, is that where one professes to act
as agent of another, even if he has
no authority at all, and as such
agent obtains goods which in fact go
to the use and benefit of the prin-
cipal, the seller may at any time be-
fore the principal has settled with
the pretended agent, notify the prin-
cipal of the truth of the case and de-
mand payment If the principal ac-
cepts the property, knowing all the
fact^, that is a ratification of the
agency; but even if he knows noth-
ing of the facts, but accepts the prop-
erty as sold him by the agent, yet
if the agent was not in fact the true
owner and the seller so notifies the
purchaser before any settlement, the
right of action in the seller exists."
327
§ 445] '^^^ ^^^ ^^ AGBNCY [book 1
But where an agent had purchased goodis without authority and
added them to his principars stock, and the principal, upon discovering
the fact, attempted to select such of the goods as remained unsold, for
the purpose of returning them to the vendor, but was unable to identify
them, it was held that his retention of the goods under such circum-
stances was no ratification of the agent's purchase.*'
g 445. ' I ■ And where one, to whom certain goods were sent by
an agent's order on approval, claimed to be tihe owner of the goods at
the time of an attempted levy upon them as the property of another,
he was held to have ratified the agent's act and accepted the goods.^*
So where an agent exchanged a mule for a horse without authority,
the principal's subsequent assertion of title to the horse was held to be
a ratification of the trade.®® So in a case invdving the ratification of a
loan made by a committee of an agricultural association, Brickell, C. J.,
said : 'It is shown very fully that the association ratified and approved
all the acts of the executive committee in this transaction, not only the
mode adopted in borrowing the money but the execution of the mort*
gage. We do not mean that it was shown that there was assent to, and
confirmation of the transaction expressed in words. That is not essen-
tial, for ratification is more often implied from the acts and conduct of
parties having an election to avoid or confirm tlian found expressed in
words. And it is implied, whenever the acts and conduct of the prin-
cipal having full knowledge of the facts are inconsistent with any other
supposition than that of previous authority or an intention to abide by
the act though it was unauthorized. Here the association accepted all
the benefits of the transaction, received and appropriated to its own
uses the money obtained on the promissory notes and has acquiesced
in all that was done by the executive committee, not even now objecting
that it was unauthorized. A corporation has as full capacity as a nat-
ural person to ratify the unauthorized or defectively executed act of its
agents and the ratification is the equivalent of a prior authority. Hav-
ing received and retained the benefits of the transaction with full knowl-
edge of all the facts, the association has ratified and confirmed it unless
intentional fraud is shown for which there is neither room nor rea-
son." «^
csSchutz v. Jordan, 32 Fed. 55. Ala. 229. And to the same effect are
See also Knapp v. Smith, 97 Wis. 111. Maddux v. Bevan, 39 Md. 485; Per-
89 Brooks V. Fletcher, 56 Vt. 624. kins v. Boothby» 71 Me. 91, in which
•0 Jones V. Atkinson, 68 Ala. 167. the principal accepted the benefit by
See also Cochran v. Chltwood, 59 111. accepting the agent's application of
53; Nlchols-Shepard & Co. v. Shaffer, the borrowed money to payment of
63 Mich. 599. the principal's debts.
«i Taylor y. A. & M. Association, 68
328
CHAP. VIl]
RATIFICATION
[§44^
§ 446* IV. By bringing sctit based on validity of agent's act.-*-One
of the most unequivocal methods of showing ratification of an agent's
act is the bringing of an action at law based upon the validity of such
act.** The bringing of such an action manifests very clearly a deter-
mination to abide by the act, to regard it as valid, to enforce its per-
formance. If the voluntary acceptance of the benefits of the act will
ordinarily work a ratification, as it has been seen to do, a fortiori will
the endeavor by legal process to secure those benefits — to compel per-
formance^ accomplish that restdt.
The basing of a defense upon the' act is, of coarse, equally within
the spirit of the rule.**
Here, as elsewhere, the principal must have knowledge of the facts,
but it sufiices for this purpose that he has such knowledge at any time
before he demands judgment 'df performance.** A disclosure of the
facts by the other party's pleadings ** or evidence ** may, it is held, be
•aPhniips Mfg. Co. V. Wnd. 144
Ala. 645; Shoninger v. Peabody, 57
Conn. 42, 14 Am. St R. 88; Curnane
V. Scheldel, 70 Conn. 13; Bailey v.
Pardrldge, 134 111. 188 ; Pells v. Snell,
31 111. App. 158; Warder v. Cutbbert,
99 Iowa, 681; Aultman Threshing,
etc., Co. v. Knoll, 71 Kan. 109; Gar-
ten V. Trobrldge^ 80 Kan. 720; Edgar
V. Brack, 172 Mass. 581; City of Wor-
cester v. Worcester &U Hy. Co., 194
Mass. 228; Johnston Harvester Co. v.
Miller, 72 Mich. 265* 16 Am. St B.
536; Leffel v. Piatt. 126 Mich. 443;
Watson y. Southern Ins. Co. (Miss.),
^1 So. 904; Alexander v. Wade, 106
Mo. App. 141; Shinn v. The Guyton
Co., 109 Mo. App. 557; Daugherty v.
Burgess, 118 Mo. App. 557; Beagles
V. Robertson, 135 Mo. App. 306; Os-
born y. Jordan, 52 Neb. 465; Tootle,
etc., Co. V. Otis, 1 Neb. Unofl. 360;
Anderson v. Scott, 70 N. H. 350; Ger-
man American Bank y. Schwinger, 75
App. Div. (N. Y.) 393, aff'd 178 N. Y.
569; Wheeler 4; Wilson Co. v. Aughey,
144 Pa. 398, 27 Am. St R. 638; Piano
Mfg. Co. y. Millage, 14 S. Dak. 331;
Piokle y. Muse, 88 Tenn. 380, 17 Acn.
St R. 900, 7 Lw R. A. 93; Arnold V.
Ins. COi 106 Tenn. 629; Whiting v.
Dough ton, 31 Wash. 327; Twentieth
Century Co. v. Quilling, 136 Wis.
481; Park Bros. y. Kelly Axe Mfg.
Co., 49 Fed. 618, 6 U. S. App. 26, 1
C. C. A. 395.
In Davis v. Severance, 49 Minn.
528, it is held that a mere precau-
tionary action brqught to hold mat-
ters in 8tatu QUO and until the facts
could be determined was not neces-
sarily a ratification.
«3 Edgar v. Brect 172 Mass. 581;
Tingley v. Boom Co., 5 Wash. 644.
0* Shinn v. The Guyton Co., 109
Mo. App. 557.
83 Thus In Edgar v. Breck, 172
Mass. 581, It is held that where the
principal is apprised by the other
party's declaration that an unauthor-
ized warranty had been given by his
agent, he ratified the act by plead-
ing a set off for the price of the war-
ranted article.
86 A principal sued upon an un-
authorized contract made by his
agent may on the trial disaf&rm the,
agent's act if at that time such act
is first brought to his knowledge.
Farmers* Bank of Elk Creek y.
Farmers' Bauk of Auburn, 49 Neb.
379.
329
S' 447]
THE LAW OF AGENCY
[book I
enough, if sufficiently definite and certain,*^ to put him to an election
either to repudiate or ratify.
Here, as elsewhere, also, if he ratifies, he must ratify in toto, — ^lie
must take the burdens with the benefits, and, by demanding perform-
ance to himself, he assumes responsibility for the instrumentalities,-*^
the frauds, misrepresentations, promises and conditions — ^through which
the act was induced, so far as they affect the enforceability of the con-
tract upon which his action is founded.**
§ 447. Illustrations of this rule are numerous. Thus a de-
mand made by an agent will be deemed to be ratified by the principal,
if he brings an action founded upon such demand,** and ratification by
a bank of its cashier's indorsement of a note is established by the fact
that the bank prosecutes an action on the note in the name of the in-
dorsees^ So if the principal appear in court and prosecute an action
of attachment begun in his name by one assuming to act as his agent,
«T In Qwensboro Wagon Co. v. Wil-
son, 79 Kan. 633, where the principal
was suing upon a note taken by an
agent, and the defense was a special
contemporaneous contract made by
the agent to Induce the giving of the
note,-:-whlch contract the plaintiff
contended was unauthorized, — the
court said, that. If the plaintiff flrst
learned of this contract upon the
trial, "it was Incumbent on the plain-
tiff either to abandon Its claim so far
as it was based upon the note and
rely upon proving the account which
was merged therein, or else take the
chances of being able to disprove that
the note was given In pursuance of
the agreement alleged. In continuing
to rely on the note, after being ad-
vised of the defendant's claim, the
plaintiff must be deemed to have
elected to pursue the latter course,
and thereby to have waived the ques-
tion of the agent's authority if In
tact the note' should be shown to
have been the fruit of such agree-
ment."
But in Shonlng:er v. Peabody, 59
Conn. 588, 14 Am. St, R. 38, where
the principal was suing for the price
of a piano sold by an agent to the
defendant, and these two parties
alone knew the terms of the sale, and
the agent testified tp one version
while the defendant testified to a
wholly different one. It was held that
the plaintiff, by pressing his suit to
Judgment, had not necessarily there-
by adopted the defendant's version.
Said the court: "Knowledge of a
fact Is one thing: knowledge that
one man claims the fact to exist, and
another denies It, is another. The
two things may be followed by very
different legal consequences."
See also Peters v. BalTlster, 3 Pick.
495; Dolvln v. American Harrow
Co., 125 Ga. 699; Morris v. Butler,
188 Mo. App. 878.
••Wheeler ft Wilson Mfg. Co. v.
Aughey, 144 Pa. 398, 27 Am. St. R
638; Anderson v. Scott, 70 N. H. 350,
Edgar V. Breck, swpra; Shonlnger v.
Peabody, 57 Conn. 42, 14 Am. SL R
88; Johnston Harvester Co. v. Miller,
72 Mich. 265, 16 Am. St. R. 536;
Eberts v. Selover, 44 Mich. 519, 88
Am. Rep. 278; Phillips Mfg. Co. v.
Wild, 144 Ala. 545.
«»Ham V. Boody, 20 N. H. 411, 61
Am. Dec. 285; Payne v. Smith, 12
N. H. 84; Town of Grafton v. Fol-
lansbee, 16 "K. H. 450, 41 Am. Dec.
736.
^•Corser v. Paul, 41 N. H. 24, 77
Am. Dec. 75S.
330
CHAP. VIl]
RATIFigATION
[§448
he will be held to have ratified the act of such agent in signing bis name
to the attachment bond.'* And where a vendw who has been de-
frauded in a sale of his goods made by an agent, proceeds to judgment
against the vendee after being fully apprised of the fraud, he ratifies
the sale.'* And where an agent without authority had consigned his
principal's goods for sale, and the principal brought an action against
the agent for the price and value of the goods- so consigned, it was held
a prima facie ratification of the consignment/® and an action to enforce
a contract made by an agent, is sufficient evidence of th6 agent's autlior-
ity to make it/* And an action to recover, upon a note or otherwise,
the price of land or goods sold by an agent, without authority, ratifies
the sale,'* and with it, in cases where such an agent would have author-
ity to warrant, a warranty made by the agent as a part of the sale.'*
And bringing an action on a mortgage taken by an agents ratifies his
act in taking it" So a principal's abandonment of a suit, upon a com-
promise of the cause of action by an agent ratifies the compromise."
§ 448. — — Suing to enforce a stock subscripti(5n secured by an
assumed agent ratifies his act, and imposes liability for- false represen-
tations made by him in procuring the subscription.'^ An action to en-
force notes taken by an assumed agent ratifies his act in taking them,
and opens the door to a defense based upon his misrepresentations in
obtaining them,®* or charges the principal with knowledge which the
agent possessed concerning their consideration.®* Suing to recover the
price of goods, sold without authority or on unauthorized terms or
conditions (instead of repudiating the sale and suing to recover the
71 Bank of Augusta v. Conrey, 28
Mi8& 667; Dove v. Martin, 23 Miss.
588.
So of enforcement of an unauthor-
ized confession of Judgment Tootle
V. Otis, 1 Neb. Unoff. 360.
T* Lloyd V. Brewster, 4 Paige (N.
Y.), 537; Bank of Belolt v. Beale, 34
N. Y. 473.
78 Frank t. Jenkins, 22 Ohio St.
597.
•<y* Dodge T. Lambert, 2 Bosw« (N.
Y.) 570; Benson v. Liggett, 78 Ind.
452; Whiting ▼. Doughton, 31 Wash.
327 (where the suit was one for
rescission but sought likewise to en-
force a forfeiture clause). Baugherty
V. Burgess, 118 Mo. App. 557. See
also Alexander v. Wade, 106 Mo. App.
141.
TB Bailey v. Pardridge, 134 111. 188;
Piano Mfg. Co. Y. Mlllage, 14 S. Dak.
331.
T« Franklin v. Elzell, 1 Sneed
(Tenn,), 497; Cochran v. Chitwood,
59 111. 53; Edgar v. Breck, 172 Mass.
581,
TT Partridge v. White, 59 Me. 564.
And see Beldman v. Goodell, 56 Iowa,
592; Roberts y. Rnmley, 58 Iowa, 301.
So of a lease. Shlnn v. Guyton Co.,
109 Mo. App. 657.
78 Holt V. Cooper, 41 N. H. 111.
78 Anderson v. Scott, 70 N. H. 350.
80 Wheeler & Wilson Mfg, Co. v.
Aughey, 144 Pa. 398^ 27 Am. St R.
638.
81 Johnston Harvester Co; v. Miller,
72 Mich. 265, 16 Am. St R. 536.
331
§§ 449> 45^1 ^^^ LAW. OF AGENCY [bOOK I
goods), ratifies the sale and charges the principal with liabilily for the
terms and conditions upon which the goods were sold.^' Suing to en-
force a policy of insurance, obtained by an unauthorized agent, imposes
liability upon the assured for the terms and conditions of the policy
as though taken out by him in person.**
Where a bank sties upon a bond, taken by its cadiier in substitution
for an earlier bond, it is held to have ratified the cashier's act in ac-
cepting the new one and cancelling and surrendering the first, and is
thereafter precluded from making a claim upon the first one.*^
But though, by suing upon a check taken without authority the prin-
cipal ratifies the taking of the check, he does not also thereby ratify the
payment of its amount to such agent, since not even an agent airthor*
ized to receive diecks in pa3rment would have thereby authority to col*
Icct them.**
§ 449. — — Suits based on the inTalidity of agent's acts, no
ratification. — ^Where the action, instead of being based upon the valid-
ity of the agent's act is based upon its invalidity, there can ordinarily
be found no evidence of ratification. Where the action is directly
aimed at the disafiirmance of the act, the case, of course, is dear. But
it has also been held that, where third persons have colluded with the
agent to defraud the principal, the fact that the latter has brought an
action against the agent to recover for his misconduct does not amount
to a ratification of the act so as to release the third persons from lia-
bility, nor is the recovery against the agent necessarily a bar to the
action against the third parties, since the causes of action are not nec-
essarily the same.*^
§ 450. ■ Delay in suing in disaffirmance of the act-— If the
principal has expressly repudiated an unauthorized act, mere delay in
bringing a necessary suit to enforce his rights cannot, it is held, be
construed into a ratification.**
And where payment of a note had been made to an agent not author-
ized to receive it, the delay of the principal, who was ignorant of the
payment, in suing upon the note, for any period short of that fixed by
the statute of limitations, was held to be no ratification.**
82 Shoninger v. Peabody, B7 Conn. Schwlnger, 76 App. Dlv. 893. afTd 178
42, 14 Am. St R. 88; Billings V. N. Y. 569.
Maaon, 80 Me. 49d; Bberts v. Selover, ss Pickle v. Muse, dS Tenn. 380, 17.
44 Mich. 519, 88 Am. Rep. 278. Am. St H. 900, 7 Li. R. A. 93.
•« Arnold v. Ins. Co., lt)6 tenn. 529. «t Barnsdall v. O'Day, 67 C. a A.
See also Watson v. Southern Ins. Co. 278, 184 Fed. 828.
(Miss.), SI So. 904. MMcClure v. EKartson, 82 Tenn.
•4 German American Bank t. (14 Lea) 495.
>• Holland y. Van BeU« 89 Ga. 228.
CHAP, yil] 11ATIFICATI6N [§§ 451^453
§ 451. V. By acqufcsoencc— Finally, the doing of the unauthor-
ized act may be ratified, as it is frequently declared, by "acquiescence"
in it It has been already seen how, by his active steps of express ap-
proval, accepting* benefits, suing to enforce, and the like, the principal
may manifest his approval. The matters now to be dealt with have to
do rather with his inaction, — his passivity, his quiescence, or, to use
the word in qu^tion, his acquiescence.
§ 452. — -^ What meant by acquiescence. — In dealing with the
subject of acquiescence, a difficulty at once! arises in determining what
is meant by it. For, while it might be thought at first view that it is a
word of well settled signification, an examination of the cases will in-
dicate that it is often used with quite widely varying shades of mean-
ing. It seems particularly difficult to keep it free from considerations
of estoppel, although the two things are entirely distinguishable.
It will be of aid to keep constantly in mind what the situation is. An
unauthorized act has been done, which does not bind the principal.
What is needed i? therefore something to make it valid, not something
to make it invalid. In other words, what is needed is affirmance, not
disaffirmance. By the hypothesis which brings the case to this point,
it has not been actively affirmed. Has it been affirmed in any other
way? That h a question of fact, upon which any competent evidence is
admissible. What is said here is that it has been affirmed by acquies-
cence, and, since there is no evidence of active acquiescence, tacit ac-
quiescence is ref efred to. This tacit acquiescence usually presents itself
either as mere silence, or a failure to disaffirm, or as conduct incon-
m
sistent with disapproval. May an inference of affirmance be properly
drawn from any of these? Or, taking them up severally, when the
alleged principal learns of the unauthorized act, and merely keeps si-
lent about it, neither actively assenting nor dissenting, may an infer-
ence of his assent be properly drawn? Putting it into other words,
is the silence of the principal, or his failure to disaffirm, a fact from
which, according to the ordinary conduct of men, an affirmance may be
inferred ?
§ 453. Mere silence or failure to repudiate. — There is a
popular notion, — ^finding expression in a familiar adage, — that silence
gives consent. This, however, is true in law only to a very. limited ex-
tent. No legal liability can result from silence alone, unless one owes
a duty to speak.*® On the other hand, it is a maxim of the law of es-
•0 See Royal Ins. Co. v. Beatty, 119 Compare Hobbs v. Massasolt Whip
Pa. 6, 4 Am. St. R. 662; Whlttemore Co., 158 Mass. 194.
V. Hamilton, 61 Codd. 153.
333
§ 4541
THE LAW OF AGENCY
[book I
toppel that he who remains silent when in conscience he ought to speak,
will be debarred from speaking when in conscience he ought to remain
silent, and this rule is frequently invoked in determining whether or
not an alleged principal has set the seal of his sanction upon a trans-
action assumed to have been done in his behalf. But estoppel is not
now involved.
But even though silence may not be per se conclusive, and even
though estoppel be for the time being excluded, it is entirely safe to say
that silence or a failure to repudiate may often be evidence of an as*
sent, more or less strong under the circumstances, from which, as a
matter of fact, an inference of assent may be drawn.** The question
seems to be this : From the failure to dissent under the circumstances,
would the ordinary intelligent man be justified in inferring that the
principal assented? Like other similar questions, this would be for
the jury, imless reasonable men could fairly draw only one inference
from the facts, and in that case the court may decide it.
§ 454. How differs from estoppel. — ^The question here, as
has been pointed out, is not one of estqppel. Estoppel depends upon
the fact that the other party has done, or refrained from doing, some-
thing to his prejudice in reasonable reliance upon the silence or failure
to dissent ; and such cases frequently arise. But here it is a matter of
inferring facts from conduct, and the question is whether a reasonable
man may fairly infer assent from the circumstances, and not whether
the other party, in reasonable reliance upon the conduct, has changed
his situation to his detriment.
It very frequently happens that both elements are present in a given
case, and courts often unconsciously slip from one to the other and
mingle them into an indistinguishable mass, — ^perfectly justifiably usu-
In Whittemore v. Hamilton* sMpra^
It was said that the principal is
bound by failure to dissent only
where he has received a direct bene-
fit from the act of the alleged agent,
or where his silence appears to have
prejudiced the other party. But in
that case, the party who acted was
not really an agent; he was a lender
of money to whom a note and mort-
gage had been assigned as collateral
security. He had released the se-
curity without the borrower's con-
sent It was held that, as between
borrower and lender, mere silence of
the borrower after knowledge did not
amount to ratiflcation. "If one hold-
ing property pledged to secure a debt
should destroy it, or convert it to his
own use, or give it away to another,
whereby it becomes lost to the owner,
does he ratify the act by mere
neglect to give notice to the wrong-
doer of his dissent? As well might
the principle be applied to a trespass
or any other tort" •
•iSee the excellent discussion in
Philadelphia, etc., R. Co. v. Cowell,
28 Pa. S29» 70 Am. Dec, 123.
334
CHAP. VIl] RATIFICATION [§ 455
ally, so far as the results in the particular case are concerned, but often
disastrously to clear expression.
The distinction is the same as in the matter of the appointment of an
agent, — there, the fact of appointment may be inferred from conduct,
or there may be estoppel, resulting from conduct, to deny appointment.
§ 455. Same subject. — This distinction is so clearly put in a
case before the court of civil appeals of Texas " as to justify a full
quotation. Here the question was whether a bank had ratified the act
of its cashier in a certain matter, and the trial court had instructed the
jury that, if the other party immediately notified the bank of the act,
and the bank did not within a reasonable time thereafter repudiate the
act, the jury should find against the bank. Upon appeal the court,
through James, C. J., said: "This charge is not correct, unless mere
silence on the part of a principal for an unreasonable time, after knowl-
edge of an unauthorized act of its agent, amounts to ratification of this
act as a matter of law. There is no express ratification here, and that
relied upon was an implied ratification. The very fact that it was a
matter to be implied, there being no act in this case amounting per se
to a ratification, would make it an issue that only the jury should de-
cide, and then only in a case where the facts and circumstances in
Connection with such silence are such as would admit of a reasonable
inference that the silence or inaction meant' a ratification. Silence
simply in itself is no evidence of anything; but the conditions under
which it occurs, and accompanying it, may show it to be a ratification.
We commend the expression of Mr. Justice Collard in Meyer v.
Smith : •* 'Mere delay in repudiating will not, in our opinion, have the
effect of ratifying. It would be evidence, along with other facts, from
which, if it should be unreasonable, the jury might infer that there
was a ratification. The court should not instruct the jury to find a
ratification in case of unreasonable delay after notice of the facts, but
he should leave the jury free to act upon such fact, and to determine
from all of the facts whether a ratification should be inferred.' We
are not speaking now of an estoppel by conduct which proceeds upon
other princijdes, and which we shall discuss hereafter. The rule is so
obviously sound, particularly in a jurisdiction where inferences of fact
M Iron City Nat Bank t. Fifth w Meyer v. Smith, 3 Tex. Civ. App.
Nat Bank (Tex. Civ. App.), 47 & W. 37.
533. This case was affirmed in 92 On the other hand, the St 'Louis
Tex. 436, but rather upon the ground Court of Appeals seems to think that
there was evidence upon which the the question is always one of estoppel,
question of estoppel should have been St Louis Gunning Adv. Co. v. Wana-
submitted to the jujry, maker, 115 Jfo. Aj^. OTO.^
335.
§ 456] THE LAW OF ACWiNCY [fiOOK I
are cammitted to the jury, that we deem citation of authorities on the
subject unnecessary. The instruction that silence alone for an un-
reasonable time, was in law a ratification, was erroneous."
§ 456. — — Elements of estoppel may be present — ^Thus far
the attempt has been to exclude the element of estoppel. Theoretic
cally the distinction between an inference of approval in fact deduced
from apparent acquiescence, and an estoppel to deny approval because
of some special circumstances, is not difficult to make. The former
is the inference which any reasonable man may fairly draw under the
circumstances. The latter, however, is the inference which a pc^ticu^
lar reasonable man may fairly draw in view of the special facts which
concern him. Suppose that, from such facts as those in question,
there would, ordinarily, be no inference of approval drawn from the
silence of the principal. If we then add to those facts, the further
one that the other party, as the alleged principal knows, is about to
change or is likely to change, his position in reliance upon the sup-
posed authority, in such a way that he will suffer serious injury if that
authority proves not to exist, is then the silence of the principal legally
permissible if he expects to deny the authority? If it would not be
permissible, do we not then say that the principal is estoppel to deny
his approval?
In the ordinary case, perhaps, the other party will have parted, with
whatever he is to part with in mere reliance upon the assumed author*
ity, at the time he made the contract. For that loss, if any, the prin-
cipal by the hypothesis is not responsible ; but how about new or f ur^
ther changes of position later made, in reliance upon both the assumed
authority and the principars knowledge and failure to object?
In some cases, perhaps, the principal's knowledge of special cir^
cumstances may simply serve to accelerate the passage of the time
within which it would be deemed necessary for him to act, if he pror
poses to repudiate the act
In a large number of the cases, if not in a majority of them, there
are present some elements of estoppel, as well as circumstances from
which pure inferences of approval in fact may be drawn ; and any con-
clusion will be likely to be one in which both elements are more or less
inseparably mixed.** Courts and writers — sometimes carelessly, some-
times unavoidably, — pass in apparent unconsciousness from one field
to the other. It is perhaps true, also, that our whole process of draw-
ing inferences of fact springs from the same root as that from which
estoppel springs. At any rate, it is entirely clear that, in the various
•4 See tine discuBBlon In Heyn v. O'Hagen, 60 Mich. 160.
336
CHAP. Vll] RATIFICATION [§ 457
rules and statements of principlfe made respecting this iHat^r of rati-
fication by acquiescence, the element of estoppel is constantly found,
and that it plays a large part in the actual determination of the cases.
In any case which must rest upon the tlieory of estoppel, there must,
of course, as in other cases oi estoppel, be shown the facts of special
reliance and prejudice upon which that doctrine rests.
§ 457* ' Other staetementa of the rule.p-*This subject is of so
much importance as perhaps to warrant a somewhat fuller exposition
of the different statements which judges have made in attempting to
declare the rule which governs it It cannot fail to be observed that
estoppel rather than ratification is the key note in the first two.
Thus it was said by a distinguished judge, '*We suppose acquies-
cence or tacit assent to mean the neglect to promptly and actively con-
demn the unauthorized act, and to seek judicial redress after the
knowledge of the committal of it, whereby innocent third parties may
have been led to put themselves in a position from which they cannoit
be taken without loss. It is the doctrine of equitable estoppel." •'
And by another, "The rule as to what amounts to ratification of an
unauthorized act is elementary and may be safely stated thus : Where
a person assumes in good faith to act as agent for another in any giveo
transaction, but acts without authority, whether the relation of prin-
cipal and agent does or does not exist between them, the person in
whose behalf the act was done, upon being fully informed thereof, must
within a reasonable time disaffirm such act, at least in cases where his
silence might operate to the prejudice of innocent parties, or he wiU
be held to have ratified such unauthorized act." ••
And again, "The correct rule seems to be that when Uie principal has
full knowledge of the acts of his agent from which he receives a direct
benefit he must dissent and give notice of his non-concurrence withiu
a reasonable time, or his assent and ratification will be presumed.
* * ♦ It is true that mere knowledge, on the part of the principal,
of an agent's unauthorized action, will not make silence or non-inter-
ference in all cases amount to ratification. But it would where the
party dealing with the agent is misled or prejudiced, or where the
usage of trade requires, or fair dealing demands, a prompt reply from
the principal. In all such cases, the principal, if dissatisfied with the
act of the agent and fully informed of what has been done, must ex-
press his dissatisfaction within a reasonable time." •^
•• Polger, X, In Kent r. Quicksilver cept as to the element of good talth,
Mining Co., 78 N. Y. 187. in Heyn v. aHagen, 60 Mich., at p.
••Lyon, J., in Saveland v. Green, 167.
40 Wis. 431; cited with approval, ex- •» Mobile A Montgomery Ry. Co. ▼.
22 337
§§ 458, 459] THE LAW OF AGENCY [bOOK Y
§ 458. Relations of the parties. — ^The situation of the par-
ties may be significant in determining conclusions. Suppose the ques-
tion arises between the other party and the principal. At the time the
act was done, the other party knew he was dealing with a special agent,
but took no steps to ascertain whether the proposed act was within the
scope of the authority. Does the principal owe him a greatjer duty of
protection than the third party owes to himself? Suppose that, at the
time the act was done, the other party knew that it was at least doubt-
ful whether the act was within the authority. Does that fact impose
any duty upon him to ascertain? Suppose that, at the time the act
was done, the other party knew that the act was unauthorized, but
counted upon the possibility or the probability that the principal would
ratify. How much protection is the principal bound to afford him in
such a speculation?
Suppose next that the question arises between the agent and the
principal. If the agent knew his act was unauthorized, or that it was
in tlie face of positive instructions, is he in a favored situation to con-
tend that the mere silence of his principal is an acquiescence ?
Suppose again that the principal knows that the other party or the
agent believes the act authorized, and is apparently relying confidently
upon it. May not that fact be material in determining what infer-
ences should be drawn from the principal's silence ?
§ 459* Failure to dissent as between principal and agent. — While
it has been said in a few cases that no inference of approval can be
drawn from the principal's failure to notify his agent of his dissent
from his unauthorized acts,*^* the general rule is undoubtedly to the
contrary. It is, of course, not diflftcult to imderstand that an agent,
who intentionally and wilfully does unauthorized acts, should not be
permitted to impose upon his principal, for the agent's protection, a
constant duty of repudiation so far as the agent is concerned. But,,
on the other hand, there are many cases, — where the agent is acting at
a distance, — where the authority is more or less ambiguous, — where
the agent is clothed with something of discretion, — where he is seeking
bona Me to benefit the principal, — ^and the like, in which different
considerations may apply, and the rule seems in general to be well set-
tled that, when the agent advises the principal that he has done some
act not warranted by his authority, the principal must repudiate it
Jay, 65 Ala, 113, modifying PoweU's agent that he disapproves his breach
Admr. v. Henry, 27 Ala. 612. of instructions. The agent must look
»8 Thus in Lewin v» DiUe, 17 Mo. to his instructions for his own safety
64, it is said that there is no duty and departs from them at his own
upon the principal to notify the risk.
338
CHAP. VIl]
RATIFICATION
[§§ 460, 461
within a reasonable time, or the agent will be justified in assuming that
the principal assents.^' Judge Story bases the rule upon commercial
usage, and says that "if the principal, having received information by
a letter from his agent of his acts touching the business of his princi-
pal, does not, within a reasonable time, es^ress his dissent to the agent
he is deemed to approve his acts and his silence amounts to a ratifica-
tion of them." *
§ 460. Mere inaction on the part of the principal may not
always be so potent evidence of approval in the case of the agent as in
the case of the third person. The agent himself usually knows, what
the third person usually does not, that his act was unauthorized; as
"between the principal and the agent it may sometimes be to the latter's
advantage to let the matter lie open a little ; he may urge the principal
to wait; and he cannot complain of inaction '^especially if such in-
action or failure to immediately disaffirm was induced by the assur-
ances or persuasion of the agent himself." •
After revoking an agent's authority, however, a principal is not
"bound, as between himself and the agent, to notify the latter of his
dissent from acts done by such agent in pursuance of the original au-
thority.*
§ 461. As between the principal and the other party. —
As between the principal and the other party, the rule is not so clear.
If the principal has received some tangible benefit from the act which
Tie retains, there is, as has been seen, ordinarily little difficulty.* But
if he has not, and the case is simply one of unauUiorized action, known
to the principal, and followed by mere silence on his part, is there rati-
fication? For his own protection the other party is bound to ascertain
the agent's authority: he has not done so. The alleged principal had
done nothing to mislead him. Is the principal bound to inform him
-of that which he should have ascertained for himself ? In one case '
It was said, "It is the duty of one trading with an agent who has only
a limited and special authority, to make inquiry as to the extent of the
•» Prince v. Clark, 1 B. & O. 186, 2
D. ft R. 266; Bell v. Cunningham,
^ Pet (U. S.) 69, 7 L. Bd. 606; Law
v. Cross, 1 Black (U. S.), 535^ 17 L.
Ed. 185; Oourcier v. Rltter, 4 Wash.
C. a 649, 6 Fed. Cas. 644; Norrls y.
Cook, 1 Curtis, 464, 18 Fed. Cas. 818;
Richmond Mfg. Co. v. Starks, 4
Mason» 296, 20 Fed* Cas. 747; Calrnes
V. Bleecker, 12 Johns. (N. Y.) 300;
"Vlanna v. Barclay, 3 Cow. (N. Y.)
281; Bray v. Gunn, 63 Oa. 144; Clay
V. Spratt, 7 Bush (Ky.), 334; Bre-
din V. Duharry, 14 Serg. A R. (Pa.)
27; Halloway v. Milling Co., 77 Kans.
76; Allen y. McAllister, 89 Wash.
440.
1 Story on Agency, i 258.
« TriggB V. Jones. 46 Minn. 277.
« Kelly V. Phelps, 57 Wis. 425.
* See ante, § 436.
5 White V. Langdon, 30 Vt 599.
339
§ 462]
THE LAW OF AGENCY
[book I
agent's authority ; if he omits inquiry, he does so at his peril. It is not
the duty of the principal, upon hearing of the sale by the agent [which
was here the unauthorized act], to seek the purchaser and give him
notice of his claim, and his omission to do so and his mere silence, are
not ordinarily to be construed as a ratification of the sale. If special
circumstances may be supposed to exist, which would make it the duty
of the principal to give such notice, none such are proved in this case."
It has been said that this case is not in accord with the weight of
authority,* and there are certainly many dicta to the contrary ; but in
the absence of the special circumstances referred to, so far as it holds
that mere silence is not per se a ratification, it is believed to be sound.''
If the question is whether an inference of assent may be drawn from si-
lence, the case does not deny it. If the other party has changed his
situation to his detriment in reliance upon the principal's conduct, he
may establish an estoppel.®
§ 462. It is not to be denied that many cases state the ob-
ligation of the principal in a very positive way. It is sometimes said
that the principal owes to the other party a "duty" to dissent, but this
oBy Mr. Qreenough, editor of the
ninth edition of Story on Agency.
§ 256, note.
7 This is well brought out in the
recent case of Smith t. Fletcher, 75
Minn. 189. See also the rules Quoted
In the following section. There is
also a good statement of the situation
in Curry v. Hale, 16 W. Va. 867, 875.
In Lynch v. Smyth, 25 Colo. 103, it
is said : "Silence of the alleged prin-
cipal when fully advised of what has
been done in his behalf, by one who
attempts to act as his agent without
authority, may be sufficient from
which to infer a ratification of the
unauthorized act (2 Greenl. Ev. I 67;
King v. Rea, 13 Colo. 69); which,
however, is not conclusive except the
party affected by such silence has
been misled or Injured (King v. Rea,
supra) ; so that It does not neces-
sarily fallow that one seeking to en-
force a liability by ratification aris-
ing from silence^ or a failure to re-
pudiate an unauthorized act after
knowledge thereof^ must alBO show
that by such silence he has been mis-
led to his prejudice^ although It Is
proper to do so, as silence of the
alleged principal under such circum-
stances may of itself be sufficient to
establish a ratification of such act.
Union M. Co. v. Rocky Mt Bank, 2
Colo. 248. Where, however, after
knowledge of the unauthorized act
comes to the alleged principal, the
party affected by such act has an op-
portunity to improve his position,
the alleged principal is bound to
disapprove within a reasonable time
after notice of such act, and a failure
to do BO is conclusive evidence of as-
sent" To same effect: Meyer v.
Smith. 3 Tex. Civ. App. 37; Iron City
National Bank v. Fifth National
Bank (Tex. Civ. App.). 47 S. W. 533
(affirmed on somewhat different
grounds in 92 Tex. 436). See also
Norden v. Duke, 120 App. Div. 1;
Stiebel V. Haigney, 134 App. Dlv.
516; llfeld v. Ziegler, 40 Colo. 40L
a See the discussions In Steffens v«
Nelson, 94 Minn. SSS; Ilfbld v. Zleg-
ler, Mupra; Stiebel v. Halgney, supra;
Mobile, etc., Sy. Ca v. Jay. 66 Ala.
113.
340
CHAP. VIl]
RATIFICATTOH
[§ 463
expression can scarcely be used in any strict legal sense. It can doubt-
less mean no more than that, if the principal does not dissent, he runs
the risk of the inferences that may legally be drawn, or of the conse-
quences which estoppel, may impose, as the result of his inaction.
To that extent, however, the situation is very clear, and the cases
are now exceedingly numerous which hold that the principal's failure
to dissent after knowledge may, under the circumstances, justify the
jury or other triers of the fact in inferring that what he has thus failed
to repudiate he at least tacitly affirms, or, upon a showing of the proper
facts, that he may be estopped to assert his dissent where the appear-
ances of assent have reasonably misled the other party to his preju-
dice.*
Moreover, as has been pointed out, the facts may be such as to rea-
sonably warrant but one inference, and then, as in other cases, the court
may draw that inference without the aid of the jury.
§ 463* Principal must act within a reasonable time. — ^The time
within which the principal must act in order to avoid the inference of
assent cannot be determined by any hard and fast rule, though num-
erous attempts have been made to declare one. Many cases assert that
the principal is bound to act "at once," "immediately," "promptly" or
"as soon as he can" upon receiving knowledge of the act ; *® but the
better rule, and the one supported by the weight of authority and rea-
son, is that which determines the matter by allowing a reasonable time
in which to decide and which draws inferences only after its expira-
• Amoni: the more recent eaflet see 62 Wash. 235; Smith ▼. Collins, dl
Dover V. Pittsburg Oil Co., 148 CaL
501; Owens Pottery Co. ▼. TurnbuU
Co^ 75 Conn. 628; Whitley v. James,
121 Ga. 521; Bau Claire Canning Co.
V. Western Brokerage Co., 213 Hi
561; Henderson v. Beatty, 124 Iowa,
163; Hartwell v. Loveland, 78 Kan.
259; Wheeler v. Citizens' Bank, 32
Ky. Ifc Rep. 989; Hiz v. Eastern S. S.
Co., 107 Me. 357; CUppinger v. Starr,
130 Mich. 468; Lowe v. Bens, 107
Minn* 562; Russell v. Waterloo
Thresh. M. Co., 17 N. Dak. 248; Min-
neapolis Thresh. Mach. Co. v. Hum*
phrey, 27 Okla. 694; Reid v. Alaska
Packing Co., 47 Greg. 215; Standard
Leather Co. v. Allemannia F. Ins.
Co., 224 Pa. 186; Keyes y. Union Pac.
Tea CO., 81 Yt 420; Ankeny v. Young,
0. C. ▲. 182, 165 Fed. 148;
!• Ward v. WllUams, 26 IlL 447, 79
Am. Dec. 385; Johnston v. Berry, 8
lU. App. 256; Pitts v. Shubert, 11 La.
286, 30 Am. Dec. 718; Kehlor v.
Kemble, 26 La. Ann. 713; Foster v.
Rockwell, 104 Mass. 167; Harrod v.
McDaniels, 126 Mass. 413; Crane v.
Bedwell, 25 Miss. 507; Bredin v. Du-
harry, 14 Serg. 4b R. (Pa.) 27; Kel-
sey V. National Bank of Crawford
Co., 69 Pa. 426; Williams v. Storm,
6 Cold. (Tenn.) 203; Fort v. Coker,
11 Heisk. (Tenn.) 579; Hart v. Dixon.
6 Lea (Tenn.), 836; Meister v. Cleve-
land Dryer Co., 11 111. App. 227; Man-
hattan Fire Ina Co. v. Harlem, etc.,
Co., 26 N. Y. Misc. 394; Bement t.
Armstrong (Tena.). 89 S. W. 899.
341
§' 463]
THE LAW OF AGENCY
[book I
tion.** What shall be deemed a reasonable time depends here, as in
other cases, upon the situation of the parties and the facts and circum-
stances of the case.^*
11 Mobile, etc., Ry. CJo. v. Jay, 65
Ala. 113; Central R. & B. Co. v.
Cheatham, 85 Ala. 292, 7 Am. St. K.
48; Gold Mining Co. v. Rocky Mt
Nafl Bank, 2 Colo. 565, afTd 96 U. S.
640, 24 L. Ed. 648; Breed v. Central
City Bank, 6 Colo. 235; King v. Rea,
13 Colo. 69; Lynch v. Smyth, 25
Colo. 103; Bray v. Gunn, 53 Ga. 144;
Booth V. Wiley, 102 111. 84; Connett
V. Chicago, 114 IlL 233; International
Bank V. Ferris, 118 111. 465; Miller
V. Stone Co., 1 111. App. 273; Terre
Haute, etc., Ry. Co. v. Stockwell, 118
Ind. 98; Farwell v. Howard, 26 Iowa,
881; Alexander v. Jones, 64 Iowa,
207; Clay v. Spratt, 7 Bush (Ky.),
334; Givens v. Cord, 44 S. W. 665,
19 Ky. Law Rep. 1898; Oliver v.
Johnson, 24 La. Ann. 460; Lafitte T.
Godchaux, 35 La. Ann. 1161; Ray-
mond V. Palmer, 41 La. Ann. 425, 17
Am. St. R. 398; Johnson v. Wingate,
29 Me. 404; Brigham v. Peters, 1
Gray (Mass.), 189; Heyn r. O'Hagen,
60 Mich. 150; Dana v. Turlay, 38
Minn. 106; Smith v. Fletcher, 75
Minn. 189; Meyer y. Morgan, 51
Miss. 21, 24 Am. Rep. 617; Swartz v.
Duncan, 38 Neb. 782; Alexander ▼.
Culbertson Irrigation Co., 61 Neb.
333; Wright v. Boynton, 37 N. H, 9,
72 Am. Dec. 319; Baldwin v. How-
ell (N. J.), 30 Atl. 428; Keim v.
Lindley (N. J.), SO Atl. 1068; Lyle
▼. Addlcks, 62 N. J. Eq. 123; Hamlin
V. Sears, 82 N. T. 827; Kelsey v. Na-
tional Bank, 69 Pa. 426; Reese ▼.
Medlock, 27 Tex. 120, 84 Am. Dec.
611; Higginbotham v. May, 90 Va.
233; Lynch v. Richter, 10 Wash.
486; Sareland v. Green, 40 Wis. 431;
Cooper V. Schwartz, 40 Wis. 54; Par-
ish y. Reeye, 63 Wis. 315; Hepburn
V. Dunlop, 1 Wheat (U. S.) 179, 4
L. Ed. 65; Law v. Cross, 1 Black (IT.
S.), 633, 17 L. Ed. 186; Gold Mining
Co. y. National Bank, 96 U. S. 640,
24 L. Ed. 648; Norris y. Cook, 1 Curt
(U. S. C. C.) 464; Abbe y. Rood, 6
McLean (U. S. C. C), 106; Lorio y.
North Chicago City Ry. Oo.> 32 Fed.
270.
On the other hand, in Mallory y.
Mallory Wheeler Co., 61 Conn. 131,
it is said: "Ratification ordinarily
requires some posltlye assertive act.
In order that acquiescence alons
should become ratification the delay
must be so long continued that it
can be accounted for only on the the-
ory that there has been some afllrm-
ative act. Town of Derby y. Ailing,
40 Conn. 410; Eyans y. Smallcombe,
Im R. 8 Eng. & Ir. App. 249.'* Com-
pare, however, Owens Pottery Co. v.
Turnbull Co., 75 Conn. 628.
"McDermid y. Cotton, 2 111. App.
297; Philadelphia, etc., R. K. Go. y.
Oowell, 28 Pena. St 329, 70 Am.
Dec. 128; Reese y. Medlock, 27 Tex.
120, 84 Am. Dec. 611.
Hoto information communicated. —
The information may come from tho
agent (Foster v. Rockwell, 104 Mass.
167), or the other party.
Information from letter, — Though
omitting to answer a written com-
munication is in general no evidence
of the truth of the facts therein
stated. Commonwealth y. Eastman,
1 Cush. (Mass.) 189; Fearing y. Kim-
ball, 4 Allen (Mass.), 126; Learned
v. Tillotson, 97 N. Y. 1; Canadian
Bank of Commerce v. Coumbe, 47
Mich. 358 (none of these bein;? a
case of agency); Irwin y. Buffalo
Pitts Co., 89 Wash. 346; yet the in-
formation as to the acts of the as-
sumed agent may be imparted to the
principal by letter as well as by any
other means. Foster v. Rockwell,
104 Mass. 167; Cooper v. Schwartz,
40 Wis. 54; Ruffner v. Hewitt 7 W.
Va. 585; Keim v. Lindley (N. J.),
80 Atl. 1063. See also Searing y.
Butler, 69 111. 576 ; Ward y. WilUams,
26 111. 447, 79 Am. Dec. 385; Kehlor
342
CHAP. VIlJ
RATIFICATION
[§§ 464, 465
Where commercial matters or fluctuating values or sudden exi-
gencies are involved hours or days may be as important as weeks or
months might be in other cases.**
§ 464. Same rule applies to private corporations. — ^And, as has
been seen, these rules apply as well to corporations within the scope of
their corporate powers as to individuals.**
"It seems to be now well settled," says Chief Justice Shaw, "since
the great multiplication of corporations, extending to almost all the
concerns of business, that trading corporations, whose dealings em-
brace all transactions from the largest to the minutest and affect al-
most every individual in the community, are affected like private per-
sons with obligations arising from implications of law, and from
equitable duties which imply obligations; with constructive notice,
implied assent, tacit acquiescence, ratifications irom acts and from si-
lence, and from their acting upon contracts made by those professing
to be their agents ; and generally by those legal and equitable consid-
erations which affect the rights of natural persons." ^^
§ 465. — ^— • And to municipal and quasi-municipal corpora-
tions.—The same rules as to ratification by acquiescence or retention
of benefits within the sphere in which they have power to act apply in
general also to municipal and gua^'-municipar corporations, although
from their nature, a ratification by acquiescence is not so readily to be
inferred as in the case of individuals or of private corporations."
Liability by ratification, however, cannot be established by acquies-
cence or informal acts in the face of express statutory requirements
V. KemblOp 26 La. Ann. 713; P!tt»-
burgh, etc., R. R. Co, v. WooUey, 12
Bush (Ky.), 461; Jennlson v. Parker,
7 Mich. 355.
isHaUoway v. Ajitansas City Mill-
ing Co., 77 Kan. 76.
i« Sheldon Hat Blocking Co. v.
Bickemeyer Hat Blocking Co., 90 N.
Y. 607; Kelsey v. National Bank of
Crawford Co., 69 Penti. St 426; Nut-
ting V. Kings Co. Elev. Co., 21 Api^.
IHt. 72; Kirwin y. Wash. Match Col,
37 Wash. 286; Clement v. Young-Mc*
Shea Amusement Co., 69 N. J. Bq.
347; German Say. Bank v. Dot
Moines Nat Bank, 122 Iowa, 737;
American Quarries Co^ v. Lay, 37
Ind. ApiK 386.
And the same rule applies to an
unincorporated association. SitT r.
Forbes, 63 N. Y. Misc. 319.
isMelledge v. Boston Iron Co., 5
Cush. (Mass.) 158, 51 Am. Dec. 59.
i« School District v. Aetna Ins. Co.,
62 Me. 330; /Chamberlain v. Dover,
13 Me. 466, 29 Am. Dec. 617; Davis v.
School DUtrict, 24 Me. 349; White y.
Sanders, 32 Me. 188; Fisher v.
School Diatrlct. 4 Cush. (Mass.) 494;
Bliss V. Clark, 16 Gray (Maas.). 60;
Johnaom v. School Corp., 117 Iowa»
ai9; Matheney v. Bl Dorado, 82 Kan.
720. 28 L. R. A. (N. S.) «80; Forrest
City V. Orgill. 87 Ark. 389; Roberts
▼. St. Marys, 78 Kan. 707; Chicago
▼. Nicholson, 130 111.' App. 466; Col-
orado Springs V. Colorado City, 42
Colo. 75; Gallup v. Liberty Co., 67
Tex. Civ. App. 175.
343
§§ 466, 467]
THE LAW OF AGENCY
[book I
that liability shall only be created in some express manner pointed out
by the statute.*^
§ 466. How when assumed agent is a mere strangier. — ^While it is
abundantly settled that acquiescence may result in the ratification of
the act of an agent, it has been much questioned whether the same re-
sult would follow if the person assuming to act for tht other was a
stranger. All of the authorities agree that the relations of the parties
have much to do in determining whether or not there has been a rati-
fication, but it is held by several of the courts that, when he who as-
sumes to act for another is not one sustaining to him the relation of an
agent but is a mere volunteer, no duty exists on the part of the other
to repudiate the act on its being brought to his notice, and that nothing
short of a positive affirmance will make it binding upon him. Thus it
is said in an Illinois case, "In general where an agent is authorized to
do an act and he transcends his authority, it is the duty of the principal
to repudiate the act as soon as he is fully informed of what has been
thus done in his name by the agent, else he wilt be bound by the act as
having ratified it by implication ; but where a stranger, in the name of
another, does an unauthorized act, the latter need take no notice of it,
although informed of the act thus done in his name, and he shall only
be bound by an affirmative ratification." " And this view is supported
by eminent judges and text writers.^*
g 467, The contrary view is also maintained by judges of
great ability. Thus it is said by Woodward, J., "If the party to be
charged has been accustomed to contract through the agency of the
individual assuming to act for him, or has intrusted property in his
keeping, or if be were a child or servant, partner or factor, the relation
conjunctionis favor would make silerice strong evidence of assent. On
IT Cook y. Cameron, 144 Mo. App.
1S7; Roemheld v. Chicago, 231 111.
467; Agawam National Bank v.
South Hadley, 128 Mass. 503.
18 Ward v. WUUams, 26 111. 447, 79
AsL Dec. 385, approved In Searing
y. Butler, 69 lU. 575.
^•Byans' Agency, 68; Llvermore'B
Agency, 9I 255, 258; Duer, Vol. TI,
151-154; Merritt v. Biflsell, 155 N. Y.
396; Britt v. Gordon. 132 Iowa, 431.
In Robbins v. Blanding, 87 Minn.
246« it l8 said: "A failure to disavow
the acts of a mere volunteer, who
meddlingly asaumes to act without
authority as the agent of another,
will not constitute a ratification.
But where a person in good faith as-
sumes to act as the agent of another
but without authority in fact, in any
particular transaction, the latter,
upon being fully informed thereof,
must, in cases where his silence
might prejudice the assumed agent
or innocent third parties, disavow
the act within a reasonable time, or
he will be held to have ratified it
As to such third persons it would
seem that the element of good faith
of the assumed agent Is not essen*
ttaL**
2H
CHAP. VIl]
RATIFICATION
[§ 468
the other hand, if there had been no former agency and no peculiarity
whatever in the prior relations of the parties, silence, — ^a refusal to
respond to mere impertinent interference, — would be very inconclusive
but not an absolutely irrelevant cir<iumstance. The man who will not
speak when he sees his interests affected by another must be content
to let a jury interpret his silence. It is a clear principle of equity that
where a man stands by knowingly and suffers another person to do acts
in his own name without any opposition or objection, he is presumed to
have given authority to do those acts. ♦ * * if mental assent may
be inferred from circumstances, sileiKc may indicate it as well as wofds
or deeds. To say that silence is no evidence of it is to say that thei*e
can be no implied ratification of an unauthorized act — or at the least
to tie up the possibility of ratification to the accident of prior relations.
Neither reason nor authority justifies such a conclusion. A man who
sees what has been done in his name and for his benefit, even by an
intermeddler, has the same power to ratify and confirm it that he would
have to make a similar contract for himself and if the power to ratify
be conceded to him the fact of ratification must be provable by the
ordinary means." ^
§ 468. — — — The true rule.— Keeping in mind that the question
in these cases is, not whether the silence is of itself a ratification, but
whether it is any evidence from which, in connection with other facts,
a ratification may be inferred, it is undoubtedly the better rule that
while the relations of the parties are very significant they arc not con-
clusive, and that even in the case of a mere stranger a ratification may
be established by the same kind of evidence that is admissible in other
cases, although the presumptions arising from acquiescence are much
stronger in a case where an agency exists than in the case of a
stranger.**
20 Philadelphia, etc., R. R. Co. T.
Cowell, 28 Pe&n. St. 329, 70 Am. Dec.
128.
21 Union Qo\d Mining Co. v. Rocky
Mt Nat Bank, 2 bol. 24S; Lynch v.
Smyth, 25 Colo. 103; Ladd v. Hllde-
brant, 27 Wis. 1Z5, 9 Am. Rep. 445;
Saveland v. Green, 40 Wis. 431;
Southern Ex. Co. v. Palmer, 48 Ga.
85; Ralphs t. Hensler, 97 Cal. 296;
Willianui ▼. Moore^ 24 Tez. Civ. App.
402; Harrod Y. McDanlels, 126 Mass.
418; Taylor t. Herron, 72 Kan. 652;
Uniontown Grocery Co. v. Dawson,
68 W. Va. 332, 23 Ann. Cas. (1912 B.)
148; 'Robblns v. Blanding, 87 Minn.
246; Greenfield Bank Y. Crafts, 4
Allen (Mass.), 447; Heyn y. O'Hagen,
60 Mich. 150. See also Hurley v.
Watson, 68 Mich. 531; Carson v.
CummingB, 69 Mo. 325; Dierks Lum-
ber Co. Y. Coffman, 96 Ark. 505.
In Merrltt v. Blssell, 155 N. Y. 396.
50 N. E. 280, it is said; "While it i»
the duty of a principal to disavow
the unauthorized act of his agent
within a reasonable time after it
comes to his knowledge, or, other-
wise, in some cases, he makes the
act his own, still, where one who has
assumed to act as an agent for an-
other has no authority to do so but
345
§§ 469-472] THE LAW OF AGENCY [bQOK I
§ 469. Silence does not ratify if stranger acts in his own
name. — ^Where, however, the stranger does not assume to act in the
behalf of the alleged principal but in his own name and behalf, the si-
lence of the alleged principal will not be evidence of a ratification of
the stranger's act.*'
§ 4yo. How when former agent continues to act. — Where
the person acting is a former agent whose authority has been revoked,
the principal who knows that he is still assuming to act must, it is held,
repudiate the authority or his assent will be inferred."
§ 471. Acquiescence coupled with conduct inconsistent with dis-
approval.—Many of the cases present evidence, not only of mere
failure to dissent, but also of that fact coupled with conduct inconsist-
ent with disapproval, as where the principal, with knowledge of the
facts, has not dissented, has found no fault, made no complaint and
entered no protest, but, on the contrary, has tacitly accepted the situa-
tion, condition, Obligation or restriction resulting from the act, and ad-
justed himself to it, acted upon it, entered upon its performance, and
the like. These cases, from their infinite variety of facts, do not lend
themselves readily to any precise rule. "It is sufficient to say that a
ratification will be implied from the conduct of the person, in whose
behalf another has assumed to act, clearly inconsistent with any inten-
tion other than a purpose to ?tdopt such act as his own." **
§ 472. Illustrations of ratification by acqaiescence.-^The cases in
which this principle has been applied are very numerous, but a few of
them are given here as illustrations of its nature and effect Thus
Is a mere volunteer, a failure to dls- Welch v. Brown, 46 Colo. 129; Cur-
avow his acts will not amount to a nane v. Scheidel, 70 Conn. 13; Kaf-
ratification, unless under such cir- fer v. Walters, 9 Kan. App. 2Sl;
cumstances as indicate an intention Gemberling v. Spaulding, 104 Mich,
to do so." 217; Blakley v. Cochran, 117 Mich.
As 'between the principal and the 394; Clipplnger v. Starr, 130 Mich.
alleged agent who claims compensa- 463; Singer Mfg. Co. v. Flynn, 63
tion for his act, it is said that the Minn. 475; GiUett v. WhiUng, 141
principal is not as to a mere N. Y. 71, 38 Am. St. Rep. 762; Wil-
Btranger, bound to dissent Kelly v. Hams v. Crosby Co., 118 N. C. 928;
Phelps, 57 Wis. 425. Fenn v. Dickey, 178 Pa. 258; Valley
22 Hamlin T. Sears, 82 N. Y. 327; Glass Co. v. American Ins. Co., 197
Garvey v. Janrls, 46 N. Y. 310, 7 Am. Pa. 254; Brown v. Wilson, 4$ S. Oar.
Rep. 335. 519, 55 Am. St. Rep. 779; McCulloch,
28Quinn V. Dresbach, 75 Cal. 159, etc., Co. v. Whitefort, 21 Tex. Civ.
7 Am. St. Rep. 138. App. 314; Roundy v. Erspamer, 112
2*0berne v. Burke, 50 Neb. 764. Wis. 181; Johnson v. Weed, etc., Mfg.
To like effect: Creson r. Ward, 66 Co., 103 Wis. 291; Fintel T. Cook, 88
Ark. 209; Smith v. Schiele. 93 Cal. Wis. 485.
144; Allln t. Williams, 97 Cal. 403;
346
CHAP. VIl] RATIFICATION [§ 473
where one in the presence of the principal sold the goods of the prin-
cipal as his agent without objection, the tacit consent of the principal
was presumed.** And where a son without authority exchanged his
father's horse for another with a near neighbor and the father, al-
though he saw the neighbor frequently, kept the horse so acquired and
used it as his own for about three months without expressing any dis-
sent, it was held that a ratification of the exchange must be presumed.*'
And so where a son assuming to act for his father, but without author-
ity, sold a half interest in his father's mowing and reaping machine,
and for two years thereafter the father and the purchaser used and
kept the machine in repair as joint owners, it was held that the father
could not complain that the sale was unauthorized.*' And so wher6 a
son who was left to manage his father's store was told not to buy goods
of the plaintiff, but did so from time to time, and the father knew that
the goods were being received and saw the boxes with the plaintiff's
name on them but gave no notice and made no dissent, there was held
to be clear evidence of ratification.*' So where an agent without
authority made a contract for the sale of land and notified his principal
of the fact, saying that he would also send a deed for execution which
he did some days later, and the principal made no objection, acknowl-
edged the receipt of the papers and said that he would return them as
soon as his attorney had examined them, it was held that there was such
evidence of ratification as would sustain the sale as against a later
repudiation.*"
§ 473. Again, where a note had been indorsed without au-
thority, but the principal afterwards wrote over the indorsement a
waiver of demand and protest, it was held that he had sufficiently
adopted the indorsement.*® So^^ where an agent without authority sold
the land of the principal to the knowledge of the latter, who made no
objections for more than four years, during which time the purchaser
had been occupying and improving the land, the principal was held to
have acquiesced in the sale.®^ So where a railroad company used and
partly paid for a quantity of material purchased by one assuming to be
«» Owsley V. Woolhoptcr, 14 Ga. 686; Sleeper ▼. Murphy, 120 lowa^
124; Glllfnger v. Lake Shore Traffic 1S2.
Co., 67 WU. 529. aoAllin ▼. Williams, 97 Cal. 403.
<» Hall V. Harper, 17 111. S2. So where the note had been altered
« Swartwout v. Evane, 37 111. 442. without authority. Montgomery v.
28Ro^ndy T. Erspamer, 112 Wis. CroBSthwait, 90 Ala. 558, 24 Am. St.
181. Rep. 832, 12 L. R. A. 140.
2» Dana v. Turlay, 38 Minn. 106. »J Alexander v. Jones, 64 Iowa, 207.
See also Stuart v. Mattern, 141 Mich.
347
§ 474]
THE LAW OF AGENCY
[book I
its agent, the purchase was held to be ratified ; '* and tinder like cir-
cumstances it was held that knowledge of the purchase on the part of
the company would be presumed.'' And where the president of a
railroad company, without authority, made a sale of property belonging
to the company, in part payment of a debt owed by it, and the fact of
the sale was communicated to the board of directors and talked over
publicly at one of their meetings, but they did nothing to disaffirm it,
it w.as held to be ratified.'* And where, after an accident, a conductor
employed a physician to care for an injured person and both the con-
ductor and the physician notified the general superintendent of such
employment, but the company gave no notice of dissent, it was held
that the employment was ratified.'^ And where an agent without au-
thority procured work to be done, and the principal on receiving the
bill objected to the amount of the charge but not to the work or the
authority to procure it, it was held that ratification might be inferred.^
So where the principal continues the prosecution of an action begun by
an agent, his approval of the action and of the steps necessary to in-
stitute it, may be inferred.*^
Other cases involving the same principle are cited in the note.'^
§ 474. ■ But, on the other hand, ratification is not to be found
without reason or presumed without cause. There must be confirma-
tory conduct, or at least conduct inconsistent with disapproval. Facts
are not to be stretched, or ambiguous, inconclusive or independent acts
made the basis of a ratification. Thus, where an unauthorized lease
had been given, but the principal formally repudiated it as $oon as
he lieard of it, the fact that he afterwards permitted the tenant to re-
•s Evans T. Chicago, etc, B. R. Co.,
26 111. 189.
•8 Scott v. Mlddletown, etc., Ry., 86
N. Y. 200.
See, also, that knowledge by the
corporation may be inferred from
length of time and general notoriety.
Central R. Co. v. Cheatham, 86 Ala.
292, 7 Am. St Rep. 48; Kelsey v. Na-
tional Bank, 69 Pa. 436.
8* Walworth County Bank v. Farm-
ers, etc, Co., 16 Wis. 629.
85Terre Haute, etc, R. Co. ▼.
StockweU, 118 Ind. 98.
88 HiU y. Coates, 84 (N. T.) Misc
535.
87 Cook V. Buchanan, S6 Ga. 760.
88 Schmidt ▼. Rankin, 193 Uo. 254;
WlUiams y. Merritt, 28 III. 623;
Bo*gel V. Teutonia Bank, 28 La. Ann.
953; Matthews v. Fuller, 123 Mass.
446; Marshall v. Williams. 2 Biss.
(U. S. C. C.) 255; Hanks v. Drako,
49 Barb. (N. T.) 186; Maddux v. Be-
van, 39 Md. 485; Farwell v. Howard,
26 Iowa, 381; Pittsburgh v. Woolley,
12 Bush (Ky.), 451; Lafltte v. God-
chaux, 35 La. Ann. 1161; Meyer v.
Morgiui, 51 Mi68. 21, 24 Am. Rep.
617; Hawkins v. Lange, 22 Minn.
557; Johnston y. Berry, 3 IlL App.
256; Marsh v. Whitmore. 21 Wail.
(U. S.) 178, 22 L. Ed. 482; Bfoyt v.
Thompson. 19 N. Y. 218; Law v.
Cross, 1 Black (U. S.), 533, 17 L. Ed.
185.
348
CHAP. VIl] BL\TIEICATION [§ 474
main from month to month at the rate fixed by the lease, and accepted
such rent, does not constitute a ratification of the lease.** And a rail-
road company will not be held to have ratified the unauthorized hiring,
by one of its station agents, of a person to assist in the detection of a
thief who had stolen property in the company's possession, merely by
reason of the fact that the company's regular detectives made use of
information, furnished by such person, which led to the detection and
arrest of the thief and the recovery of the property.** And so, where
the principal sent his agent to obtain a team and carriage from livery-
man P, but the agent procured them from O, and on the way back the
horses, while driven by the agent ran away and did injury, after which
O attached the horses to another carriage and took them to the prin-
cipal who used them, it was held that such use did not ratify the pror
curing of the first conveyance, so as to make the principal responsible
to O for the injury done.*^ And so where the foreman of a laundry,
without authority, employed a physician to attend 9ii employee injured
in the laundry, it was held that the principal, who expressed a willing-
ness to pay for the first visit but protested against further obligation,
did not thereby ratify the emplo3rment so as to become liable for the
whole.** So where one, acting as agent without authority, ordered
goods, upon the receipt of which the principal notified the seller of the
agent's lack of authority, and her readiness to return the goods, a sub-
sequent oflfer to take the goods at one-half of the price asked by the
vendor will not be a ratification.** So.whwe an agent sent to his
principal the copy of a written contract, entered into by the agent with-
out adequate authority, and the principal wrote a letter in reply, calling
attention to terms in the contract that he did not understand, asking
their meaning, and proposing that the agent endeavor to get better
terms, it was held that this was not sufficient evidence of ratification.**
So where an agent to make arrangements for the sale of his princi-
pal's goods had, without authority, undertaken to give a certain person
the exclusive right of dealing in the principal's goods in a given terri-
tory, the fact that the principal afterwards recognized that person as
one of an unlimited number having the right to sell goods in that ter-
ritory, did not amount to a ratification of the unauthorized agreement
*• Owens T. Swaaton, 25 Wash. ^z Holmes v. McAUlster, 123 Mich.
112. 493, 48 L. R. A. 396.
4« SomervtUe v. Wabash R. Ca, 109 ^s American Silk Label Mfg. Co. v.
Mich. 294. Wolf, 123 N. Y. Supp. 923.
41 Oglesby v. Smith, 88 Mo. App. «« Larson v. Newman, 19 N. D. 153,
67. 23 L. R. A. (N. S.) 849.
340
§ 475]
THE LAW OF AGENXY
[book 1
that he should have the exclusive right." Similar cases are cited i»
the note.*'
§ 475. Retaining in employment as ratification. — ^Whether a mas-
ter or principal, who retains in his employment a servant or agent who-
has committed an unauthorized act, thereby ratifies the act, especially
where that act was a tort committed upon a third person, has been dis-
cussed in several cases. It is often said that such retention, with
knowledge of the facts, is evidence of an approval of the act ; but it is
clear that the weight of it must, at best, vary greatly with the circum-
stances. The certainty of the facts, the nature of the offense, and the
question whether disapproval may not be shown as well or better by
some other means, should all be taken into account. Where there can
be no doubt that the servant has done a serious wrong which would
justify his immediate dismissal, his retention in employment, in the face
of such a fact, may be very strong evidence of approval ; but where the
fact of the wrong is doubtful — where, for example, a previously
trustworthy and competent servant plausibly denies that he was guilty
of the wrong alleged — or points to justifying circumstances — to retain^
him in his employment until the matter can be properly investigated
may be, not only no evidence of ratification, but simply, as was said in
one case, "an act of courageous justice." *^ And even where the serv-
ant was clearly in the wrong, it does not follow that the master, who-
has actively disapproved the act in other ways, necessarily expresses
his approval by not discharging the servant,** only where the circum-
stances are such as to reasonably warrant an inference of approval,,
should the matter be left to the jury, and then under proper instruc-
tions from the court, to determine the extent of the approval indi-^
cated.**
4B White Sewing Machine Co. t. ^^ See EVerlngham v. Chicago, etc.
Hill, 136 N. C. 128.
46 Chicago Cottage Organ Co. v.
Stone (Ark. no opinion), 73 S. W.
392; Findlay v. Hlldenbrand, 17
Idaho, 403, 29 L. R. A. (N. S.) 400;
McGowan v. Treacy, 84 N. Y. Supp.
497; Hale v. Goodell, 49 Colo. 95;
Thlel Detective Service Co. v. Sea-
vey, 145 Mich. 674; Bromley v. Aday,
70 Ark. 351; Fosb Inveetment Co. v.
Ater, 49 Wash. 44C; Craver v. House,
138 Mo. App. 251.
*f WUllamfl V. Pullman Car Co., 40
La. Ann. 87, 8 Am. St. Rep. 612.
48 Deacon v. Greenfield, 141 Pa. 467.
R. Co., 148 Iowa, 662, Ann. Cas. 1912
C. 848; Kwlechen v. Holmes, etc.,.
Co., 106 Minn. 148, 19 L. R. A, (N.
S.) 255; Woodward v. Kagland, &
App. Cas. D. C. 220; Smith v. Sibley
Mfg. Co., 85 Ga. 333; Grattan v.
Suedmeyer, 144 Mo. App. 719; Dil-
lingham v. Russell, 73 Tex. 47, IS-
Am. St. R. 753, 3 L. R. A. 634; Gulf,
etc., Ry. Co. v. Reed, 80 Te*. 362, 26
Am. St. R. 749; International, etc.,
R. Co. V. McDonald, 75 Tex. 41; Rob-
inson V. Superior, etc., R. Co., 94
Wis. 845, 69 Am. St R. 897, 34 U
R. A. 205.
350
CHAP. VIl]
RATIFICATION
[§§ 476, 477
^ 476. Rule as to ratification by acquiescence applies only to prin-
cipals.—The doctrine of ratification by acquiescence applies only to
the principals in the transaction, and cannot tlierefore operate to effect
a ratification upon the ground of the acquiescence of one of two joint
agents in the act of his coagent in which the former ought to have
joined in order to effectually exercise the power.*^
VI.
MANIFESTATION OF RATIFICATION.
§ 477. Manifestation of ratification necessary. — It is, of course,
oisually essential that the ratification be manifested in some way.
Treating it merely as assent, the fact of assent must still usually be
made manifest. A mere determination to approve, or a mere approval
kept for ever concealed in the principal's breast, can have no legal
effect. It must in some way appear, so as to be acted upon where
action is necessary, and must at least be capable .of being established
T>y the ordinary means of proof. "^ Where the other party is suing the
In Cobb Y. Simon, 119 Wis. 597,
100 Am. St. R. 909, it Is said: "Re-
tention of a servant In his employ-
ment after notice to the principal of
^ tort committed by the servant is
evidence of ratification of the act by
the principal. Bass v. C. ft N. W.
Hy. Co., 42 Wis. 6&4, 24 Am. Rep.
437; Robinson v. Railway Co., $u-
pra. The information to the prin-
cipal should be full and complete, in
order to justify the conclusion of
ratification on this ground. Patry
V. Chicago, etc., Ry. Co., 77 Wis. 218.
It is not essential that the informa-
tion should come from the plaintifC,
but, however it comes. It should be
more than mere Idle rumor, and
should be so convincing and persua-
sive as to convince the mind of an
ordinarily prudent employer that
the facts exist which call for the
servant's discharge. Any other rule
would necessitate the discharge of
faithful employees whenever their
<:onduct is assailed by irresponsible,
unfounded gossip, and such a rule
would be plainly unjust both to em-
ployer and eauployee. The question
35
is generally one for the Jury, in view
of all the information which came
to the employer."
But see the comments upon this in
Kwiechen v. Holmes, etc., Co^ and
in Bveringham v. Chicago, etc., R.
Co., supra, where it is said: "The
fact that an employee is retained,
after knowledge of a negligent act
for which the master is already
liable, is sometimes important as
bearing upon the right to recover
exemplary damages, and this is evi-
dently all the Wisconsin court in-
tended to hold in Cobb v. Simon."
w> Penn v. Evans, 28 La. Ann. 576.
See ante, 9 198.
*i**A ratification, though it must
be evidenced by external demonstra-
tions, is merely an act of the mind.
It is a volition or determination to
abide by and adopt the act of an*
other. The validity of a ratification,
where no act of another is founded
upon it, does not depend upon its be-
ing communicated." Bayley v. Bryant,
24 Pick. (Mass.) 198. See also Shef-
field V. Ladue, 16 Minn. 888, 10 Am.
Rep. 145.
§§ 47^> 479] ^^B ^^^ OP AGENCY [book 1
principal, in reliance upon the alleged ratification, he mast come pre-^
pared to establish the fact by legal evidence, which will usually be the
words or conduct of the principal having a tendency to prove it.
Where the mere fact of assent is to be proved, the other party may
doubtless, if he is able, establish it even by the reluctant admission of
the principal as a witness that he then approved it, without any out-
ward act.
When the principal, in reliance upon his own ratification, is suing the;
other party, he also, of course, must show that he has ratified. Usu-
ally the mere commencement of suit is a sufficient manifestation.**
Where, however, he relies upon a prior act, it must be an act mani-
fested. He could not, for example, rely upon a written document,
kept constantly in his own possession, and never given legal efficacy
by delivery." And where his purpose is to require an act of per-
formance by the other party, it would seem that notice of the ratifica-
tion must be brought home in some authentic way to the latter.
§ 478. To whom. — ^The persons to whom the ratification
must be manifested are, of course, usually the parties involved in the
transaction, or their agents for this purpose, though doubtless what is
said or otherwise manifested to third persons may often be competent
as evidence. Ratification by conduct will also often present different
aspects than express ratification. In a well considered case of the
latter sort before the Transvaal supreme court,*^ it was said by Innes,
C. J., "The plaintiffs' case is that there has been an express ratifica-
tion ; and it seems to me, on principle, that such ratification must be
addressed either to the agent or to the person with whom the agent
had dealings. All other persons are outsiders, and communications
addressed to them, with reference to the agent's conduGt, are res inter
alios acta."
VII.
PROOF OF THE RATIFICATION.
§ 479. Burden of proof. — Ratification is not a matter to be pre-
sumed ; it must be proved. And the burden of proof rests upon him
who alleges it."
MSoe Warder, etc., Oo. v. Cutli- s^Reld ▼. Warner, [1907) Tranev.
bert. 99 Iowa, 681; Bolton Partners v. L. R. 961.
Lambert, 41 Ch. Div. 295. »» Moore v. Ensley, 112 Ala. 228;
M See Dickinson v. Wright, 56 De Vaughn v. McLeroy, 82 Oa. 687;
Mich. 42; Baldwin T, Schiappacasse, Davis v. Talbot, 137 Ind. 2S6; Ser*
109 Mich. 170. . rant t. McCampbell, H Colo. 292;
35^
CHAP. VIl]
RATIFICATION
l§§ 480, 481
§ 480. Anxnmt of proof — Liberal interprctatien of factSw — No
rule can be laid down by which to detennine the aiTiount of proof re-
quired in this, any more than in other similar cases. It has been said
in several cases hereafter noted** that, as between the principal and
agent, the conduct of the principal will be liberally interpreted in favor
of ratification; and the rule has latterly been stated generally as ap-
plicable to all cases.*^ It is difficult to see any very satisfactory rea-
son for such a rule in any case. As between the principal and third
persons, the principal is under no obligation to ratify; there is no a
priori reason why he should be considered more at fault than the other
party who has trusted without discovering the agent's lack of author-
ity ; and it would seem that the case should be dealt with like any other.
Judge Story has, indeed, said that "slight circumstances and small
matters will sometimes suffice to raise a presumption of ratification,"
but that is no more true of ratification than of many other things.
§ 481. Court or jury. — ^Where written instruments of ratification
are to be construed^ the question is for the court. So, if the facts are
uiMiisputed and only one inference can reasonably be drawn from them,
the ^uestbn whether diey constitute ratification or not, is one of law
for the court ; but where the facts are in dispute, or where the infer-
ences to be deduced from them are. such that men may reasonably
differ concerning them, the question of ratification or not is for the
jury.*" This is especially true where ratification is sought to be im-
plied from conduct, or deduced from acts of alleged acquiescence.
Deaii T. Hln>» 16 Colol App^ 5S7;
Brown Y. Henry, 172 Mass. 669; Min-
ter V. Cupp, 98 Mo. 26; Detroit, etc.,
Ry. 00. ▼. Haiti, 147 Mich. 364; Hop-
klnB y. aartc 7 N. Y. App. Dlv. 207
(aTd 168 N. Y. 299); Sanfor4 t.
Fmintain, 49 Mtac. SOI; Reese v. Med-
lock, 27 Tex. 120, 64 Am. Dec. 611;
Llgtitfoot V. Horst (Tex. Glv. App.)>
122 S. W. 606; SWnrln v. O'Brien, 43
Tex. Civ. App. 1*
s« See post, { 498.
iT Carlson y. Stone-WellB Co., 40
Moat 434; Hartlore v. Fait Co., 89
Md. 264.
In Washington Savings Bank v.
Butchers/ etc, Bank, 107 Mo. 183, 28
Am. 8t. R. 406, it Is said on the an>
thority of MoraweU on Corporations)
that -where acts done in behalf of a
corporation are clearly beneficial to
it, ratification may be Inferred on
Blight evidence. Same: Davis t.
Neuccs Valley Irr. Co., 103 Tex. 243.
In Bement T. Armstrong (Tenn.
Ch.), 89 S. W. 899; McLeod v. Mor-
rison, 66 Waah. 683, 38 L. R. A. (N.
S.) 783; Trlggs v. Jones, 46 Minn.
277; it is said that less evidence Is
required to establish ratification as
between principal and third person
than as between principal and agent;
the rule is also not Infrequently said
to be precisely the opposite.
In Trustees, etc., y. Bowman, 136
N. Y. 621, It is said: "The proof of
knowledge of the facts should be rea-
sonably clear and certain, particular-
ly In a case like this, where, so far
as the record discloses no substantial
harm has come to the defendant
from the delay or the acta of the
principal." *
BsSwartwout v. Evans, 87 UL 443;
23
353
§§ 482, 483]
THE LAW OF AGENCY
[boojc I
Where the question is left to the jury, the court should properly in-
struct the jury as to what constitutes ratification, and what are the
methods by which it may be effected.'^*
VIII.
THE RESULTS OF RATIFICATION.
§ 482. What for this subdivision. — Having thus considered the
preliminary questions, it remains to determine what are the results of
a ratification made in conformity to the rules heretofore laid down
It is obvious that there are several parties whose rights and obligations
may be affected by a ratification, and we shall consider the question, —
I. In general. 2. As between principal and agent. 3. As between the
principal and the other party. 4, As between the agent and the other
party. '
1, In General,
§ 483. Usually equivalent to precedent authority. — ^By ratifying
the unauthorized act the principal assumes and adopts it as his own,
and as has been seen, this adoption extends to the whole of the act, — it
goes back to its inception and continues to its legitimate end. Subject
therefore to an exception to be immediately noticed, it is the universal
rule that as against the principal the ratification is retroactive and
equivalent to a prior authority ,•• or to use the language of a distin-
guished writer and judge, "No maxim is better settled in reason and
Trustees t. McCormlck, 41 111. 323;
Marine Co. v. Carver, 42 111. 66; Paul
y. Berry, 78 lU. 158; Henderson v.
Cummings, 44 111. 825; Pohl y. Daven-
port Malt Co., 46 111. App. 61S;
Stokes v. Mackay, 140 N. Y. 640;
Murray y. Mayo, 157 Mass. 248; Hop-
kins V. Clark, 7 N. Y. App. Dlv. 207,
(ard 158 N. Y. 299) ; Quale y. Hazel,
19 S. Dak. 483.
80 Morrin V. McNeill, 74 Neb. 291.
ttoPleckner v. Bank of U. S., 8
Wheat (U. S.) 338, 6 L. Ed. 631;
Cook V. Tullis, 18 Wall. (U. S.) 332,
21 L. Ed. 933; Despatch Line v. Bel-
lamy Mfg. Co., 12 N. H. 206, 37 Am.
D«c. 203; Clealand y. Walker, 11 Ala.
1058, 46 Am. Dec. 238; McMahan ▼.
McMahan, 13 Penn. St. 376, 53 Asi.
Dec. 481; Daughters of American
Reyolution v. Schenley, 2f04 Pa. 572;
Pearsons v. McKibben, 6 Ind. 261, 61
Am. Dec. 85; Wood y. McCain, 7 Ala.
800. 42 Am. Dec. 612; Planters* Bank
y. Sharp, 4 Smedes ft M. (Miss.) 76,
43 Am. Dec. 470; Starks v. Sikes, 8
Gray (Mass.), 609, 69 Am. Dec. 270;
Goss y. Steyens, 32 Minn. 472; United
States Express Ca y. Raw son, 106
Ind. 216; Bronson y. Chappell, 12
Wall. (U. S.) G81, 26 L. Ed. 486;
Lawrence y. Taylor, 5 Hill (N. Y.),
107; Lowry y. Harris, 12 Minn. 266;
Hanklns y. Baker, 46 N. Y. 666; Ham-
mond y. Hannin, 21 Mich. 374, 4 Am.
Rep. 490; Mclntyre v. Park, 11 Gray
(Mass.), 102, 71 Am. Dec. 690; Lonis-
yille, etc., Ry. Co. y. McVay, 98 Ind.
391, 49 Am. Rep. 770; Cassldy y. Sa-
line Co. Bank, 14 Okla. 532; Welker
y. Appleman, 44 Ind. App. 699; Grif-
fith y. Stewart, 31 App. D. C. 29;
Hlckox y. Fels, 86 HI. App. 216;
Garten y. Trobridge, 80 Kan. 720.
354
CHAF. VIl]
RATIFICATION
[§484
law than the maxim amnis ratihabitio rttrotrahitur, et maiidaio priori
equiparatur; at all events where it does not prejudice the rights of
strangers." *^
"The ratification operates upon the act ratified precisely as though
the authority to do the act had been previously given, except where the
rights of third parties have intervened between the act and the ratifica-
tion." •* And this rule applies as well to corporations as to individ-
uals.**
It has been seen also, that the principal cannot avail himself of the
benefits of the act and repudiate its obligations.** Having with full
knowledge of all the material facts ratified, either expressly or im-
pliedly, the act assumed to be done in his behalf, he thenceforward
stands responsible for the whole of it to the full extent to which tlie
agent assumed to act, and he must abide by it whether the act be a
contract or a tort,** and whether it results to his advantage or detri-
ment.**
§ 484. Scope and duration. — ^Ratification, by its very na-
ture, is naturally and normally retroactive. It does not ordinarily cre-
ate agency or give authority for the future. It usually presents itself
as a matter of the approval of some particular act or transaction al-
ready done or happened. It is, moreover, ordinarily confined to that
particular past act only, and does not affect prior unauthorized acts
not connected with that one ; •^ but there would seem to be no reason
why — ^granting sufficient knowledge — ^there may not, by the ratification
of a particular act, be approval of prior acts naturally and usually
connected with it, or why even subsequent acts closely following and
naturally connected may not be included. There would seem also to
be no reason why the ratification of even a single past act may not be
so full and comprehensive in its scope as to amount either to a general
•1 Story, J., in Fleckner v. Bank,
aupra,
fl2 Field, J., in Cook v. TnlUs, supra.
M Planters* Bank v. Sharp, $upra ;
Despatch Line v. Bellamy Mfg. Co.,
Bupra; Leggett r. N. J. Mfg. and
Banking Co., 1 Saxt Ch. (N. J.) 541,
23 Am. Dec. 72S; Frankfort S. T. Co.
V. Churchill, 6 T. B. Monroe (Ky.),
427, 17 Am. Dec. 159; EJverett v.
United States. 6 Port. (Ala.) 166, 30
Am. Dec 584.
S4Ant€. § 410.
•ftCooley on Torts, 127.
a«Wood V. McCain, supra; Demp-
sey V. Chambers, 154 Mass. 880, 26
Am. St. R. 249, 13 L. R. A. 219.
«T In Baldwin v. Burrows, 47 N. Y.
199, it Is said: "Although such rati-
fication [here ratification of specific
acts] is, as to the act specifically rati-
fied, equivalent to a previous author-
ity, it is not retroactive to the extent
of binding the principal for other
acts in excess of the authority of the
agent, though the principal might
have been bound for such other un«
authorized acts, if they had been
done under color of a previous au-
thority actually given."
355
§§ 48s, 486]
THE LAW OF AGENCY
[book r
declaration of agency or at least to raise an estoppel as to the future.
As has been already seen, inferences of audiority may arise from the
approval of acts already done, and estoppels may arise from apparent
acquiiesecince in such acts.^^
Where an apparently general or continuing agency has been estab-
lished in thjs way, it would, as in other cases, presumptively go on
imtil notice of its termination.®*
It is, however, to be kept in mind, that ratification is merely con-
firn>atory. It does not make a new contract, nor change the existing
one in question. It must be taken as it exists, and if, for reasons other
than lack of authority, the contract is not good, ratification will not
help it^'*
§ 485. ■■■ '■■ ■ May be so treated in pleading.— So completely is
ratification regarded a^ equivalent to prior authority that it is generally
held not necessary to expressly plead it as such :. it may be shown tm-
der the general allegations that the act was done or the contract 'made
for the principal or by his agent, and the li]fiie»^^
§ 486. Cannot affect intervening rights of third peii?i0iiA.<^Until
ratification the principal has not been a party to the tranaaction. Al«*
though done in his name, the act has no binding force as to him until
he sanctions it. And akhough in ordinary cases the ratification ex-
tends back to the beginning and operates upon all that haa aince been
done, yet it is obviously just and reasonable that where prior to his
ratification,— before he has given his sanction, — third persons have in
good faith acqtured such substantial rights or have been placed in such
position in reference to the same transaction that they will be preju-
diced by such retroactive eflFect, the ratification should not be allowed
to overreach and defeat those rights. And such is the rule of law.
The intervening rights of third persons cannot be defeated by the rati-
fication. If prior to the ratification the principal has put it out of his
«s"Aa unautkorixed act may be
made to operate by ratification as an
estoppel upon the person in wboee
behalf it was done." Steffens v. Nel-
son, 94 MiAn. 866.
««Hartj>0A V. Reiibsamen, 19 Misc.
Ii9.
TO See Atlanta Buggy Go. v. Hess
fiprlBg and Axle Co., 124 Qa 63^, 4
L. B. A. (N. S.) 431.
TiGkwtz v. Ooldbaum (Cal.), 37
Pac. 646; Blood t. La Serena L. ft
W. Co.» 113 CaL 321 ; Smyth v. Lynch*
7 Colo. App. 383; Long t. Osborn, 91
Iowa, 160; Johnston v. Milwaukee,
etc., Co., 49 Neb. ^ 68 N. W. 888.
UU90uri. — In Lipscomb v. Talbott,
243 Mo. 1, 147 S. W. 798. it is said:
"The rule seeme to be, in this Juris-
diction (whatever it may be gen-
erally), that if a party reliea oa rati-
fication, he should tender such fosue
in his pleading," citing Wade v.
Hardy, 75 Mo. at p. 399; Noble y.
Blount, 77 Mo. p. 242; Loving Ca v.
Cattle Co., 176 Mo. p. 353-354; Mc-
Clanahan v. Payne, 86 Mo. App. p.
292.
356
CHAP. .Vll]
RATIFICATION
{§486
power to perform the contract ratified, by conveying the subject-matter
thereof to a thini person who took the same in good faith/' or if third
parties have in good faith acquired an estate or mterest in, or a lien or
claim xx^n the subject-matter by attachment, garnishment, judgment
or qtheryf'mfij'* ^hf se rights cannot be cut 00 at the mere volition of
the prtneipal.^^ Nor will the principal by ratifying be permitted to
impose ^i^stantial duj^es or obligations upon third persons which would
not exist if ratification had not taken place.
nifcCracken t. City of San Fran-
ciBco, 16 CaS. 691; Bord^nre v. Den* '
106 CaL 594 (attempt to ratify a
prior iQase, made by aa agent, so as
to cut oft one griven by the prin-
cipal) ; McDonald v. McCoy, lai Cal.
^; dendemilag v. Hawk, 10 N. Dak.
90.
T3ln Wood V. McCain, 7 Ala. 800,
4Z Am. Dec. 612, it was held that,
after a prineiQal's creditor baa served
garnishment process upon the prin-
clpal's debtor, the principal could
not, by ratification of a prerious ua-
authoriEBd aavignmeoi ff t^ ^\m,
defeat the rights of tl^^ garnisheelni^
creditor. Norton v. Alabama Nat.
Bank, 102 Ala. 420, and Dalton Buggy
Go. T. Wood, 7 Ga. App. 477, are atf
tachment casea of the same type.
In Taylor v. Robinson, 14 Gal. 396,
an agent to coHect, without authority
recelYed the tabtorls eood9 tn satis-
faction of the pHnelpal's claim. It
was held that, after the property had
been levied upon as that of the
debtor, the principal could not by
ratification dotait the rights under
the levy. Pollock ▼. Cohen, 32 Ohio,
514, Is a case ot the same kind. See
also Hartmaa 9teel Co» ▼. Hong, 104
Iowa, 269.
See the dispu^slon of the question,
not decided, aa to who is entitled to
avail himself of the rule, in Llndauer
V. Meyberg, 27 Mo. App. 181.
Subs^uent ratification by a mar-
ried man, of an unauthorized con-
veyance of land while he was ua-
married, cannot cut ofC wife's right
of dower. Britt v. Qordon, 132 Iowa,
431.
74 Flake r. Holmes, 41 Me. 441 (In
a #uit upon aa aocount, defi^idants
could not upon the trial, by ratify-
ing a previous unauthorized pay-
ment made on their behalf, so de-
stroy the plaiatiCs cause of action
as to put costs upon him) ; Parmelee
V. Simpson, 72 tJ. S. (5. Wall.) 81,
18 L. Ed. 542 (where a deed was
executed and put upon record, in thd
absence aad ii^norance of the grantee,
he could not ratify the delivery and
the recording so as to hold the land
freo from a mortgage executed and
recorded after the recording of the
doed, but before ratification) ; Stod-
dard's case, 4 Ct. CI. 511 (an agent
in the south, to eollect claims and set-
tle up the business of a northern prin-
eipal, made an unauthorized purchase
of cotton with his principars funds;
but before any acts of ratification oc-
curred, the civil war broke out and
the goods were seized by the United
States; ratification after that was
too late; the United States stood in
the position of a creditor with an
Intervening attachment) ; Cook v.
Tunis, 85 U. S. (18 Wall.) 332, 21 L.
Ed. 933 (suit by trustees in bank-
ruptcy to recover a note and a mort-
gage which, without authority, the
bankrupt had substituted for prop-
erty belonging to the defendant in
his hands. After the failure but be-
fore the adjudication of bankruptcy,
the defendant had learned of and
ratified the substitution. The re-
covery is denied upon the ground
that, until the adjudication of bank-
ruptcy, the insolvent is free to deal
with his property, so long as he re-
357
§§ 487, 488]
THE LAW OF AGENCY
[boor I
No case has been discovered dealing with the rights of a mere heir
or personal representative, but if all that the unratified act amounts to
is a mere offer, it doubtless would hot affect them.
What would be held in any of the cases above referred to under the
English doctrine in Bolton Partners v. Lambert," that there is some
sort of a conditional contract created, seems not to have been discussed.
§ 487. Defenses, conditions, rights of cancellation.' — ^The
doctrine of the preceding section has also been applied, in a number
of cases, to prevent the loss by third persons, through the principal's
ratification, of existing defenses against liability, conditions affecting
liability, rights to escape liability, and the like. Thus, for exam{de»
where an agent has obtained a policy of insurance for his principal,
and later, without the authority or knowledge of the principal, has as-
sumed to surrender that policy and take another in its place, — the latter
containing the usual provision that it should be void in case of undis-
closed prior insurance — it has been held that, after a loss has occurred
before the principal has consented to the surrender of the first policy,
the principal cannot by the ratification of such surrender deprive the
second company of its right to make the defense of other insurance.*'*
§ 488. Law of what place governs. — ^Where the act is done or tlie
contract is made at one place, while the act of ratification occurs at
another, interesting questions arise as to the place whose law is finally
to control. Where an agent does not assume to make a binding con-
tract, but is known only to solicit orders or proposals which must go
.to his principal in another place for acceptance or approval, — as in the
familiar case of the "commercial traveler" — the contract ordinarily is
deemed to be made where the acceptance or approval is given."
But where the agent purports to make a present, binding contract,
though without authority, and that contract is subsequently ratified,
the logic of the doctrine of ratification requires that the coi^tract be
held good as of the time and place of its original negotiation. As said
celves a fair value for what lie trans-
fers, and that, until the adjudication,
the trustees acquire no right to con-
trol any specific property).
7B See post, § 676.
TO See Johnson v. North British Ins.
Co., 66 Ohio St 6; Hartford F. Ins.
Co. V. McKenzle, 70 111. App. 615;
Larsen v. Thuringia Am. Ins. Co.,
108 111. App. 420, alTd 208 111. 166.
TTKling V. Pries, 83 Mich. 275;
Tegler T. Shipman, 33 Iowa, 194, 11
Am. Rep. 118 j Keiwert v. Meyer, 62
Ind. 687, 30 Am. Rep. 206; Claflin T.
Meyer, 41 La. Ann. 1048; State Mut
F. Ins. Co. T. Brinkley Stave ft Head-
ing Co., 61 Ark. 1, 64 Am. St. R. 191,
29 L. R. A. 712; De Bary v. Souer,
101 Fed. 425, 41 C C. A. 417; Sar-
becker v. State. 65 Wis. 171, 66 Am.
Rep. 624. Compare Wilson v. Lewis-
ton Mills Co., 150 N. Y. 314, 65 Am,
St. R. 680: Ivey v. Kern County
Land Co., 116 CaL 196.
358
CHAP. VII ]
RATIFICATION
[§§ 489* 490
in one instance, "In case of a contract made in a foreign country, by
an agent without authority, which the principal at home afterwards
ratifies, the contract is considered as made in that foreign country, be-
cause the ratification relates back tempore et loco, and is equivalent to
an original authority." " Other courts, however, have said that the
unauthorized contract, though in form complete, was, in effect, only
an offer or proposal inoperative until the principal assented, and that
. therefore the contract was made where such assent was givenJ*
§ 489. Ratification irrevocable— -Changing repudiation to ratifi-
cation.— ^As has been seen, the principal upon being fully informed of
the unauthorized act of one assuming to be his agent has the right to
elect whether he will ratify such act or not ; but when he has once ex-
ercised this right the election is final. If therefore he adopts the act,
even for a moment, it is said, he adopts it forever, and he will not be
allowed, at least where the rights of other parties may be affected
thereby, to revoke his ratification.^
With respect of repudiation the rule seems to be somewhat different.
Though the principal at first disa^rove, he may, it is held, afterwards
change his disapproval to an afiirmance,^^ though doubtless not where
such a change would prejudice rights or actions .based upon the pre-
vious rejection."
2. As Between Principal and Agent.
§ 490. In general. — ^The general result of a ratification has already
been stated. It is now to be considered what special results ensue
TsDord ▼. Bonnaffee, 6 La. Ann.
663, 54 Am. Dec. 673. To like effect:
GolBon y. Ebert, 62 Mo. 260; In re In-
surance Co.. 22 Fed. 109; Compare
Flndlay t. HaU. 12 Ohio, 610.
7» Shuenfeldt y. Junkermann (C.
Ct.), 20 Fed. 857. In In re Insurance
Co., rupra, it is said that the court
in the Shuenfeldt case "strained the
rule to uphold the contract and pre-
yent the success of an unfair pro-
ceeding."
80 Jones y. Atkinson, 68 Ala. 167;
Whitiield y. Riddle, 78 Ala. 99;
Smith y. Cologan, 2 T. R. 188n;
Clarke y. Van Reimsdyk, 9 Cranch
(U. S. C. C), 153; Hazelton y.
Batchelder, 44 N. T. 40; Brock y.
Jones, 16 Tex. 461; Beall v. January,
62 Mo. 434; Sanders y. Peck, 87 Fed.
61, 80 C. 0. A. 680; Hnnter y. Oohei
84 Minn. 187; Kirkpatrick y. Pease,
202 Mo. 471; Mutual Anto Acces-
sories Co. y. Beard, 69 Miac. 174;
Lutjeharms y. Smith, 76 Neb. 260.
81 Woodward y. Harlow, 28 Vt 338;
Neely y. Jones, 16 W. Va. 626, 37 Am.
Eep. 794; Warder, etc., Co. v. Cuth-
bert, 99 Iowa, 681; Sloan y. Johnson,
20 Pa. Super. 643; Pickles y. West-
ern Assur. Co., 40 Noya Scotia, 827.
«« See Warder, etc., Co. y. Cuthbert,
eupra. Where an agent without au-
thority has sold land of which the
purchaser takes possession and
makes improvements, and the prin-
cipal on being informed refuses to
approye whereupon the buyer aban-
dons the land, the principal cannot
subsequently ratify and enforce the
contract Wilkinson y. Harwell, 13
Ala. 660.
359
§§ 491. 492]
THE LAW OF AG£NCY
[booic I
affecting the mutual rights and obligations of the principal and the
agent. It will readily be seen that these results are of great conse-
quence to the agent. Whether he was an agent who had exceeded the
authority conferred upon him, or whether he was a mere stranger with
no semblance of authority at all, his acts were not bifiding upon the
assumed principal. He had undertaken to act for another from whom
he had no authority at all, or with authority insufficient to justify the
act assumed to be done, and he would himself be liable either to the
parties to whom he had failed to bind the principal, or to titat prmcipal
for damages occasioned by exceeding the authority with whidi he was
invested. From this dilemma, however, the ratification ordinarily re-
lieves him. Thenceforward the principal assumes the responsibility of
the transaction with all of its advantages and all of its burdens.
§ 491. Gcfheral cfiFcct of ratification — Releases agent from liabil-
ity to principal. — The general rule, between the principal and the
agent, therefore is, that by such ratification the principal absolves the
agent from all re^onsibility for loss or injury growing out of the un-
authorized transaction,^ and also, as will be seen, gives the principal
the same claim to benefits, and to the agent the same right to compensa-
tion, reimbursement and indemnity, that they would respectively have
had, if the act had been previously authorized.
§ 492. Limitations.^— While, as has been stated, it is ordi-
narily true that the ratification by the principal not only perfects the
relations between the principal and the third person, but also releases
the agent from liability to the principal, the latter consequence does
not invariably follow. Thus, for example, it is possible that the prin-
cipal may, as to third persons, be held to have ratified because of delay
in disaffirmance, when that delay was not unnecessarily of unreasonably
caused by his efforts to ascertain from his agent the real state of the
case ; his delay as pointed out in one case may have been ''induced by
the assurances or persuasion of the agent himself ;" •* the principal
MSee Lunn v, Guthrie, 116 Iowa,
601; Wann v. Scullin, 235 Ma 629;
Aetna Ins. Go. v. Sabine, 6 McLean
(U. S. G. C.), 393, Fed. Cas. Na 97;
OBborzhe v. Durham, 157 N. Gar. 262;
Bray v. Gunn, 53 Ga. 144; Clay v.
Spratt, 7 BuBh (Ky.), 834; Ward v.
Warfield, 8 La. Ann. 468; Flower v.
Downs, 6 La. Ann. 538; Oliver v.
Johnson, 24 La. Ann. 460; Towle v.
Stevenson, 1 Johns. (N. T.) 110;
Calrnes v. Bleecker, 12 Johns. (N.
Y.) 800; Skinner v. Dayton» 19 Johns.
(N. Y.) 513, 10 Am. Dec 286; Vianna
V. Barclay. 3 Cow, (N. Y.) 281; Green
V. Clark, 5 Dea. (N. Y.) 497; Hazard
V. Spears, 4 Keyes (N. Y.), 469;
Hanks v. Drake, 49 Barb. (N. Y.)
186; Woodward T. Suydam, 11 Ohio»
360; Piokett v. Pearsons, 17 Vt 470;
Courder v. Ritter, 4 Wash. C. C. 649,
Fed. Cas. No. 3,282.
M ThuB In Trlggs v. Jones, 46 M!nn.
277, an agcat had been given a deed
360
CHAP. VIl] RATIFICATION [§ 493
may have relied, until it was too late, upon the untrue reports or rep-
resentations of the agent; or the principal may, in reasonable en-
deavours to extricate himself from the dilemma in which the agent's
tmauthorized act has placed him, and to save himself and all parties
from unnecessary loss, have done acts which, as to third persons, might
be construed as ratification, but which it would be very unjust to con-
strue as an approval of the act 'so far as the agent himself is con-
cerned.®*
It is also possible, of course, that the principal may, at the express
or implied request of the agent, have proceeded with the transaction
so far as the other party is concerned, for the purpose of saving the
agent from loss, and without waiving or intending to waive his claim
against the agent There may also be cases in which the principal,
&r the purpose of saving gfreater loss, has performed the contract with
the other party, and in wktch, while the agent may not be liable to the
principal, the agent should not be allowed to recover compensation or
commissions for the unauthorized act.
§ 493.. ■■ So where the agent, in violation of instructions, has
bound the principal to third parties, the fact that the principal performs
or recerves performance so far as the odier party is ccmcermd, is not
such a ratification as will release the agent from his UabUity to the
principal for his breach of duty.** And where the principal in such a
to deliver only when a certain oer* th€ pnvduunr's cwmiilalnt offlered to
pomtiott flbould be organlaetf and vobstitute another machine^ the prin-
shares of stoek In it delivered to the eipal was anowed to treat the agent's
agent for the principal, but the agent vnanthoriaed delivery as a conver-
made an lesmediate ahaolute delivery sion and to reoover the valne ot the
of the deed, the principal was allowed machine from the agent
damages against the agent, although See also Goodale v. Middaugh, 8
he had heaped in the sahsequent at* Colo. App. 22S; White y. Sanders, 32
'tempts to organize the oorporation, Ife. IBS; Paeile Vinegar, ete.. Works
and had fiUled to repudiate the ▼. Ihnith, 152 Oal. 507.
transaction for so long a time that sain Mechanios' ft ftaders' Ins.
the court thought that, as to the Oo. v. Rion (Tenn.), 62 8. W. 44, an
grantee^ he should have been held to agent who bad been instructed to Is-
a ratification, and that the property ne no policy upon a particular risk,
had already been mortgaged to a did issue such a policy, and before
bona fide purchaser. the principal's letter in reply to the
» See also iuite, % 440. agent's report, ordering cancellation
In Brown ▼. I^Mter, 137 Mich. 86, of the policy was received, the loss
In which an agent had made a sale occurred. The principal settled with
of a machine upon the condition, not the insured and received the prem-
authorised by his principal, that the ium from the agent, liie court said
machine might be returned If the that this was not a ratification of the
purchaser should not find it satis- ageat^i act In disobeying instruc-
iactory, and the principal had upon tlons, that in as much as the agent
361
x
/
^
^
§§ 494, 495]
THE LAW OF AGENCY
[book I
case has performed to the other party as he was bound to do, the fact
that he demands, or sues to recover, from the agent, who has received
it, the fruit of the correlative performance of the other party, does not
amount to a ratification or release the agent. It does not belong to the
agent, giving it up does him no wrong, the other party is not entitled
to it, it belongs to the principal, and his recovery of what is thus his
own is no ratification of the original wrongful act of the agent which
was the cause of the principal's unwarranted liability."
§ 494. Methods of ratification^ — With reference to the
methods by which the principal may ratify, what has been said in the
preceding subdivision, with reference to the methods of ratification ia
general, applies here as well as where the principal and the third per-
son are involved. Thus, there may be express ratification, or implied
ratification by taking the benefits of the act '* or bringing suits to en-
force it,*^ while the rule, which deduces a ratification from the piind*
pal's failure to dissent when informed of an unauthorized act, has
often been thought to find its clearest exemplification in the cases in
which the question arose between the principal and the agent.**^
§ 495. Ratification of entire act. — ^Here also the general
rule so fully discussed in the preceding subdivision applies that the
principal cannot ratify a portion of an entire act and reject the resi-
had the power to bind the principal
upon the contract, the principal was
bound and his perfoimance of the
contract and claim to the benefits
incident to it, concerned only the re-
lation between the principal and the
insured.
Where an agent is authorized to
sell goods on credit but up to a oer*
tain amount only, and he sells and
gives credit for more than that
amount, taking the buyer's notes,
the fact that the principal seeks to
collect upon the notes, does not re-
lieve the agent Pacific Vinegar A
Pickle Works v. Smith, 162 Oal. 507.
Where an agent, having authority
to lend money, lends it upon a pro-
hibited kind of security, the mere
fact that the principal recognises
it SB a valid loan to the borrower,
does not relieve the agent from lia-
bility if the money be lost by reason
of the defective security. Bank of
St Mary's v. Calder, 8 Strob. (B.
Oar.) 408.
«T In Continental Ins. Co. v. Clark,
186 Iowa, 274, an insurance agent
had issued a policy at a rate of prem-
ium lower than the company al-
lowed, and the loss occurred before
the insurance company had been in-
formed of the issuance of the policy.
The company paid the claim made
by the insured and demanded of the
agent the premium which the in-
sured had paid. The suit was
against the agent by the company to
recover for the loss which the com-
pany had suffered through the issu-
ance of the policy, and it was heid»
that there was no ratification of the
agent's wrongful conduct either in
the demand for the premium or the
fact that the premium was again
claimed in the declaration*
«s See antt, I 434.
8«See ante, { 446.
•0 See ante, %l 469, 460.
362
CHAP, VI I ]
RATIFICATION
[§§ 496^ 497
due.** But even under this rule the approval of one unauthorized act
does not necessarily carry with it the ratification of a further act, fol-
lowing after but not an inseparable consequence of the prior one. Thus
where an agent without authority had collected money for Ws principal
and applied it to his own use, it was held that an action by the prin-
cipal against the agent to recover the money, while it might operate as
a ratification of his collection of it, did not necessarily amount to an
approval of his retention of it.®*
§ 496. ' Knowledge of the facts. — Here, as in other cases,
the ratification must have been made with full knowledge of all the
material facts, or with the equivalent thereof within the rules already
discussed.** If the agent has kept back or suppressed any such facts,
the tatifieation of the principal made kk ignorance of them is no defense
to the agent.** And even if the agent communicate to his principal
all the facts known to him at the time, but if afterwards it. turns out
that the facts so commumcatfiid vd^nt not the real facts of the ease, the
agent is not relieved by a ratification made under such a misapprehen-
sk>n,** although the facts and cirounistances may have been innocently
concealed or inadvertently misrepresented.*® In such a case the as-
sumed condition is not that claimed to have been ratified.
§ 497. ^ Agent's motives unimportant* — ^The motives of the
agent in the transaction are of no importance. If he has deviated from
his duty he becomes liable to his principal for such losses as are the
direct and natural consequences of such deviation, whether his motives
•1 See ante, | 410.
•sSchanz v. Martin, 87 Misc. 492.
Same effect: Knowlton v. School
City, 75 Ind. 103.
So In Bank of St Mary's v. Calder,
3 Strob. (S. a) 403, it Is lield that
where an agent's power to lend
money la clear, a recognition of the
loan as between the principal and
the borrower does not necessarily
amount to a ratification of the
agent's act in taking insufficient se-
curity.
The principal by suing the agent to
secure moneys collected by him
without authority does not ratify the
act but on the contrary repudiates
It. Holland Coffee Co. v, Johnson, 38
Misc. 187.
•3 See ante, S 3S8 et seq,
A principal who recalveB knowl-
edge of facts indicating a breach of
duty by his agent and who suspects
him of it, while the transaction is
still executory and he can then pro-
tect himself, will not be permitted to
then proceed to consummate the
transaction and sustain a loss, and
afterward recover damages from the
agent. Bartelson y. VanderhofT, 96
Minn. 184 (quoting Thompson v.
LIbby, 36 Minn. 287; Ballard v. Nye,
138 Cal. 588).
«4Bell v. Cunningham, 8 Pet. (U.
S.) 69, and cases last cited; Bank of
Owensboro v. W^estern Bank, 13
Bush (Ky.), 526, 26 Am. Rep. 211.
(^BBank of Owensboro v. Western
Bank, supra; Bank of Commerce y.
Miller, 105 111. App. 224.
»« Vincent v. Rather^ 31 Tex. 77, 98
Am. Dec 516.
363
§§ 49^5^1] "^HE LAW OF AGENCY [bOOK 1
were good or bad ; and he is only released from such liability where the
principal with full knowledge of all the material facts ratifies such
departure from his duty.'^
§ 498. Act8 erf ratificatiOfi libetatty con8tnibd.--^The con-
duct of the principal will, it is often said, be liberally conUrued in favor
of the agent in effecting a ratification, especially if the alleged agent
was already an agent for some purpose and not a mere stranger.** On
the other hand, as has been pointed out, it is often said that the rule is
not so liberal in favor of the agent as in favor of third persons.**
There is really no reason for liberality tti either c^se. It should be
merely a matter of making fair and reasonable iftferences under the
circumstances.
§ 41^. Ratification at appointment of siibagent.*^If the
agent without authority has employed a dubagent, the ratification will
embracfe the appointment and acts bi the subagent.^
§ 500. Cives agent claim iigaiiittt priticipod for oompMsaticn mnA
reimbursement. — On the other hand, an tsiqualified ri^cation gives
the agent in general the same rights agaltist the pdncipal which he
would have had if the act had originally been amhortted. The agent
may therefore claim ccmpensatioti for the performance of the act,* or
demand reimbursement for outlays,* in the same w^y and to tile same
extent as any duly authorized agent.
§ 501. Entitles {Mincipal to benefits as agaiast agent-— And not
only does the principal by ratifying assume liabiiky to the agent, but
the agent also is liable to the principal like an authorized agent The
J^TBank of Owensboro v. Western » United States Mortgage Co. v.
Bank* supra, Henderson, 111 tnd. 24; OosB v. Stev-
es Szyznanski Y. Plassan, 20 Ia. ens, 32 Mina. 472; Nesbitt ▼. Hesler,
Ann. 90, 96 Am. Dec. 3S2; Flower v. 49 Mo. 888; Gelatt ▼. Ridge, 117 Mo.
Jones, 7 Martin (La.), N. S. 143; 553, 38 Am. St. Rep. 683; Wilson v.
Johnson v. Carrere, 45 La. Ann. 847, Dame, 58 N. H. 392; Beagles ▼. Rob>
13 So. 195; Terrll y. Flower, 6 Mart ertson, 135 Mo. App. 806.
(La.) 0. S. 583; Ck)dwise ▼. Hacker, Many other cases of the same sort
1 Gaines (N. Y.), 526; Byrne v. will appear in the chapter upon
Doughty, 13 Oa. 46; Plummer v. Brokers, particularly real estate
Knight, 156 Mo. App. 321. See also broket*8.
Carlson v. Stone, etc., Co., 40 Mont « Frixione v. Tagllaferro, 10 Moore
434; Hartlove v. Fait Co., 89 Md. 254. P. C. 175 (where it is held that if
AS See ante, S 480. the agent has incurred expenses in
1 Elggleston v. Boardman, 37 Mich, departing from his authority and the
14, 20; Blantin v. Whitaker, 11 principal afterwards ratify such de-
Humph. (Tenn.) 313; Sheldon v. parture, the agent is entitled to be
Sheldon, 3 Wis. 699; Hornbeck ▼. reimbursed for the expenses so in-
Gilmer, 110 La. 600; Bellinger v. curred).
Collins, 117 Iowa, 178; Nichols y.
Berning, 37 Ind. App. 109.
i64
CHAP. VIl]
RATIFICAtrON
[§§ 50^504
prificipal is therefore etttWcd to the benefits and profits of the tt^nskt-
tion and to all of the advafitages which would flow ffom an atithotized
performance, and can compel ah atcotirittng therefor from the Agent *
He miy recover from the agent property or money i^ceived from Hht
other party by virtue of the transaction ratified ; * and ifter ratification
the ag^nt may flot f eturn to th^ other party money or property so re-
ceived : if he does so, he is liable for it to the principal.*
5. As between Principal and the Other Party.
§ 502. In general.— The question of the effect of ratification as be-
tween the principal and the other party to the transaction involves two
aspects: a. What are the rights of the other party agaoBSt'the princi-
pal based upon the ratification? b. What rights does the principal by
his own ratification acquire against the other party to the transaction
ratified? Each of these also may be considered from the standpoint
of actions based upon contract or sounding in tort
a Otb^ Fatty Agaiist Prineipak
§ 503. What eontriderations ihvolved.--The aspect prfeseMed when
the othei* party is seeking to ettfotee rights agaitist th^ principal, based
upon his ratification of att unauthorized act, is the typical one. In this
field, the doctrix5(e of ratification had its origin. Here if has full sway.
The great majority of the cases upon the subject i*rvofy^ fh*s form of
it Two general classes of cases are found : those involving some kind
of liability in Cofttract and tho^e based upon tort.
§ 504. z. In contract. — ^Where a contract has beeii made 1^ one
person ifi the name 6l another, of a kind that the latter might lawftf ly
make himself and the only defect is the lack of authority on the part
of the person acting, the subsequent ratification of thttt Contract, white
still in tfcat condition, by the person on whose behadf it was made and
who is fully apprised of the facts, operates to cure that defect and to
establish the contract as his contract as though he had atithof ized it in
^Starks v. Sikes, 8 Gray (Mass.),
609, 69 Am. Dec. 270; Hormann y.
Sherln, 6 S. D. 82; Montgomery v.
Pacific Coast Laad Bureau, 94 Cal.
284, 28 Am. St. Rep. 122; Conant v.
Rlseborough, 139 111. 383; Roller v.
man, 68 W. Va. 340; White v. Cooper,
3 Pa. St 130; Walters v. Bray (Tex.
Spilmore, 13 Wis. 26; Siers y. Wise-
Civ. App.), 70 8. W. 443.
There can not be ratification un-
less the act was done as agent, but
there may perhaps be a trust estab-
lished. See Garvey y. Jarvis, 46 N.
Y. 310, 7 Am. Rep. 335 (no ratifica-
tion and no trust) ; Virginia Pocha-
hontas Coal Co. y. Lambert, 107 Va.
368, 122 Am. St R. 860, 13 Ann. Cas.
277 (no ratification but trust).
ft Hormann y. Sherin, supra; Snow
y. Carr, 61 Ala. 363, 22 Am. Rep. 3;
Miltenberger y. Beacom, 9 Pa. St. 198.
e Montgomery y. Pacific Coast
Land Bureau, supra.
36S
^§ 5oSj 5<^I the law of agency [booic- i
the first instance. From this time on, he is subject to all the obliga-
tions that pertain to the transaction in the same manner and to the
same extent that he would be lud the contract been made originally by
him in person, or by his express authority. The other party therrfore
may demand and enforce on the part of the principal the full perform-
ance of the contract entered into by his agent.^ If the c(Hitract of the
agent was tainted or procured by fraud, the principal by ratification
assumes responsibility for the fraud.' Statements or admissions made
or knowledge possessed by the agent which would charge the principal
if the agent had been previously authorized will charge him after the
relation has been established by ratification." It is unnecessary to cite
instances of this. What has been or may be hereafter said of the ob-
ligations of the principal, applies as well to one who became such by
ratification as to one who was such by original agreement. *
§ 505. In order that these results shall ensue, however, it is
essential, as has been seen, that the contract shall have been made on
account of the person ratifying, and that he shall have had full knowl-
edge of the facts.^^ The attempted contract must 4^9 stiU continue,
for there must be something to ratify ; it must still be capable of per-
formance on both sides, for clearly the other party cannot call upon the
principal to perform when performance of his own correlative obliga-
tion has become impossible ; and the attitude of the parties must have
remained unchanged, for the principal cannot be compelled to assume
relations to new parties to any greater extent than the contract origi-
nally contemplated.
§ 506. 2. In tort. — ^The doctrine of liability by ratification in tort
cases is abundantly established- Indeed this seems to have been the
earliest form of it. By whatever methods the act be adopted and ap-
proved in accordance with the rules already discussed, the principal
7 No attempt is here made to 10 Although the plaintiff may not
gather together the cases upon this be able to prove ratification with
subject. They will be found under knowledge of a particular term of
every head in the preceding sections, the contrart, still if the law would
8 See National Life Ins. Co. v. otherwise supply a term he may re-
Mlnch, 53 N. Y. 144; Elwell v. Cham- cover upon that basis, e. g,, although
berlin, 31 N. Y. 611; Smith v. Tracy, plaintiff cannot show ratiftcatlon of
36 N. Y. 79; Lane v. Black, 21 W. Va. a term fixing delivery of goods sold
6lt'; and many other cases cited at a certain time, he may neverthe-
ante, § 411. less recover for not delivering within
• Lampkin v. First Nat Bank, 96 a reasonable time. Langlands Foun*
Ga. 487; Haas v. Sternbach, 156 111. dry Co. v. Worthington Pumping
44. Compare Smith v. Savings Eng. Co., 22 Victoria L. R. 144.
Bank, 1 Tex. Civ. App. 116.
366
CHAP. VIl]
RATIFICATION
I§5o6
becomes liable for the tort as though he had previously directed it.^*^
And it is not always necessary that the approval shall look to the par-
ticular act. In the case of master and servant, for example, if the
approval, with knowledge, establishes the relation, the master becomes
responsible for any torts committed within its scope for which he would
have been responsible had the relation been regularly created. As
said in such a case,*^ "The ratification goes to the relation and estab-
lishes it ab initio. The relation existing, the master is responsible for
torts which he has not ratified specifically just as he is for those which
he has not commanded, and as he may be for those which he has ex-
pressly forbidden."
In the case of principal and agent, also,- the principal who ratifies the
act is not only, as has been seen, affected in the enforcement of the
contract by the instrumentalities through which it was procured,*' but
he also becomes personally liable for such of the frauds, misrepresen-
tations and deceits of the agent, and for those only, which would, un-
der similar circumstances and in like forms of action, impose liability
upon the principal of a previously authorized agent.**
" Saunderson v. Baker, 2 W.
Black. S32, S Wlls. 809; Wilson t.
Tumman, 6 M. A G. 236 (dictum):
Buron t. Denman, 2 Exch. 167; East-
ern Counties Railway Co. v. Broom,
6 Exchequer 314; Bishop v. Monta-
gue, Croke, Bllz. 824; Exum v. Bris-
ter, 36 Miss. 391; Dempsey v< Cham*
bers, 154 Mass. 330, 26 Am. St. R.
249, 13 L. R. A. 219; Gulf, etc., Ry.
Co. T. Donahoe, 66 Tex. 162; Murray
T. Lovejoy, 2 Clifford (U. S. C. jC.),
191, s. c. 70 U. S. (8 Wall.) 1, 18 L.
Bd. 129.
II In Dempsey v. Chambers, 154
Mass. 330, 26 Am. 8t Rep. 249, 13 Ii.
R, A. 219, a volunteer delivered
coal which the plaintiff had ordered
of the defendant, and broke a win-
dow in making the delivery. The
defendant, with full knowledge of
the accident, presented and collected
a bill for the coal so delivered. In
an action in tort to recover for the
breaking of the glass It was held that
the ratification accomplished through
accepting the benefits of the unau-
thorized act established the relation
•f master and servant ab initio and
made the defendant liable in tort as
principal.
18 See ante, § 411.
14 It Is true that statements ap-
parently to the contrary- are some-
times met Thus Keefe v. Shell, 181
Pa; 90, is sometimes cited as hold-
ing the contrary, but It in fact does
not It was an action of trespass for
deceit which could be maintained in
Pennsylvania against any principal
only upon a showing of some partlci*
pation or knowledge on the part of
the latter, as the case of Freyer ▼.
McCord, 165 Pa. 539, cited by the
court, had previously held. In the
case at bar, even if there were otI-
dence of ratfficntlon, there was no
evidence of knowledge of the misrep-
resentations, and therefore in ac-
cordance with the Pennsylvania doc-
trine the action could not be main-
tained.
Garrett Co. v. McComb. 58 N.
Y. App. Div. 419, is also some-
times cited, but that case is easily
distlnp'nishable. It does not appear
that the person who made the repre-
sentations purported to act as agent.
3^7.
§ so?}
THE LAW OF AGENCY
[BOOK I
Ratification in tort cases is a distinct gain to the <^er party, giving
him a remedy against the principal while not depriving him of his
remedy against the wrongdoer himself."
§ 507. Unique character of doctrine. — ^Although the doc-
trine of rat^cation is established in these cases, it is none the less
tmique and striking. As stated by Justice Holmes, in a case in Mass-
achusetts already cited: ^* **If we were contriving a new code to-day,
we might hesitate to say that a man could make himself a party to a
bare tort, in any case, merely by assenting to it after it bad been com-
mitted. But we are not at liberty to refuse to carry out to its conse*-
quences any principle which we believe to have been part of the com-
and If not there could be no ratifi-
eation. Hamlin v. Sears, 82 N. Y.
327. But even if there could be rati-
fication, the representations were
held not to be such as would impose
liability upon the principal of am au-
thorized agent Lansing v. Cole^ian,
58 Barb. 611; Smith v. Tracy, 86 N.
Y. 79.
T>Bj v. Building Ass'n, 96 Ya. 484,
also sometimes cited is an Incan/clu-
sive case apparently proceeding upon
the same theory as Kee€e v. Shell,
Libel. — In Penn. Iron Works v.
Voght Maeh. Co. (Ky.), 9S S. W. 551,
where an agent in the course of hi»
employment wrote a letter purpos-
ing to divert business from the plain-
tM, a competitor, to the defendant,
and in It made many libelous charges
agalAst the plaintiff, the defendant
was held, by its acquiescence and Its
failure to repudiate the libelous
terms of the letter, when it had full
knowledge of them, to have ratified
the publication, so as to be liable for
them.
Slander. — ^In* Lindsey v. St Louis,
etc., Ry. Co., 95 Ark. 534, it was held
that the defendant railroad corpora-
tion was not liable for an alleged
slander by a person whose general
act was alleged to have been ratified,
but with nothing to indicate ap-
proval of the particular slander, be-
cause under the rule adopted in that
state (contrary to the rule prevail-
ing in some others, see Rivers t.
Yasoo, etc., Ry. Co., 90 Miss. 196, 9
L. R. A. <N. S.) 931; Elmpire Cream
Separator Co. v. De Laval Dairy Co.,
75 N. J. L. (46 Vroom) 207; Hypes
V. Southern Ry. Oo., 82 S. C. 315, 21
L. R. A, <N. ^y 873, 17 A^p. Caa.
620), a corporation cannot be held
liable for slander "unless it author-
ised, approved or ratified the act of
the agent in uttering the pi^rtieular
slater."
Ue«rjif,— In Nye v. Swan, 49 Minn.
431, where a^ a^ont authorized to
buy lands wltb his princlpars mcmey
had loaned the sftoney without au-
thority, and taJcen and deliveped to
his principal a deed of lands abso-
lute in form but really intended aa a
security for the n^ney loaned, it
was held that though the principal^
if he accepted the deed* must do so
subject to the right to redeem, he
did not thereby become responsible
for the agent'9 unknown act of de*
mending usurious interest in the
transaction. Had the agent made the
loan with authority, the principal,
it was said, would not have been lia-
ble for unautheriised and unknown
usury. Jordan v. Humphrey, 31
Minn. 496. On this question, see
post, Book IV, Chap. V.
15 See po8t, § 546.
16 Dempsey v. Chambers. 154 Mass.
330, 26 Am. St R. 249, 13 L. R. A.
219, 9upr<k
368
CHAP. VIl] RATIFICATION [§ 507
mon l*w, simply because the grounds of policy on which it must be
justified seem totis to be hard to find, and probably to have belonged to
a diflEerent state of society. It is hard to explain why a master is lia-
ble to the extent that he is for the negligent acts of one who at the
time really is his servs^nt, acting within the general scope of his em-
{rfoyment Probably master and servant are 'fained to be all one per-
son' by a fiction which is an echo of the patria potestas and of the Eng-
lish fr^pk pledge.^^ Possibly the doctrine of ratification is another
asp^t of the same tradition. The requirement that the act should be
done in ti)e name of the ratifying party looks that way.^* The earliest
instances of liability by way of ratification in the English law, so far
afi w« have noticed, were where a man retained property acquired
through the wroiigful act of another.^* But in these cases the defend-
ant's aasent was treated as relating back to the original act, and at an
early date the doctrine of relation wa^ carried so far as to hold that,
where a trespass would have been justified if it had been done by the
authority by whidi it purported to have been done, a subsequent rati-
fication might justify it also.** This decision is qualified in Fitzhpr-
bert'a Abridgement •* and doubted in Brooke's Abridgement ; ^* but it
has been followed or a|>proved so continuously, and in sp many later
cases, that it would be hard to deny that the common law was as there
stated by Chief Justice Gascoigne.**
"If we assume that an alleged principal by adopting an act which
was unlaw&d when done can make it lawf lU, it fcdjows that he adopts
it at iit$ peril, and is liable if it should turn out that his previous com-
mand would not have justified the act. It never has been doubted that
a nian's subsequent agreement to a trespass done in his name and for
his benefit amounts to a command so far as to make him answerable.
The ratihabitio mandate comparatur of the Roman lawyers and the
IT Citing Byington ▼. SiniMoa, U4 «> Citing Y. R 7 Hen, IV. 34, pi. 1.
Mass. 169, 170, 45 Am. Rep. 814; ti Citing Pita Alur. Bayllye, pi. 4.
Fltz. Abr. Corone, pL 438. t2 citing Bro. Abr. Trespass, pL 86.
IS Citing New England Dredging .2s Citing Oodbolt, 109, 110, pL 129 ;
Co. T. Rockport OraHite C«., 149 Mass. a a 2 Leon. 196, pL £46; Hull ▼.
SSI, S82; Fuller ft THmwen's Ctfe, % PickersglU, 1 Brod. ^ Bing. 282;
Leon. 215, 216; Sext Dec. 5, 12, De Muskett v. Drummond, 10 B. ft C.
Reg. Jur., Reg. 9; D. 4G, 16, 1, S 14 153, 157; Biiron v. Deaman, 2 Bsch.
gloss. See also cases next cited. 167, 188; Secretary of State in Coun-
19 Citing Y. B. 80 Bd. I, 1, 128 cil of India v. Kamacbee Boye Sah*
(Rolls Bd.) ; 88 Lib. Ass. 228, pi. 9; aba, 18 Moore, P. C. 22, 86; Chaetham
8. a 88 Ed. Ill, 18, Engettement de v. Mayor of Manchester, L. R. 10 C.
Garde. See Plowd. 8 ad. fin., 27, 31; P. 249; Wiggins Y. United States, 3
Bract fol. 158b, 159a, 171b; 12 Ed. Ct of CL 412.
IV, 9, pi. 23.
24 369
§So8]
THE LAW OF AGENCY
[book I
earlier cases ** has been changed to the dogma aequiparatur ever since
the days of Lord Coke.*** Doubts have been expressed, which we need
not consider, whether this doctrine appHed to the case of a bare per-
sonal tort.** If a man assaulted another in the street out of his own
head, it would seem rather strong to say that, if he merely called him-
self my servant, and I afterwards assented, without more, our mere
words would make me a party to the assault, although in such cases
the Canon law excommunicated the principal if the assault was upon
a clerk.'^ Perhaps the application of the doctrine would be avoided
on the ground that the facts did not show an act done for the defend*
ant's benefit.'* As in other cases it has been on the ground that they
did not amount to such a ratification as was necessary.** But the Ian*
guage generally used by judges and text- writers, and such decisions
as we have been able to find, is broad enough to cover a case like die
present when the ratification is established." ■•
b. Principal Against the Other Party.
§ 508. What considerations involved. — ^Where, however, instead of
the ordinary case wherein the third person is endeavoring to hold the
principal on the ground of the latter's ratification of the act, the prin-
cipal takes the initiative and attempts, by means of his own ratification,
to build up and enforce affirmative rights against the other party, dif-
ferent considerations apply. Does the doctrine of ratification work
both ways? May the principal avail himself of it for his benefit as
well as the other party ? It will be convenient to discuss this question
14 Citing D. 46, S, 12, I 14; D. 4S,
16, 1. § 14; Y. B. 80 BSd. I, 128.
t9 Citiag 4 Inst 317. See Bro. Abr.
Trespass, pi. 113; Co. Lit 207a; Win-
gate's Maxims, 124; Com. Dig. Tres-
pass, C. 1; Eastern Counties Railway
V. Broom, 6 Bxch. 814, 326, 327; and
cases hereafter cited.
2« Citing Adams v. Freeman, -9
Johns. (N. T.) 117, 118; Anderson
and Warberton, JJ., in Bishop v.
Montague, Cro. Bliz. 824.
ST Citing Sext. Dec. 6, 11, 23.
"Citing Wilson v. Barker, 1 Nev.
ft Man. 409; 0. a 4 B. & Ad. 614 et
seq,; Smith v. Lozo, 42 Mich. 6.
20 Citing Tucker v. Jerris, 75 Me.
184; Hyde v. Cooper, 26 Vt 652.
so Citing Perley v. Georgetown, 7
Gray, 464; Bishop v. Montague, Cro.
Bliz. 824; Sanderson ▼. Baker, 2 BL
832; s. a 3 Wils. 309; Barker v. Bra-
ham, 2 Bl. 866, 868; s. 0. 3 Wlls. 368;
Badkin v. Powell, Cowper, 476, 479;
Wilson T. Tumman, 6 Man. & G. 236,
242; Lewis v. Read, 13 M. & W. 834;
Buron v. Denman^ 2 Sxch. 167, 188;
Bird v. Brown, 4 Exch. 786, 799;
Eaatem Counties Railway v. Broom,
6 Exch. 814, 326, 327; Roe v. Birk-
enhead* Lancashire 4b Cheshire junc-
tion Railway, 7 EUch. 36, 41; Ancona
Y. Marks, 7 H. A N. 686, 695; Condit
V. Baldwin, 21 N. Y. 219, 225, 78 Am.
Dec. 137; Exum v. Brister, 35 Miss.
391; Galveston, etc.. By. v. Donahoe,
56 Tex. 162; Murray y. Lovejoy, 2
Cliff, 191, 195; see Lovejoy v. Mur-
ray, 3 Wall. 1, 9« 18 L. Ed. 129; Story
oi;i Agency, |§ 455, 456.
370
CHAP. VIl]
RAXIFiCAJiON
Ii§ S09> 510
under the three heads of (1) contracts, (2) tofts, and (3) other acts
creatingf rights or duties.
§ 509. I. In contract — ^May principal ratify and enforce imau-
thori^ed contract?— ^Whcfe the contract made by an unauthorized
agent involves mutual acts of performance, the other party who, in
reliance upon the principars ratification, has called upon the latter to
perform or who has accepted performance from him, must also assume
resxKmsibffity for the duties of perfbrniance whfch the contract Im-
poses upon^.himself ; and there can he no doubt that the principal who
has thus performed or stands ready to perform in pursuance of such a
demand, may require the other party to perform on his part.**
But where acts are to be done upon but one side only and that the
other side, or where the acts first due are those of the other party, or
where acts of performance are contemporaneously doe, — may tlie as-
sumed principal who deems the contract advantageous to himself vol-
untarily come forward, declare his approval, pTomise or tender per-
formance on his side, as the contract may require and insist upon
performance by the other party? If so, within what'tiitie and subject
to what conditions?
§ 510. ■ Before the principal has acted, the matter stands in
this condition : Here is what was intended to be and what purports to
be, not an option or an offer, but a contract between parties. One of
these parties — ^the principal — ^is not bound by it, or, at least, he may
repudiate all liability." Is the other party bound ? What is the con-
sideration for his promises ? Where is the mutuality ? May he with-
draw ? If he is not then bound, may the principal approve the contract
and, without any further act or assent on the part of the other, hrfd
the latter to its performance? If the other party, before tfie principal
has acted, discovers the lack of authority and expressly dissents^ may
he still be held if the principal is willing to ratify?
«i See Soames v. Spencer, 1 Dowl.
St Ry. 32; Hammond v. Hannln, 21
Mich. 374, 4 Am. Rep. 490; Andrews
V. Aetna I* Ins. Co., 92 N. Y. 59(S;
24 American Law Review, 5S0.
92 How when agent guarantees
performance by the principal. — In
Weiseger v. Wheeler (1861), 14 Wis.
101, it was held that, where the
aarent personally guaranteed that the
alleged principal would perform the
contract, the other party when sued
by the principal cannot defend npon
the ground of the agent's lack of au-
thority. "The respondents," said
Dixon, CL J., "are in no position to
take advantage of an original want
of power on the part of [the agents]
to execute the agreement as agents
of the appellants,, if such want of
power were shown. At the time of
its execution [the agents] guar-
anteed its performance by the appel^
lants as their principals, and upon
that guaranty the respondents must
be presumed to have acted.'*
37X
§§ 5IIf 512] THE LAW OF AGENCY [bOOK I
Or, again, suppose that, before the princifiat has intervened, the other
party and the agent have consented to undo what has been done ; may
tlie principal nevertheless ratify and enforce the contract?
These questions have recently aroused nwch interesting discussion **
though the cases which are directly in point are comparatively few.
It will conduce to convenience to dispose of the questicxi last sug<-
gested first.
§ 52 1. If agdnt and other party have previoualy consented to can-
cel the contract-^Before the principal has intervened to ratify the
contract, may the agent and the odier party consent to cancel it in
such wise as to prevent subsequ«>t ratification? If the contract were
an authorized one, of course the agent could n9t cancel it, but it ta as
yet unauthorized. The agent here is usually an interested party. If
he has made a contract without authority, he CH'dinarily incurs a per-
sonal liability. Suppose then that» having made a contract in good
faith which he believed he hail authority to make, he discovers that he
had no such authority : may he go to the other party, explain the situa-
tion, and, widd the latter's consent, undo what has been done at least
so far as to release the agent? This question seems not to have been
adjudicated, but there would seem to be na doubt that such a release
could be given4
§ 512. ■■ ■ ■ But may the agent and the other party by their con-
sent release the latter from a^y future liability to the principal? Mr.
Whart6n has e^ressed the view, relying upon certain German authori-
ties, that thib may not be done.^^ But the English courts seem to hold
that it may be. Thus where a former agent without authority had
pitid a clebt for his former principal, but afterwards and before the
latter had mttfied it went to the latter's creditor and requested him to
return the money, which he did, and then sued the principal, it was
held that the latter could not by ratifying avail himself of the payment
in defense.** ''Prima facie'' said Kelly, C. B., '*we have here a rati-
fication of the payment by the defendant's plea ; but whether the pay-
ment was then capaWe of ratification depends on whether previously
it was competent to the plaintiff and Southadl [the agent] , apart from
the defendant, to cancel what had taken place between thefn. I am
of opinion that it was competent to them to undo what they had done.
The evidence shows that the plaintiff received the money in satisfac-
M See, for example, note, 5 Am. St. < Whartoa on Principal and
R. IS^O; 24 Aflnericaa Law Review, Asent, $ 77* citing Scuff. Archiv.
680; 26 American Law Review, 74; XIV, pp. 210, 211; Windscheid, Pan-
9 Harvard Law Review 60; 86 Ameri- dektenrecht, ( 74.
can Law Review, 864. >& Walter v. James, L. R., 6 BSxcIl.
124.
27^
CHAP. VIl] RATIFICATION [§§ 513, 514
tion tmder the mistaken idea that Soutiiall had authority from the de*
f endant to pay him. This was a mistake in fact, on discoyering which
he was, I think, entitled to return the money, and apply to his debtor
for payment If he had insisted on keeping^ it, the defendant might
at any moment have repudiated the act of Southall, and Southall would
then have been able to recover it frcfm the platntiff 4s money reoeived
for SouthalKs use. I am, therefore, of opinion that the plaintiff, who
originally accepted this money under an entire misapprehension, was
justified in returning it, the position of the parties not having been in
the meanttme in afiy way altered, and that the defendant's plea of
payment fails."
So in a New York case it was held that a person who had volun-
tarily procured insurance for Jfiis own and another's benefit might, be-
fore the latter had tafified the act, cancel or surrender the prficy.
"So long as th6 option of the owner of the goods to adopt or reject
the policy cootinues^ so loqg must the absolute control of the agent
over the policy remain." ••
§ 513. If the oth^ party ha« attempted to wiftdraw from the
contract. — May the other party, before ratification, withdraw from the
contract 7 If it be a contract, he may break it but be can not withdraw
from ft. If ft be not a contract, biH an option or ati offer, he may
withdraw his offer at any time before its acceptance, at least where it
was not under seal or given for a consideration* Where the other
party thought it a cofitttict, it is difficult to see how it can be regarded
as a mere offer. If, on the other hand, he knew or believed that the
agent had no authority to make the contract, and that ratification was
therefore necessary, it would not be so difficult.
The discussion of this question, in view of the cases actually decided,
is so interwoven with other aspects, that it seems desirable to postpone
it for a Ifttle.
§ 514. If agent and other party have don* nothing to cimcel the
contract.^ — ^Returning now to the other question, where no such act of
the agent has intervened, what is the right of the principal to ratify
and enforce the contract against the other party? Conceivably the
otlier party in the meantime may have remained passive, or he may,
before or after the principal's attempted ratification, have himself
SB Stillwell V. Staples, 19 N. Y. 401. ^ant of such aiifeority, would ren-
rn Mason v. Caldwell, 10 111. 196. der the proferted agent personally
48 Am. Dec. 330, it is said: "If a liable, flucii contract may be adopted
person professing to act on behalf of by the princliNa while it is still in
another, but without authority, en* force as between the professed agent
ters Into a contract which, for the <M*tf the other party.**
373
§ SIS]
THE LAW OF AGENCY
fsOOK I
sought to escape the ccMitract. So far as the adjudicated cases go upon
this question, they represent three distinct views which will now be
considered.'^
g 515. ........^ The Wisconsin cases.— The earliest cases involving
this precise question arose in Wisconsin,^ and that court has denied
that ratification alone can in such a case suffice to charge the other
party. Referring to the general principle that subsequent ratification
87 This discussion, of course, pre-
supposes that there is evidence of
ratification sufficient in form. Thus,
where ratification under seal is nee-
essary* the principal could not suo-
ceed here if he could not show such
a ratification. Neely v. Stevens, 138
Q&. S06.
«« Dodge V. Hopkins, 14 Wi& 630,
affirmed in Atlee v. Bartholomew, 69
Wis. 43, 5 Am. St R. lOS. Similar
views were also expressed in Clews
V. Jamieson, 39 Fed^ 63 (but UkBf
were overruled in 182 U. S. at p.
483); and Cowan v. Curran, 216 111.
598. See also Wilkinson v. Heaven-
rich, 58 Mich. 574, 55 Am. Rep. 708;
Wilkinson v. Harwell, 18 Ala. 660;
Atlanta Buggy Co. v. Hess Spring ft
Axle Co., 124 Ga. 888, 4 L. R. A.
(N. a) 431.
In Dodge v. Hopkins, supra, a per-
son assuming to act as plaintlfT's
agent, had, without authority, en-
tered into a contract with defend-
ant, by which defendant agreed to
purchase of plaintiff certain real es-
tate. PlaintlfT seeking to enforce
the contract, brought an action
against the defendant to recover
certain installments of the purchase
price which defendant had refused
to pay. Defendant resisted upon
the ground that as the contract,
owing to the agent's lack of author-
ity, did not bind the plaintiff to sell,
defendant was not bound to pur-
chase. Dixon, C. J., said: "It Is very
clear, in the present condition of
the case, that the plaintiff was not
bound by the contract and that he
was at liberty to repudiate it at any
time before it had actually received
his sanction. Was the defendant
bound? And If he was not, could
the plaintiff by his sole act of rati-
fieation, make the contract obligatory
upon him? We answer both these
questions in the negative The cov-
enants were mutual — ^those of the de<
f endant for th« pasrm^t of ■ money
being in consideration of thati of .the
plaintiff for the conveyance of the
lands. The intention of the parties
was that they should be mutually
bound — ^that.each should execute the
instrument so that the other could
set it up as a. binding contract
against him, at law as well as In
equity, from the nioment of its exe«
cutloB. In such cases it fa well
settled both on principle and au-
thority, that if either party neglects
or refuses to bind hims^f, the in*
strument is void for want of mu-
tuality, and the party who Is not
bound cannot avail himself of it as
obligatory upon the other. Towns*
end V. Coming, 28 Wend. 486, and
Same v. Hubbard, 4 Hill, 351,. and
cases there cited. • • •
"I am well aware that there are
dicta and observations to be found in
the books, which, if taken literally,
would overthrow the doctrine of the
cases to which I have referred. It is
said in Lawrence v. Taylor, 5 Hill,
118, that 'such adoptive authority re-
lates back to the time of the trans-
action, and is deemed In law the
same to all purposes as if it had
been given before.' And in Newton
V. Bronson, 8 Kern. 594, (67 Am.
Dec. 87), the court says: 'That a
subsequent ratification is equally ef-
fectual as an original authority, is
well settled.' ♦ • •
374
CHAP, VIlJ
RATIFICATION
I§ Si6
is equivalent to a prior authority, the court declares it to be inaccurate
as a rule of universal application. "The inaccuracy consists in not
properly distinguishing between those cases where the subsequent act
of ratification is put forth as the foundation of a right in favor of the
party who has ratified, and those where it is made the basis of a de^
mand against him. There is a broad and manifest difference between
a case in which a party seeks to avail himself, by subsequent assent, of
the unauthorized act of his own agent, in order to enforce a claim
against a third person, and the case of a party acquiring an inchoate
right against a principal by an unauthorized act of his agent to which
validity is afterwards given by the assent or recognition of the princi-
pal. The principal in such a case may, by his subsequent assent, bind
himself, but, if the contract be executory, he cannot bind the other
party. The latter may, if he choose, avail himself of such assent
against the principal, which if he does, the contract, by virtue of such
mutual ratification, becomes mutually obligatory. There are many
cases where the acts of parties, though unavailable for their own bene-
fit, may be used against them.*'
§ 516. The English cases. — In 1889, the question came before the
English court of appeal in Bolton Partners v. Lambert.** It appeared
that the defendant had written to one Scratchley, who was managing
director of an incorporated company, an offer to lease certain works
belonging to that company. Scratchley replied that he would refer the
offer to the directors. Before the directors met there was a meeting
of "the work committee" of the directors of which Scratchley was a
member and this committee voted to accept the offer. This committee
however had no such power. Scratchley then wrote to tbe defendant
saying that the directors had accepted his offer, and that the com-
pany's solicitor would prepare the papers. While correspondence over
the form of the documents was pending, the defendant wrote with-
drawing his offer, though not upon the ground of Scratchley's want
of authority. Afterwards the board of directors met and formally
"Lawrence v. Taylor and Newton
y. Bronson were both actions In
which the adverse party claimed
rights through the agency of indi-
viduals whose acts had been subse-
quently ratified. And the authorities
cited in support of the proposition
laid down In the last case (Weed v.
Carpenter, 4 Wend. 219; Episcopal
Society V. Episcopal Church, 1 Pick.
372; Corning y. Southland, 3 Hill,
552; Moss v. RoBsle Lead Mining Co.,
5 Id. 137; Clark v. Van Riemsdyk, 9
Cranch, 153, and Wlllinks v. Hol-
llngsworth, 6 Wheat 241, 5 L. Ed.
251), will, when examined, be found
to have been cases where the sub-
sequent assent was employed against
the persons who had given it and
taken the benefit of the contract"
<» Bolton Partners y. Lambert, 41
Ch. Dly. 296.
375
§§ 5^7> 51SJ ^^^ ^^W ^ AJQGNCY [^OOK I
ratified Scratchley's letter of acceptance, and, the def^tujaot refusing
to go on, this action for specific performance was instituted. The de-
fense was the lack of mutuality and the withdrawal of the offer before
acceptance. Kekewich, J., granted the relief prayed for,* saying : "The
doctrine of ratification is this, that when a principal on whose behalf a
contract has been made, though it may be made in the first instance
without his authority, adopts it and ratifies it, then^ whether the con-
tract is one which is for his benefit and which he is enforcing, or which
is sought to be enforced against him, the ratification is referred to the
date of the original contract, and the contract becomes as from its in-
ception as binding on him as if he had been originally a party."
§ 517. — — • The case went to the court of appe^, where the judg-
ment was affirmed. Several opinions were written, but quotatioa from
one will indicate the view of all.
Lopes, L. J., said : ''If there had been no withdrawal of the offer this
case would have been simple. The ratification by the plaintiffs wQi}ld
have related back to the time of the acceptance of the defendant's offer
by Scratchley, and the plaintiffs would have adopted a contract made
on their behalf. It is said that there was 00 eoatrai^ which could be
ratified, because Scratchley at the time he accepted the defendant's
offer had no authority to act for Ae plaintiffs. Directly Scratchley on
behalf, and in the name of the plaintiffs, accepted the defendant's offer,
I think there was a contract made by Scratchley assuming to act for
the plaintiffs, subject to proof by the plaintiffs that Scratchley had that
authority. The plaintiffs subsequently did adopt the contract and
thereby recognized the authority of their agent Scratchley. Directly
they did so the doctrine of ratification applied and gave the same effect
to the contract made by Scratchley as it would have had if Scratchley
had been clothed with a precedent authority to make it. If Scratchley
had acted under a precedent authority, the withdrawal of the offer by
the defendant would have been inoperative, and it is equally inopera-
tive where the plaintiffs have ratified and adopted the contract of the
agent. To hold otherwise would be to deprive the doctrine of rati-
fication of its retrospective effect. To use the words of Baron Martin
in Brook v. Hook,*® the ratification would not be 'dragged back as it
were, and made equipollent to a prior command.* **
§ 518. .— Bolton Partners v. Lambert has been affirmed in later
cases *^ in the same court, though one of the judges who concurred in
40 Brook V. Hook, L. R. 6 Bxch. 96. 42 Ch. D. 160. Same: Bosaaguet's
«i See In re Portuguese Consoli- Case, 45 Oh. D. IQ; In re TledeiQiaiiQ,
dated Copper Mines, Steele's Case, [1899] 2 Q. B. 66.
CHAP. VIl] RATntCATION [§ 519
it gave an explanation of it not to be reconciled with the opinions in
the original case. Its doctrine that there may be ratification notwith-
standing a previous attempt at withdrawal by the other party, has,
however, been criticised by judges of lower courts,*' nevertheless
bound by it, by magaxiue and text writers *• and by Lord Justice Fry
in a note added for that purpose to his treatise on Specific Perform-
ance.*^ As stated by the latter, 'It seems to follow from it that the
intervention of a mere .stranger may prevent a person who has made
an offer from witlidrawing that offer until it be seen whether the per-
son to whom it is made will ratify it or hot^ and consequently places
that person in the difficult position of neither having a contract nor a
right to withdraw an offer. An offer made to a principal may be with-
drawn : all offer made to a person who professes to be an agent but is
not, cannot be withdrawn ; so that the person making the offer is worse
off in the latter than the former case." "To hold him [the other party]
bound wit!h perhaps the market rising," says another writer,** "while
the principal is free to ratify or rej.ect, is to place him at an tmdeserved
disadvantage."
The later cases have attached an obviously just limitation tibat the
ratification must take place within a reasonable time, a matter here, as
elsewhere depending upon the circunostances of each case.**
. § 519. — -«-i^ Several American cases declare a contrary rule. —
The rule that the principal can ratify even after the other party has
attempted to withdraw is denied in several American (iases. In one of
the most recent,*^ one S., acting as agent for complainant, but without
written authority, entered into a contract to sell land to defendant. "It
needs no citation of authorities to show that this contract was void under
the statute of frauds, and did not bind eitlier complainant or defendant,
until complainant had ratified the act in some manner which would
take it out of the statute." Defendant tendered compliance but com-
plainant insisted upon other terms to which defendant would not as-
sent. After further negotiation, complainant declared that if the mat-
ter was not closed by a certain hour he "should call the deal off," to
whidi the defendant replied, "If that is so, all right," and the parties
separated. After this, complainant tendered a deed and signed a paper
ratifying the act of S. and handed it to him. This document, however,
M stt per Kcrrth, J., fn Bosanquet's 44 Appendix, Note A.
Case, supra. See also per Ghltty, J., m g Law Quarterly Review, 441.
in Dlbbias v. DIbbins, [1S96] 2 Oil. *« See per Bowen» U J., in Bosan-
848. qaet'fi Case, BUpra,
*^ See 5 Law Quarterly Review, ^7 Baldwin t. Schiappacasse, 109
441; 9 Hanrard Law Review, 40. Mich. 170.
377
§ Sao]
THE LAW or AGENCY
[book J
was never shown to the defendant, and, said the court, "of course, was
not binding upon him/' *• The complainant then insisted that a sale
had taken place and filed this bill to enforce a vendor's lien. The bill
was dismissed. Said the court: "Until complainant had placed him-
self in such a position that defendant could enforce the contract against
him, he was not in position to enforce it against the defendant. Until
that was done, there was in fact no contract binding upon cither party,
and the defendant was at liberty to withdraw.** After such with-
drawal, the complainant could not bind the defendant by any act of
ratification. The paper executed by S. and the defendant was not a
continuing offer to purchase, which might at any time be accepted by
the complainant. It purported to express the terms of an agreement
of sale, void because there was no written authority to make it, and
incapable of being ratified after the refusal of the defendant to be
bound by it."
§ 520. In a case before the appellate court in Illinois •• it
appeared that the plaintiff had authorized one E., a brcdcer, to buy oats.
4ft Citing Dickinson t. Wright, 56
Mich. 42. •
*• Citing Pom. Cont | 166; Duvall
V. Myers, 2 Md. Oh. 40S; Bodine t.
Glading, 21 Pa. 60, 59 Am. Dec. 749.
There is discussion of the question,
but no decision, in Aetna Ins. Co. ▼.
Stambaugh-Thompson Co., 76 Ohio
St. 138, 118 Am. St R. 834; and in
Atlanta Buggy Co. v. Hess Spring A
Axle Co., 124 Ga. 338, 4 L. R. A. (N.
S.) 431, with full note in latter re-
port
There is quite elaborate discussion
in Kline Bros. v. Royal Ins. Co., 192
Fed. 378, with a disapproyal of Bol*
ton Partners v. Lambert
It ia held, in Owen v. National
Hatchet Co., 147 Iowa, 393, that after
ratification by the principal the
other party can not withdraw, though
it is said that had he done so before
"there would be fair room for the
contention that no agreement had
ever been perfected." No cases are
cited. Brelthaupt v. Thurmond, 8
Rich. (S. Car.) L. 216, is to same
effect
In Cowan v. Ciirran. 217 111. 598,
at pp. 610, 611; Dodge v. Hopkins, 14
Wis. 680, tttpro, and Atlee ▼. Bar-
thoUmiew, 69 Wis. 43, 5 Am. St R.
103. supra, are cited and followed
with apparent approral. There is
no reference in the case to the cases
taking the contrary view. See also
Brooks V. Cook, 141 Ala. 499.
Where the other party has once
repudiated the contract on the
ground ef the lack of authority, he
cannot afterwards take advantage of
an alleged ratification by the prin-
cipal without consenting to be also
bound by It himself. Haldemaa r.
Chambers, 19 Tex. 1, 52.
•0 Qregg T. Wooliscroft 52 111. App.
214.
Where an agent without authority
sells lands to a purchaser who en-
ters and makes improvements, and
the principal on learning of the sale
disapproves of it, whereupon the
buyer abandons the land* the prin-
cipal cannot afterward ratify and en-
force the contract. Wilkinson v. Har-
well, 13 Ala. 660.
378
CHAP. Vll] RATIFICATION |§ 52!
not stating the grade and thereby, as the court held, authorizing only
the purchase of the usual grade, No. 2. The broker contracted with
defendant for the sale of "cool and sweet" oats, aa inferior grade. The
broker advised the plaintiff that he had bought of def aidant "mixed
oats" to arrive "cool and sweet," at a certain price. There was no
such grade of oats as "mixed oats" and therefore, the court held,
g^ade No. 2 must be inferred. Plaintiff then wrote directly to defend-
ant confirming the purchase of "grade 2, mixed oats." Defendant im-
mediately replied that he had not offered to sell oats of grade No. 2,
and withdrew his offer of the "cool and sweet" oats. Plaintiff then
wrote confirming the purchase of the oats as "cool and sweet," but
defendant refused to recognize a contract or to deliver the oats. The
action was for damages, and in the circuit court the plaintiff recovered,
but this judgment was reversed on the defendant's appeal. "Before the
appellee wrote the letter [of confirmation] he had received notice from
E. and also from the appellant that the appellant had revoked his offer
and cancelled any alleged sale. If the appellant offered to sell cool
and sweet oats and E. accepted the offer for the appellee the accept-
ance was unauthorized, and not binding on the appellee until he adopted
it, and in such case the appellant might lawfully withdraw the offer at
any time before the appellee had accepted."
§ 521, — — — • Other American cases also declare a rule contrary
to that of the English cases although the facts are distinguishable. The
most carefully considered of these is, perhaps, the Pennsylvania case of
McClintock v. South Penn Oil Co."* Here the plaintiff's husband, as
her agent but without written authority, had entered into a contract to
sell to defendant certain interests in land belonging to the plaintiff.
Later written ratification was supplied, after which the defendant
sought to repudiate. Said the court per Mitchell, J. : "If the agent had
been properly authorized, the contract would have bound both parties
in the first instance, and the settled rule is that ratification is equivalent
in every way to plenary prior authority. The objection of want of
mutuality is not good in many cases of dealing with an agent, for if
he exceeds his authority, actual and apparent, his principal will not be
bound, yet may ratify, and then the other party will be bound from the
inception of the agreement. The aggregatio mentium of the parties
need not commence simultaneously. It must co-exist ; but there must
be a period when the question of contract or no contract rests on the
will of one party to accept or reject a proposition made, and this in-
terval may be long or short. The offer, of course, may be revoked or
•1 146 Pa. 144, 28 Am. St R. 785.
379
§ $22] TUB LAW OP AGENCY [bOOK I
withdrawn at any tiine prior to acceptance, bitt %i%er acceptance it is
too late. The contract is complete."
I s^s. ■ Rules compared-— The weight oi authority. — If 9
comparative statement of tfaeae various rules wer^ attempted, it niiglit
be said that the Wisconsin cases deny the. right of the principal to
ratify in the absence of something showing the other party's present
adherence to the contract ; that the English courts admit a ratification
within a reasonable time even though the other party has before the
ratification attempted to withdraw; while the majority of American
courts permit a ratification, within a reasonable time, if the other party
has not previously signified his intention to withdraw* though not ^fter*
ward.
Neither of these rules is entirely satisfactory. The Wisconsin rule
seems to the writer fundamentally sounds though it perhaps gives too
little effect to the growing doctrine of ratification. The English rule
is certainly questionable for the reason already sMed> anioqg olhers,
that it puts a pers(Mi who makes an offer to an agent in a worse position
than though he had made it directly to the principal. The other
American rule ignores the consideration that the other party may be
refraining from a withdrawal when he would be glad to with<kaw,
only because he supposes he is bound by a valid contract. Perhaps a
sufficient answer to the last objection is that if the other party had
used due care in the first instance to ascertain the agent's authority,
he would not have made the contract ; and that iu most cases if he has
been deceived by the agent as to the existence of his authority he has
a remedy against the agent for any loss thereby sustained-
The latter American rule, however, seems open to fewest objections
and is likely to prevail. It may, perhaps, be stated thus : Where one
assuming to be agent but without authority has negotiated a contract
for his alleged principal, the latter may ratify the act and enforce the
contract against the other party where he so ratUies within a reason*
able time and before the other party has signified his withdrawal from
the negotiation, but not afterward.
The English courts would of course sustain the rule on its positive
side, though they would carry it much further, and would deny the
limitations.
The German Civil Code provides that "Before ratification of the
contract the other party is entitled to revoke it, unless he knew of the
absence of authority at the time when tfie contract was entered into." ••
it Section 17S. The translation is that of Dr. Wang.
380
CHAP. VIl]
RATIFICATIOM
[§^ 523. 5^4
9 533.
ApplicationB of the nde . — Vnier the ai^ication of
this rule, the principal may ratify and e»forcc contracts for die sale or
purchase or Leasing of real or personal property,'* the furnishing of
material,^^ the performance of labof , aod the like.
§ 534- ■ ■ Ratiflcatiott by iwured of insurance effected for
his benefit.«*^Within the operation of the general rule also would come
the case of the ratification by the insured after a loss of insurance
effected for his benefit. That this might be done had been held by the
English courts long before the difficult questions involved in ^olton
Partners v. Lambert had presented themselves,'^ and this holding had
been followed in the United States.'* It is difficult to imagine a case
wherein the fast and loose character of the principal's obligation, or
his range of speculation whether to ratify or not, would seeni to be
more clearly illustrated. If no loss occurs he may ignore the contract
and escape liability for the premium ; if a loss happens, he may ratify
and enforce the contract. As against the agent he may ratify even
after payment.*'
The case is exceptional also in the fact that ratification after loss
enables the principal to do by ratification what he could not then him-
self do directly, namely, insure lost property ; and a strong effort was
made some years ago in the English courts to induce a reconsideration
of the cases holding that it may be done, but it was declared that these
cases were much too strong and of too long standing to be overruleci"
MMcOliMoek v. South Penn Oil
Co.^ 146 Pa. 144, 28 Am. St R. 785;
ClewB V. Jamles^^n, 182 U. S. 461, 45
Ii. Bd. 1183; Soames v. Spencer, 1
Dovl. 4 R. 32; Hammond v. Haonin,
21 MlctL 374. 4 Am. Eep. 490; Citl-
sens' Gas Co. v. Wakefield, 161 Mass.
432, 3 L. R. A. 457.
84 New Bagland Monument Co. t.
Johnson, 144 Pa. 61.
05 Hagedorn y. OlIversoQ, 2 M. Jb S.
485; Routh v. Thompson, 18 Bast
274; Lucena T. Craufurd, 1 Taunt
325; WUliama y. North China Ins.
Co., 1 C. P. Div. 757. See also Pickles
y. Western Assur. Co., 40 Nov. Scotia
327.
In an article In 19 Green Bag 93,
Mr. Frederick T. Csuse contenda that
the rule should he confined to the
cases In which the person who ef-
fected the insurance waa a part
owner or other person with an in-
terest in the property, ao that a
yalld contract waa closed hefore the
loaa, leaving open only the question
to whom the loss la to be paid. But
aee 20 Harvard Law Review, 504.
»« Finney v. Fairhaven Inanrance
Co., 5 Mete. (Mass.) 192» 88 Am. DetL
397; Oliver y. Mutual Ck)mmercial
Ins. Co., 2 Curtis, 277; Insurance Co.
V. Chase, 5 Wall. (U. S.) 509; Snow
y. Carr, 61 Ala. 863, 32 Am. Rep. 3;
Mlltenherger v. Beacom, 9 Pa. St
198; Watkioa v. Durand, 1 Port
(Ala.) 251; Boutwell v. Globe, etc.,
Ins. Co., 193 N. Y. 323, a. o. 87 N. B.-
1115.
8T Snow y. Carr, supra; Milten-
berger v. Beacom, ntpra.
S8 Williams y. North China Ina.
Co., suprtk.
381
H 5^5-5^7] THE 'LAW OF AGENCY ^ [bOOK I
It is to be observed, however, that the case is not or^marityso hard
upon the insurance company as might, at first blush; appear to be the
fact. In many of the cases, the premium had been already paid by the
agent or he had made himself liable for it In any caae moreover. in
which the agent^s liability had not been exdnded, he would be liable
for a breach of his implied warranty of authority if die principal did
not ratify. What the company would lose in such a case would be the
expected liability of the principal for the premituns.
In a late case in the United States circuit court, it was held that
where the premium had not been paid and the agent was not liable for
it, there could be no ratification after loss, although the principal then
tendered the premium before the company repudiated the policy.**
§ 525- Limitations. — It has been said, however, that the
principal's right of ratification in these cases is, where the assumed
agent was a mere volunteer, subject to the latter's power to surrender
and cancel the policy before ratification occurs^"*^
And where it was expressly stipulated that a life insurance policy
should not take effect until the advance premium thereon should be
paid in the life time of the person whose life was insured, it was held
that a payment of the premium in his life time by an unauthorized per-
son could not be ratified by the administrator and beneficiary after his
death.*^
§ 5a6. Defence based on Fatifi[cation.*-The principal may,
of course, base a defence upon his own ratification as well as a cause
of action. Thus where an insurance company, whose .agefH had in-
serted an unauthorized clause in a policy, had formally ratified the
act and undertaken to perform accordingly, it was held that the other
party could not afterwards repudiate the transaction on the ground
that no contract had really been entered into and recover back the
money he had paid upon the policy.**
§ 527. II. In tort.— The application of the rule in tort cases must
necessarily be limited because the cases wherein the principal will seek
to enforce rights based upon his ratification of his agent's torts will be
very rare. Injuries to rights acquired by ratification may often occur
and give rise to action. Thus it has been held that where property
acquired for the principal through the unauthorized act of his agent
A» Kline Bros. v. Royal Ins. Co., 192 L. Ins. Co., 129 Mass. 240, 37 AnL
Fed. 378, reversed, on other points. Rep. 317.
198 Fed. 468. «* Andrews v. Aetna L. Ins. Co., 92
•0 StlllweU V. Staples, 19 N. Y. 401. N. Y. 596. See also Cook v. Tnllia,
•1 Whiting v. Massachusetts Mut 85 U. S. (18 Wall.) 332. 21 L. Bd.
933.
CUAF. VIlJ RATIFICATION [§§ 528, 529
has been converted, the principal may ratify the act and sue for the
conversion." The bringing of the action is in itself, it was held, a
sufficient ratification.
§ 528. III. Other acts creating rights or duties. — In addition to the
acts resulting strictly in contract or constituting torts, there is a large
class of acts upon which rights may be founded or duties imposed and
to which the doctrine of ratification may be applicable. Examples
may be suggested in such acts as asstgnments of causey of action, de-
mands, entries, notices, and the like ; and in a number of instances
difficult questions will be found presented. The case of a notice to
quit given by a person acting as agent but without authority, may be
used as illustration. What is the tenant to do? If he vacates and
the notice is not ratified, he will still be liable for the rent. If he re-
mains and the notice may- be ratified, he is remaining at his peril.
Judge Story in his work on Agency •* undertook to state a rule to
govern these cases, saying that "where an act is beneficial to the prin-
cipal and does not create an immediate right to have some other act
or duty performed by the third person, but amounts simply to the as-
sertion of a right on the part of the principal," the rule giving rati-
fication its retroacfive effect is applicable ; but where the act done by
the unauthorized person "would, if authorized create a right to have
some act or duty performed by a third person, so as to subject him to
damages or losses for the non-performance of. that act or duty, or
would defeat a right or an estate already vested in the latter, there the
subsequent ratification or adoption of the unauthorized act by the
principal will not give validity to it so as to bind such third person to
the consequences." This rule has been criticised •* and can not be
regarded as entirely accurate, but it serves to illustrate some of the
ideas which must determine the matter. A number of cases will throw
further light upon it.
§ .529. _.- Actions — Ratification of unauthorized bringing. —
The unauthorized bringing of an action may, it is held, be ratified by
the person in whose name and on whose account it was brought so as
to sustain the action from the beginning.** .
«» Warder, etc., Co. v. Cuthbert, 99 •« Ancona ▼. Marks, 7 H. lb N. 686;
Iowa, 681. See also Smith v. Savin, Day Land it Cattle Ca v. State, 68
69 Hun (N. T.), 311, (aff'd 141 N. Tex. 626. But see Prye v» Calhoun,
Y. 315). 14 111. 13S.
•♦ Story on Agency, {§ 24e-247. Same rule applied to filing claims.
w Farmers' Loan & Tr. Co. v. Mem- Stearns t, Klug, 21 Victoria L. R.
phis, etc., R. Co., 83 Fed. 870; Wright 164.
on Principal and Agent, p. 76.
383
§§ 53^-533]
TH£ LAW OF AGENCY
[book. I
§ 530.
Assignment of cause of aotioo/^^So it has been bdd
that the unauthorized assignment of a cause of action may be ratified
after the commencement of the action so as to sustain it;*^ but other
courts have denied that the defendant can, by ratiikation, be thus de-
prived of his defense that the plaintiff had iiot, when he sued, a com-
plete cause of action/' and the weight of authority seems to be with
them.
§ 531. Adding parties to existing actions.«^So it has been
held that the doctrine of ratification can not be so applied as to author-
ize one to be made a party to a suit by amendment, when the ratifica-
tion took place after the suit was instituted.**
§ 532- Attachment affidavit and bond.*^In reliance upon
the rule suggested by Judge Story, it has been held that authority for
the making of the affidavit and bond in attachment must be perfect at
the time the action is begun, and consequently an unanthorized mak-
ing could not be made good by subsequent ratification;'* but the coik-
trary has also been held or assumed in several cases,^^
§ 533. Declaration of maturity to accelerate actkm.^^So,
where a bond and mortgage provided that, in case of certain defauks>
the whole amount unpaid might be declared to be immediately due, it
was held that such a declaration made without authority might, after
suit brought in reliance Upon it, be ratified whh retroactive effect ; '*
but it may be difficult to reconcile this conclusion with certain of those
referred to in the preceding section.
«7 Ancoaa v. Mar^ swpra; Persons
V. McKibben, 5 Ind. 261, 61 Am. Dec.
85; Marr v. Plummer, 'S Greenl.
(Me.) 73.
e8Wlttenl>rook v. Bellmer, Wi Cai.
12; Read v. Buffum, 79 Cal. 77, 12
Am. St R. 131; Dlngley v. McDon-
ald, 124 Cal. 682; Graham y. Wil-
Uams, 114 Ga. 716.
See also Fbfke y. Holm«s, 41 Me.
441; Powell v. Henry, 96 Ala. 412.
••Burns v. Campbell, 71 Ala. 271,
289. In this case Somenrllle, J.,
says: "It [the doctrine of ratifica-
tion] cannot be applied so as to au-
thorise one to be made a party de-
fendant to a suit, by amendment,
when the act creating his liability
was done after the suit was insti-
tuted. AH pleas setting up defenses
to an action, have reference to the
time when an action W8« commenced.
excepting pleas to ths further main-
tenance of the action, and pleas
pui$ darrein continuance. If a de-
fetidaat be not naDls on the date
when the suit is commenced, he can
not be made liable at all in that ac-
tion by any subsequent act of adop-
tion or ratification. To create such
retroBpeotive liability, irith its at-
tendant costs and consequences,
would be to pervert the doctrine of
relation to an unjust and improper
end."
TO Grove v. Harvey, 12 Rob. (La.)
221.
71 Bank y. Conrey, 28 Miss. 667;
Mandel v. Peet, 18 Ark. 236; Hutch-
inson ▼. Smith, 86 Mich. 145; Palmer
v. Seligman, 77 Mich. 305.
72 Farmers' Loan & Trust Co. y.
Memphis, etc., R. Ga (C. a) SS Fed.
Rep. 870.
384
CHAP. VIl] RATIFICA^'ION ' [§§ 534^538
§ S34- ■ ■' Demamd of payment, deKvery^ etc^— On the other
hand, a demand of payment, delivery of goods, and the Hke, must, it is
hdd, in order to put the other party in default so as to sustain an action
against him, be made by a person who has then authority to make the
demand so that it may safely be complied with, and such a demand
made by an unauthorized person will not sustain an action. A rati-
fication of it by adopting it and basing an action upon it, is not
enough.'*
§ 535- — Notice of abandonment. — So it was held that no-
tice of abandonment, under a marine policy, could be made only by
some one then authorized so that it might safely be relied upon, and it
was said that a subsequent ratification would not avail.^*
§ 536. Notice of dishonor. — Notice of dishonor of negoti-
able paper, also, must, it is held, be given by an authorized person;
and the subsequent adoption of a notice given by an unauthorized per-
son is not sufficient.''*
§ 537. — — Notice to quit. — ^The requirement of present author-
ity is applied also in the case of a notice to quit, and a subsequent as-
sent on the part of a landlord will not, it is held,, establish by relation
an unauthorized notice to quit given by another as his agent. The
tenant must act upon the notice at the time it is given, and the notice
must, therefore, at that time, be such as he can act upon with security ;
otherwise the tenant would be subjected to the injustice of being left
in doubt as to his action until the ratification or disavowal of the prin-
cipal.''*
g 538. — — Options. — ^Again where an option is given to be ex-
ercised within a particular period, the other party is entitled to know
absolutely within that period whether it is to be accepted, and a notice
of acceptance given within the time fixed but by a person who has no
7s Solomons v. Dawes, 1 Esp. 83; T«Per Crompton, J., in Jardlne v.
Coore T. Callaway, 1 Esp. 115; Coles Leathley, 8 B. ft S. 700.
T. Bell, 1 Camp. 478, note. See also tb East v. Smith, 16 Li. J. Q. B. 292;
Freeman v. Boynton, 7 Mass. 483. Brower v. Wooten, 4 N. Car. T. R.
In Sequin v. Peterson, 45 Vt. 256, 70, 7 Am. Dec. 692.
12 Am. Rep. 194, a demand by the Tipickard t. Perley, 46 N. H. 188,
wife for the return of money spent 86 Am. Dec. 153; Brahn y. Jersey
by her boy for pipes and tobacco was City Forge Co., 88 N. J. L. 74; Mcr
held to sustain a subsequent action Croskey v. Hamilton, 108 Ga. 640, 75
by the father, though the court at- Am. St. R. 79; Right v. Cuttrel, 6
tached emphasis to the peculiar re- Bast, 491 ; Doe v. Walters, 10 B. & C.
lation of the mother and to the fact 626; Doe t. Gold win, 2 Q. B. 148.
that defendant had recognized her Contra^ Roe t. Pierce, 2 Camp. 96;
authority by returning a part Qoodtitle t. Woodward, 2 B. A Aid.
689.
«s 38s
§§ 539-541 1 THE LAW OF AGENCY {BOOK I
authority cannot, it is held, be made good by ratification after the time
has expired.^^
§ 539- — — Stoppage in transit.— And so it has been decided
that a notice of stoppage in transit given by a person without author-
ity during the transit, cannot, after the transit is ended, be made good
by ratification.'*
4. As Between Agent and the Other Party.
§ 540. In general. — It is ordinarily neither the purpose nor the func-
tion of the agent to create binding relations of any sort between him-
self and the third persons with whom he deals. On the contrary, it is
usually his intention and his duty to create relations only between his
principal and such third persons. There are, however, three classes
of cases in which relations between the agent and the other party may
arise. One is where, though fully authorized, the agent conceals the
fact of his agency and deals as the ostensible principal. Here, of
course, no question of ratification can arise because there is no lack of
authority: there is merely a failure to disclose it. In these cases, as
will be seen, the agent binds himself to the other party though the
latter has his option of holding the undisclosed principal when dis-
covered.^*
A second class of cases, somewhat like the first, is that in which an
agent, though fully authorized and disclosing his principal, has yet seen
fit to pledge his personal responsibility. Here, often it is true, as will
be seen,*® that the other party may, at his option, hold either the prin-
cipal or the agent ; sometimes the agent only.
The other class of cases is that wherein one has acted as agent with-
out authority. He may do this in two forms: He may intend to act
as agent but conceal that intention ; or he may intend to act as agent
and openly avow that fact and act and contract as agent. In the first
form, as has been seen, there is much doubt whether the doctrine of
ratification has any application.*^ In the second case, the doctrine has
full sway. Assuming that there may be ratification by the assumed
principal, the question is, what is its effect as between the agent and
the other party?
g 541. It is the general rule, as will be more fully seen here-
after, that when one assumes to act as agent of another but fails to
TTHoUand v. King, 6 C B. 727; »• Bird v. Brown. 4 Exch. 786.
Dibbins V. Dibblns, [1896] 2 Cb. 348 t» See post, Book IV, Chap. III.
(distinguishing Bolton Partners r. sosee post, Book IV, Chap. III.
Lambert). '«i See ante, fi 387.
386
CHAP, VIl] RATIFICATION [§ 542
bind that other as assumed on accovint of a lack of authority, he will
himself become personally liable to the party who relied upon his pre-
tended authority for all losses and damages which he may sustain by
reason of such failure.^^ But now the act, ex hypothesi, is ratified,
and the ordinary effect of such a ratification is» as has been seen, to go
back to the beginning and cure all defects which flowed from the origi-
nal absence of authority. It establishes authorized relations between
the principal and the agent. It puts the relations between the princi-
pal and the other party, in the main, upon the same basis as though
authority had originally been given. In the main, also, it does the
same with the relations between the agent and the other party, though
a distinction is to be observed between cases of contract and those of
tort.
§ 542. Ratification releases agent on contract. — ^Where the con-
tract has been made in the name and bn behalf of the alleged princi-
pal, and the latter, with full knowledge of the facts, has ratified it, the
contract then becomes in fact, sb far as the rights of the other party
are concerned, what at first it only assumed to be, — the contract of the
principal. The other party has then what he contracted for, — ^the lia-
bility and responsibility of the principal ; and he can obviously iauffer
no injury from the fact that the agent's act was originally tmauthor-
ized. The agent, therefore, drops out of sight. His identity is there-
after merged in that of the principal and he cannot personally call
upon the other party for performance, nor can performance be de-
manded of him. He cannot sue in his own right, nor can he be ren-
dered personally liable upon the ground of the failure of an assumed
authority."
The fact that the principal subsequently fails to perform the con-
tract on his part does not revive the liability of the agent.**
82 See post, Book IV, Chap. III. cipal, new notes In Batisfactlon of
88 See also East India Co. v. Hens- the old, and had falsely represented
ley, 1 Esp. 112; Polhm v. Walter, 8 that he himself was the owner of
B. it Ad. 114; Bowen v. Morris, 2 the note being surrendered, eubse-
Taunt. 374; Hopkins v. Bverly, 150 quent ratification of the transaction
Pa. 117; Berger's Appeal, 96 Pa. 443; by the principal made the transac-
Lingenfelder t. Leschen, 134 Mo. 55; tion valid, and without Injury to the
Sheffield v. Ladue, 16 Minn. 3S8, 10 third person so that this tiilrd per-
Am. Rep. 145; Spittle v. Liavender, 2 son cannot In a suit upon the ezten-
Brod. ft B. 452; Brong v. Spence, 56 alon notes brought later by the man
Neb. 638. formerly agent avail himself of the
In Bllllngeley v. Benfleld, 87 Ark. agent's lack of authority or -of his
128, It was held that where an agent, misrepresentations as a defense,
without authority, had taken, from 84 Liingenfelder v. Lesclieii* mtpra,
the maker of a note due his prin-
387
CHAPTER VIII
OP THE TERMINATION OP THE RELATION
I 647. Purpose of this chapter.
548. Variety of methods.
649. Classification adopted.
I. BT ACT OF THIS PABTIES.
i. By Force of TJ^ir Original Agree-
ment.
660, 651. 0. By efflux of time.
662-554. h. By accomplishment of
object.
666. Where object contemplated in«
Tolved a series of acts.
666. Authority does not neces-
sarily continue until object
accomplished.
657. 0. Termination in pursuance
of a term in the contract
t. By Their 8ul>8equent Acta*
668. What here included.
A. Termination by Mutual Consent
669. Authority so terminable.
B. Revocation by the Principal.
660. Rules different in public and
in private agency.
1. Private Agency,
a. Power of Revocation.
661, 662. In general.
663. General rule — ^Authority rev-
ocable at any time.
564. If not already executed.
566. Rule applies though authority
called "exclusive" or "irrev-
ocable."
666. Rule applies though principal
may have agreed that au-
thority should continue for
a definite period.
569.
670.
571.
572.
573.
674.
575.
667. Or though agent may have
performed some service or
incurred some expense.
568. Distinction between power to
revoke and right to revoke
— Between authority and
contract of employment
Exceptions — Authority not
revocable.
L Authority "coupled with an
interest"
Variety of forms.
American use of term.
English use of term.
— * Difference in results.
Power irrevocable by
death irrevocable by act of
principal.
2. Power given as security and
therefore "couplied with an
interest."
Power forming part of a
contract
— Power given for a val-
uable consideration.
680. 3. Authority "coupled
with an obligation."
"Interest" of third person.
Provisions for agency in con-
tracts with third persons.
"Interest" and authority from
same source.
Express language as to rev-
ocabillty.
Illustrations — Sufficient inter-
est— Powers given for se-
curity.
What interest not suffi-
cient— Instances.
Bare powers.
676.
677.
678.
679,
681.
582.
683.
584.
586.
686.
587.
588.
589.
590.
New nomenclature needed.
What may be the subject
matter of iMwer given as se-
curity.
Necessary characteristics
of such a power.
390
CHAP. Yin]
TERMINATION 09 THE RELATION
591.
592.
593.
594.
695.
596.
597.
598,
€00.
601.
602.
603.
604.
605.
606.
607.
608.
609,
611.
612.
*— - Against wbom power
glTen as security enforce-
able.
Contracts of employment—
When right to terminate
exists — Employments at
will.
»--*- Employment on condi-
tion—"Satisfaction"— "Good
cause."
Termination for cause
specified.
Implied conditions.
Contract for definite time can-
not be terminated without
liability except for legal
cause.
What amounts to contract for
definite time.
699. Unilateral stipula-
tions.
Contrary views.
Mutuality under statute
of frauds.
Contract for a definite time
implied from circumstances.
Implications from yearly
or periodical salary or ac-
countings.
Stipulation for "permanent"
employment
Continuing under prior con*
tract — ^Holding over.
Agency terminable for agent's
incompetence.
Agency terminable for agent's
disobedience, dishonesty, or
other misconduct.
Agency terminable for agent's
disloyalty.
610. Illustrations.
Limitations — Waiver-
Condonation.
Even though employed for
definite time, agent may be
discharged subject to liabil-
ity for damages.
b. Manner of Revocation.
613. How authority may be
voked.
614. By sealed instrument
616. Express revocation not
Quired.
616. Revocation may be Implied.
617. Reducing rank, changing
duties, etc.
- — Acts not working a rev-
ocation.
— By disposing of subject
618.
619.
620.
621.
622.
matter.
— By dissolution of part-
nership or corporation.
— By severance of a joint
interest
— Subagent's authority ter-
minated by termination of
principal's authority.
0. Notice of Revocation.
623. Notice usually necessary.
624. 1. To the ag^it— When notice
must be given to him.
625. When notice not neces-
sary.
626. — Constructive notice.
627. 2. To snbagents — When no-
tice must be given.
628. 3. To third persons — Where
authority was general.
629-681. Where authority was
special.
632, 633. Theory of necessity
of notice.
684, 636. Notice how given— What
sufficient
636. When power of attorney re-
corded, revocation should be
recorded.
637. Notice should be unequivocal.
688. How sufficiency determined.
639. Burden of proof as to notice.
2, PuhHo Agency.
640. Statutory authority not rev-
ocable at will of principal.
0. Renunciation by Agent.
re-
641. General rule — Agent may
nounce at any time.
642. Enforcement of contract — Spe-
cific performance — Injunc-
tion to prevent breach.
648. Injunction when services
unique and damages not
adequate.
— Mutuality.
644. —
645. Renunciation by mutual con-
391
THE LAW OP ACENCY
[book I
sent.
646. Abandonment may be treated
as renunciation.
647. Agent may lawfully renounce
if required to do Illegal acts.
648. Agent's abandonment may be
Justified by prlncipars mis-
conduct
649. Notice of renunciation.
n. BT OPEBATION OT lAW.
660. In generaL
i. By Death of One of the Parties.
a. By Death of the principal.
651. In general.
652. General rale — Death of prin*
cipal terminates agency.
663. Even though not ter-
minable by principal's act
in his life time.
654. Consideration of this rule.
655. Authority not revocable by
death when coupled with an
interest.
656. — *» What constitates such
an interest.
657. What meant by interest
— ^Difficulty in applying rule.
658. The real reason — That
thfi agent may act in his
own name.
659-661. What interest sufficient —
Instances.
662, 663. What Interest not suffi-
cient— Instances.
664, 665. How when death un-
known.
666, 667. luBtances.
668. Effect of prlncipars death on
contract of employmeht.
669. Death of partner or Joint
owner dissolves agency.
670. Death of principal dissolvea
authority of substitute.
t. By Death of the Agent,
671. General rule— Death of agent
terminates agency.
672. Not when coupled with
aa interest
678. When death of one of two
agents terminates agency.
674. Dissolution of artificial per-
flOA which was the agent
675. Effect of agent's desAh on au-
thority of substitute.
8. By Insanity of one of the Parties,
0. By Insanity of the Principal.
676. In general.
677. General rule.
678. Ignorance of insanity.
679. When authority coupled with
an interest
680. What evidence of Insanity re-
gulred.
b. By Insanity of the Agent
681. In general.
682. General rule — Terminates
agency unless coupled with
interest
683. How when insanity unknown.
684. Insanity of one of two or
more agents.
685. Effect on subagents.
$, By Bankruptcy of One of the Par-
ties.
686. In general — Effect of bank-
ruptcy.
a. Bankruptcy of Principal
»
687. General rule-^Bankruptcy of
principal terminates agent's
authority.
688. Mere Insolvency not enough.
689. Authority not terminated
when coupled with interest
690. How when bankruptcy un-
known.
5. Bankruptcy of the Agent
691. General rule.
4. By Marriage,
692. a. Marriage of the principal.
693. h. Marriage of the agent
392
I
CHAP. VIII ]
TERMINATION OF TH£ IBLATION
[§§ 547-54$
^, 9y War.
694-696. In general — ^War between
eoiintrles of principal and
of B^ont termJnates com-
mercial agency.
6. By Destruction of Subject Matter.
697. Deatmctlon of subject matter
UBually terminates agency.
7. By Termination of PrincipaVa Ifh
terest in Buhject Matter.
698. Usually terminates authority.
8, By Termination of PrincipaVt Aur
thority.
699. Principars removal from of-
fice removes subordinates.
9» By OMnge in Lav.
700. Change In law rendering
prosecution of agency un-
lawfuL
XO, Notice of t?ie Termination,
701'70a. Notice not generally neo-
essary when authority ter-
minated by operation of
law.
§ 547. Purpose of chapter. — ^Having heretofore considered in what
manner and tinder what conditions the relation of principal and agent
may be created, it now remains to be seen in what manner and undef
what conditions that relation may be terminated, and also to ascertain
what results may follow from such termination.
§ 548. Vatriety of rtictfiodd. — ^The termination of the authority may
be effected by a variety of methods. Thus the agency may have been
created to endure only for a limited period, and at the expiration of
that period would come to a close by the mere efflux of time ; or it may
have been called into being for the express purpose of performing a
single act or a series of acts, and these being performed the agency
would be terminated by the accomplishment of that for which it was
created. Again, under certain circumstances, the agency may be con-
cluded by the act of the parties, as where the principal revokes or the
agent renounces it. So subsecjuent events or changes in the condition
or relation of the parties may render the continuance of the agency in-
consistent or impossible, and it will be terminated by what is often,
termed the operation of law.
§ S49* Classification adopted. — ^Fof convenience of treatment the
various methods of termination may be (Rrtributed tinder two main
heads: I. By act of the parties. II. By operation of law. Termina-
tion by act of the parties may be by force either of, i. Their original
agreement, or 2. Their subsequent acts. Termination by original
agreement arises when the parties at the time expressly or impliedly
put a limitation upon its continuance, and it may be either by a. Ex-
piration of time, b. Accomplishment of object, or c. Stipulation in* the
contract. Termination by the subsequent act of the parties may be
either by a. Mutual consent, b. Revocation by the principal, or
999
§ SSO] THE LAW OF AGENCY [BOOK X
c. Renunciation by the agent. Termination by ''operation of law"
occurs where some event happens, or some change occurs, which ren-
ders the further continuation of the relation impossible or impracticable,
such as death, bankruptcy, marriage, war, and the like. Each of
these methods will be separately considered.
I.
BY ACT OF THE PARTIES,
1, By Force of Their Original Agreement
I 550. a. By efflux of time. — Where the agency was originally
created to endure during a given period or until the happening of a
certain event, the expiration of that period and the happening of that
event would respectively operate to terminate the agency.*
Where the language used by the parties is express as to the length
of time the agency is to continue, there can of course be no doubt as
to its duration; but this result may also be reached where the period
is not expressly fixed but must be determined by the facts and circum-
stances of the case.
Thus where a resident of Australia who was possessed of estates in
England, executed a written power of attorney to a firm of English
solicitors, in which he recited, "Whereas I am about to return to South
Australia and am desirous of appointing attorneys to act for me dur-
ing my absence from Englai;d in the care and management of the said
estate * * * and generally to act for me in the management and
dealings with any property belonging to me during my absence from
England," and then proceeded by the operative part of the instrument
to convey such a power, but without any limitations as to time, it was
held that the recital controlled the general language used in the opera-
tive part of the instrument and limited the exercise of the powers of
the attorneys to the period of the principal's absence from England.'
1 Thus, fdr example, where an Where a mortgagor was permitted
agent has power to do a certain act to remain in possession and make
as, e. g. to sell land, if he can do so additions as the agent of the mort-
before a certain date, his power gagee it was held that his power ex-
ceases upon the expiration of the plred when the debt was due. Herd
time fixed. Rundle v. Cutting, 18 y. Bank of Buffalo, 66 Mo. App. 643.
Colo. 337; Castner v. Richardson, 18 s Danby T. Coutts, L. E., 29 Ch.
Colo. 496; Learned v. McCoy, 4 Ind. Div. 600.
App. 288.
994
CHAP. VIIl] TERMINATION OF THE RELATION [§§ 55 1, 552
§ 551* ■ So where an agreement creating an agency for the
sale of machines, made no provisions as to the time of its continuance,
but did provide that the agency should extend over a certain section
of the country, and that the principal agreed to furnish to the ag^t
"such number of machines as he may be able to sell as their agent,
prior to October ist, 1867," it was held in an action against the agent's
sureties, that a fair and reasonable construction of the agreement crer
ated an agency only until the first day of October, i867.*
§ 552. b. By accomplishment of object. — ^Where the agency was
created for the purpose of performing some specific act or acts, it will
be terminated by the accomplishment of the purpose which called it
into being. Having fulfilled its mission, it is henceforth fundus officio.
Thus is an Iowa case,* the firm of A & B had been employed by one
S to negotiate for him the purchase of some land. In the month of
July they made the purchase and delivered to S the contract of sale,
and S then gave them one-half of the purchase price for payment to
the vendor, and paid them for their services. In August a deed for
the land was sent to them and they delivered it to S, who then paid
the balance of the purchase price. In October following, A bought
the same land at a sale thereof for taxes, and subsequently brought an
action to recover the land of the vendee of S, and it was attempted to
defeat the action upon the ground that A & B were still the agents of S
at the time A made the purchase at the tax sale. But the court said
that upon these fact's it was quite clear that the agency of the plaintiff,
or of A & B, for the purchase of the land for S, terminated at the time
they delivered to him the written contract for the conveyance of the
land on receipt of one-half of the purchase money and the payment of
their fee for the services performed. When this was accomplished,
A & B had done all they had been employed to do. They had made
the purchase as S had desired them to do, delivered to him the written
contract sent to them for S, and had received the first payment as per
agreement. This completed the services they had undertaken. S
himself so regarded it, for when these things were done, he inquired
how much they charged for their services, and, on being informed of
the amount, he paid the same. They had performed the business for
which the agency had been constituted, and by operation of law, the
agency was terminated. This was in July. The purchase at the tax
sale was not made until October of the same year. At that time they
< Guttdlach v. Fischer, 509 111. 172. case of Walker y. Derby, 5 Bissell,
« Moore v. Stone;«40 Iowa, 269. And 184. See also Blackburn v. Scholes,
a like ruling was made in the timilar 2 Camp. 848. .
395
§ 553]
THE LAW OF AGENCY
[book I
were as free to purchase the same as any other persons. Their agency
no longer existed.*
§ 553. ■ So where an agent was employed to And a purchaser
for land at a fixed price, which he did, it was held that thereupon his
agency to the seller terminated, and he was at liberty to undertake the
service of the purchaser in attending to the due execution of the con-
veyance.* And an agent to sell after fully completing his undertak-
ing, and after the title has passed and the price has been paid, is as
competent to acquire title from the purchaser as any one else.^
So a power delegated to an agent to "fix and determine" a matter
in which he has no power of his own outside of the agency, is ex«
pended when he has once acted upon it*
Similarly, a power of attorney to confess judgment is ordinarily
exhausted when the judgment is confessed, and will not sustain a sec*
ond judgment*
ft An agency to obtain a loan ceases
when the money is received by the
borrower, and all the requisite pa-
pers have been executed and deliv-
ered. Statements thereafter made by
the former agent do not bind the
principal. Atlanta Sav. Bank v.
Spencer, 107 Ga. 629.
So where an aeent acts tor both
parties in negotiatisis; a contract for
the sale of goods, the agency ter-
minates when the contract is signed
by the pcurties and notiee to him, or
correspondence with him, from one
of the parties no longer binds the
other. Groneweg ft Schoentgen Co.
v. Bstes, 144 Mo. App. 41S.
So the authority of an attorney by
virtue of his retainer terminates
when Judgment is obtained. Butler
T. Knight, L. R. 2 Bt. 109; Macbeath
V. Ellis, 4 Bing. 578; Newkirk t. Ste-
vens, 152 N. C. 498 (in which it was
held that after judgment was ob-
tained the attorney might deal with
the former client concerning the
land in suit and might act at arm's
length); Haines v. Wilson, 85 S. C.
388 (in which it was held that a con-
tract for the conduct of a suit was
completed when Judgment was reooy«
ered, and that further servicei in at*
tending to the client's interesta in
bankruptcy proceedings against the
judgment creditor were not covered
by the contract).
So in Tobler ▼. Nevitt, 49 Cola
231, 182 Am. St R, 142. 23 U R. A.
(N. S.) 702, 16 Ann. Cas. 925, it was
held that an attorney, employed to
defend a suit which had been brought
against his client, has no Implied
power to do anything looking be-
yond the judgment entered upon the
trial, or in preparation for a possible
appeal.
0 Short V. Millard, 6& la 292. And
after an agent to sell has completed
his contract he cannot thereafter
bind his principal to changes and
modifications of the contract made
with the vendee. Campbell v. Chase,
78 Kan. 593.
7 Board of Trustees v. Blatr, 4S W.
Va. 812. See also Walker y. Carriage
ton, 74 111* 446; Robertson v. Chap-
man, 152 U. S. 673, 38 L. Ed. 692.
« Douvielle v. Supervisors, 40 Mich.
586.
• Bellevue Borough v. Hallett, 234
Pa. 191; Com. v. Massi, 225 Pa. 548;
Manufacturers* etc.. Bank v. Cowden,
8 Hill (N. Y.), 461. There is good
dlecusalon of this subject in 60 Uni-
vePBl^ of Pennsylvania Law Review,
784.
396
•CHAP. VIIl]
TERMINATION OF THE RELATION
[§§ 554-556
§ 554-
Again, where the object for which the agency was
created is accomplished by other means before the agent has acted,
there is nothing left for him to act upon, and his authority is there-
fore terminated. Thus where the inhabitants of a town authorized
their treasurer to borrow money for the adjustment of a state tax, but
the tax was adjusted in another way before the treasurer had acted,
it was held that his authority to borrow money was thereby termi-
nated.** So where before one of two agents separately authorized to
sell real estate had found a purchaser, the principal had effected a sale
of the land to a purchaser produced by the other agent, it was held
that the first agent's authority to sell was terminated by the sale."
§ 555- Where object contemplated involved a series of acts. —
Where the end to be attained, or the object to be accomplished, re-
quires continuous negotiations, or is an enterprise not fully ended by a
single act, but requires a series of acts to complete it according to the
intention of the parties and the usages of business under similar cir-
cumstances, the authority of the agent does not expire with the per-
formance of one act, even though that ax:t may be of prime impor-
tance.**
§ S5& Authority not necessadly continuing until object accom-
plished.— It does not necessarily follow that, because an authority would
be terminated by the accomplishment of the object, it must in all cases
continue until the object is accomplished. That it is to so continue
until the object is attained, may be evident from the express terms of
the appointment or from the surrounding circumstances," but, on the
loBenolt V. Conway, 10 Allen
(Mass.), 528.
ii Ahern t. Baker, 34 Mian. 98.
12 Cleveland, etc., R. Co. v. Closser,
126 Ind. 848, 22 Am. St R. 593, 9 L.
R. A. 754 [citing Pennsylvania Co.
V. NaUons, 111 Ind. 208; United
States, etc., Co. v. Rawson, 106 Ind.
815; Wells y. Morrison, 91 Ind. 51;
Louisville, etc., R. Co. v. Henly, 88
Ind. 585;.Kirfcstall, etc., Co. t. Fur-
ness R. Co., L. R. 9 Q. B. 468; Morse
Y. Connecticut, etc., R. Co., 6 Gray,
450; Lane v. Boston, etc., R. Co., 112
Mass. 455; Gott v. Dinsmore, 111
Mass. 45].
In McClanahan v. Breeding, 172
Ind. 457, a power to "sign any re-
monstrance or remonstrances against
persons who may give notice of in-
tention to apply for license to sell in-
toxicating li<iuor8, and also to file and
present" the same to* the board of
county commissioners, was held to
be a continuing one, not confined to
a single remonstrance or a single in-
stance.
18 Formal powers of attorney to do a
given act or to do acts of a class, may
well be longer lived than informal
ones, or than authority based merely
upon circumstances which are sub-
ject to change. Thus in Chicago, etc.,
R. Co. V. Keegan, 185 111. 70, a record-
ed power of attorney to sell and
convey land, executed five years be-
fore a oonveyance made under it,
was presTUoed to be still operative,
the only inquiry made by the court
being whether It eould be presumed
397
.§ 557] ' '^^^ ^^^ ^^ AGENCY. [book I
other hand, it may be equally clear that the authority i» not to con-
tinue indefinitely merely because the accomplishment of the* object is
indefinitely delayed or postponed. Known changes in conditions or
values may be significant and perhaps conclusive. The mere lapse of
time may raise a presumption of termination, which may become con-
clusive where the period elapsed is so great that no reasonable man
could fairly believe that the parties still intended the authority to con-
tinue. In some cases, it would be a question of reasonable time. The case
of the real estate broker may be taken as an example. He has been
"authorized" (though the term "authority" is here usually a mis-
nomer : there is usually simply an offer of a commission if he finds a pur-
chaser) to find a purchaser, and has been promised a commission if he
does so. This would usually, like any other similar offer, expire after
a reasonable time if the purchaser had not been found ; and could not
be held as necessarily enduring until he could find a purchaser.**
In many other cases also, it would be evident that, though not ex-
pressly so declared, the authority was only to be executed in case the
object could be accomplished at once, or speedily, or concurrently with
some other object.
§ 557* ^' Termination in pursuance of term in the contract. — It
is also entirely competent for the parties, at the time of creating the
relation, to provide for its termination, automatically or otherwise,
upon the happening of certain events ; or to reserve to one or to either
to have been terminated by a possible Comi>are Proudfoot y. Wightman,
death of the principal within that 78 111. 653» where three years had
time. It was held that no such pre- elapsed and the property had greatly
sumption would arise; on the con- Increased in value. Hall v. Qambrlll,
trary the presumption would be that 88 Fed. 909 (alTd 92 Fed. 82), where
he was stiU living. six years had elapsed and the land
1^ See post. Book V, Chap. Ill, had increased in value from |6 to |100
Real Estate Brokers. It is true per acre, and, Wasweyler v. Martin,
that language more or less op- 78 Wis. 69, where more than nine
posed is used in Hartford v. McGll* months had intervened and the prop-
llcuddy, 103 Me. 224, 16 L. R. A. (N. erty had increased in value.
8.) 481, 12 Ann. Cas. 1083, but while Compare Chicago, etc., U. Co. v.
the conclusion in that case may be Keegan, cited in preceding note,
sound upon the facts, the present In Dillon v. Maedonald^ 21 New
writer is obliged to dissent from cer- Zeal. L. R. 46, it Is said by Stout. C.
tain of the views advanced by it J., *'lf a considerable time elapsed.
There a real estate broker was held nothing being done in the meantime,
to have earned his commission by after an agent is authorized to sell
making a sale ten years after the a property, I think it will be as-
authority was conferred, but there sumed that the agency had ceased,"
was evidence of acts in the meantime citing Breese v. Liindsay, 8 Victoria
which gave color to the idea of a L. R. 232L
continuing authority.
398
CHAP, VUl] TERMINATION OF THE RELATION [§§ 558, 559
the right to terminate it, at particular times or at any time, for causes
specified or for any cause, upon conditions or without them; and a
termination in pursuance of such a provision will be effective, and will
impose no liability upon the party exercising the right.^'
2, By Their Subsequent Acts,
§ 558. What here included. — ^Termination of the authority may
also be effected in many cases by the subsequent acts of the parties.
This may be either the act of both, or termination by mutual consent,
or it may be by virtue of the act of one of them only. When done by
the principal, it is usually spoken of as revocation, and, when done by
the agent, as renunciation.
A. Termination by Mutual Consent
§ 559. Authority so terminable. — ^It will be seen hereafter that, in
general, the authority may be revoked by the principal or renounced
by the agent at any time ; though it can not be so revoked where it is
coupled with an interest, nor can it be revoked or renounced, without
liability, in violation of an agreement that it should continue for a
definite time not yet expired. But even though it may not be term-
inable by the act of one of the parties, it may, given the necessary con-
ditions of form and consideration, be terminated through the subse-
quent release by the party in interest, or the agreement of both parties
to rescind or cancel the contract between them.^' Notwithstanding
any limitation or condition originally imposed, the same power that
made the arrangement in the first instance can subsequently waive the
condition or remove the limitation. So far as any authority depends
upon the act of the parties (as distinguished from authority created
by law), the law has no purpose to subserve which will require the
continuance of the relation, when both parties desire and agree that it
shall be terminated, and the rights of third persons are not impaired.
a»Barkley ▼. Olctitt, 52 Hun (N. Travellers' Ins. Co., 119 N. Car. 187;
Y.) 452; Karsner v. Union Cent L. Oregon Mtg. 8av. Bank v. American
Ins. Co.. 12 Ohio C. C. 394: Doyle v. Mortgage Co., 85 Fed. 22, 13 Sawyer,
Phoenix Ins. Co., 25 Nov. Sco. 436; 260.
Bnrelson r. Northwestern Mut L. i«Bin88e y. Ohl, 51 N. J. L. 47;
Ins. Co., 86 Cal. 842; Ballard ▼. Conrey y. Brandegee, 2 La. Ann. 132.
399
§§ S^^^'S^^] '^^^ ^^^ O^ AGENCY [book I
B. Revocation by the PrincipaL
§ 560. Rules different in public and in private agency.^— ^ome*-
what different rules apply to revocation by the act of the principal in
the case of a private agency, from those governing in the case of a
public agency, and they will therefore be separately considered.
i. Private Agency,
o. Power of Revocation.
§ 561. In general. — ^The authority existii^ in any giveia case njay
have been conferred under a variety of circumstances which may in-
fluence to some extent the time and method of its withdrawal. Thus,
I. The execution of the authority may have been undertaken wholly
gratuitously by the agent, for the accommodation or convenience of
the principal, and the question whether it shall be executed or not may
be a matter of complete indifference to the agent. 2» It may be that,
whilej as before, the agent had no interest whatever in the thing to be
accomplished or in the results to flow from the execution of the author-
ity, he yet was to be paid fpr doing it, and is therefore anxious to ex-
ecute the authority in order to earn the promised compensation. 3. It
may be that while, as in the last case, the agent had no interest what-
ever in the thing to be accomplished, his authority to do it was coupled
with, or was an incident of, a contract of employment by the princi-
pal for a definite time, which employment the agent is desirous of
continuing in order to obtain the compensation agreed upon. 4. It
may be that the authority was given as an incident to some right or
interest, then acquired by the agent, in the property or thing concern-
ing which the power is to be exercised, and that the continuance of the
power is essential to enable the agent to protect or realize upon the
right or interest so acquired. 5, It may be that the agent has been
induced to do some act, or incur some obligation, in reliance upon the
continuance of the power, and that such continuance is essential to
enable him to avoid or indemnify himself against the risk or liability
so incurred.
§ 562. It will be observed that the interest of the agent in
all these cases varies somewhat. In tlie first, he has no interest what-
ever in the continuance of the authority. In the second and third, he
has an interest, not in the thing itself which is to be done or in the
result to be accomplished, but merely in earning the compensation
400
CHAP. Vlll] TERMINATION OP THE RELATION " [§ 563
which was to be paid for doing' it. In the fourth and fifth cases, the
situation is different Here the agent is interested not merely in .
earning compensation, but he has an interest or estate in the very thing
itself concerning which the power is to be exercised, and its continu-
ance is essential to protect his interest or shietd him from liability.
In the first three cases, the principal alone has any real interest in
having the authority executed. In the last two, the agent has such an
interest. In the first three, the agent has an authority but no real in-
terest in its execution. In the last two, he has an interest as well as
an authority. The distinction will be found to be significant.
Cases falUng within the first groups are much the more common.
Such cases may indeed be called the ordinary ones, and the rule which
governs them will be stated first. Thus —
§ 5^3' General rule— Authority is revocable at any time. — ^The
authority of the agent to represent the principal depends ordinarily
wholly upon the will and license of the latter. It is the act of the prin-
cipal which creates the authority ; it is for his benefit and to subserve
his purposes, that it is called into being; and, unless there is some
other element present, as, for example, that the agent has acquired
with the authority an interest in the subject-matter, it is in the prin-
cipal's interest alone that the authority is to be exercised. The agent,
obviously, except in the instance mentioned, can have no right to insist
upon a further execution of the authority if the principal himself de-
sires it to terminate.^^
It is the general rule of law, therefore, that the authority of the
agent may be revoked by the principal at his will at any time, and with
or without good reason therefor.^* Authority of this nature is often
XT See Clark v. Haraiglla, 1 Deaio 8 Colo. 592; Lowell v. Hessey, 46
(N. Y.), 817. 43 Am. Dec. 670; State Colo, 517; BrlggB v. Chamberlain, 47
▼. Walker. 88 Mo. 279; Owen ▼. Colo. 382. 135 Am. dt R. 223; Under
Frink. 24 Cal. 171, 178; Lord ▼. v. Adams. 95 Oa. 668; Bonney v.
Thomas, 64 N. Y. 107; Frith y. Frith, Smith, 17 111. 581; Davis v. Fidelity
[1906] A. C. 254. Fire Ins. Co.. 208 111. 875; Shiff y.
i«Hunt'y. Rousmanier, 8 Wheat Lesseps, 22 La. Ann. 185; Creager y.
(TJ. S.) 174, 5 L. Ed. 589; Taylor v. Link, 7 Md. 259; AttriU y. Patterson,
Bums. 203 U. S. 120. 51 L. ISd. 116; 58 Md. 226; Cadigan y. Crabtree. 186
Chambers y. Seay, 73 Ala. 372; Mass. 7, 104 Am. St. R. 543. 66 L. R.
Cronin y. American Securities Co., A. 982; Smith y. Kimball* 193 Mass.
163 Ala. 533. 136 Am. St R. 88; Hyn- 582; Loving Co. y. Cattle Co., 176
■on y. Noland. 14 Ark. 710; Poeten Mo. 330; Miller y. Wehrman. 81 Neb.
y. Rassette. 6 Cal. 467; Barr y. 888; Hartshorne y. Thomas. 48 N. J.
Schroeder. 32 Cat 609; Brown y. Eq. 419; Hutchins y. Hebbard, 34 N.
Pforr, 38 CaL 550; Mitchell y. Oray, Y. 24; Qardner y. Pierce, 181 App.
8 Cal. App. 428; Darrow y. St George, Diy. (N. Y.) 605; Oppenheimer y.
26 401
§ 564]
THE LAW OF AGENCY
[book I
termed a bare or naked power ; and it is but to restate the general riile
in different form to say^ as it is so often asserted, that a bare power is
revocable at the will of the principal at any time.
This power to revoke exists when the state is the principal as well
as when the principal is a private person.**
An alleged custom that an authority otherwise revocable shall be
irrevocable is said to be unreasonable and void.'^
§ 564. — — If not already executed. — Of course if the authority
has been executed, or if the agent, in pursuance of it, has entered into
contracts or created obligations binding upon the principal, the author-
ity, though otherwise revocable, cannot be revoked so ,as to affect
these acts already done. And if the agent, in pursuance of the author-
ity, has incurred obligations or been put to expense, on the principal's
account, the revocation would not affect his right to indemnity or re-
imbursement for what had thus been already done.**
BKmett, 131 App. Div. 614; Brook-
Bhire v. Voncannon, 6 Ired. (N. C.)
231 ; Raleigh Trust Co. v. Adams, 145
N. C. 161; Wheeler v. Knaggs, 8 Ohio,
169; Simpson v. Carson, 11 Ore. 361;
Coffin V. Landls, 46 Pa. 426; Fred-
erick's Appeal, 52 Pa. 338, 91 Am.
Dec. 159; Hartley's Appeal, 53 Pa.
212; Blackstone v. Buttermore, 53
Pa. 266; Kirk v. Hartman, 63 Pa. 97;
Macfarren v. Galllnger, 210 Pa 74;
McMahon v. Burns, 216 Pa. 448; Mc-
Callum V. Grier, 86 S. C. 162, 138 Am.
St R. 1037; Newton v. Conness (Tex.
Civ. App), 106 S. W. 892; Arthur v.
Porter (Tex. Civ. App.), 116 S. W.
127; 8. 0. 118 S. W. 611; Tucker v.
Lawrence, 56 Vt 467; Weekes V.
Dale, 14 Victorian L. R. 159; Hlnchey
V. Keam, 20 New Zeal. L. R, 478. See
also Brookfield v. Drury College, 139
Mo. App. 839.
Instate V. Walker, 88 Mo. 279;
Missouri V. Walker, 125 V. 8. 839, 31
L. Ed. 769; Lord v. Thomas, 64 N. Y.
107.
20 Minis V. Nelson, 43 Fed. 777.
ai Where the agent, at the prin-
cipal's direction to pay money in the
agent's hands to a third person, has
incurred an obligation to pay it to
such person, the principal cannot re-
voke his authority to pay it out of
those funds unless the principal in-
demnifies him against liability. Bris-
tow V. Taylor, 2 Starkle^ 50 (dictum) ;
Hodgson V. Anderson, 3 B. & Cr. 842;
Goodwin v. Bowden, 54 Me. 424.
So of credits extended before au-
thority terminated. Qelpcke v. Quen*
tell, 74 N. Y. 599.
So of payment of bets made on
principal's account Read v. Ander-
son, 10 Q. B. Div. 100, 13 Id. 779.
So of authority to buy property
out of funds in the agent's hands,
after he has bound himself for the
purchase. Wiger v. Carr, 131 Wis.
584, 11 L. R A. (N. 8.) 650, U Ann.
Cas. 998.
So there are cases in which, if the
principal revokes the authority out
of the proceeds of which the agent
was to be paid, he must compensate
the agent for what he hds already
done, If it be not a case in which, as
la usually true of the real estate
broker,' the agent is to take his
chances of reimbursement out of
commissions if earned. McCray v.
Pfost, 118 Mo. App. 672 (although the
court uses wider language than this,
it can mean no more); Royal Rem-
edy Co. V. Gregory Grocer Co., 90
402
CHAP. VIIl]
TERMINATION OP THE RELATION
[§§ 565> 566
If the authority has been executed in part only, and the residue be
severable, the authority as to such residue may be revoked as in other
cases.
§ 565. Role applies though authority called "exclusive" or 'Mr-
revocable/'— The mere fact that an authority, which from its nature
would otherwise be revocable at the will of the principal, is called "ex-
clusive," *' or "irrevocable," ** will not change the rule. It cannot be
made irrevocable merely by calling it so, and unless given as security
or coupled with an interest, in the sense to be hereinafter explained,
such an authority may be terminated as in any other case. The fact,
however, that the parties expressly declare a power "irrevocable," has
some tendency to prove that they regarded it as one coupled with an
interest or given as a security.**
§ 566. Rtile applies though principal may have agreed that
agency should continue for a definite period. — ^And even the fact that
the principal may have expressly agreed that the agency shall con-
tinue for a certain period will not prevent his revoking the authority
before the expiration of that time, if not coupled with an interest or
otherwise irrevocable as hereinafter explained ; but he will be liable to
the agent for the damages which the agent sustains on account of the
revocation contrary to the agreement.**
If, therefore, a declaration that the authority shall be "exclusive" or
"irrevocable," as referred to in the preceding section, may be construed
Mo. App. 68; LowoU v. He68e7> 46
Colo. 517; Brlggs y. Cbaniberlain, 47
Colo. 882, 136 Am. St. R. 223.
So where an agent to find a pnr«
ebaser for land has fully performed,
see post, Book V, Cli. III.
n Chambers ▼. Seay, 78 Ala. 372;
Woods V. Hart, 60 Neb. 497; Norton
T. Sjolseth, 48 Wash. 827; Kolb v.
Bennett Land Co., 74 Miss. 567.
Contract to give an agent the "ex-
clusive" agency in certain territory,
does not prevent the principal from
selling there (Gkilden Gate Packing
Co. T. Farmers' Union, 56 Cal. 606),
though he may be liable in damages
if he does. Garfield v. Peerless Motor
Car Co., 189 Mass. 396.
2s Chambers v. Seay, 73 Ala. 372;
Blackstone v. Buttermore, 63 Pa.
266; Prink ▼. Roe, 70 Cal. 296; Mc-
Gregor Y. Gardner, 14 Iowa, 826;
Walker r. Denison, 86 lU. 142; Attrill
y. Patterson, 68 Md. 226.
s« Norton v. Whitehead, 84 Cal.
263, 18 Am. St R. 172.
IB This, of course, is what is meant
in Milligan t. Owen, 123 Iowa, 286,
though the court calls it an Irreroc-
able authority. So, in Richardson v.
McCleary, 16 Manitoba, 69; Park v.
Frank, 75 CaL 864; Alworth v. Sey-
mour, 42 Minn. 526; Rowan t. Hull,
55 W. Va. 835; NovakoTich v. Union
Trust Co.. 89 Ark. 412; Norton t.
Sjolseth, 43 Wash. 327; Harrison v.
Augerson, 116 111. App. 226; Johnson
V. Buchanon, 54 Tex. Civ. App. 328.
See also Standard Oil Co. v. Gilbert,
84 Ga. 714, 8 L. R. A. 410; Missouri
T. Walker, 125 U. S. 839; Wilcox A
G. Sew. Mach. Co. t. Bwing, 141 U. S.
627; Dtirkee ▼. Gunn, 41 Kan. 496,
18 Am. St R. 300; Prith v. Prith,
[1906] App. Cas. 264.
403
§ 567]
TH£ LAW OF AGENCY
[book I
as an agreement not to revoke it during a definite period, it may still,
subject to liability for damages, be revoked if not coupled with an in-
terest or given as a security.**
In the analogous case of the dissohition of a partnership by one part-
ner in violation of an agreement that it should continue lionger *^ it is
said: "When one partner 'becomes dissatisfied, there is commonly no
legal policy to be subserved by compelling a continuance of the relation,
and the fact that a contract will be broken by the dissolution is no argu-
ment against the right to dissolve. Most contracts can be broken at
pleasure, subject, however, to responsibility in damages. And that
responsibility would exist in breaking a contract of partnership as in
other cases." *•
The revocation in these cases is operative not only as to the agent,
but as to third persons also who have notice of it. The fact that the
revocation may be a breach of the contract between the principal and
the agent, does not enable a third person to charge the principal upon
a contract made with the agent after knowledge of the revocation of
th^ agent's authority .*•
§ 567. Or though agent may have performed some aervice or in-
curred some expense. — The fact that the agent acting under a bare
power, may have performed some service for which he is entitled to be
2«Auerbach v. Internationale Ge-
BeHschaft, 177 Fed. 458.
2TPer Cooley, C. J., In Boiomoa v.
Kirkwood, 56 Mich. 256, citing Skin-
ner V. Dayton, 19 Johns. (N. Y.) 513,
10 Am. Dec. 286; Mason v. Connell,
1 Whart (Pa.) 381, and Slemmer's
Appeal, 58 Pa. 155, 98 Am. Dec. 248.
See also Karrick v. Hannaman, 168
U. S. 328. 42 U Ed. 484.
29 In the leading case of Clark v.
Mareiglia, 1 Denio (N. Y.), 317, 43
Am. Dec. 670, it is said: "To hold
that one who employs another to do
a piece of work is hound to suffer it
to he done at all events, would some-
times lead to great injustice. A man
may hire another to labor for a year,
and within the year his situation
may be such as to render the work
entirely useless to hinL The party
employed cannot persist in working,
though he is entitled to the damages
consequent upon his disappointment
So if one hires another to build a
house, and subsequent events put It
out of his power to pay for it, it is
commendable in him to stop the
work, and pay for what has been
done and the damages sustained by
the contractor. He may be under a
necessity to change his residence;
but upon the rule contended for, he
would be obliged to have a house
which he did not need and could not
use. In all such cases, the Just claims
of the party employed are satisfied
when he is fully compensated for his
part performance, and indemnified
for his loss in respect to the part left
unexecuted; and to persist in ac-
cumulating a larger demand is not
consistent with good faith towards
the employer." See also Derby v.
Johnson, 21 Vt 17; Owen v. Frink,
24 CaL 171; Lord v. Thomas, 64 N.
Y. 107.
3« Norton r. Sjolseth, 48 Wash. 327;
Kilpatrick t. Wiley, 197 Mo. 123.
4*^
CHAP. Vlll] TERMINATION OP THE RELATION [§§ 568, 569
compensated, or incurred expense for which he may claim reimburse-
ment, or subjected himself to a liability against which he may demand
indemnity, — the authority not being given to him for the purpose of
securing him in these cases^^does not affect the revocability of the
power. For all of these matters the agent woitld, where he was prop-
erly acting, and upon the principal's account, have a just claim against
the principal ; '^ but no oine of them of itself gives th)e agent that tort
of a» "interest^ or right to aecurhy, which in many cases operates to
make a power irrevocable, within the ntles hereafter to be consid-
ered."
§ 568. DiBttnctson betWMn power and right to revoke<--Betwe0n
authority and contract of empIoymQBt.-^Distinctioo may be made in
these cases between the power to revoke and the right to revoke ; the
principal always having the power to rcnroke but not having the right
to do so in those cases wherein he has agreed not to exercise his power
daring a certain period If, in the latter case, he does exercise his
power he must respond in damages.''
The same conchision may also be reached in other cases by dis-
tinguishing between the authority and the contract of employment.
The authority may be withdrawn at any moment, but the contract of
employment can not be terminated in violation of its terms, without
making the principal liable in damages.'*
§ 569. Exceptions — ^Authority not revocab}e.-^In all of the cases
thus far considered, the revocation of the authority has involved noth-
ing more than that, and perhaps, alto Ae breach of a contract of em-
ployment with its consequent loss of salary, fees or commissions. For
the breach of such a contract, and its consequent loss of compensation,
an ordinary action for damages affords an adequate legal remedy.
But while this is the ordinary situation, and revocability the ordi-
nary rule, there may be cases in which the circuutstances are such that
the agent is something more than a mere agent, and the authority
something more than a mere naked power to be exercised only for the
principal's benefit, — cases in which it is clear that the agent has ob-
tained something more than a mere contract, with its consequent right
»oSee HallBtead v. Perrlgo, 87 Neb. ««See Turuer v. Sawdon, [1901] 2
128; LoweU v. Hessey, 46 Colo. 517. K. B. 653. See also Toppiu v. Healey,
8J See post, IS 585, 659. 11 Week. Rep'r, 46G, where Wllles. J.,
32 See Alworth v. Seymour, 42 says, "You may revoke an authority,
Minn. 526: Rowan v. Hull, 55 W. Va. although you cannot revoke a con-
386; NoTakovlch y. Union Trust Co., tract"
S9 Ark. 412; Cloe ▼. Rogers, 31 Okla.
255, 88 L. R. A. (N. 8.) 366.
S 570] THE LAW OP AGENCY [bOOK I
to look simply to the personal responsibility of the principal for redress
in case of breach, but has obtained security by virtue of a power to
deal with specific property or interests for his protection— and in
which, consequently, the revocationr of the authority would cause a
loss other than the mere loss of employment and its compensation — ^a
loss not to be adequately remedied by a mere action for damages. In
such cases, the rule of revocability should not apply.
These cases assume a variety of forms. Thus, i. There are cases
in which the agent has acquired some interest of his. own in the ex-
ecution of the authority, in addition to his mere interest in the contract
of employment with its resulting gains — cases wherein it is often, said
he has a power "coupled with an interest." 2. There may be cases in
which the agent has been induced to assume a responsibility, or incur
a liability, in reliance upon the continuance of the authority, under
such circumstances that, if the authority be withdrawn, the agent will
be exposed to personal loss or injury^ 3. Tliere may be cases in which
the authority was created for the protection, not of tlie. agent, bot^of
some third person, under such circumstances that its revocation would
impair the latter's rights. 4. There may be cases of statutory powers
which may be revoked only under the conditions prescribed by the
statute. Each of these forms will be separately considered.
§ 570. I. Authority ^'coupled with an interest."—- The cases most
commonly arising, in which the authority is deemed irrevocable, are
those in which the authority is said to be "coupled with an interest."
This expression is sometimes used to designate the whole class of ir-
revocable authorities, and sometimes to indicate but one species of
such authorities. It is used somewhat differently in the English and
in the American cases. By some of the latter, it has a different sig-
nificance when applied to revocability by death than when revocation
by the mere act of the principal is concerned. The question depends
upon the meaning to be attached to the word "interest."
The "interest" which the agent may have in the execution of the
autliority may be one of three kinds : —
1. That already referred to, namely, an interest, not in the thing
concerning which the power is to be exercised, or in the results to
flow from its exercise, but merely an interest in being permitted to
exercise it in order to earn his commissions.
2. An interest, not amounting to a property or estate in the thing
itself, but still an interest in the existence of the power or authority to
act with reference to it, not for the purpose of earning a commission
by the exercise of the power, but because the agent has parted with
406
CHAP. VIIl] TERMINATION OF THE RELATION [§§ 571, 572
value, or incurred Kability, or assumed obligations, at the principal's
request or with his consent, looking to the exercise of the power as the
means of reimbursement, indemnity or protection.
3. An interest or estate in the thing itself, concerning which the
power is to be exercised, arising from an assignment, pledge or lien
created by the principal, coupled with which is the power to deal with
the thing itself in order to make the assignment, pledge or lien ef-
fectual.
§ 571. -^r— Variety of forms. — ^Each of these tlaree forms dif-
fers from the others. The first is the mere naked power, and is rev-
ocable at the will of the principal, as already seen, even though such
revocation involves the breach of his agreement not to revoke it.
The second and third differ from each other only in the fact that,
in the latter, the agent has an estate or interest in the subject matter
of the power, while in the former his interest is rather in his right to
exercise the power over the thing, in order to make it available for
the security or protection contemplated.
The second and third forms might each be called a power coupled
with an interest, and each has been so called, though the interest in
the respective cases is of a different nature.
§ 572. American use of term. — ^According to Chief Justice
Marshall in the leading case of Hunt v. Rousmanier,'* an interest of
the second sort, though sufficient to make the power irrevocable by the
mere act of the principal, is not such a "power coupled with an inter-
est" as will survive his death. Notliing short of an interest of the
third sort will, according to that view, suffice to prevent revocation by
death. He says, in language often quoted and hereinafter more fully
referred to, **Where a letter of attorney forms a part of a contract,
and is a security for mcMiey, or for the performance of any act which
is deemed valuable, it is generally made irrevocable in terms, or, if not
so, is deemed irrevocable in law. * * ♦ But does it retain its ef-
ficacy after his death ? We think it does not. We think it well settled
that a power of attorney, though irrevocable during the life of the
party, becoines extinct by his death. * * * This general rule, that
a power ceases with the life of the person giving it, admits of one ex-
ception. If a power be coupled witi an 'interest,' it survives the per-
son giving it, and may be executed after his death. As this proposi-
tion is laid down too positively in the books to be controverted, it
becomes necessary to inquire what is meant by the expression, *a power
coupled with an interest? ' Is it an interest in the subject on which the
•4 8 Wheat. (U. 8.) 174,
407
§§ 573-575] THE LAW OF AGENCY [BOOK I
power is to be exercised, or is it an interest in that wirich is produced
by the exercise of the power ? We hold it to be ctear, that the interest
which can protect a power after the death of a person who creates it,
must be an interest in the thing itself. In other words, the power must
be engrafted on an estate in the thing."
§ 573' English use of term. — ^On the other hand, using the
same term to express a different sort of interest^ Lord Etienborough
said : "A power coupled with an interest cannot be revoked by the per-
son granting it ; but it is necessarily revoked by his death ;" •• and in
another case •• it is said : "What is meant by an authority coupled with
an interest being irrevocable is this — ^that where an agreement is en-
tered into on a sufficient consideration, whereby an authority is given
for the purpose of securing some benefit to the donee of the authority,
such an authority is irrevocable." In still another case *'' Lord Ken-
yon said: "There is a difference in cases of powers of attorney; ia
general, they are revocable, from their nature, but there are these ex-
ceptions— where a power of attorney is part of a security for money,
there it is not revocable ; where a power of attorney was made to levy a
fine, as part of a security, it was held not to be revocable : the princi-
ple is applicable to every case where a power of attorney is necessary
to effectuate any security, such is not rcvocaWe."
§ 574* DifiFerence in reBUlts^-^Chief Justice Mar^all's def-
inition leads to this classification: i. Ordinary bare powers which are
revocable by the principal at any time. 2. Powers forming "part of a
any act which is deemed valuable." These are irrevocable by the act
contract," given as "a security for money or for the performance of
of the principal, but are revoked by his death. 3. "Powers coupled
with an interest," which are not only not revocable by the act of the
principal, but are also not revoked by his death.
The English courts, by applying the term "power coupled with an
interest" to the second class, have not reserved any familiar phrase to
designate the third, nor do they seem to have had much occasion to
consider it. Notwithstanding this difference in nomenclature, there*
is very little difference in the actual results reached in the' two coun-
tries.
§ 575. ' Power irrevocable by death irrevocable by act of
principal. — Not all of the American courts have followed the distinc-
•• In Watson ▼. King, 4 Oamp. 273. w Walsh v. Whltcomb, a Esp. 565»
99 In re Hannan's Empress Gold quoted In Smart v. Sandars, 5 C. B.
MIn. ft Dev. Co., Carmlchael's Case, 895. See also Gauisen v. Morton, 10
[1896] 2 Ch. Div. 643, quoting from B. ft C. 78L
Clerk V. Laurie. 2 H. ft N. 199.
408
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 576
tions made by Chief Justice Marshall, though that is clearly the ten-
dency.** Without attempting at this stage, however, to reconcile dif-
ferences in nomenclature, it is sufficient for the present purpose to
observe that all courts, English and American, would agree in holding
that an interest of the kind required by Chief Justice Marshall to
preserve the power from revocation by death, would a fortiori render
it irrevocable by the act of the principal.^' What these powers are,
will be considered in a later section to which the reader must be re-
ferred.*®
§ 576. d. Power given as security and therefore ''coupled with
an interest."— It is clear, however, that there is a large class of cases
in which the agent may have an "interest," less than an estate in the
thing itself, which will render the power irrevocable by the act of the
principal, even though it might not suffice to preserve it against his
death. The "interest" here referred to is that of the second sort; it
is more than a mere power, it is less than an estate in the subject
matter of the authority. It exists where the agent has some other
interest than merely to accomplish the principal's purpose and to earn
the promised commission. A typical case is presented where the agent
has advanced money, or incurred an obligation, for the principal, and
the latter has given him some power, — ^for example, the power to sell
certain property and pay himself out of the proceeds, — for his protec-
tion. The principal might have secured the agent by mortgage, or he
might have delivered the property to him by way of pledge, in which
case the agent would have acquired an estate or property as well as a
power ; but the principal has not done so : he has simply given a power
by way of security. It is, however, more than a mere contract, for
whose breach an action for damages may be maintained. The parties
contemplated more than that: they intended a security. It is analo-
gous to agreements to give security, which may be specifically enforced
is See Terwllliger r. Ontario, etc.,
R. Co., 149 N. Y. 8«.
MSee Hunt t. Housmanier, 8
Wheat (U. a) 174, 6 L. Ed. 589;
Watson V. King, 4 Gamp. 272; Knapp
y. AlYord, 10 Paige (N. Y.), 206, 40
Am. Dec. 241; TerwilUger v. Ontario,
etc., R. Co., supra; Gulf, etc., Co. v.
MiUer, 21 Tex. Civ. App. 609 ( au-
thority to collect a claim coupled
with an assignment of an Interest In
It, not rerooable by assignor).
«»See p09t, §1 655-663.
In Royal Society v. Campbell, 17
R. I. 402, 13 L. R. A. 601, as part of
a family settlement, power was given
to collect certain insurance moneys,
put them into a common fund and
pay out the fund in certain proper
tlons. Heldt that there was an equit*
able assignment of the insurance
which made the power, to receive
and pay out, one coupled with an in-
terest, and it was therefore irrevoca-
ble by the act of grantor.
409
§ S77l
THE LAW OF AGENCY
[book I
because a mere judgment for damages, against a party perhaps pe-
cuniarily irresponsible, would afford no adequate relief. As against
the principal, such a power is irrevocable, so long as the agent has
need to rely upon it for his protection.*^
§ 577. Powers forming part of a contract — In other cases
the granting of the power is one of the conditions of a contract be-
tween the parties, and is designed as a security for one of them. In
the language of Chief Justice Marshall, it "forms part of a contract
and is a security for money or for the performance of any act which is
deemed valuable," and is irrevocable by the act of the principal for
like reasons.**
«i See the discussion in Terwilliger
▼. Ontario, etc., R. Co., 149 N. Y. 86,
supra.
*2 A contract with an "under-
writer" to subscribe for shares in a
proposed corporation, gave to the
other party, the promoter, an "irrev-
ocable" power to apply for the req-
uisite number of shares in the name
of the underwriter. Held, not to be
revocable by the underwriter. Car-
michaers Case, In re Hannan's Em-
press Gold Min. & Dev. Co., [1896]
2 Ch. DIv. 648. See also Ottey v.
Perth Licensing Justices, 9 West Aus-
tra. L. R. 39. The English court
termed this "an authority coupled
with an interest." Chief Justice
Marshall would have called it "a let-
ter of attorney forming part of a con-
tract," or "a security for the per-
formance of an act which is deemed
valuable" but not "a power coupled
with an interest." He would, how-
ever, have agreed with the English
court that it was irrevocable by the
act of the principal. There is good
discussion of the question in Natal
Bank v. Natorp, [190S] Transvaal L.
Rep. 1016, where it is held that the
Roman-Dutch law and the English
law agree. A, being indebted to B,
in order to discharge the debt, exe-
cuted to B, a power of attorney au-
thorizing him to sell certain land be-
longing to A. Held that this, being
an authority coupled with an inter-
est, could not be revoked by A.
Gaussen v. Morton, 10 B. it C. 781.
Chief Justice Marshall would have
called this a "letter of attorney given
as a security for money," but he
would also have held it irrevocable
by the act of A. A, being insolvent,
gave to B, a creditor, a power of at-
torney to collect debts due A and ap-
ply the proceeds upon the debts
due from A to B and other creditors.
Heldf irrevocable as "part of the se-
curity for the payment of the cred-
itors." Walsh V. Whltcomb, 2 Esp.
665.
In Smyth v. Craig, 8 Watts, ft S.
(Pa.) 14, a power given to a third
person to fix the price of goods sold
in discharge of a debt was, on the au-
thority of Walsh V. Whltcomb, supra,
compared by Chief Justice Gibson to
"a power coupled with an interest in
the execution of it," and therefore
held irrevocable.
In Terwilliger v. Ontario, etc., R.
Co., 149 N. T. 86, suprOt a power to
sell property to satisfy a claim for
damages for trespass by the princi-
pal on the land of the agent, was
held to be irrevocable if it should be
found that "there was any valid con-
sideration within the law applicable
to executory contracts, to uphold the
authority."
In Raymond v. Squire, 11 Johns.
(N. Y.) 47, a debtor had agreed with
his creditor that the latter should
have the benefit, for his security, of a
covenant running from a third per-
4TO
CHAP;. VIIl]
TERMINATION OF THE HELATION
[§ 578
§ 578^
Po¥^r8 given for a valuable consideration. — It
is not infrequently said that the power is irrevocable, if granted for a
valuable consideration. It is, of course, so granted in the cases above
mentioned. But something more than a valuable consideration is es-
sential, for the granting of a bare power may be upon such a consid-
eration.*' The test is, whether the agent has some interest to be pro-
tected,— other than his m^re employment, or the opportunity to exercise
a power in order that, by doing so, he may earn the commission or
other compensation which awaits its exercise, — ^and for the protection
of which interest he has stipulated for the power, imder such circum-
stances that an action to recover damages for its revocation would not
afford him the contemplated remedy.
son to the debtor; the debtor also ex-
ecuted to his creditor a power of at-
torney to Bue.Qpon and enforce the
covenant In the name of the debtor.
There was, however, no formal aa-
signment of the covenant Beld that
the agreement, plus the power of at-
torney, "was equivalent to a formal
assignment, for the letter of attor-
ney, being coupled with an interest,
and given as a security, was not re-
vocabla"
In DeForest v. Bates, 1 Bdw. (N.
Y.) Ch. 394, an order to an agent to
devote the principal's property to the
payment of one of his creditors was
held to amount "to an equitable as-
signment of the property founded
upon a valuable consideration, there-
fore carrying with it an Interest
coupled with the power, and on that
account not revocable."
In American Loan & Trust Co. v.
BillingB, 58 Minn. 187, it was held
that a power of attorney executed by
A, empowering B to sell and convey
real and personal estate and pay the
proceeds to C. to be applied in pay-
ment of a debt from A to C, existing
or contemplated at the time of its
execution, and executed and accepted
as security for such debt, cannot be
revoked by A.
In Montague v. McCarroll, 15 Utah,
318, a power of attorney, given for
a small consideration, authorized the
sale and conveyance of lands, and
also expressly renounced and re-
leased to the agent all claim to the
proceeds. Held, irrevocable.
So alBO the power of sale contained
in a mortgage is said to be irrevoca-
ble by the act of the party even
though revoked by death. Johnson
y. Johnaon, 27 8. Oar. 309, 18 Am. St
R* 636; Wilkina v. Mc(}ehee, 86 Ga.
764. Equally so, a power to put a
lien upon land — "to pass a bond over
It" Natal Bank y. Uaimp, [1908]
Transvaal L. Rep. 1016. And so of a
power of attorney to transfer stock
given by way of security. Skinner
V. Ft Wayne, etc., R. Co., 58 Fed. 55.
And so of a power given by an in-
ventor to an attorney to hold and
control a patent for the benefit of
those who had advanced money to
pay for the expense of procuring it,
who were also to pay the expenses
of defending It, and were entitled to
operate under it. Day v. Candee, 8
Fish. Pat. Cas. 9, 7 Fed. Cas. p. 230,
No. 3,676. And so, of a power given
by an Insolvent firm to one who ad
vanced money to it, to sell its prop
erty for reimbursement. Union Qar
ment Co. v. Newburger, 124 La. 820
48 Norton v. Sjolseth, 43 Wash. 327
The mere fact that one pays a valua
ble consideration for appointment as
a newspaper distributor or for a
newspaper "route," does not make
the appointment irrevocable. Star-
oske V. Pulitzer Pub. Co., 235 Mo. 67.
411
§ 586]
THE LAW OF AGENCY
[book I
§586.
What ''interest" not sufficient^Iiistances. — ^But a
mere interest in the results or proceeds of the execution of the author-
ity, as by way of compensation, is not enough.
Thus where one is given authority to sell the lands or other prop-
erty or loan the money of another, and is to have a certain commission
or share out of the proceeds for his services, the authority may be
revoked at the will of the principal, even though in terms it was de-
clared to be exclusive or irrevocable ; •' and so where one is author-
ized to collect a debt and is to have a commission or a share of what he
Am. St. R. 459; Smith v. San Fran-
ci8C0» etc., R. Co., 115 Gal. 584, 56 Am.
St R. 119, 35 L. R. A. 309: Hey v.
Dolphin, 92 Hun (N. Y.), 230; Boyer
v. Neshltt, 227 Pa. 398, 136 Am. St
R. 890.
Compare Harvey v. Llnvllle Im-
provement Co., 118 N. C. 693, 54 Am.
St R. 749, 32 L. R. A. 265.
A power of attorney to sell land,
upon which the agent, at the request
of the principal, has made valuable
improvements, and for which he Is
to reimburse himself out of the pro-
ceeds, is irrevocable by the act of
the principal unless he otherwise re-
imburses the agent Buffalo Land
Co. V. Strong, 91 Minn. 84.
So of a power given to an agent, who
has procured Insurance for his prin-
cipal and advanced the money for
the premiums, to hold the policy and
collect its proceeds or its surrender
value, under given circumstances, in
order to reimburse himself (Miller
V. Home Ins. Co., 17 N. J. Bq. 175);
and a power given by a landlord to
his tenant to sell crops in which the
landlord had an interest in order to
satisfy a debt which the landlord
owed to the tenant (Big Four Coal
Co. V. Wren, 115 111. App. 381); and
a power, given by an insolvent firm
to one who has advanced money to
pay their debts, to sell the firm prop-
erty for his reimbursement (Union
Garment Co. v. Newburgher, 124 La.
819) ; and a power of attorney to as-
sign wages to pay a debt where there
is a subsisting employment (Cox v.
Hughes, 10 Cal. App. 553).
A vessel was hired from the agent
of the owner upon an agreement that
the hirer, in addition to rent, should
pay All expenses of aavigation and
give a bond to secure performance.
Later it was agreed that in lieu of
the bond, the agent should have the
power to collect all freight money
and disburse it as agreed. Held, ir-
revocable by the act of the hirer.
The court said that it might be re-
garded as a power coupled with an
interest, there being in effect at least
an equitable assignment of the
freight money. Pacific Coast Co. v.
Anderson, 47 C. C. A. 106, 107 Fed.
073.
Where a bank, which had given
credit upon a check that was later
dishonored, had then received for
collection a second check In order to
reimburse itself, it was said that its
authority to collect the second check
was irrevocable. Citizens Bank t.
Tessman, Minn. — , 140 N. W.
178. The question, however, did not
arise in any attempt to collect the
check. The case contains a good
discussion of irrevocable powers.
•s Taylor v. Burns, 208 U. 8. 120,
51 L. Ed. 116; Chambers v. Seay, 78
Ala. 372; Barr v. Schroeder, 32 Cal.
609; Brown v. Pforr, 38 CaL 560;
Frlnk v. Roe, 70 Cal. 296; Schilling
v. Moore, 38 Okla. — , 125 Pac. 487;
Norton v. SJolseth, 43 Wash. 327;
Hartley's Appeal, 68 Penn. St 212;
Walker v. Denlson, 86 111. 142; Gil-
bert V. Holmes, 64 111. 660; Bonney
V. Smith, 17 111. 631; Hunt v. Rous-
manler, 8 Wheat (U. S.) 175. 5 L.
416
CHAP. VIII ]
TERMINATION OF THE RELATION
[§ 587
collects for his services, the power is not coupled with a sufficient in-
terest and is therefore revocable by the principal at will~ The inter-
est in the commissions to be earned and in the moneys expended in
endeavoring to carry out the agency, is not sufficient to prevent revoca-
tion. And so a mere power of attorney to confess judgment in favor
of a third person not shown to have been executed on any considera-
tion or to have been given as a. security for any demands or to render
a security effectual, is revocable at the will of the principal.'*
Of course, no interest can be acquired where to do so would violate
the express provisions of the law.** And though there was an attempt
to assign an interest with the power, yet if that interest was not as-
signable, the power would be a bare power and revocable at will.**
§ 587. Bare powers. — A fortiori, a bafe power, not con-
nected with any interest in the agent, may be revoked, without liabil-
ity, at any time before its execution. Thus where a debtor, or one on
his behalf^ without consideration, deposits money with another to be
paid to a creditor of the debtor, or to compromise an action against
him, the relation of principal and agent arises between the debtor and
the person with whom the money is so deposited. In such a case the
money remains the property of the principal and he may revoke the
Ed. 589; Elwell v. Coon (N. J. Eq.),
46 AtL 5S0; t)arrow v. St Qeoirge, 8
Colo. 609; Simpson v. Carson, 11 Ore-
gon, 361; Blackstone v. Buttermore,
53 Penn. St 266; Oregon Bank v.
American Mtg. Co., 85 Fed. 22.
The mere fact that the commis-
sions are large, e. g, one half of the
amount, does not change the rule.
McMahan ▼. Bums, 216 Pa. 44S;
Walker v. Denlson, 86 111. 142.
The same rule applies to an insur-
ance agent who is simply interested
in earning the commissions. An-
drews V. Trav^ers' Ins. Co., 24 Ky.
L. R. 844, 70 S. W. 43. Even though
the writing under which the agent
claims contains terms which pur-
port to "sell" him the property or an
interest in it, yet if the whole trans-
action shows that he was merely an
agent authorized to sell for a com-
mission, his authority is revocable.
Taylor y. Burns. 203 U. S. 120, 51 L.
Ed. 116, Bupra.
es Hartley's Appeal, 53 Pa. St 212,
91 Am. Dec. 207; Flanagan v. Brown,
27 4
70 Cal. 254; Burke ▼. Priest, 50 Mo.
App^ 310; Stler t. imperial Life Ins.
Co., 58 Fed. 843.
Same rule applied where one was
appointed by a state to prosecate
elaims against' the U. S. government
upon a commission. Missouri v.
Walker, 125 tJ. S. 339, 31 L. Ed. 769.
And where an insurance agent was
authorized to eollect premiums for a
commission. Andrews v. Travelers
Ins. Co., 24 Ky. L. Rep. 844, 70 S.
W. 43.
•4 Evans V. Feame, 16 Ala. 689, 50
Am. Dee. 197; Woodruff v. Dubuque,
etc.. R. R. Co., 30 Fed. 91.
•0Thus a statute expressly pro-
vides that no transfer of land scrip
issued to Indians shall be valid, this
can not be defeated by the device of
an Irrevocable power of attorney to
sell. Midway Co. v. Baton, 183 U. 8.
602, 46 L. Ed. 347 See also Strong
v. Buffalo Land Co., 203 U. S. 582, 51
L. Ed. 327, affirming s. 0., 91 Minn. 84.
«« Flynn v. Butler, 189 Mass. %!!
17
§§ 5^8, 589] THE LAW OF AGENCY [bOOK I
authority at any time until the agent has actually paid the money to
the creditor, or has come under an obligation to him for it.*^ And any
disposition of the money by the debtor, before such payment or credit,
inconsistent with the appropriation first intended, as by an assignment
for the benefit of creditors, will operate as a revocation.*® So a de-
posit of stock with the officers of a corporation or otliers to enable it
to be voted upon, is but a bare power and may be revoked at any time.**
§ 588. New nomenclature needed. — It will be evident from the
foregoing discussion, that a new nomenclature is needed, for the pres-
ent one is sadly ambiguous. If the expression "power coupled with
an interest" is to be retained and used here to designate powers not
revocable by the act of the principal (even though they may be re-
voked by his death),, as seems to be the English practice, the term
"power coupled with an estate," or something equivalent to that, should
be used for the sort which survive death, and which are yet to be con-
sidered. If, on the other hand, we are to adopt the prevailing Ameri-
can practice, and call these latter powers "powers coupled with an
interest," we should apply some other name to the ones now being
considered; and the expression "power given for security" will suf-
fice, if emphasis be laid upon the fact that it is only a power, and not
an estate or property which is so given, although such an estate or
property might have been conveyed.
Thus we should have, as heretofore suggested, this classification:
1. Bare powers.
2. Powers given as security (either of the agent or of third persons).
3. Powers coupled with an interest.
Bare powers are always revocable, even though a breach of con-
tract may thereby be involved.
Powers given as security may not be revoked by the act of the prin-
cipal (unless he actually reimburses the party protected) though they
would ordinarily be deemed revocable by his death — a point yet to be
considered.
Powers coupled with an interest are irrevocable by the act of the
principal or by his death or other disability.
§ 58g. What may be the subject matter of a power given
as security. — ^The subject matters with which a power given as security
may be concerned, as shown by the decided cases, are very numerous.
«T See Seaman v. Whitney, 24 «« SImonton v. First National Bank.
Wend. 260, 35 Am. Dec. 618; Howard supra.
College V. Pace, 15 Ga. 486; Phillips «• Woodruff v. Dubuque, etc., R. R.
V. Howell, 60 Ga. 411; Simonton v. Co., 30 Fed. 91.
First National Bank, 24 Minn. 216.
418
CHAP. VIII ]
TERMINATION OF THE RELATION
[§§ 590-592
Such a power may be one over choses in action and the various forms
of personal property, or — given the requisites of form — over real es-
tate, or it may be an authority to impose personal obligations upon the
principal/*
§ 590. Necessary characteristics of such a power. — In or-
der to make a power given by way of security effectual, it must, ob-
viously, be conferred in definite and specific terms, and be to do some
definite and specific act or acts. It need not be in writing, except
where a statute requires it.''^ It must be a power to do some act for
the protection of the party interested, and not merely an employment
of him to do the act for the employer's benefit, with merely a result-
ing benefit to the agent in the form of fees or commissions. It must
also, in order to be directly enforceable, be to do such an act and under
such circumstances as would enable a court of equity either to enforce
it specifically or at least to enjoin interference with its performance.'*
§ 591. Against whom power given as security enforce-
able.— ^The question as to the persons against whom a power given as
security, and therefore irrevocable by the mere act of the principal,
may be enforced, has thus far apparently be^n little considered by the
courts. The true rule would seem to be that, so far as it concerns
property, it is operative, not only against the principal, but also against
any one succeeding to the property by the act of the principal,'* and
who is eitlier a mere volunteer or a purchaser with notice.'* So far
as its exercise properly results in the creation of personal obligations
against the principal, they would doubtless have the same eflFect upon
those claiming through him, as though he had incurred the same ob-
ligations by his own personal act.
§ 592, Contracts of employment — ^When right to terminate ex-
ists— Employments at will. — Passing now beyond the question of the
mere revocation of powers — ^and perhaps into a field not properly a
TO See the cases referred to antet
§1 576-8.
TiTerwiniger v. Ontario, etc., R.
Co., 149 N. Y. 86. See also Wlger v.
Carr. 131 Wis. 584, 11 L. R. A. (N.
S.) 650, 11 A. & E. Ann. Cas. 998.
tsSee Frith v. Frith, [1906] App.
Cas. 254, where it was held that even
though the power might be deemed
irrevocable, it was so inseparably
bound up with a contract for i)er-
Bonal services that a court of equity,
not being able to enforce that, could
not enforce the residue.
7« See Day v. Candee, 8 Fish. Pat.
Cas. 9, 7 Fed. Cas. p. 230, No. 3,676.
Compare Howes v. Ball, 7 B. & Cr.
481; commented upon in Sewell v.
Burdick, 10 App. Cas. 74, 95. Not
good as against bona fide purchaser
of res without notice. Terwilliger v.
Ontario, etc., R. Co., 149 N. Y. 86
{dictum).
7* Clark V. Flint, 22 Pick, (Mass.)
231, 33 Am. Dec. 733.
419
§ 592]
THE LAW OF AGENCY
[book I
part of agency, if strictly limited, at all — attention may be given to the
matter of the termination of employments. As has been already seen,
the conferring of authority may or may not be accompanied by a con-
tract of employment. It also may or may not be accompanied by an
agreement for continuance. With reference to "bare" powers, i. e.,
those not coupled with an interest or given as a security, it has been
seen that even though there was an agreement not to revoke, the prin-
cipal may nevertheless revoke, subject to liability for damages for the
breach of the agreement. With reference to contracts of employment
also, much the same situation exists. The employer may usually dis-
charge his employee at pleasure, subject to damages if, in doing so, he
breaks a contract of employment without legal justification." There
may have been no contract for a definite term, or, even if there were
one, there may be legal excuse for breaking it, and in either of these
events there would be no liability.
Speaking first of the former case, where there was no express or
implied contract that the employment should continue for a definite
time, it may ordinarily be terminated by either party at any time with-
out liability. Such employments are deemed to be at will merely, and
their termination violates no contract and involves no liability.^'
TsThis may, perhaps* be made
more clear by an illustration.
1. I give to a real estate broker au-
thority to sell my land and promise
him a commission for so doin^. This
is merely an authority , and not a
contract of hiring or employment.
There is as yet no contract between
us at all. I may revoke this author-
ity at any time before performance
without liability.
2. I give to a real estate broker au-
thority to sell my land, promising
him a commission if he does so, and
I abso, for a sufficient consideration,
agree not to revoke his authority
within six months. This is still
merely an authority, with a contract
that it shall not be revoked. I may
nevertheless revoke the authority,
but am liable for the breach of the
contract.
8. I may hire a man for six
months to act as my agent [or serv-
ant, according to some views] in
such matters as I may direct him. I
then say to him, I authorize you to
sell my stocks or chattels. Here is
a hiring or an employment for a defi-
nite time. I may revoke his author-
ity to sell my stocks or chattels at
pleasure, and incur no liability. But
if I also discharge him from my em-
ployment, I violate my contract of
hiring or employment, and must pay
him damages.
Tawillcox & Gibbs Co. v. E^fring,
141 U. S. 627; Kirk v. Hartman, 6S
Pa. 97; Coffin v. Landis, 46 Pa. 426;
Jacobs V. Warfleld, 23 I^a. Ann. 89S;
Knox V. Parker, 2 Wash. 34; Sheahan
V. National S. S. Co., 87 Fed. 167, 30
C. C. A. 593; Rees v. Pellow, 97 Fed.
167, 38 C. C. A. 94; Hoover v. Per-
kins Windmill Co., 41 Minn. 143;
Brougham v. Paul, 138 IlL App. 45$;
Brookfleld v. Drury College, 139 Mo.
App. 339; Blumenthal v. Bridges, 91
Ark. 212; Harrod v. Wineman, 146
Iowa, 718; Harrington v. Brockman
Commission Co., 107 Mo. App. 418;
Evans v. Gay (Tex. Civ. App.), 74
420
CHAP. Vlll]
TERMINATION OF THE RELATION
[§ 593
The law presumes that all general or indefinite employments are
thus at will merely, and the burden of proving an employment for a
definite time rests upon him who alleges it^^ He must, of course^
show a consideration as in other cases.
Where, oa the other hand, there was an employment for a definite
term, or an agreement that the agency should continue for a stated
period, it can only be terminated without liability, either where there
was some right reserved or condition attached to that effect, or where
some event has occurred or default happened which will legally justify
a termination of the contract.
§ 593. Employment on condition — "Satisfaction"— "Good
cause/' — It is not tmcommon to provide that the agency, or employ-
ment, although otherwise for a definite period, shall cease or may be
terminated by either party upon the happening of a certain event or
the arising of a certain contingency, and when the agency does so
cease, or is so terminated, no liability attaches to either party. Thus
it is competent to provide that the relation shall continue only so long
as one or either of the parties is satisfied, and where such is the agree-
ment, the dissatisfaction of the party to be satisfied, if it be bona Me,
is a sufficient ground for terminating the relation without liability^*
S. W. 575; Warden v. Hinds, 90 C. C
A. 449, 163 Fed. 201, 25 L. R. A. (N.
S.) 629; Clarke v. Stevedoring Co.,
163 Fed. 423; Currier ▼. Ritter Lum-
l)er Co., 150 N. a 694, 184 Am. St.
R. 955; Briggs V. Chamberlain, 47
Colo. 382, 136 Am. St R. 223.
T» Moore v. Security Trust Ins. Co.,
93 C. C. A. 652, 168 Fed. 496, and
other cases cited above.
T« Tyler y. Ames, 6 Lansing (N.
Y.) 280; Crawford ▼. Publishing Co.,
163 N. Y. 404; Brown v. Retsof Mln.
Co., 129 App. Div. 368; Qlnsberg v.
Friedman, 146 N. Y. App. Div. 779;
Adriance v. Rutherford, 67 Mich.
170; Sax v. Detroit, etc., Ry. Co., 125
Mich. 252, 84 Am. St. R. 572; iSbeU v.
Carriage. Co., 170 Mich. 304; Hotch-
kiss y. Gretna Gin & Compress Co.,
36 La. Ann. 617; Kendall v. West, 196
111. 221, 89 Am. St. R. 317; Karsner
V. Union Cent. L. Ins. Co., 12 Ohio C.
C. 394; Beissel y. Vermillion Farm-
ers' Bleyator Co., 102 Minn. 229, 12
L. R. A. <N. S.) 403; Corgan y. Lee
Coal Co., 218 Pa. 386, 11 Ann. Cas.
841, 120 Am. St R. 891; Stewart A
Co. V. Exum, 132 Ga. 422; MacKenzie
y. Minis, 132 Ga. 833, 23 L. R. A. (N.
S.) 1003; Lieberman v. Weil, 141
Wis. 635.
But a dismissal in such a case, aim-
ply because his services were not
needed, is a breach. Sax v. Detroit,
etc., Ry. Co., supra; Atlanta Stove
Works V. Hamilton, 88 Miss, 704.
See also Hotchkiss v. Gretna Gin. ft
Compress Co., supra; and compare
Crawford v. Pub. Co., 163 N. Y. 404.
It has been held, in a case in which
in consideration of the release of a
claim for injuries, an employe ac-
cepted an agreement for work so long
as his services should be satisfactory,
that the grounds of the dissatisfac-
tion must be reasonable. Lake Erie
ft W. Ry. Co. v. Tierney, 29 Ohio C.
83 (aff'd without opinion, 75 Ohio
St 565); but see cxmtra Baz v. De-
troit, etc., Ry. Co., 125 Mich. 252, 84
Am. St R. 572.
- It has been suggested that in cases
involving not- commercial services.
421
Trr I.- V
[P.OOK I
-ra.' ''jit i-fTT^sii^A bv cidier party
nn f;- i t*-- - 'viir/i^c \f «hcr party for
* :ot e—'t'-.T-^-TT: 5»: jicsr *? ^ does ** faithful
"J ' '^ ' rt . ^rc"" r-iif l.^^:^ 1-: i r: 'e -j^^rri^zrJst ^ :bc will of cither
y<-. -*
t 5<^
^'
- — ^So, of course, it
"r",*^.*rT, f.r 'r^ z-r^r.'*^ rt f-'-zjit* trjsl tbe principal shall
:3 caucus, or upon
of such
.. 4&
- - t «
.-». i
'- "*•
»-•* ci35e f^Tcatra for must
L- rr^-^ *" And where the
V-
irxr* c.^'.", r.r-rla-.^-! f:r the nc't t: i.r-i-iEte f:r a certain cause,
*' 'zzt :* in ~rS.\*:r, e:- v:-:'^ rf ih^ rir^t to ter~:-:ste fc-r anv other
'>."^*', '*,':.:rr: ^^^i.-l :y:t 'Ui:::v a :^: — --j?:"-- ja the absence of anv
;'':t a ccr-trarr f.xfng^ ao term fc-r hs cMr.tfn-jaiice. and therefore ter-
r :n;i^!t at v. i!!. v.;!! not be rendered r>:t so terminable bv the mere
f^r*'.'/, «i Ml faction or j^d^ment,* the
#tr.r'!or*rr rr.il jr <:.»rhanre witbont as-
%\v.tiUvtc, any r^aji/^R. or statins bis dis-
ft^Mnra/'lon, sbd that the court and
j Tf wtil utA fso bfrhlnd his action.
H;,x^ r, 8^»I»^^t Ttj'atrical Co^ 57
VJsr-, <520; Brown ▼. Retsof Min. Co.,
J 27 App, Uiv. 3^8; Cra-Aford T. Pub.
in iMlM/nf.'ATi V. Weil, 141 Wis. 635.
it wan b/'M tlu in cases at least of
/'//rn mercial i^rrvlce, the dissatisfke-
tion mtfst tie real, whether it was
reanonable or not, and that the ques-
tion of bona fLde$ mis<ht go to the
Jury,
Where the contra/:t was for three
y^ars 'V/r as long as he performs bis
<\u\U'% in a succ^rssftil or satisfactory
nmnn'f/' the court distinguished the
tuH-f. first clt^d in this note, and
held fhat thr. principal could not dis-
<'harj^e nx-n'ty because be vas dissat-
\Ht\i'i\. Hrldr/'ford v. Meagher, 144
Ky, 47J>.
-^^ Vaxiuuh'T v. nutfs, 40 Mich. 322,
29 Am. Hep, 630. The contract may
mnk#» the (•mployer the sole Judge of
perform ar^^. AC'zaB t. Yukon Con-
soL Gcid T\'\^ Oo^ 7 Western U
Rep. 31 S, a^nxied % id. 37X
The right to terminate "for cause**
will not Justify a purely arbitrary
disicisaaL Margulies ▼. Oppen-
heimer, 159 IlL App. 5^\
^ LooisTille, etc.. R. Co. t. Offutt,
99 Ky. 427. 59 Am. St Rep. 467; Lou-
isville, etc, R. Co. T. Harrey, 99 Ky.
157.
61 Johnson ▼. Pacific Bank Fixture
Co., 59 Wash. 58; White Sewing
.Mach. Co. Y. Shaddock, 79 Ark. 220.
Where tbe principal may terminate
if he desires to make a certain other
arrangement that condition must ac-
tually exist in order to justify a tei^
roination. Fuller y. Downing, 120
App. Dlv. 36.
As to a custom requiring notice
where none is stipulated ' for, see
Joynson v. Hunt, 21 Times L. Rep.
692 (not allowed against a written
contract apparently at will).
«Newcomb v. Imperial Life Ins.
Co., 51 Fed. 725. To same effect:
Newhall v. Journal Printing Co., 105
Minn. 44, 20 L. R. A. (N. S.) 899.
422
CHAP. VIIl]
TERMINATION OF THE RELATION
[§§ 595. 596
insertion of provisions by which it may be terminated in certain events.
Such provisions would not ordinarily be sufficiently indicative of an
intention to agree that a contract, otherwise terminable at will, should
be terminated only in the cases provided for; and they would ordi-
narily be deemed to be cumulative and inserted only out of abundant
caution.*'
5 595- Implied conditions.-^So there are certain implied
conditions which enter into every contract of agency, for a violation of
which the principal may rightfully terminate the contract. The most
important of these are those which relate to the questions of the agent's
ability to perform the appointed service, and the fidelity with which he
employs the powers entrusted to him.
A full discussion of these conditions will be given in a later section.
§ 596. Contract for definite time cannot be terminated without
liability except for legal cause.— Where the agent has been employed
for a fixed period the agency cannot be rightfully terminated before
the expiration of that period at the mere will of the principal, but only
in accordance with some express or implied condition of its continu-
ance. Any other termination of such an agency by the act of the
principal will subject him to liability to the agent for the loss he has
sustained thereby."* The principal will also be liable to the agent for
his compensation up to the time of the wrongful revocation and for
any liabilities and expenses which the agent has fairly and in good faith
incurred on the principal's account in the execution of the authority
before its revocation.'*
sswnicox & Gibbs Co. v. Ewtng,
141 U. S. 627, 35 L. Ed. 882; Stier v.
Imperial L. Ins. Co., 58 Fed. 843;
Moore v. Security Trust Ins. Co., 93
C. a A. 652, 168 Fed. 496.
84 See post. Book IV. Ch. IV; Rand
V. Cronkrite, 64 IlL App. 208; Glover
V. Hendersoji, 120 Mo. 367, 41 Am. SU
Rep. G95; Rowan v. Hull, 55 W. Va.
335, 104 Am. St R. 998.
A contract of employment for the
"season," presumptively means the
season known to the particular trade,
(Bauer v. Goldman. 45 Colo. 163),
and in the territory in which the
agent is to operate. Wolfshelmer v.
Frankel, 130 App. Div. 853.
Where one was employed "subject
to the account of the Alliance Silk
Mills remaining with" the employer.
It was held that the employer was
liable for a discharge before that ac-
count was withdrawn. Downes v.
Poncet, 38 Misc. 799.
So where, in consideration of $10
paid by the agent to his principal,
and of services rendered and to be
rendered In the sale of a piece of
land to a church, the principal
agreed that the agency should con-
tinue until such time as the church
could be brought to buy, the princi-
pal who gave notice of termination
and himself closed the sale to the
church, was held liable to pay to the
agent the amount of commission
agreed upon. Luhn v. Fordtran, 53
Tex. Civ. App. 148.
85 See post, Book IV, Chap. IV.
423
§ 594]
THE LAW OF AGENCY
[rook I
A Stipulation that the contract may be terminated by either party
for "good cause," was held to justify a termination by either party for
any cause which he in good faith deemed sufficient.'*
So a contract to give one employment so long as he does "faithful
and honest work" has been held to be terminable at the will of either
party.*^®
§ 594- Termination for causes specified. — So, of course, it
is entirely competent for the parties to stipulate that the principal shall
have the right to terminate the contract for certain causes, or upon
giving notice of a certain sort ; and a termination in pursuance of such
a stipulation entails no liability. But the cause stipulated for must
exist, and the notice required must be duly given.** And where the
parties have stipulated for the right to terminate for a certain cause,
there is an implied exclusion of the right to terminate for any other
cause which would not justify a termination in the absence of any
stipulation.**
But a contract fixing no term for its continuance, and therefore ter-
minable at will, will not be rendered riot so terminable by the mere
but the peculiar personal "taste,
fancy, satisfaction or judgment/' the
employer may discharge without as-
signing any reason, or stating his dis-
satisfaction, and that the court and
jury will not go behind his action.
Saxe V. Shubert Theatrical Co., 57
Misc. 620; Brown v. Retsof Min. Co.,
127 App. Div. 368; Crawford v. Pub,
Co., 163 N. Y. 404.
In Lieberman v. Well, 141 Wis. 685,
it was held that in cases at least of
commercial service, the dlssatisfac*
tion must be real, whether it was
reasonable or not, and that the ques-
tion of bona fides might go to the
jury.
Where the contract was for three
years "or as long as he performs his
duties in a successful or satisfactory
manner," the court distinguished the
cases first cited in this note, and
held that the principal could not dis*
charge merely because he was dissat-
isfied. Brldgeford v. Meagher, 144
Ky. 479.
T9 Cummer v. Butts, 40 Mich. 322,
29 Am. Rep. 530. The contract may
make the employer the sole judge of
performance. Allman v. Yukon Con-
sol. Gold Fields Co.. 7 Western L.
Rep. 318, affirmed 8 id. 373.
The right to terminate "for cause"
will not justify a purely arbitrary
dismissal. Margulies t. Oppen-
heimer, 159 111. App. 520.
80 Louisville, etc., R. Co. v. Offutt,
99 Ky. 427, 59 Am. St. Rep. 467; Lou-
isville, etc., R. Co. V. Harvey, 99 Ky.
157.
81 Johnson v. Pacific Bank Fixture
Co., 59 Wash. 58; White Sewing
Mach. Co. V. Shaddock, 79 Ark. 220.
Where the principal may terminate
if he desires to make a certain other
arrangement that condition must ac-
tually exist In order to justify a ter-
mination. Fuller V. Downing, 120
App. Div. 36.
As to a custom requiring notice
where none is stipulated for, see
Joynson v. Hunt, 21 Times L. Rep.
692 (not allowed against a written
contract apparently at will).
s2Newcomb v. Imperial Life Ins.
Co., 51 Fed. 725. To same effect:
Newhall v. Journal Printing Co.. 105
Minn. 44, 20 L. R. A. (N. S.) 899.
422
CHAP. VIIl]
TERMINATION OF THE RELATION [§§ 595, 596
insertion of provisions by which it may be terminated in certain events.
Such provisions would not ordinarily be sufficiently indicative of an
intention to agree that a contract, otherwise terminable at will, should
be terminated only in the cases provided for; and they would ordi-
narily be deemed to be cumulative and inserted only out of abundant
caution.**
§ 595* Implied conditions,— So there are certain implied
conditions which enter into every contract of agency, for a violation of
which the principal may rightfully terminate the contract. The most
important of these are those which relate to the questions of the agent's
ability to perform the appointed service, and the fidelity with which he
employs the powers entrusted to him.
A full discussion of these conditions will be given in a later section.
§ 596. Contract for definite time cannot be terminated without
liability except for legal cause.— Where the agent has been employed
for a fixed period the agency cannot be rightfully terminated before
the expiration of that period at the mere will of the principal, but only
in accordance with some express or implied condition of its continu-
ance. Any other termination of such an agency by the act of the
principal will subject him to liability to the agent for the loss he has
sustained thereby.** The principal will also be liable to the agent for
his compensation up to the time of the wrongful revocation and for
any liabilities and expenses which the agent has fairly and in good faith
incurred on the principal's account in the execution of the authority
before its revocation.**
ssWJUcox & Gibbs Co. v. Ewlng,
141 U. S. 627, 35 L. Ed. 882; Stler v.
Imperial L. Ina. Co., 58 Fed. 843;
Moore v. Security Trust Ins. Co., 93
C. a A. 652, 168 Fed. 496.
84 See post. Book IV. Ch. IV; Rand
V. Cronkrite, 64 III App. 208; Glover
y. Henderson, 120 Mo. 367, 41 Am. SU
Rep. G96; Rowan v. Hull, 55 W. Va.
S35, 104 Am. St. R. 998.
A contract of employment for the
"season," presumptively means the
season known to the particular trade,
(Bauer v. Goldman. 45 Colo. 163),
and in the territory in which the
agent is to operate. Wolfsheimer v.
Frankel, 130 App. Div. 853.
Where one was employed "subject
to the account of the Alliance Silk
Mills remaining with" the employer.
it was held that the employer was
liable for a discharge before that ac-
count was withdrawn. Downes v.
Poncet, 38 Misc. 799.
So where, in consideration of $10
paid by the agent to his principal,
and of services rendered and to be
rendered in the sale of a piece of
land to a church, the principal
agreed that the a?ency should con-
tinue until such time as the church
could be brought to buy, the princi-
pal who gave notice of termination
and himself closed the sale to the
church, was held liable to pay to the
agent the amount of commission
agreed upon. Luhn v. Fordtran, 53
Tex. Civ. App. 148.
85 See post, Book IV, Chap. lY.
423
§ 594]
THE LAW OF AGENCY
[book I
A Stipulation that the contract may be terminated by either party
for "good cause," was held to justify a termination by either party for
any cause which he in good faith deemed sufficient."
So a contract to give one employment so long as he does "faithful
and honest work" has been held to be terminable at the will of either
party.*^®
§ 594' Termination for causes specified.— So, of course, it
is entirely competent for the parties to stipulate that the principal shall
have the right to terminate the contract for certain causes, or upon
giving notice of a certain sort ; and a termination in pursuance of such
a stipulation entails no liability. But the cause stipulated for must
exist, and the notice required must be duly given.*^ And where the
parties have stipulated for the right to terminate for a certain cause,
there is an implied exclusion of the right to terminate for any other
cause which would not justify a termination in the absence of any
stipulation.**
But a contract fixing no term for its continuance, and therefore ter-
minable at will, will not be rendered not so terminable by the mere
but the peculiar personal "taste,
fancy, satisfaction or judgment," the
employer may discharge without as-
signing any reason, or stating his dis*
satisfaction, and that the court and
jury will not go behind his action.
Saxe V. Shubert Theatrical CJo.. 67
Misc. 620; Brown v. Retsof Min. Co.,
127 App. Div. 368; Crawford v. Pub.
Co., 163 N. Y. 404.
In Lieberman v. Well, 141 Wis. 635,
It was held that in cases at least of
commercial service, the dissatisfac-
tion must be real, whether it was
reasonable or not, and that the ques*
tion of bona fides might go to the
jury.
Where the contract was for three
years "or as long as he performs his
duties in a successful or satisfactory
manner," the court distinguished the
cases first cited in this note, and
held that the principal could not dis-
charge merely because he was dissat-
isfied. Brldgeford v. Meagher, 144
Ky. 479.
70 Cummer v. Butts, 40 Mich. 322,
29 Am. Rep. 530. The contract may
make the employer the sole judge of
performance. Allman ▼. Yukon Con-
sol. Gold Fields Co., 7 Western L.
Rep. 318, affirmed 8 id. 373.
The right to terminate "for cause"
will not justify a purely arbitrary
dismissal. Margulies t. Oppen-
helmer, 159 111. App. 520.
soLouisviUe, etc., R. Co. v. Oftutt,
99 Ky. 427, 59 Am. St. Rep. 467; Lou-
isville, etc., R. Co. y. Harvey, 99 Ky.
157.
81 Johnson v. Pacific Bank Fixture
Co., 59 Wash. 58; White Sewing
Mach. Co. V. Shaddock, 79 Ark. 220.
Where the principal may terminate
if he desires to make a certain other
arrangement that condition must ac-
tually exist in order to justify a ter-
mination. Fuller V. Downing, 120
App. Div. 36.
As to a custom requiring notice
where none is stipulated' for, see
Joynson v. Hunt, 21 Times L. Rep.
692 (not allowed against a written
contract apparently at will).
«2Newcomb v. Imperial Life Ins.
Co., 51 Fed. 725. To same effect:
Newhall v. Journal Printing Co.. 105
Minn. 44, 20 L. R. A. (N. S.) 899.
422
CHAP. VIIl]
TERMINATION OF THE RELATION [§§ 595, 596
insertion of provisions by which it may be terminated in certain events.
Such provisions would not ordinarily be sufficiently indicative of an
intention to agree that a contract, otherwise terminable at will, should
be terminated only in the cases provided for; and they would ordi-
narily be deemed to be cumulative and inserted only out of abundant
caution.®^
§ 595. Implied conditions. — So there are certain implied
conditions which enter into every contract of agency, for a violation of
which the principal may rightfully terminate the contract. The most
important of these are those which relate to the questions of the agent's
ability to perform the appointed service, and the fidelity with which he
employs the powers entrusted to him.
A full discussion of these conditions will be given in a later section.
§ 596. Contract for definite time cannot be terminated without
liability except for legal cause. — Where the agent has been employed
for a fixed period the agency cannot be rightfully terminated before
the expiration of that period at the mere will of the principal, but only
in accordance with some express or implied condition of its continu-
ance. Any other termination of such an agency by the act of the
principal will subject him to liability to the agent for the loss he has
sustained thereby.** The principal will also be liable to the agent for
his compensation up to the time of the wrongful revocation and for
any liabilities and expenses which the agent has fairly and in good faith
incurred on the principal's account in the execution of the authority
before its revocation."
ssV^MHcox & Glbbs Co. v. Swing,
141 U. S. 627, 35 L. Ed. 882; Stier v.
Imperial L. Ina. Co., 58 Fed. SiZ;
Moore v. Security Trust Ins. Co., 93
C. a A. 652, 168 Fed. 496.
84 See post. Book IV, Ch. IV; Rand
V. Cronkrite, 64 III. App. 208; Glover
V. Henderson, 120 Mo. 367, 41 Am. SU
Rep. G95; Rowan v. Hull, 55 W. Va.
S35, 104 Am. St. R. 998.
A contract of employment for the
"season," presumptively means the
season known to the particular trade,
(Bauer v. Goldman. 45 Colo. 163),
and in the territory in which the
agent is to operate. Wolfsheimer v.
Frankel, 130 App. Div. 853.
Where one was employed "subject
to the account of the Alliance Silk
Mills remaining with" the employer.
it was held that the employer was
liable for a discharge before that ac-
count was withdrawn. Downes v.
Poncet, 38 Misc. 799.
So where, in consideration of $10
paid by the agent to his principal,
and of services rendered and to be
rendered in the sale of a piece of
land to a church, the principal
agreed that the a?ency should con-
tinue until such time as the church
could be brought to buy, the princi-
pal who gave notice of termination
and himself closed the sale to the
church, was held liable to pay to the
agent the amount of commission
agreed upon. Luhn v. Fordtran, 53
Tex. Civ. App. 148.
85 See post, Book IV, Chap. TV.
423
§ 594]
THE LAW OF AGENCY
[book I
A stipulation that the contract may be terminated by either party
for "good cause," was held to justify a termination by either party for
any cause which he in good faith deemed sufficient."'*
So a contract to give one employment so long as he does "faithful
and honest work" has been held to be terminable at the will of either
party.*®
§ 594- Termination for causes specified. — So, of course, it
is entirely competent for the parties to stipulate that the principal shall
have the right to terminate the contract for certain causes, or upon
giving notice of a certain sort ; and a termination in pursuance of such
a stipulation entails no liability. But the cause stipulated for must
exist, and the notice required must be duly given.®* And where the
parties have stipulated for the right to terminate for a certain cause,
there is an implied exclusion of the right to terminate for any other
cause which would not justify a termination in the absence of any
stipulation.*^
But a contract fixing no term for its continuance, and therefore ter-
minable at will, will not be rendered not so terminable by the mere
but the peculiar personal "taste,
fancy, satisfaction or Judgment," the
employer may discharge without as-
signing any reason, or stating his dis-
satisfaction, and that the court and
jury will not go behind his action.
Saxe V. Shubert Theatrical Co.. 67
Misc. 620; Brown v. ReUof Min. Co.,
127 App. Div. 368; Crawford v. Pub.
Co., 163 N. Y. 404.
In Lieberman v. Weil, 141 Wis. 685,
it was held that in cases at least of
commercial service, the dissatisfac-
tion must be real, whether it was
reasonable or not, and that the ques-
tion of bona fides might go to the
Jury.
Where the contract was for three
years "or as long as he performs his
duties in a successful or satisfactory
manner,'' the court distinguished the
cases first cited in this note, and
held that the principal could not dis-
charge merely because he was dissat-
isfied. Bridgeford v. Moagher, 144
Ky. 479.
• •Cummer v. Butts, 40 Mich. 322,
29 Am. Rep. 530. The contract may
make the employer the sole judge of
performance. Allman ▼. Yukon Con-
sol. Gold Fields Co., 7 Western L.
Rep. 318, affirmed 8 id. 373.
The right to terminate "for cause"
will not Justify a purely arbitrary
dismissal. Margulies ▼. Oppen-
heimer, 159 IlL App. 620.
80 LouisYille* etc., R. Co. v. Offutt,
99 Ky. 427, 59 Am. St. Rep. 467; Lou-
isville, etc., R. Co. V. Harvey, 99 Ky.
167.
81 Johnson y« Pacific Bank Fixture
Ca, 59 Wash. 68; White Sewing
Mach. Co. V. Shaddock, 79 Ark. 220.
Where the principal may terminate
if he desires to make a certain other
arrangement that condition must ac-
tually exist in order to Justify a ter-
mination. Fuller v. Downing, 120
App. Div. 36.
As to a custom requiring notice
where none is stipulated ' for, see
Joynson v. Hunt, 21 Times L. Rep.
692 (not allowed against a written
contract apparently at will).
«2Newcomb v. Imperial Life Ins.
Co., 51 Fed. 725. To same eCTect:
Newhall v. Journal Printing Co., 105
Minn. 44, 20 L. R. A (N. 8.) 899.
422
CHAP. VIIl]
TERMINATION OF THE RELATION
[§§ 59S» 596
insertion of provisions by which it may be terminated in certain events.
Such provisions would not ordinarily be sufficiently indicative of an
intention to agree that a contract, otherwise terminable at will, should
be terminated only in the cases provided for; and they would ordi-
narily be deemed to be cumulative and inserted only out of abundant
caution.®^
§ 595. Implied conditions. — So there are certain implied
conditions which enter into every contract of agency, for a violation of
which the principal may rightfully terminate the contract. The most
important of these are those which relate to the questions of the agent's
ability to perform the appointed service, and the fidelity with which he
employs the powers entrusted to him.
A full discussion of these conditions will be given in a later section.
§ 596. Contract for definite time cannot be terminated without
liability except for legal cause.— Where the agent has been employed
for a fixed period the agency cannot be rightfully terminated before
the expiration of that period at the mere will of the principal, but only
in accordance with some express or implied condition of its continu-
ance. Any other termination of such an agency by the act of the
principal will subject him to liability to the agent for the loss he has
sustained thereby.** The principal will also be liable to the agent for
his compensation up to the time of the wrongful revocation and for
any liabilities and expenses which the agent has fairly and in good faith
incurred on the principal's account in the execution of the authority
before its revocation.**
sswnicox & Glbbs Co. v. Bwfng,
141 U. S. 627, 35 L. Ed. 882; Stler v.
iDiperial L. Ina. Co., 53 Fed. 843;
Moore v. Security Trust Ins. Co., 93
C. a A. 652, 168 Fed. 496.
84 See post. Book IV, Ch. IV; Rand
V. Cronkrite, 64 111. App. 208; Glover
V. HenderBOD, 120 Mo. 367, 41 Am. St.
Rep. 096; Rowan v. Hull, 55 W. Va.
S35, 104 Am. St. R. 998.
A contract of employment for the
"season," presumptively means the
season known to the particular trade,
(Bauer v. Goldman. 45 Colo. 163 )»
and in the territory in which the
agent is to operate. Wolfsheimer v.
Frankel, 130 App. Div. 853.
Where one was employed "subject
to the account of the Alliance Silk
Mills remaining with" the employer.
It was held that the employer was
liable for a discharge before that ac-
count was withdrawn. Downes v.
Poncet, 38 Misc. 799.
So where, in consideration of $10
paid by the agent to his principal,
and of services rendered and to be
rendered in the sale of a piece of
land to a church, the principal
agreed that the agency should con-
tinue until such time as the church
could be brought to buy, the princi-
pal who gave notice of termination
and himself closed the sale to the
church, was held liable to pay to the
agent the amount of commission
agreed upon. Luhn v. Fordtran, 53
Tex. Civ. App. 148.
85 See post, Book IV, Chap. lY.
423
§ 594]
THE LAW OF AGENCY
[nOOK I
A Stipulation that the contract may be terminated by either party
for "good cause," was held to justify a termination by either party for
any cause which he in good faith deemed sufficienf*
So a contract to give one employment so long as he does "faithful
and honest work" has been held to be terminable at the will of either
party.®®
§ 594- Termination for causes specified. — So, of course, it
is entirely competent for the parties to stipulate that the principal shall
have the right to terminate the contract for certain causes, or upon
giving notice of a certain sort ; and a termination in pursuance of such
a stipulation entails no liability. But the cause stipulated for must
exist, and the notice required must be duly given." And where the
parties have stipulated for the right to terminate for a certain cause,
there is an implied exclusion of the right to terminate for any other
cause which would not justify a termination in the absence of any
stipulation.'*
But a contract fixing no term for its continuance, and therefore ter-
minable at will, will not be rendered not so terminable by the mere
but the peculiar personal "taste,
fancy, satisfaction or judgment," the
employer may discharge without asr
signing any reason, or stating his dis-
satisfaction, and that the court and
jury will nat go behind his action.
Saxe V. Shubert Theatrical Co.. 57
Misc. 620; Brown v. Retsof Mln. Co.,
127 App. Dlv. 368; Crawford v. Pub.
Co., 163 N. Y. 404.
In Lieberman v. Weil, 141 Wis. 635,
it was held that in cases at least of
commercial service, the dissatisfac-
tion must be real, whether it was
reasonable or not, and that the ques-
tion of bona fldea might go to the
jury.
Where the contract was for three
years ''or as long as he performs his
duties in a successful or satisfactory
manner," the court distinguished the
cases first cited in this note, and
held that the principal could not dis-
charge merely because he was dissat-
isfied. Bridgeford v. Meagher, 144
Ky. 479.
79 Cummer v. Butts, 40 Mich. ^22,
29 Am. Rep. 530. The contract may
make the employer the sole judge of
performance. Allman ▼. Yukon Con-
sol. Gold Fields Co., 7 Western L.
Rep. 318, affirmed 8 id. 373.
The right to terminate "for cause"
will not Justify a purely arbitrary
dismissal. Margulies ▼. Oppen*
helmer, 159 111. App. 520.
soLoulsYllle, etc., R. Co. v. Offutt,
99 Ky. 427, 59 Am. St Rep. 467; Lou-
isville, etc, R. Co. V. Harvey, 99 Ky.
157.
81 Johnson v. Pacific Bank Fixture
Co., 59 Wash. 58; White Sewing
Mach. Co. V. Shaddock, 79 Ark. 220.
Where the principal may terminate
If he desires to make a certain other
arrangement that condition must ac-
tually exist in order to justify a ter-
mination. Fuller V. Downing, 120
App. Dlv. 36.
As to a custom requiring notice
where none is stipulated' for, see
Joynson v. Hunt, 21 Times L. Rep.
692 (not allowed against a written
contract apparently at will).
flsNewcomb v. Imperial Life Ins.
Co., 51 Fed. 725. To same effect:
Newhall v. Journal Printing Co., 105
Minn. 44, 20 L. R. A. (N. S.) 899.
422
CHAP. VIIl]
TERMINATION OF THE RELATION [§§ 595, 596
insertion of provisions by which it may be terminated in certain events.
Such provisions would not ordinarily be sufficiently indicative of an
intention to agree that a contract, otherwise terminable at will, should
be terminated only in the cases provided for; and they would ordi-
narily be deemed to be cumulative and inserted only out of abundant
caution."
§ 595* Implied conditions. — So there are certain implied
conditions which enter into every contract of agency, for a violation of
which the principal may rightfully terminate the contract. The most
important of these are those which relate to the questions of the agent's
ability to perform the appointed service, and the fidelity with which he
employs the powers entrusted to him.
A full discussion of these conditions will be given in a later section.
§ 596. Contract for definite time cannot be terminated without
liability except for legal cause.— Where the agent has been employed
for a fixed period the agency cannot be rightfully terminated before
the expiration of that period at the mere will of the principal, but only
in accordance with some express or implied condition of its continu-
ance. Any other termination of such an agency by the act of the
principal will subject him to liability to the agent for the loss he has
sustained thereby.** The principal will also be liable to the agent for
his compensation up to the time of the wrongful revocation and for
any liabilities and expenses which the agent has fairly and in good faith
incurred on the principal's account in the execution of the authority
before its revocation.**
bsWillcox & Gibbs Co. v. Bwtng,
141 U. S. 627, 35 L. Ed. 882; Stter v.
Imperial L. Ina. Co., 5S Fed. 84^;
Moore v. Security Trust Ins. Co., 93
C. a A- 652, 16S Fed. 496.
84 See post. Book IV. Ch. IV; Rand
V. Cronkrlte, 64 111. App. 208; Glover
V. Henderson, 120 Mo. 367, 41 Am. SU
Rep. C96; Rowan v. Hull, 55 W. Va.
S35, 104 Am. St. R. 998.
A contract of employment for the
"season," presumptively means the
season known to the particular trade,
(Bauer v. Goldman. 45 Colo. 163),
and in the territory in which the
agent is to operate. Wolfshelraer v.
Frankel, 130 App. DIv. 853.
Where one was employed "subject
to the account of the Alliance Silk
Mills remaining with" the employer.
It was held that the employer was
liable for a discharge before that ac-
count was withdrawn. Downes v.
Poncet, 38 Misc. 799.
So where, in consideration of $10
paid by the agent to his principal,
and of services rendered and to be
rendered In the sale of a piece of
land to a church, the principal
agreed that the agency should con-
tinue until such time as the church
could be brought to buy, the princi-
pal who gave notice of termination
and himself closed the sale to the
church, was held liable to pay to the
agent the amount of commission
agreed upon. Luhn v. Fordtran, 53
Tex. Civ. App. 148.
85 See post, Book IV, Chap. lY.
423
§§ 597. 598J
THE LAW OF AGENCY
[book I
§ 597* What amounts to contract for definite time. — To consider
exhaustively the question of what is to be deemed a contract for a defi-
nite time, is not within the scope of the present discussion. In many
cases the contract is express and dear. In others no serious difficuhy
is presented in determining the intention of the parties. Illustrations
of interpretation are collected in the note."
§ 598. Unilateral stipulations. — It is, however, in many
cases, difficult to determine whether the parties have made a definite
agreement for a fixed time or not. It is not indispensable that they
should, in the first instance, be both bound for tiie same period. It
may lawfully be made to rest with either party to determine, at his
option, that the agreement shall be one for a certain time.'^ So it has
been held that the appointment of an agent to do certain acts during
a given period does not, of itself, amount to an agreement that he should
be permitted to continue to act during that period." Many other cases
involving the same general question are referred to in the notes.
90 In Mason v. New York Produce
Exchange, 127 N. Y. App. Dlv. 282,
an agreement In the following lan-
guage: "You were appointed at a sal-
ary of $2,500 for the first year and
* * ♦ your remuneration for the
second year and thereafter will be
$3,000 per annum," was held to be
a contract for an annual period, and
was renewed on that basis by con-
tinuance in service.
In Dally v. Wheaton Co., 79 N. J.
L. 574, an OiTcr made in these
terms: "We are willing on the above
basis to start you In, say for three
months, and see what you can do,"
y\as accepted. Heldf employment
was for the period stated, and not at
will.
In Seago v. White, 46 Tex. Civ.
App. 539, a contract reading: "I will
work for you the first year for $1,000,
etc.," was held to create a hiring for
one year and not one terminable at
win.
87 Where the contract Is for em-
ployment so long as the employee de-
sires it, the term does not become
fixed until he has exercised his op-
tion, and if he is discharged l>efore
doing so he cannot recover damages
based upon a fixed period. "Perhaps
the defendants could not, by abruptly
breaking the contract, by discharg-
ing the plaintiff, deprive him of tho
right to exercise his option to fix a
definite and reasonable period of
service. But, though he might have
exercised and declared his election
even when he was notified of his dis-
charge, * < * he does not appear to
have done so." BoUes v. Sachs, 37
Minn. 816.
A contract to give another employ-
ment for whatever time the employee
may desire to serve, entitles the em-
ployee to fix the period when he pre-
sents himself for work. But If he
does not so fix it and is dismissed, ho
cannot recover damages based upon
any particular period. Bast Line R.
Co, V. Scott, 72 Tex. 70, 13 Am. St R.
758 (see s. c. 76 Tex. 84); followed
in Hlckey v. Klam (Tex. CJlv. App.),
83 S. W. 716.
88 Where an agent agreed to trans-
port all the goods that might be
"presented to him" for that purpose
during one year, but the principal
did not expressly agree to furnish
any goods for transportation, held,
that the agreement was binding upon
Uie agent only, and that the princi-
pal might, at any time, refuse to fur-
424
CHAF. VIIl]
TERMINATION OF THE RELATION
[§ 599
§ 599*
So where the plaintiff agreed to serve the defendants
"during the term of not exceeding three years," and not to be con-
nish any goods, and thus, practically,
terminate the agency during the year
without liability. Burton v. Great
Northern Ry. Co., 9 Exch. 507.
Where the owner of coal mines ap-
pointed agents for the sale of the
coal at Liverpool for seven years, but
did not agree to furnish them any
coal to sell during that period, held,
that the owner might sell his mines
and terminate the agency even
though the seven years had not ex-
pired, without liability to the agents.
Rhodes v. Forwood, L. R., 1 App. Cas*
256.
See also Northey t. Trevlllion, 7
Com'I Cas. 201. (But compare
Turner v. Goldsmith, [1891] 1 Q. B.
544 cited in seoond section following
wherein this case was distinguish-
ed.) See also Churchward y. The
Queen, L. R. 1 Q. B. 173; Esb parte
Maclure, L. R. 5 Ch. 737; Cowasjee
Nanabhoy v. Lallbhoy VuUtibhoy, L.
R. 8 Ind. App. 200; Chicago, etc., R.
Co. T. Dane, 4S N. Y. 240.
So where it was agreed between A
and B that A should manufacture
cement for the uee of B of a speci-
fied quality; that B should pay A a
certain weekly sum for two years
from the agreement, and another
weekly sum for one year after, and
should receive A into partnership in
the business of manufacturing ce-
ment at the end of three years; and
that A should instruct B in the art
of manufacturing cement Held, on
action brought by A assigning as a
breach of this agreement that B
wrongfully discharged him, the plain*
tiff, from his service, and from man-
ufacturing cement for the use of the
defendant, and from any longer in-
structing the plaintiff in the art of
manufacturing cement, before the ezp
ptratton of two years from the agree-
ment, that this agreement did not
raise an implied contract of hiring
and service for three years between
the parties, and therefore the action
was not maintainable. Aspdln v.
Austin, 1 Dav. & M. 515; 8. c. 5 Q. B.
671, 8. c. 5 A. A E. 671.
So where it appeared that by In-
denture between defendant of the
first part, J. D. son of plaintiff, of the
second part, and plaintiff of third
part, plaintiff, covenanted that his
son should be assistant to the de-
fendant, a dentist for five years, and
do all such service as defendant
should order to be performed in the
way of his art; and that defendant,
for the services to be done by the son,
covenanted during the term, and in
case the son should perform his part
of the agreement, that he, defendant
Would pay the son a certain sum
weekly during the term as compensa-
tion fbr the services aforesaid. That
the son entered upon the service, and
that he and the plaintiff performed
their part of the agreement, and were
ready and willing to continue such
performance during the term. And
the breach alleged was that defend-
ant refused to permit the son to con-
tinue in the service and dismissed
htm. It was held there was no im-
plied covenant by the defendant to
retain the son In the service during
the five years. Dunn v. Sayles, 1 Dav.
& M. 579; s. a 6 Q. B. 685, s. o. 5 A.
A E. 685. [But some of the doctrines
of Aspdln T. Austin, Dunn v. Sayles,
and Williamson v. Taylor (cited in
the following case), have been much
criticised in the BTngllsh courts, and
they doubtless go no further than the
precise point decided. See per Erie
C. J., in Mclntyre v. Belcher, 32 L. J.
O. P. (N. S.) 2&4; Crompton J., fn
Worthington v. Sudlow, 81 L. J. Q.
B. (N. S.) 131; L. Alverstone in De-
vonald v. Rosser, [1906] 2 K. B. 728.1
Where a traveling salesman, *'in
consideration of the sum of $2,100 for
the year 1873, and |2,400 for the
year 1874» to be paid In semi-monthly
425
§ 599]
THE LAW OF AGENCY
[book I
nected with any other persons in like btisiness "during the continuance
of this agreement ;" while the defendants merely agreed to pay him a
stated sum per week "during the said term," it was held that defend-
ants could terminate the agreement within three years by giving rea-
sonable notice.**^ Said the court : "There is no express agreement of
the defendants to employ the plaintiff for three years, and no stipula-
tion from which, in our judgment, such an agreement can be implied.
The agreement appears to have been framed and adapted to secure to
the defendants the right to the exclusive services of the plaintiff for
such time, not extending beyond three years from its date, as he should
perform such services and they should continue the business and re-
quire his services, paying him the stipulated compensation weekly, so
long only as he should be employed by and faithfully serve them ; but
not to oblige them to continue the business, or to employ him therein,
except at their own election, or to pay him any compensation after
or monthly instaUments, agreed to
devote his whole time and attention
solely to the Interests of a certain
firm, and entered into their service
and continued until June 11, 1873, at
which date the firm became bankrupt
and suspended business, and the
salesman was discharged, held, in an
action brought by the salesman to re-
cover damages for his discharge, that
the contract contained no undertak-
ing on the part of the firm to retain
or continue him in their employ for
any definite term and that hence he
could not recover. Orr v. Ward» 73
IlL 318 [citing Williamson v. Taylor,
5 A. A B. 175, and Aspdln v. Austin,
supra] ; Brou^am v. Paul, gUrpra.
An employment to sell "any or all"
of a certain quantity of goods, the
agent "to devote his entire time to
the sale," and to have a commission
"upon all sales made by him," was
held since the agent had not bound
himself to sell any or all of the
goods, or to give his entire time for
any specified period, to be an employ-
ment at will, and terminable by the
principal at any time. Wlnslow v.
Uajo, 123 App. Div. 758, aff'd without
opinion, 196 N. Y. 551.
A contract for employment "for
the sale o£ all the lumber that wUl
or may be sawed" upon a certain
named tract of land, is not a con-
tract of employment to last until all
the lumber is taken, but is rather "a
provision as to what the agency is so
long as it continues in force." Brad-
lee V. Southern Coast Lumber Co.,
193 Mass. 378.
So an employment to prepare a
tract of land for sale In lots and to
secure purchasers, the compensation
to be a commission upon sales made
was held terminable at the Instance
of either party. Brougham v. Paul»
138 111. App. 455. But compare
Qlover v. Henderson, 120 Mo. 867, 41
Am. St R. 696.
In Pellet v. Mfgrs. Ins. Co.. 43 C. C.
A. 669, 104 Fed. 602, an insurance
agent was denied recovery of pro-
spective commissions as damages for
the breach of a contract for a defi-
nite term, where the defendant com-
pany sold out its business In the
agent's territory. To same effect:
In re English Marine Ins. Co., 5 Ch.
App. 737, where the ^nployment
ceased on account of the voluntary
dissolution of the company.
»o Harper y. Hassard, UZ Mass.
187.
426
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 600
reasonable notice that they should no longer require his services. The
case does not present the question whether the plaintiff had a similar
right of election/'
§ 600. ■ Contrary views. — But where one had been appointed
general agent of a life insurance company for five years, but without
any express agreement on the part of the company to employ him for
any definite period, and the company, after the time had partly ex-
pired, became insolvent,, abandoned the business and discharged the
agent, a different conclusion was reached.®^ In an action brought by
the agent to recover damages for the discharge, it was argued on be-
half of the defendant that by the terms of the contract sued on, the
plaintiff was merely appointed agent for the company for five years,
and as the company did not expressly bind itself to continue in busi-
ness for that length of time, its inability to act and execute the whole
stipulation on its part constituted no breach. But it was said in reply
by the learned judge who rendered the opinion of tlie court: "It is true
there was no positive and direct covenant, on the part of the company,
to carry on the business for any definite time. But the plaintiff agree^
to act exclusively for the company for the period of five years, and ha^
he neglected or failed, he would have been liable in damages. If»iife
was bound for that length of time, it necessarily follows that ffle i6'nV-
pany must also have been bound, for mutuality was esse^ti^ tp.ith^
validity of the agreement. It very frequently happens that'»o6nfi-acts
on their face and by their express terms appear to be xM'i^tot^ 6ii
one party only ; but in such cases if it be manifest tha,^,^t y^.^^ fii^ in-
tention of the parties, and the consideration upon whiDh;on» party, as-
sumed an express obligation, that there should be a (ib^r^^ttbnfflih^' aiffd
correlative obligation on the other party, such corre^iipnd^ng^'^na qor-
rclative obligation will be implied." •^ ., . i.' h ...
I ; ■' ' ' ' . . M , . I LI
•1 Lewis y. Atlas Mut L. Ins. Co.,
61 Mo. 534, 538. See also Glover v.
Henderson, 120 Mo. 367. 41 Am. St
Rep. 695. And Macgregor v. Union
Life Ins. Co., 57 C. C A. 613, 121 Fed.
493, where the insurance company
having sold out its business, was
compelled to pay damages to an
agent for loss of commissions for the
balance of his term. That the prin-
cipal's Insolvency furnishes no ex-
cuse for a breach of the contr^t,
see Vanuxem v. Bostwick (Penn.j)^j7
Atl. 598.
' .; r
. .l)ill )
Where tJ^^ cpft^rj^ct decjar^ ,,t;^fkt
"it is mutnalfi^ picl^rstood" thajt ,?un
employiiii^pt .fa to, Vj9,fipr,,five ye^9,
it is^|xot.,lackJns liji, m^tu^Ut^y.., be-
cause, jth^ agi^^J, m^^noi fiprj^^ly
as;r^e ,t<^ seirye , ^^ , th,^i tj^n^.„puit-
tei:}pj$: ,Pub., ^. .y,, ,WhttQpmb...22;o, JU.
6i(;>5, 8;UJl.,A* (N- 9,) ,1004.,^ ',../
, ,,.w. Cy;in,g;. Pojrflag^i.v.rOolej ,l.vWw.
^^\xs\a, ..3;p;;...C^pi>\irA;^w^iid . Ti vVkfi
,Q^eep,.j6 ^, *,S,.^O^j,fll^lj..y, Wood-
yAV
§6oi]
THE LAW OF AGENCY
[book X
§ 6oi.
Mutuality under Statute of Frauds. — Cases under
this head frequently arise in which the Statute of Frauds becomes an
important element. Thus in a case in Michigan** it appeared that
the defendants had entered into a written contract with the plaintiff as
follows :
"We promise and agree to pay Thomas Wilkinson wages or salary
at the rate of $3,500 a year for three years from the second day of
October, 1882, in consideration of his working for us that length of
time as cutter in our merchant tailoring department in the city of East
Saginaw, Michigan. Payments to be made as earned, in such sums
and at such times as he may desire.
"Dated October 14, 1882.
"Heavenrich Bros. & Co."
writing to employ the plaintiff as
trareling salesman or agent **iipon
the terms and eubject to the stipula-
tions and conditions hereinafter con-
tained." Among these terms and
conditions were the following: "(1)
The agency shall be deemed to have
commenced on the 31st day of Jan-
uary, 1887, and shall be determinable
either by the company or the said
A. S. Turner at the end of five
years" by written notice. (2) Tur-
ner agreed to do his utmost to ob-
tain orders for all goods "manu-
factured or sold" by the company
of which they should furnish him
samples for that purpose. (5) Turner
agreed not to sell goods except those
"manufactured or sold" by the com-
pany. (8) The company was to pay
him a commission on all goods sold.
Two years later the company's fao-
tory was destroyed by fire and the
company did not resume business or
continue plaintiffs employment He
saed to recover damages for the
breach of the contract The com-
pany contended that the agreement
was (like that In Rhodes v. For-
wood cited In the preceding section)
only that he should solicit orders for
such goods only as they gave him
samples, but that they did not agree
to supply him with any such sam-
ples. But It was held, distinguish-
ing Rhodes v. Forwood, that there
was a binding contract to employ
plaintiff for five years.
Compare Northey v. Trevilllon, 7
Com'l Cas. 201.
M Wilkinson v. Heavenrich, 68
Mich. 674» 55 Am. Rep. 708. The
court said: "The conflict of author-
ity upon questions of the kind raised
upon this record Is truly bewilder^
Ing, and the cases are Incapable of
being reconciled with each other;
a large and respectable class holding
that a contract which the Statute of
Frauds declares shall not be valid
unless In writing and signed by the
party to be charged therewith, need
only to be signed by the party de-
fendant In the suit, and that It is no*
objection to maintaining such suit
and recovering upon such contract
that the other party did not also sign
and was not bound by its terms.
2 Kent's Com. 510; 2 Stark. Ev. 614;
Smith's Appeal, 69 Penn. St 480;
Tripp V. Bishop, 56 Penn. St 424;
Perkins v. Hadsell, 60 111. 217; Old
Colony R. R. Corp. v. ETvans, 6 Oray
(Mass.), 81, 66 Am. Dec. 894; Wil-
liams V. Robinson, 73 Me. 186, 40 Am.
Rep. 852. See also Mason v. Decker,
72 N. y. 595, 28 Am. Rep. 190; Jus-
tice V. Lang, 42 N. T. 49$, 1 Am.
Rep. 576; Shirley v. Shirley, 7 Blackf.
(Ind.) 452; Douglass v. Spears, 2 N.
4a8
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 6oi
Plaintiff alleged that he entered upon and continued in the employ-
ment under the contract until on or about July 5, 1884, when he was
discharged without cause and against his protest. On July 8, he wrote
to defendants, saying: "I hereby protest against your attempt to can-
' eel our contract. I hold your written agreement for a three years* term
of service, from October 2d, 1882. That contract I am ready and willing
to perform on my part, and I hereby offer to continue, and request you
to furnish me employment under the terms of that agreement."
A McC. (S. C.) 207; 10 Am. Dec. 588;
Morin V. Martz» 18 Minn. 191; An-
derson v. Harold, 10 Ohio, 399; Bars*
tow V. Gray, 3 Greenl. (Me.) 409;
Allen V. Bennett, 3 Taunt 175; Lay-
thoarp V. Bryant, 2 Blng. N. C. 735;
Saunderson t. Jackson, 2 Bos. A Pul.
228. Another and equally respectable
class of Jurists hold that unless the
party bringing the action Is bound
by the contract, neither Is bound be-
cause of the want of mutuality.
Lees V. Whltcomb, 3 C. ft P. 289;
Sykes v. Dixon, 9 Ad. ft El. 693, 36
Bng. Com. L. 366; Krohn y. Bants,
68 Ind. 277; Stiles v. McClelland, 6
Col. 89; and as bearing upon the
question. Hall v. Soule, 11 Mich. 496;
Scott V. Bush, 26 Mich. 418; Llddle
V. Needhara, 39 Mich. 147; McDonald
V. Bewick, 51 Mich. 79. See also,
Corbltt V. Salem Gaslight Co., 6 Oreg.
405, 25 Am. Rep. 541 and note.
I shall not attempt a reconciliation
where reconciliation is Impossible;
but as the question Is new In this
state, the court Is left to adopt such
view as appears to rest upon prin-
ciple. It is a general principle In
the law of contracts, but not without
exception, that an agreement entered
into between parties competent to
contract, in order to he binding,
must be mutual; and this is espe-
cially so when the consideration con-
sists of mutual promises. In such
cases, if it appears that one party
never was bound on his part to do
the act which forms the consldera-
tion for the promise of the other,
the agreement is void for want of
mutuality. Hopkins v. Logan, 5 M.
6 W. 241; Dorsey v. Packwood, 12
How. (U. S.) 126, IS L. Bd. 921;
Ewins V. Gordon, 49 N. H. 444; Hod-
desdon Gas Co. v. Haselwood, 6 C. B.
(N. S.) 239; Souch v. Strawhridge,
2 M. G. ft 8. 808; Callls v. Bothamly,
7 Wk. Rep. 87; Sykes v. Dlzon, 9 Ad.
ft El. 693; Addison, Cont } 18; Par-
sons, Cont 449; Utlca, etc., R. Co.
V. BHnckerhoir, 21 Wend. (N. Y.)
139; Lester v. Jewett, 12 Barb. <N.
Y.) 502. Such was the case here.
The consideration consisted of mu-
tual promlaee of the parties, not to
be performed within a year from the
making thereof. The defendants'
promise was in writing, and signed
by them; but the plalntlfTs promise
does not appear In the writing signed
by the defendants, nor was any note
or memorandum made and signed by
him promising to labor for defend-
a'nts three years or any length of
time. Plaintiff was never bound by
the agreement. There never was,
then, any consideration to support de-
fendants' promises. The agreement
was void for w^ant of mutuality. The
plaintiff was under no legal obliga-
tion to work for defendants a mo-
ment loftger than he chose, and the
defendants were under none to keep
him In thefr employment The plain-
tiff could neither revive nor make a
contract with defendants after he
was discharged by them, without
their consent and concurrence. The
letter written after he was discharged
was of no avail.'*
429
§ 602]
THE LAW OF AGENCY
[book I
In an action brought to recover damages for the discharge, it was
held that as the plaintiff had not also signed the contract, it was not
binding as to him under the Statute of Frauds ; and that as he was not
bound to stay three years, there was no mutuality in the agreement
and that hence the defendants were not bound.
The weight of authority, however, seems to be against the view
taken by the court in this case as to the necessity of the signing by
both parties.®'
§ 602. Contract for a definite time implied from circumstances. —
But a contract to retain the agent for a definite time may be implied,
although not clearly expressed, where from the facts and circumstances
surrounding the case, such appears to have been the intention of the
parties.** Whether it was so or not is usually a question of fact for
the jury.*^
Thus in a leading case where it appeared that the plaintiff had en-
tered into a contract with a joint stock company whereby he agreed
that from a certain date he would act as the attorney and solicitor of
the company for a salary of lool. a year, and the company on its part
agreed to retain and employ him as such attorney and solicitor on the
terms aforesaid, it was held, although no time for the continuance of
the relation was agreed upon, that it must be construed to be a retainer
09 See Wood on the Statute of
Frauds, § 405, and casoB cited.
9^ In Luce v. San Diego Land Co.
(Cal.), 37 Pac. 390, plaintiffs wrote:
"An annual salary of $5,000 Is the
least sum for which we ought to take
upon ourselves the la,hor and re-
sponfiibillties incident to continuing
our position as general attorneys for
the company." Defendant replied:
"On and after March Ist, until a
change be made, their names shall
appear on the pay roll at the rate of
$416.66 per mo." Later the plaintifCs
stated orally that their offer con-
templated a yearly hiring and not
a monthly one. The defendant's
agent answered : "We would no more
employ you by the month than you
would be employed by it" Held, a
contract for one year with salary
payable monthly.
In Chamberlain v. Detroit Stove
Works, 108 Mich. 124, the plaintiff,
who had worked for the defendant
company a number of years at an an-
nual salary, was elected director and
secretary in January, 1886. He con-
tinued to perform same services, but
at an increased salary. He was re-
elected each year until 1892, when
another person was chosen in his
place. In May, 1892, he was dis-
charged. The jury found that the
employment was for an annual period
and continued distinct from his of-
fices in the corporation. Held, that
the character of the hiring was
properly left to the Jury, and that
their determination was not im-
proper.
07 See cases cited In following
notes: Tallon v. Grand Portage Cop-
per Min. Co., 55 Mich. 147; McCul-
lough Iron Co. v. Carpenter, 67 Md.
554; Tatterson v. Suffolk Mfg. Ca»
106 Mass. 56; Davis V. Ames Mfg.
Co., 177 Mass. 54^
430
CHAP. Vlll]
TERMINATION OF THE RELATION
{§ 603
for at least one year.*' So where an offer of employment as superin-
tendent of ships was made by a letter stating that the wages would be
one hundred dollars per month, "and if you give me satisfaction at the
jnd of the first year, I will increase yoiu- salary accordingly," it was
held that this was a contract for a yearly hiring.*' So a letter engag-
ing a person as a hotel manager at a salary of one hundred and twenty-
five dollars per month, and showing upon its face that tlie engagement
contemplated his giving up another situation and removing, with his
family, several hundred miles to a hotel, and there undertaking, be-
sides the duties of a manager, those of secretary and treasurer of the
hotel company, was held to import an engagement for at least a year.^
§ 603. Yearly or other periodical salary — Yearly ac-
countings.— The mere fixing of the salary by the year, month or other
interval is not, according to many cases, enovigh to make the employ-
ment one for such interval, unless the nature of the undertaking or
the surrounding circumstances indicate — as they may undoubtedly do —
that such was the evident intent of the parties.* Other cases, how-
•« Emmets v. Elderton, 13 Com. B.
495. An appointment of an attorney
"at a salary of $1,000 per year pay-
able quarterly," and an acceptance
"upon the terms offered" constitute
a hiring for at least one year. Horn
V. Western Iiand Association, 22
Minn. 23S. See Beeston v. Collyer,
4 Bing. 309.
w Norton v. CJowell, 65 Md. 359, 57
Am. Rep. 331. See also Tallon v.
Grand Portage Copper Min. Co.,
1 Smith V. Theobald, 86 Ky. 141.
See also Franklin Mining Co. v. Har-
ris, 24 Mich. 115, where there was
held to be evidence of an employ-
ment for a year; but c/. Kansas Pac.
Ry. Co. V. Roberson, 3 Colo. 142,
where under quite similar facts ther^
was held not to be. See also Bauer
V. Goldman, 45 Colo. 163.
3 Palmer v. Marquette Rolling Mill
Co., 82 Mich. 274; Franklin Mining
Co. V. Harris, 24 Mich. 116; De Briar
V. Mlnturn, 1 Cal. 450; Tatterson v.
Suffolk Mfg. Co., 106 Mass. 56; Mc-
Cullough Iron Co. v. Carpenter, 67
Md. 554; Orr v. Ward, 73 III. 318;
Haney v. Caldwell, 35 Ark. 156;
Prentiss v. Ledyard, 28 Wis. 131;
Weidman v. 'United Cigar Stores Co.,
223 Pa. 160, 132 Am. St. R. 727; Wat-
Son V. Gugino, 204 N. Y. 536, 39 L*
R. A- (N. S.) 1090; Currier t. Ritter
Lumber Co., 150 N. C. 694, 134 Am.
St. R. 955; Bauer v. Goldman, 45 Colo.
163; Martin v. Ins. Co., 148 N. Y. 117;
Finger v. Brewing Co., 13 Mo. App.
310; Evans v. Ry. Co., 24 Mo. App.
865.
Same: Central South African Ry.
V. Cooke, [1904] Transv. L. R. 531.
So in Edwards v. Seaboard, etc.,
R. Co., 121 N. C. 490, it was held
that a letter stating **you have been
appointed general storekeeper ♦ • *
to take eftect July 15th. Your salary
will be 11,800 a year," did not con-
stitute an emoloyment for a year.
So in The Pokanoket, 84 C. C. A.
49, 156 Fed. 241, where, upon the em-
ployment of a marine engineer, it
was agreed that his wages were to
be $60 a month, it was held that
there was no hiring by the month.
Thus in Frank v. Manhattan Ma-
ternity & Dispensary, 107 N. Y.
Supp. 404, it was said, "It is too well
settled in this state to require ex-
tended citation that 'a hiring at bo
much a day, week, month or year.
431
§ 6o4]
THE LAW OF AGENCY
[book I
ever, declare it to be enough, even in the absence of such circum-
stances.^
Neither is the fact that in a contract, not fixing a definite time^ there
are stipulations for yearly accountings. "These provisions/' said the >
court, ''upon which the plaintiff relies as showing an agreement to con-
tinue the business from year to year, we tliink amount to no more than
agreements for yearly accountings so long as the relation established
by the contract shall continue." ^
§ 604. Stipulation for ''permanent" employment. — A contract for
"permanent" employment is not necessarily one for a fixed and definite
period. That ordinarily is "permanently" established which is de-
signed to continue generally without present expectation of change.*
Not more than that can usually be claimed for a "permanent" employ-
ment. It cannot ordinarily be interpreted as meaning an employment
for life or for any fixed or certain period, but only an employment that
no time being specified, Is an in-
definite hiring and no -presumption
attaches that it was for a day even,
but only at the rate fixed for what-
ever time the party may serve.' Mar-
tin V. Insurance Oo.» 148 N. Y. 117,
121; Wood, Master and Servant,
§ 136; Baker v. Appleton & Co., 107
App. Div. 358, affd 187 N. Y. 548;
Outerbridge v. Oampbell, 87 App. Dlv.
597; Fisher v. Sanchez & Hays Co.,
44 App. Div. 629. Where a contract
of hiring is general or indefinite in
its terms, it is prima facie a hiring
at will, and the burden rests upon
the servant to prove that the hiring
is for a definite term. Hotchkiss v.
Godkin, 68 App. Dlv. 468."
sin Maynard v. Royal Worcester
Corset Co., 200 Mass. 1, the court
says that "the weight of authority
is that this circumstance alone,
[namely, "a hiring at so much a year,
where no time is specified"] in the
absence of any other consideration
impairing its weight, will sustain a
finding that there was a hiring for
that period." Not all the cases cited,
however, sustain the proposition,
though several of them do. This
seems to be the settled rule in Kug-
land. Km mens v. Elderton, 4 H. L. C.
624; Buckingham v. Surrey ft Hants
Canal Co., 46 L. T. R. (N. S.) 886;
Foxall V. International Land Credit
Co., 16 L. T. R. (N. S.) 637. And in
Canada: Armstrong v. Tyndall
Quarry Co.« 20 Manitoba, 254. This
seems to be the rule in some Ameri-
can states. Beach v. Mullln, 84 N. J.
L. 843; Young v. Lewis, 9 Tex. 73;
Horn V. Western Land Ass'n, 22 Minn.
283; Kelly v. Carthage Wheel Co., 62
Ohio St. 598; Jones v. Vestry of
Trinity Parish, 19 Fed. 59; Magara-
han V. Wright, 83 Qa. 778; Odom v.
Bush, 125 Ga. 184. See also Kellogg
V. Citizens' Ins. Co., 94 Wis. 554;
CronemiUar v. Duluth, eto., Co., 134
Wi0. 248, and Kirk v. Hartman, 63
Pa. St, 97.
^Hoover v. Perkins Windmill Oo.,
41 Minn. 143.
» See as to "permanent" location or
establishment of buildings or Instltu-
tlona. Texas, etc., R. Co. ▼. City of
Marshall 136 U. 8. 393, 34 L. Ed.
385; Newton v. Commissioners, 100
U. S. 648, 25 L. SM. 710; Mead r. Bal-
lard, 7 WaU. (U. S.) 2»0, 19 L. BdL
190; Harris v. Shaw, 13 IlL 466:
Bentley v. Smith, 3 6a. App. 242.
432
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 604
shall continue indefinitely and until one party or the other sliall desire,
for some good reason, to change it.*
Under exceptional circumstances, however, it may be clear that
something more was intended; and a contract, made as part of a set-
tlement of a claim for personal injuries, to give the employee injured
"steady and permanent" employment, has been construed as meaning
that the latter should -be employed as long as he was able, ready and
willing to perform such services as the other party, a railroad com-
pany, might have for him to perform.'
Even though a contract for permanent employment exists, it may
be terminated, without liability, for any misconduct, and the like, which
would justify the discharge of a servant employed for a fixed term.^
«B€ntley y. Smith, 8 Ga. App. 242,
59 S. E. 720. An employment as
'permanent attorney'* means merely
a general as dtstinguiBhed from an
occasional or special employment
Elderton v. Emmens, 4 Com. B. 479.
An employment as the "permanent"
attorney of a corporation cannot be
deemed to be for the life of the cor-
poration or of the attorney, and Is
satisfied by a year's employment.
Sullivan v. Detroit, etc., Ry. Co., 135
Mich. 661, 106 Am. St. R. 403, 64 L.
R. A. 673. An appointment as the
"'permanent" rector of a chiiroh. Is
not an employment for life but only
nntf] either party "upon fair and
equitable terms and after reasonable
notice" desires to terminate it Perry
y. Wheeler, 12 Bush (Ky.), 541. An
agreement by an employer that the
employment shall be permanent so
long as the employee desires to make
it so, in consideration of the em-
ployee using his best efforts to ex-
tend the business, does not mean that
the emplo3^ent is for life or any
fixed period but only that It is to con-
tinue Indefinitely and until one or
the other should wish for some good
reason to sever the relation. Lord
v. Goldberg, 81 Cal. 596, 22 Pac. 1126,
15 Am. St R S2. Under a contract
to give "permanent employment" as
long as the employee wishes it and
his services are satisfactory, he must
announce how long he wishes it to
-continue, when he enters upon the
employment Hlckey v. Klam (Tex.
Civ. App.), 83 S. W. 716.
In Carnig v. Carr, 167 Mass. 544,
57 Am. St R. 488, 35 L. R. A. 512, a
contract for permanent employment
was held to be not for life, but so
long as the employer had work of
that sort to be done and the em-
ployee could do it satisfactorily. The
question was suggested but not de-
cided in Orient Ins. Co. v. Kemp, 29
111. App. 232.
T Pennsylvania Co. v. Dolan, 6 Ind.
App. 109, 51 Am. St R. 289 (a case
of settlement for personal inJurUe
in consideration of "steady and per-
manent" employment).
To same effect: Louisville, etc., R.
Co. V. Cox, 146 Ky. 667. In this case
the court said: "In many of the cases
where contracts of this sort have
been sustained, the contract was to
give employment until some event
happened, as, for instance, as long
as the servant may be able to do the
work (Smith v. St Paul R. Co., 60
Minn. 330), or until he gets well, or
so Ipng as the servant lives, or the
employer is in business. Fierce v.
Tenn. CoaJ Co., 173 U. S. 1, 43 L. Ed.
581; Yellow Poplar Lumber Co. v. Rule
106 Ky. 455; Norton viUe Coal Co. v.
Sisk, 145 Ky. 65." Bee also Harring-
ton v. Kansas City Cable Co., 60 Mo.
App. 223.
s Louisville, etc., R. Co. v. Cox,
supra.
28
433
§§ 6o5, 606]
THE LAW OF AGENCY
[book I
§ 605. Continuing under prior contract — Holding over. — ^A per-
son who has been previously employed by the month, year or otlier
fixed interval, and who is permitted without any new arrangement to
continue in the employment after the period limited by the original em-
ployment has expired, will, in the absence of anything to show a con-
trary intention, be presumed to be employed until the close of the cur-
rent interval and upon the same terms.®
This, however, is merely a presumption, and gives way before evi-
dence that such a continuation was not intended.^°
§ 606. Agency terminable for agent's incompetence. — As will be
seen hereafter, there is an implied covenant on the part of every agent
that he possesses and will exercise in the execution of his undertaking,
a reasonable degree of skill, knowledge and ability. If, therefore, the
agent, though employed for a definite period, proves not to possess
that reasonable degree of skill, or, if possessing it, he neglects or re-
fuses to exercise it, the principal may properly terminate his authority
therefor without liability for a breach of the contract.^^ A fortiori
would this be true where the covenant for competency was express in-
stead of implied. Any other rule would, as can readily be seen, place
« Standard Oil Co. v. Gilbert, 84 The Wlmmera, etc., Co., 6 Vict U R.
Ga. 714, 8 L. R. A. 410: Adams v.
Fitzpatrlck, 125 N. Y. 124 (citing
many other New York cases). Doug-
lass V. Merchants* Ins. Co., 118 N. Y.
484, 7 L. R. A. 822, 23 N. B. 806; Vail
V. Jersey Falls Co., 32 Barb. (N. Y.)
564; Grover & B. Sew. M. Co. v. Bulk-
ley, 48 111. 189; Moline Flow Co. v.
Booth, 17 111. App. 574; Kelly v.
Carthage Wheel Co., 62 Ohio St. 598;
Sines v. Superintendents of the Poor,
58 Mich. 503; Tallon v. Mining Co.,
55 Mich. 147; Tatterson v. Suffolk
Mfg. Co., 106 Mass. 56: Alba v. Mor-
larty, 36 La. Ann. 680; Lalande v.
Aldrlch, 41 La. Ann. 307; McCul-
lough Iron Co. v. Carpenter, 67 Md.
554, 11 Atl. Rep. 176; Weise v. Mil-
waukee County Supervisors, 51 Wis.
664; New Hampshire Iron Co. v.
Richardson, 5 N. H. 294; Wallace v.
Floyd, 29 Pa. St. 184, 72 Am. Dec.
620; Ranck v. Albright, 36 Pa. St.
367; Nicholson v. Patchin, 5 Cal. 474;
Capron v. Strout, 11 Nev. 804; Bees-
ton V. Collyer, 4 Blng. 309; Mansfield
V. Scott, 1 CI. & Fin. 319; Bullock v.
362.
10 A. travelling salesman, employed
by the year, became by accident in-
capable of completing his year. Two
months afterward he came back,
worked a little about the store,
"dunned" several of his former cus-
tomers, but did not resume his
former duties as traveler. Held, not
enough to Justify the presumption
that the parties had assented to an
arrangement for another term of the
same length at the same salary.
O'Connor v. Briggs, 182 Mass. 387.
11 Peterson v. Drew, 2 Alaska, 560;
Franklin v. Lilly Lumber Co., 66 W.
Va. 164; Rosbach v. Sackett Co., 134
App. Div. 130; United Oil Co. v. Grey,
47 Tex. Gir. App. 10; AUoroft v.
Adams, 38 Can. S. C. 365. The prin-
cipal does not necessarily lose his-
right because he does not imme-
diately discharge the agent upon dis-
covering his incompetency. Rosback
y. Sackett Co., 8upra. See also United
Oil Co. V. Grey, supra.
434
CUAP. VIIl]
TERMINATION OF THE RELATION
[§ 607
the principal at the mercy of an incompetent agent, and compel him to
suflfer, perhaps for a long period, a constant and increasing loss and
injury from the inefficiency of an agent who had impliedly, if not ex-
pressly, warranted himself to be conjpetent.
If, however, at the time of the employment, the principal knew of
the agent's incompetence, he could not discharge him on that ground,
unless, at least, the incompetence were greater than the principal knew
or had reasonable grounds to suppose. If a man knowingly chooses
incompetent agents, he has no reason to complain if he receives incom-
petent service.
Brief periods of incompetency caused by illness or accident would
not be within the rule; but if continued for an unreasonable period,
and certainly if permanent, would justify a termination.^*
§ 607. Agency may be terminated for agent's disobedience, dis-
honesty or other misconduct. — It is also an implied condition in every
contract of agency, that the agent will not wilfully disobey or disre-
gard the reasonable and lawful instructions of his principal ; that he
will not willingly permit to suffer his principal's interests committed to
his care ; that he will be honest and f aitlif ul, and will exercise reason-
able care and diligence in the performance of his duties; and that he
will not intentionally violate the established principles of morality or
the laws of the land."
If, therefore, the agent, though employed for a definite time violates
this condition, the principal may discharge him therefor without in-
curring liability on account of such discharge.^*
This rule is indispensable for the protection of the principal. The
agency is created by him for the furtherance of his interests. It is his
will that is to be executed, his object that is to be accomplished. Within
reasonable and lawful limits, he has, and of necessity must have, the
right to determine the time, the methods and the means to be employed.
He has a right to have the business performed in his own way, if it be a
12 Spindel y. Cooper, 46 N. Y. Mise.
569; Gaynor v. Jones, 104 N. Y. App.
Div. 35; Johnson v. Walker, 155
Mass, 253, 31 Am. St R. 550; Poua-
sard y. Spiers, 1 Q. B. Div. 410; Dart-
mouth Ferry Co. v. Marks, 84 Can.
S. C. 366; Storey y. Fulham Steel
Works, 24 Times L. R. 89; Myers y.
Sleradski, [1910] Transv. L. R. 869.
13 Callo y. Brouncker, 4 C. ft P. 518 ;
Atkin y. Acton, 4 C. ft P. 208; Bixby
y. Parsons, 49 Conn. 483, 44 Am. Rep.
246; Parker y. Farlinger, 122 Ga. 315.
Where an agent has been guilty of
misconduct which justifies his dis-
charge, the fact that he was guilty
of no actual wrong intention is im-
material. Kelmar y. Souden, 2 N. S.
Wales St. R. 348.
i^ Chicago, etc., Ry. Co. y. Bayfield,
37 Mich. 205; Dierlnger y. Meyer, 42
Wis. 311, 24 Am. Dec. 415; Hender-
son y. Hydraulic Works, 9 Phila.
(Penn.) 100; Urquhart y. Scottish
Am. Mtg. Co., 85 Minn. 69, 88 N. W.
264.
435
§ 6io]
THE LAW OF AGENCY
[book I
the tendency is to injure or endanger, not to protect and promote, the
interests of the latter. And it makes no difference in such a case that
the agent gives his whole time and services to the business of his prin-
cipal ; his interest in the other business, though actually conducted by
agents of his own, is hostile to his principal's interests.**
§ 6io. Further illustrations. — So where a clerk and travel-
ing agent, employed by the year, assaulted his principal's maid servant
with intent to ravish her, it was held that this was a good cause for his
dismissal without notice, and that he was not entitled to recover wages
for the time he had served.*^ This decision was based upon the ground
that the agent by his misconduct had broken the implied agreement
which formed part of the contract of hiring and gave the principal the
right to rescind it. So where an agent seduced the minor daughter of
his principal, it was held that this was a good cause for his discharge
and that the principal might recoup against the agent's claim for wages,
the damages sustained by the seduction.-*
So if the agent proves to be wilfully or habitually disobedient or
disregardful of his principal's reasonable instructions or directions;-''
»Dieringer ▼. Meyer. 42 WIb. 311,
24 Am. Rep. 415 [citing Singer v.
McCormick, 4 W. & S. (Pa.) 265;
Jaffray v. King, 34 Md. 217; Adams
Express Co. v. Trego, 35 Md. 47;
Lacy y. Osbaldiston, 8 C. & P. 80;
Read t. Dunsmore, 9 C. & P. 588;
Nichol V. Martyn, 2 Esp. 732; Gard-
ner V. McCutcheon, 4 Beav. 534;
Ridgway v. Market Co., 3 Ad. & E.
171; Amor v. Fearon, 9 Ad. & E. 548;
Horton v. McMurtry, 5 Hurl. & N.
667].
Thus where it appeared that a
traveling salesman who had con-
tracted his entire time to his em-
ployer, had been secretly taking or-
ders for another firm, it was held
that this would Justify his discharge
though employed for a fixed term.
Orr v. Ward, 73 111. 318 [citing Ridg-
way V. Market Co., supra; Spotswood
v. Barrow, 5 W. H. A O. 110].
In Day v. American Machinist
Press, 86 N. Y. App. Div. 613, the
fact that the plaintiff had taken
steps to procure a copyri^^t and had
talked of the possibility of starting
a rival business, was held not such
disloyalty as would Justify a dis-
missal. So merely planning to enter
a rival business after his term ex-
pires is not enough. Myers v. Sul-
livan, 166 Mich. 193. See other cases
cited in preceding section.
38 Atkin y. Acton, 4 a ft P. 208.
2'*Blxby V. Parsons, 49 Conn. 483,
44 Am. Rep. 246; Wood v. Barker, 12
Western L. Reporter, 225.
A female performer in a circus
who is guilty of such Immoral con-
duct as to scandalize and demoralize
tbe whole company, may be right-
fully dismissed. Drayton y. Reld, 5
Daly (N. Y.), 442. So may a man
servant who openly boasts of his im-
proper familiarity with women. Den-
ham V. Patrick, 20 Ont. L. R. 347.
25 Jerome v. Queen City Cycle Co.,
163 N. Y. 351; Peniston v. Huber Co.,
196 Pa. 580; FOrsyth v. McKinney,
56 Hun (N. Y.), 1; Ford v. Danks, 16
La. Ann. 119; Edwards, v. Levy, 2
Fost. ft Fin. 94; Callo v. Brouncker,
4 C. ft P. 618. Where an agent wil-
fully sells his principars goods for
less than the fixed price or so con-
ducts himself as to drive away his
principal's customers, the principal
is justified in discharging him. New-
438
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 6lO
or if he proves to be an habitual drunkard, or if he becomes a drunkard
to such an extent as to incapacitate him for the performance of his
undertaking,^' he may properly be discharged. And so if he becomes
a gambler upon the stock exchange.*^
Further illustrations will be given in the note."
man v. Rea^n, 65 Ga. 612. See also
a striking iUustration in Von Heyne
V. Tompkins, 89 Minn. 77, 5 L. R. A.
(X. S.) 624.
In Costet V. Jeantet, 108 N. Y. App.
Div. 201, where it was expressly
agreed that the employee should per-
form a particular service, it was held
improper to submit to the Jury the
question whether a command to do
the same was reasonable. In Lind-
ner T. Brewing Co., 131 Mo. App.
SM, It was held that a refusal by
superintendent to go into the bottling
department until the foreman apolo-
gized to him was such disobedience
as would authorize a discharge. In
the following cases a failure to make
reports as requested was held to
justify a discharge. Macfarren v.
Gallinger, 210 Pa. 74; Kenner ▼.
Southwestern Oil Co., 113 La. 80;
Armstrong v. Ins. Co. (Tex. Civ.
App.), 112 S. W. 327. In Russell v.
Inman, 79 N. Y. App. Div. 227, an
employee's persistence in signing his
own name to firm correspondence
was held to warrant his discharge.
Where a question of reasonableness
in a command is in doubt, it is for
the Jury to determine under all the
facts of the case. In Smith v. Her-
ring-Hall-Marvin Safe Co., 115 N. Y.
Supp. 204, a written contract of gen-
eral employment was made in New
York; the plaintlfT was ordered to go
to Philadelphia and refused. On
question of reasonableness of the
order, held that the jury could hear
parol evidence in regard to a cus-
tom in the defendant's business of
transferring its agents. In Develop-
ment Ca V. King, 88 C. C. A. 255, 161
Fed. 91, 24 L. R. A. (N. S.) 812, R
was employed "to devote all his time
* * * to service of the company
and to the performance of such la-
bors as the officers may direct" Prior
to his contract R had been president
of defendant company. R refused
to obey an order to go to a remote
part of Mexico and examine land,,
alleging it to be an unreasonable
command. Held, that reasonable-
ness was a question for the jury, and
that the motive behind the com-
mand was immaterial provided the
command itself was rea8;>nable.
2<iMcCormick v. Demary, 10 Nebu
616; Physioe t. 8hea» 76 Ga. 4«i(>:
Nolan V. Thompson, 11 Daly (N. Y.),
814; Bass Furnace Ca v. Olassootik,.
82 Ala. 462» 60 Am. Rep. 748; Atkin-
son V. Heine, 134 N. Y. App. Div. 406;
Mowbray v. Gouki, 83 N. Y, App. Div.
226.
»T Pearce v. Poster, 17 Q. B. Div.
636.
2a In the following cases the facts
were held to support a finding that
the agenf s misconduct warranted his
dismissal. Standidge v. Lynde, 120
111. App. 418 (an attorney's clerk left
his briefs one Saturday afternoon to
play base ball) ; Wieselthler v. Cohen,
116 N. Y. Supp. 559 (the employee
took and kept patterns belonging to
his master) ; Highland Buggy Co. v.
Parker, 27 Oh. Cir. Ct. 115 (a sales-
man sold below the prices fixed ) ;
Wright v. Lake, 48 Wash. 469 (neg-
ligence in twice allowing a team to
run away) ; Alexander v. Potts, 161
111. App. 587 (disrespectful language
to fellow employees and to cus-
tomers); Shields V. Carson, 102 HI.
App. 38 (refusal of a salesman to
return samples on request) ; Hutch-
inson V. Washburn, 80 N. Y. App.
Div. 867 (overcharging in an ex-
pense account) ; Parks v. Tolman,
113 Mo. App. 14 (employer bargained
439
§ 6iiJ
THE LAW OF AGENXY
[book I
§ 6ii.
Limitations — ^Waiver — Condonation. — But it is not
for every slight offense, or for every default causing no $erious in-
jury, that the ag^nt is to be discharged. The question of the suffi-
ciency of the reason in such a case is ordinarily one of fact and law to
be determined from all the facts and circumstances of each particular
transaction. The disobedience of the agent ought to be such as to
show such a spirit of insubordination or of reckless and careless dis-
regard for proper instructions as reasonably to indicate that he could
not be relied upon for faithful and efficient service.^*
Where the principal undertakes to discharge because of specific acts
of misconduct, he must, it is held, act with reasonable promptness
after their discovery; otherwise he will be deemed to have waived or
condoned them.*® On the other hand, where the principal undertakes
for senrices of an unmarried woman
as stenographer. Regardless of rea-
sons for the condition, marriage and
concealment thereof was grounds for
dismissal); McGeorge v. Ross, 5 Ter-
ritories L. R. 116 (employee cir-
culated false reports concerning the
principal); Bonsquet t. Nellis, 35
Que. S. C. 209 (the employee slan-
dered the master) ; Gourmany t.
Manitoba Cluh, 1 West L. R. 175
(club steward appropriated club sup-
plies to his own use); Thomson v.
Raworth, [1910] Transv. L. R. 783;
Youngash v. Saskatchewan Bngine
Co., 16 West L. R. 268; Walker v.
John Hancock Mut. L. Ins. C!o., —
N. J. L. , 79 Atl. 354; Thomas V,
Houston, etc., Co., 146 Ky. 156 (wil-
ful disobedience to orders).
2» Shaver v. Ingham, 58 Mich. 649,
55 Am. Rep. 712.
Compare Jerome y. Ciycle Co.,
supra, A single act of disobedience
was held sufficient in Connell t. Gis-
bome Times Co., 28 New Zeal. L. R.
299; a single act of serious negli-
gence in Raster y. London Printing
Works, [1899] 1 Q. B. 901. There is
no fixed standard by which the ques-
tion may be decided in every dase.
It must often be left to the jury with
proper instructions. Clouston v.
Corry, [1906] App. Gas. 122. Gf. with
Vidalia V. Mathews, 1 €kL App. 56^
where it is said that absence from
employihent may or may not Justify
a discharge. It is to be determined
by considering the contract^ the na-
ture of the business and the ^ect
upon the employer's interests.
Sane: Brown y. Sessell, [1998]
TransT. L. R. 1187.
In the following cases, the grounds
for discharge were held insuiBeient.
Porter v. Murphy, 7 Ind. Ter. 395
(M was retained as attorney by the
Creek Nation; although his serv-
ices were satisfactory* he was re-
leased because he was mentioned dis-
paragingly in a report made by fed-
eral agents); Wood v. RaVenscroft*
185 Iowa, 846 (misrepresentations aa
to amount of salary paid by him to
an assistant) ; Burt v. Catlin, 175 N.
Y. 486 (fighting with a f^low serv-
ant which the Jury found Justifiable
in view of the provocation); Beau-
cage v. Winnipeg Stone Co., 14 West.
L. R. 575 (a single act of negligence
which could be compensated by dam-
ages); WiUiamB v. Hammond, 16
Manitoba, 869 (a single instance of
disrespectful language provoked by
the employer's conduct).
30 In Batchelder v. Standard Ele-
vator Co., 227 Pa. 201, 19 Ann. Oa&
875, it was held that intoxication
was condoned by retention for a
year thereafter; and likewise an act
of misconduct in using hie employer's
time in outside service was condoned
440
CHAP. VIIl]
TERMINATION OF THE RELATION [§§ 6X2, 613
to discharge, not because of specific acts of misconduct, but because of
an inherent want of capacity or integrity, of which various acts of mis-
conduct were evidence, it is held that this doctrine of condonation by
mere delay is not applicable.'^
§ 612. Even though employed for definite time, agent may be
discharged subject to liability for damages. — It must also be kept in
mind that even though there is an employment for a definite time, and
no right to terminate it exists, such employment may in fact be termi-
nated and the employee discharged before the expiration of that time,
subject to the employer's liability to pay damages for the wrongful
discharge. Mere employments do not, as has been seen, come within
the rules governing irrevocable authority,'* and, as will be seen here-
after, courts of equity do not ordinarily undertake to specifically en-
force contracts of personal service or to enjoin their violation by the
parties.'*
"b. Miinner of Revocation*
§ 613. How the authority may be revoked.— Passing now to the
question of how the au^rity, when revocable by the principal, may be
revoked, it may be observed that the means by which the authority
may be revoked are as various as the methods by which it may be con-
ferred. It may be done by a solemn instrument under seal, or by a
writing not under seal, or by a piibliQ and formal announcement or
proclamation, or by a simple aoad private declaration. It may also be
inferred from circumstances.
The precise mode to be adc^ted in any given case, or the mode
which, having been adopted, shall be deemed sufficient in such case, is
to be determined largely by considering the object with which an au-
thority is revoked. A revocation is not effected by the mere operation
by lapse of one month before objec-
tion. In Reynolds v. Hart. 42 Colo.
150, the employee quit work for nine
days; he resumed it with his em-
ployer's knowledge, and was dis-
charged two days thereafter. The
dereliction was held to have been
condoned. And see Fltzpatrick Gin-
ning Co. V. McLaney, 153 Ala. 586,
127 Am. St R. 71.
31 Kelly Plow Co. v. London (Tex.
Civ. App.), 125 8. W. 974. In Glas-
gow V. Hood (Tenn. Ch. App.), 57 S.
W. 162, the business manager of a
girls' seminary was discharged for
incompetency. The court said: "The
fact that the employer bears with the
incompetency or Irregularities of
such employee for a time, or for
years, even, does not estop him from
discharging such employee for such
incompetency if it continues."
• To same eflFect is United Oil Co.
V. Gray, 47 Tex. Civ. App. 10.
82 8ee ante, $ 566. Frith v. Frith,
[1906] App. Cas. 254.
33 See post, §S 642-644.
441
§§ 6i4, 615]
THE LAW OF AGENCY
[book I
of the principars will. That will must he expressed, and its expres-
sion must be brought to the attention of those whom it is desired to
affect. This leads to the necessity of giving notice of the revocation,
a question hereafter to be considered. It will be evident, too, that the
mode adopted for accomplishing the revocation must not only be 00-
extensive with the degree to which by length of time or widespread"
operations or publicity of appointment, the knowledge of the authority
has been disseminated, but that it must also be adapted to the particular
means by which such dissemination was effected.
It is to be kept in mind, also, that the question now is as to the method
and not as to the effect of revocation, — liow, for example, the author-
ity may be terminated and not whether such a tennination is a breach
of contract which will entitle the agent to damages.
§ 614. By sealed instrument. — It is very customary to revoke a
power of attorney under seal by an instrument executed with the same
degree of solemnity, and the statutes of many states provide for givii^
constructive notice of the revocation of a recorded power of attorney
by recording the instrument of revocation in the same office with the
power. But a revocation under seal is not necessary even where the
authority was conferred by deed. A parol revocation will suffice,**
and particularly so when the seal upon the power to be revoked was
superfluous, not being required by the nature of the act to be per-
formed."
§ 615. Express revocation not required. — Neither is it necessary
that the revocation, in absence of a statute requiring it, should be in
writing, or should be couched in any formal phrase. It is not neces-
sary that the word "revoke," or other similar words, should be used.**
A request to resign may amount to a revocation or discharge. Thus
S4 Brookshire ▼. Brookshlre, 8 Ired.
(N. C.) Law, 74. 47 Am. Dec. 341;
Oopeland t. Mercantile Ins. Co., 6
Pick. (Mass.) 198.
Recording revocation. — As to the
necessity of recording the revoca-
tion, see post, § 636.
8s Brookshire v. Brookshire, supra.
so Jones V. Graham, etc., Transp.
Co., 51 Mich. 539. Notice to an agent
that he would "better let it go," is
sufficient to revoke his authority to
make a proposed purchase. First
Nat. Bank v. Hall, 8 Mont. 341. 20
Pac. 638; or that the principal's wife
will not sign a deed and therefore
that the a«:ent might juBt as well
take the property o£t the market
Lacey v. Thomas. 164 Fed. 623.
Any language by which an em-
ployee is notified that his services
are no longer required is sufficient to
constitute a discharge from an em-
ployment. Ryan v. Mayor. 154 N. Y.
328; Sigmon v. Goldstone, 116 App.
Div. 490. Refusing to accept the
services except upon conditions vio-
lative of the contract is enough.
Curtis V. Lehmann, 115 Lia. 40; or per-
mitting only different and inferioi
work to be done, Wolf Cigar Stores r.
Kramer. 50 Tex. Civ. App. 411.
442
CHAP. Vlll]
TERMINATION OF THE RELATION
[§ 6l6
the words "I am very sorry to have to ask you to resign your position"
in a letter from a principal to his agent were held by the court to be a
civil form but none the less a peremptory discharge of the agent, and
that he rightly treated it as such.*^ So the demand by the principal of
thc^retum of a written power under which the agent was acting, and
its surrender or withdrawal without any explanatory words or further
instructions, amount to a revocation of the power.*® On the other
hand, a request to resign under circunistances showing that the em-
ployer desired a resignation but did not mean to force it, was held not
to be a discharge.'*
§ 6x6. Revocation may be implied. — So a revocation may be im*
plied from the circumstances of the case, as where something has been
done or has happened which makes the further continuance of the au-
thority inconsistent or incompatible with the present situation of affairs.
Thus if the powers conferred upon cmic agent are subsequently given
to another, it will, in general, operate as a revocation of the authority
of the first, as where a power is given to an agent to sell the interest
of a principal in a vessel and the principal afterwards confers the same
power upon the first agent jointly with another,*®
S7 Jones y. Graham, etc., Transp.
Co., supra,
«« Kelly ▼. Brennan, 55 N. J. Eq.
428.
An unequivocal notice of revoca-
tion will be effective even though it
may inadvertently ascribe the wrong
date to the power or even refer to
one which was not the one ezecated.
Switzer v. Switzer, 57 N. J. Eq. 421.
«» Reiter v. Standard Scale Co., 141
ni. App. 427. A voluntary resigna-
tion accepted terminates the employ-
ment by mutual consent without
liability on either side. New York
L. Ins. Co. V. Thomas, 47 Tex. Civ.
App. 150.
But where the employer wrote
telling the employee in substance
that his services were no longer re-
quired, saying that he presumed that
the employee would prefer to retire
by resignation and suggested that he
send one and saying "It is hereby
understood that the same is ac-
cepted/' it was held not a voluntary
resignation but a discharge. Cum-
berland, etc., R. Co. Y. Slack, 45 Md.
161. In Wharton v. Christie, 63 N.
J. L. 607, the court stood seven to six
upon the question whether a resigna-
tion was voluntary or forced.
In Merrill v. Wakefield Rattan Co.,
1 App. Div. 118, the employer re-
quested a resignation and it was
given unconditionally. It was held
not a discharge, "Possibly, probably
even, a refusal to resign would have
been followed by a dismissal; but
still there was no compulsion."
A mere complaint that the em-
ployee's services are very unsatis-
factory is not per se a discharge.
Caldwell Milling Co. v. Snively, 78
Kan. 556.
4oCopeland v. Mercantile Ins. Co.,
6 Pick. (Mass.) 198; Schafer's Es-
tate, 39 Pa. Super. 384. So where
property is put into the hands of an
agent with instructions to make cer-
tain disposition of it, this authority
will be revoked by subsequent direc-
tions to deliver the property to some
one else. Keyl v. Westerhaus, 42
Mo. App. 49.
443
§§ 6i7, 6i8]
THE LAW OF AGENCY
[book I
So a revocation will be implied if the agent is afterwards authorized
to deal with the subject-matter in an entirely different capacity, as
where an agent authorized to sell land is subsequently made trustee to
hold it for the benefit of a third person.*^ And so, where the principal
subsequently authorizes an act inconsistent with the execution of the
first power, as where having given authority to dismiss a suit he sub-
sequently gives another authorizii^ its continuance.**
§ 617. Reducing rank, changing duties, etc. — So a revoca-
tion or discharge may be implied where the principal substantially re-
duces the rank, radically changes the nature of the dtities, or insists
upon the performance of materially greater or more oo^ous services,
as compared with the rank, duties or services contemplated by the orig*
inal contract of employment.** Not so, however, where the change is
immaterial, casual, or such as may fairly be deemed to have been
within the terms of the employment.**
§ 61B. Acts not working a revocation. — ^But an employ-
ment by written contract to do a specified thing is not necessarily re-
voked by a subsequent general emplo3^ment to attend to all the prin-
cipal's business ; *• nor is a power of attorney executed by a widow and
heirs at law of a decedent empowering the agent to complete an en-
gagement entered into by the decedent, necessarily revoked by a sub-
sequent grant of administration to the widow ;*• nor will a second
power given to one of two previously appointed agents necessarily re-
voke the authority of the other, where the second appointment confers
no new or additional authority in reference to the subject-matter of
the agency ; *^ nor will an authority given by a principal to an agent to
collect a sum of money, be necessarily revoked by the mere authoriza-
tion of another agent to receive the same sum.**
So where the present holder of a note allowed the former owner to
continue to receive payments thereon from the maker as they fell due,
4iChenault v. Qulsenberry (Ky.),
56 S. W. 410, 22 Ky. L. Rep. 79, 57
S. W. 234. But authority to sell land
iB not necessarily terminated by the
fact that the principal has given the
agent an option to buy it himself.
Lipscomb v. Cole, 81 Mo. App.' 63.
42 Aiken v. Taylor (Tenn. Ch.), 62
S. W. 200.
43 See Marx v. Miller, 134 Ala. 347;
Cooper V. Stronge, 111 Minn. 177, 27
L. R. A. (N. S.) 1011, 20 Ann. Cas.
663; Kramer v. Wolf Cigar Stores
Co., 99 Tex. 597; Loos v, Walter
Brewing Co., 146 Wis. 1, 140 Am.
St R. 1052.
44 See Excelsior Needle Co. v.
Smith, 61 Conn. 56; Lathrop v. Print-
ing Co. (R. I.), 80 Atl. 964; Wright
V. Graves Land Co., 100 Wis. 269.
45 Smith V. Lane, 101 Ind. 449.
48 Jones V. Commercial Bank, 78
Ky. 413.
47 Cushman v. Qlover, 11 III. 600,
52 Am. Dec. 461.
48Dayol v. Qulmby, 11 Allen
(Mass.), 208.
444
CHAP, VIIl]
TERMINATION OF THE RELATION [§§ 6x9, 62O
the authority of the maker to make further payments in the same way
is not revoked merely by putting the note in a bank for collection, as
the authority so given and exercised was entirely independent of the
possession of the note,^
§ 619. — — By disposing of subject-matter. — ^Where the prin-
cipal, before the execution of the authority by the agent disposes of
the subject-matter upon which the authority was to operate, an inten-
tion to revoke the power will ordinarily be implied. Thus if a prin-
cipal authorizes an agent to sell his real estate,"® or his interest in a
patent," but before the agent has found a purchaser the principal sells
the same himself, there is nothing left to support the agency and —
questions of notice not being involved — revocation will be implied."
In one such case, the court said : "That act [the sale by the principal] ,
of itself stripped her agent of all power to make another contract in
derogation of that entered into by his principal. The agent could have
IK) greater authority than the principal, and the latter having disposed
of the subject-matter of the agency, the power of the agent to act any
further in the premises was at once ended." •*
§ 620* By dissolution of partnership or corporation. — So
where a firm ** or corporation ^'^ which has appointed an agent, is sub-
sequently dissolved, tlie dissolution will ordinarily operate as a revoca-
tion of the power (though it does not usually terminate the contract of
employment) ; '• but a mere change in the name of the firm, where the
new firm is composed of the same members as the old does not operate
49 Enright v. Beaumond, 68 Vt. 249.
»• Gilbert v. Holmes* 64 IlL 648;
Ahern v. Baker, 34 Minn. 98; Molt v.
Ferguson, 92 Minn. 201; White v.
Benton, 121 Iowa, 354; KeUy v. Bren-
nan, 65 N. J. Eq. 423; Hallstead v.
Perrlgo, 87 Neb. 128; Frazier v. Cox
(Ky.), 125 S. W. 148; Lowell v. Hes-
sey, 46 Colo. 517; Wallace v. Flgone,
107 Mo. App. 362. As to the neces-
sity of notice of the sale, see post,
under head of Notice.
Bi Walker v. Denison, 86 111. 142.
<TbiB was called a termination "by
operation of law," but It was not that
In any proper sense. The agent
knew of the sale, and the action was
to get back from the agent's wife
property which had been conveyed to
her by the persons to whom the
agent had undertaken to sell.)
»«BIssell T. Terry, 69 IlL 184.
(Here all parties knew of the sale.)
Same where for example he sells a
judgment which his attorney would
otherwise have authority to enforce
and collect Caldwell v. Bigger, 76
Kan. 49.
03 Kelly v. Brennan, 55 N. J. Eq.
423, supra.
84 Schlater v. Winpenny, 75 Penn.
St 321; Whitworth v. Ballard, 56*
Ind. 279; Meyer v. Atkins, 29 La.
Ann. 586; Vaccaro v. Toof, 9 Heisk.
(Tenn.) 194.
B* Salton v. New Beeston Cycle Co.,
[1900] 1 Ch. 43.
66 Brace v. Calder, [1895] 2 Q. B.
253; Tiffin Glass Co. v. Stoehr, 54
Ohio St 157; Globe Infl. Co. v. Jones,
129 Mich. 664; Kinsman v. Fisk, 37
N. Y. App. Dlv. 443; Spader v. Mfg.
Co., 47 N. J. Eq. 18. But see Louch-
445
§§ 621-624]
THE LAW OF AGENCY
[book I
to revoke an agency conferred upon it, the identity remaining the
same.*^
§ 621. By severance of d joint interest. — Upon similar
grounds, it is held that where two or more principals jointly appoint an
agent for the transaction of some business in which they are jointly in-
terested, a severance of this joint interest will operate. to revoke tlie
agency.*^*
§ 622. Subagent's authority terminated by termination of
authority of principal agent. — The termination of the authority Of an
agent terminates also the authority of subagents who derive their au-
thority from him, and this is true even though he may have been ex*
pressly authorized to appoint them if they were appointed as his
agents.***
c. Notice of Revocation.
§ 623. Notice usually necessary. — In order to render the termina-
tion of the authority by the act of the principal effectual, notice of it
must, as a general rule, be given to those parties who are to be affected
by it ; and these parties are, usually, the agent himself, and those per-
sons who from knowledge of his authority or from previous dealings
with him, would be likely to deal with him in good faith in ignorance
of the termination and upon the strength of the previous authority. Jt
is necessary therefore to consider when notice of termination of the
agent's authority must be given (i) to the agent, (2) in some cases to
subagents, and (3) to third persons.
§ 624. I. To the agent — ^When notice must be given to him. —
Notice of the termination of the agent's authority by the act of the
principal must, in general, be given by the principal to the agent, and,
in general, the revocation will not, as between the principal and the
agent, become operative against the agent until such notice is given to
him.®^ In some cases, indeed, as in those in which revocation can not
helm v. Printing Co., 12 Pa. Super.
55; People v. Ins. Co., 91 N. Y. 174;
Lenoir v. Linville Impr. Co., 12G N.
C. 922.
fi7 BillingBley v. Dawson, 27 Iowa,
210.
58Rowe V. Rand, 111 Ind. 206.
B9 Union Casualty Co. v. Gray, 52
C. C. A. 224, 114 Fed. 422.
60 Welle V. United States, 7 Ct. of
CI. 535 (notice to third person only
held not enough); Jones v. Hodg-
klns, 61 Me. 480 (commission agent
not liable in trover for selling goods
after Intended revocation but before
notice); Best v. Ounther, 125 WIs^
518, 110 Am. St R. 851, 1 L. R. A.
(N. S.) 577; Spinks v. Georgia Gran-
ite Co., 114 La. 1044.
Where the parties had stipulated
for "Immediate notice" to the agent»
it was held that this meant notice
within a reasonable time, taking all
the circumstances Into account, and
446
CHAP. VIII J
TERMINATION OF THE RELATION
[§ 625
well be manifested by conduct, a notice of revocation seems to be the
only method open for the accomplishment of the object. Where the
authority terminates by mere lapse of time, or upon the accomplish-
ment of the object, or upon any other fixed or certain event, notice, of
course, is unnecessary, as the agent knows tliese things as well as the
principal ; but the agent can not be presumed to know, until in some
manner he has been notified, of the uncertain and unforeseen act of the
principal in terminating the authority by his own act, and before it
would otherwise have terminated. Hence, notice in some form must
be given to the agent. If it be given by letter, it takes effect from the
time the agent receives the letter, and not from the time of its mailing.*^
But after revocation of the agent's authority, the principal is not
bound, as between himself and the agent, to notify the latter of his dis-
sent from acts which the agent thereafter assumes to do by virtue of
the original authority.**
§ 625. When notice to agent not required. — There can, of
course, however, be no necessity of formally notifying the agent of
facts which he already knows.®* He may, perhaps, know them before
the principal does, or know them better than anyone else. There can
be no necessity of notifying him of the happening of events, which
like death and bankruptcy, operate ipso facto to terminate an agency.**
Neither can there be any necessity of notifying him of events which
by the express or implied terms of his employment he can be said to
have assumed the risk of knowing. Thus it has been held in many
cases — questionably, it is believed, unless it can be put upon the ground
of an implied term in the employment *' — that a real estate broker's
authority to sell is terminated, ipso facia and without notice, by a sale
made by the principal in person, or through another broker.**
that the jury were to determine
whether this requirement had Veen
satisfied. Tuffree v. Blnford, 130
Iowa, 532.
01 Robertson v. Cloud, 47 Miss. 208;
Sayre v. Wilson* 86 Ala. 151. A no-
tice sent to and received at the right
place takes effect on such receipt,
though the agent by reason of ab-
sence did not see it till later, if the
sender was ignorant of his absence.
Rees V. Pellow, 38 C. C. A. 94, 97
Fed. 167.
A notice given to the agent through
another agent of the principal au-
thorized to give it, is sufficient Free-
land V. Hughes, 109 111. App. 73.
«2 Kelly Y. Phelps, 57 Wis. 425.
M Palms V. Howard, 129 Ky. 668.
«* See post, H 701-3.
0s See post, Book V, Chap. Ill, Real
Estate Brokers.
8«Ahern v. Baker, 34 Minn. 98 ;1
White V. Benton, 121 Iowa, 354; Hall-
stead V. Perrlgo, 87 Nob. 128; Wal-
lace V. Figone, 107 Mo. App. 362;
Kelly V. Brennan, 55 N. J. Eq. 423;
Teal V. McKnight, 110 La. 256; Smith
V. Fowler, 57 Tex. Civ. App. 356;
Frazier v. Cox (Ky.), 125 S. W. 148;
Mott y. Ferguson, 92 Minn. 201.
Contra: Woodall v. Foster, 91 Tenn.
195, especially where there is a pro-
447
§§ 626-628] THE LAW OF AGENCY [BOOK I
§ 626. ' Constructive notice. — It has also been held that the
registry of a deed, made by the principal upon such a sale, is con-
structive notice to the agent under a statute which provides that re-
cording shall be "notice to all persons of the existence of such deed." •''
This would seem to be doubtful except for such a statute.
§ 637. 2. To subagents — ^When notice must be given to subagent*
Where the subagent derives his authority solely from the agent, no
notice is required to be given by the principal to the subageht of the
revocation of the agent's authority; but where the subagent was ap-
pointed by and with the authority of the principal, he is, as has been
seen, the agent of the principal, and notice should be given to him of
the revocation of his authority.**
§ 628. 3. To third persons — ^Where authority wa^ general — With
respect of third persons, a distinction is made between the case in
which the authority was a "general" or apparently continuing one,
and the case in which the authority was "special" or confined fo the
doing of some specific act, and therefore ordinarily exhausted when
that act is done. Where a general authority is once shown to have
existed, it may be presumed to continue until it is shown to liave been
revoked,** and persons who have dealt with the agent as such, or who
have had knowledge of his authority and are therefore likely to deal
with him, may very properly expect that if the authority be with-
drawn, reasonable and timely notice of that fact will be given and
they may therefore lawfully presume, in the absence of such notice,
that the authority still continues.
General rule. — It is therefore the general rule that the acts of a
former general agent within the scope of his original authority will,
notwithstanding its revocation, continue to bind the former principal to
those parties to whom the agent has been thus accredited and who deal
with him in good faith in reliance upon his former authority, until due
notice of its revocation ^® has been given in the manner required
vision requiring notice. Reams v. Idaho, 717; Dlversy v. Kellogg, 44
Wilson, 147 N. Car. 304. 111. 114; Murphy v. Ottenhelmer, 84
OT Donnan v. Adams, 30 Tex. Civ. 111. 39 ; Meyer v. Hehner, 06 HI. 400;
App. 616. Meeker v. Mannla, 162 IH. 203; Long-
08 story on Agency, § 469. worth v. Conwell, 2 Blackf. (Ind.)
o» Insurance Co. v. McCain, 96 U. 469; Ulrlch v. McCormlck, 66 Ind.
S. 84, 24 L. Ed. 653; McNeilly v. In- 243; North Chicago, etc.. Mill Co. v.
snrance Co., 66 N. Y. 28. It is trtie that some of these cases
TO Wheeler v. McGuIre, 86 Ala. 398, arose between the principal and third
2 Lf. R. A. 808; Stockton Ice Co. v. persons only, though the language
Argonaut Land Co. (Cal.), 56 Pac. used is general. For further discus-
886; Bourke v. Van Keuren, 20 Colo, si on, see Real Estate Broken in the
96; Fellows v. Hartford, etc., Co., 38 chapter on Brokers.
Conn. 197; Feldmann v. Shea, 6
448
CHAP. VIIl]
TERMINATION OF THE RELATION
[§ 629
by the law for the class of persons to which they belong. But this
rule has no application where the act done is beyond the scope of the
agent's former authority, and particularly so where the act is in ex-
cess of the power which the agent himself claimed to possess.^^
Notice would not be necessary of the revocation of the authority
of a subagent, unless he was so appointed With the principal's consent
as to make him the principal's agentJ'
I 6ag. -_ Where authority was speciaL^-^Where^ however,
the authority was special or limited to the performance of a sii^Ie
act, a different rule applies. As has been seen, an authority created
for the performance of a specific act exhausts itself in the accom-
plishment of the purpose for which it was created. No such pre-
sumption of continuity can arise from the existence of authority for
the performance of a single act, as naturally arises from the existence
of authority for a continuous course of dealing.
General rule, — It is therefore the general rule that no notice is re-
quired to be given to third persons of the termination of the authority
of a special agent after the special authority has been executed.^'
This rule must, however, be subject to the consideraticms already
considered in an earlier chapter.''* It is possible that even a q)ecial
Hyland, 94 Ind. 448; Springfield, eta,
Co. ▼. Kennedy, 7 Ind. App. 502;
Baudouine v. Grimes, 64 Iowa, 370;
Hancock v. Bjrrne, 5 Dana (Ky.),
613; Qragg v. Home Ins. Co., 32 Ky.
L. R. 988, 107 S. W. 322; Girard v.
Hfrsch, 6 La. Ann. 651; Harris v.
Cuddy, 21 La. Ann. 388; Maxcy Mfg.
Co. ▼. Bumham, 89 Me. 638, 66 Am.
St. R. 436; Packer y. Hinckley Loco-
motive Works, 122 Mass. 484; Wright
T. Herrlck, 128 Mass. 240; Planters'
Bank t. Cameron, 3 Sm. St M. (Mlsa.)
609; Lamothe v. St Louis, etc, Co.,
17 Mo. 204; Beard v. Kirk, 11 N. H.
397; Capen v. Pacific Mut Ins. Co.,
1 Dutch. (N. J.) 67, 64 Am. Dec. 412;
McNeilly y. Ins. Co., 66 N. Y. 23;
Claflin y. Lenheim, 66 N. Y. 301;
Barkley y. Rensselaer, etc, Co., 71
N. Y. 206; Munn y. Commission Co.,
16 Johns. (N. Y.) 44; Marsh y. Gil-
bert, 4 Thomp. it Cook (N. Y.), 259;
Marshall y. Reading F. Ins. Co., 78
Hun (N. Y.), 83, aTd 149 N. Y. 617;
Rice Y. Isham, 4 Abb. App. (N. Y.)
37; Cloyer Condensed Milk Co. T.
Cnshman, 31 N. Y. App. Diy. 108;
Steyens y. Schroeder, 40 N. Y. App.
Dly. 690; Vogel y. Weissmann, 23 N.
Y. Misc. 266; Lynch y. Rabe, 28 N. Y.
Misc. 216; Braswell y. American L.
Ins. Co., 76 N. C. 8; Aetna Ins. Co. y.
Stambaugh-Thompson Co., 76 Ohio,
138, 118 Am. St. R. 834; Tier y.
Lampson, 36 Yt 179, 82 Am. Vec
634; Hatcb ▼. Ooddinston. 96 XJ. S.
48, 24 L. Ed. 339; Insurance Co. y.
McCain, 96 U. 8. 84, 24 L. Bd. 663;
Johnson y. Christian, 128 U. 8. 374,
32 L. Ed. 412.
Termination "by lapse of time, —
Where authority of a general agent
terminates by lapse of time for its
continuance, principal must glye no-
tice to those who did not know of the
limit fixed. Willis y. Joyce, 27 Times
L. R. 388, 16 Com'l Cas. 190.
71 Baudouine y. urimes, 64 Iowa,
370.
7a See ante, H 622» 627; po9t, | 676.
» Watts y. Kayaaagh, 36 Yt 84;
BIraohan y. Mnxkiw, 24 Wis. 21.
T« See ante, § 262.
29
449
§§ 630, 631]
THE LAW OF AGENCY
[book 1
agency may be accompanied by such generality in its creation or its
recognition as to reasonably warrant an inference of its continuing
character.
g 630. ■ Where, however, the principal seeks to revoke the
authority before its execution, different considerations apply. Such
a case stands practically upon the same footing as any other. If the
special agent has been accredited to a particular person, that person
should ordinarily be notified: if the principal knows that negotiations
have been begun with a particular person, the same requirement
would ordinarily exist; in other cases, the principal must doubtless
do whatever he reasonably should, if any thing, to prevent third per-
sons who are charged with the duty of protecting themselves, in deal-
ing with agents, from being misled by acting upon a power with-
drawn.^'
Third persons are not, in this case, entitled to the same consideration
as in the case of the so called general agency. The situation presup-
poses the absence of a habit or course of dealing, and there is nothing
ordinarily to qualify the general rule that those who deal with an
alleged agent must look to his authority.
g 631. ■ Moreover, as there may be express, there may also
doubtless be implied conditions read into the authority even so far as
third persons are concerned. Thus it is held that a third person con-
tracting for the purchase of land through an agent acquires no rights
against the principal if the latter has previously sold the land in per-
son or through another agent even though the third person and the
agent were both ignorant of the fact.''* In a leading case,'^ the court
said: "This is a case of special agency, and there is nothing in the
case going to show that the defendant [the principal] would be es-
topped from setting up a revocation of the agency prior to the sale by
Fairchild [the agent], A revocation may be shown by the death of
the principal, the destruction of the subject-matter, or the determina-
tion of his estate by a sale, as well as by express notice. The defend-
ant had a right to employ several agents, and the act of one in making
a sale would preclude the others without notice, unless the nature of
Ti '*Where It appears that a person
lias been constituted a special agent
to do a partlcalar thing, and his au-
thority to do this particular thing
has been revoked before he acta in
the matter, the principal will BOt be
bound by a rabieauent pwformance
of the act, where the principal has
not held the agent out as having the
authority notwithstanding tlie revo-
cation, and has not subsequently
ratified the act." Florida Central R.
Oo. V. Ashmore, 43 Fla. 272.
76Ahern v. Baker, 84 Minn. 98;
Kelly V. Brennan, 56 N. J. ESq. 428.
If Ahern v. Baker, iupra.
450
CHAP, VIIl] TERMINATION OF THE RELATION [§§ 63^, 633
his contract with them required it. In dealing with the agent the
plaintiff took the risk of the revocation of his agency/'
The collocation here, as though they were of equal rank, of the death
of the principal, the destruction of the subject-matter, perhaps by a
vis major, and a sale by the act of the- principal, is certainly question-
able. If the case is sound it would seem that the true ground must
be cither the one first suggested by the court that, the authority having
been revoked by the sale, before the third person knew of the former
authority, there was nothing to estop the principal from setting up
the prior revocation against him, or, as suggested in the last clause of
the quotation, that in all dealings with a mere real estate broker there
is an implied condition that all negotiations through him are subject
to the contingency of a prior sale, either by the principal in person or
through another broker.
It will be observed also in this case that no notice had been given to
the agent,
§ 63a. ' Theory ot necessity of notice.— Revocation or other
termmation of authority is usually a matter of intention and foct,
rather than a matter of form. Notice to third persons is not per se
an indispensable part of it. The necessity of notice to them arises
from the doctrine of estoppel. The principal for his own purposea
has conferred authority and done something to cause it to appear^
He wishes and intends that it shall be relied and acted upon. Other-
wise, it would be of no avail. He now does or has done something
by which or upon which he desires and intends the authority to termi-
nate. If, however, notwithstanding this, what he did or caused re-
specting the creation of the authority is likely to lead reasonable men,
ignorant of the change of fact or intention, reasonably to conclude
that the authority still continues and to act upon that conclusicm in
such wise as to prejudice them if the conclusion be unfounded, he owes
them a duty to take reasonable precautions to prevent that prejudice
to them. If no such prejudice can arise, he owes no such duty.
§ 633. — — Stated in a different form, after the authority of
the agent has in fact terminated, the former principal can not be bound
by his acts, unless the person seeking to bind him can work an es-
toppel against him which will prevent the principal from showing the
fact of the termination. What are the elements of such an estoppel ?
I. A representation. 2. A reasonable reliance upon it. In order to
work an estoppel, then, the principal must have made some represen-
tation, by word or conduct, which reasonably led the other party to
conclude that an authority once created by the principal still existed
451
§634]
THE LAW OF AGENCY
[book I
at the time in question ; and the other party must hare acted upon that
representation in such wise that he will now be prejudiced if it be not
true. What was the representation in question? Was it the repre-
sentation of authority in the agent to do a single act, or at a particular
time only ? If so, it warrants no inference of authority for other acts
or at other times. Was it a representation of an exclusive authority
to do the act, or did it leave it open for the principal to do the act in
person or to authorize it to be done by some oilier agent also ? Was
the authority created so long ago that no reasonable man could prop-
erly infer that it still existed, or was it so recent that a reasonable man
would properly conclude that it must be stiQ in force ? Was it appar-
ently a general and continuing power which may fairly be deemed still
operative ? Was it, perhaps, a representation so made to the particular
person that he might fairly conclude that it was to continue until he was
notified to the contrary? In order to support an estoppel, the represen-
tation must have been of an authority which in the fair judgment of a
reasonable man was still operative at the time in question.
§ 634. Notice — ^How given — ^What sufficient. — ^What shall be
deemed sufficient notice in any case, and how it shall be given, are
questions concerning which it is impossible to lay down any general
rule, which shall be both comprehensive and precise. It is evident
that these questions must be largely determined by the facts and cir-
cumstances of each particular case. The end to be aimed at must be
a method reasonably adapted to reach the classes of persons entitled
to receive notice.
The case is often said to be analogous to that of the dissolution of
a partnership, and to be governed by the same rules.'* To all persons
who have had actual dealings with the agent, involving the giving of
credit in reliance upon the existence of the authority,'* actual notice
must be given,** or such knowledge of the fact must be brought home
to them as would be sufficient to put an ordinarily prudent man upon
inquiry.** To persons who have had no such actual dealings, notice
78ClaflJn V. Lenheim, 66 N. Y. 301,
305; Lynch v. Rabe, 28 Misc. 215;
Stevens v. Schroeder, 40 App. Div.
590.
T9 In partnership, those only are
entitled to actual notice, under the
head of former dealers or customers
who have given credit to the firm.
Vernon v. Manhattan Co., 22 Wend.
(N. Y.) 188; Clapp v. Rogers, 12 N.
Y. 283; Austin v. HoUand, 69 N. Y.
571, 25 Am. Rep. 246; Askew v. Sil-
man» 95 Ga. 678; Merritt v. WilUama,
17 Kan. 287.
80 Claflin V. Lenheim, supra; Lynch
v. Rabe, supra; Stevens v. Schroeder,
supra; Braswell v. American L. Ins.
Co., 75 N. C. 8; Fellows v. Hartford,
etc., Co., S8 Conn. 197.
<iSee Wniiams v. Birbeck, Hoff-
man (N. Y.), Ch. 359. Notice that
the principal has appointed some one
45«
CHAP. VIIl]
TERMINATION OF THE RELATION
[§§ 63s, 636
may be given by publication in some newspaper of general circula-
tion in the place in which the business is carried on.*' Notice by
publication is stifficlent even to those who have had dealings with the
agent if it can be shown that they actually received it ; otherwise not.'*
§ 635. — — The notice need not, of course, be in any particular
form, but it must be clear and unequivocal; it need not come directly
from the principal, but it must at least come through an apparently
authentic channel, so as to fairly put the other party on inquiry.*^
Where notice by publication or other similar means is all that the
law requires it is, of course, immaterial that the party now claiming
did not in fact know of the revocation. He is bound to know that
the authority may be so revoked and must govern himself accordingly.**
S 636. When evidence of agency recorded, revocatioa should be
recorded. — It is a common provision of the statutes of the various
else to do Uie act, where authority to plaintilt. Johnson v. Youngs. 82 Wis.
two would be inconsistent, would be
enon^^h (Clark v. Mullenlx, 11 Ind.
532); but mere knowledge that the
princlpaFs store has burned is not
necessarily enough (Claflin v. Len-
heim, 66 N. T. 301) ; nor Is a notice
stamped niK>n the face of a notice
to pay a life Insurance premium to
"remit direct to the home office" con-
clusive. McNelUy y. Continental Life
Ins. Co., 66 N. Y. 23.
M Notice by publication is by no
means a sine qua non. It is a method
prima facie sufficient, but there may
be no newspaper available, or the
only one available may be of such
limited circulation or otherwise so
peculiar as not to make its use a rea-
sonable method.
8>See Haynes v. Carter, 12 Heisk.
(Tenn.) 7, 27 Am. Rep. 747; Rose v.
Coffield, 63 Md. 18, 36 Am. Rep. 389;
Robinson v. Floyd, 159 Pa. 165; Union
Bank v. Lumber Co., 70 W. Va. 658,
41 L. R. A. (N. S.) 663.
84 Plaintiff being dissatisfied with
the conduct of his agent C, instructed
D to act in the settlement of a cer-
tain matter with defendant. D went
to defendant, showed him his author-
ity to represent plaintiff and notified
defendant to settle with. him and not
with C. Nevertheless defendant set-
tled with C. Held, not binding on
107.
C, in Montana, had been buying
wool for H of Chicago. Having an
opportunity to buy a quantity at a
certain price, C telegraphed H, say-
ing that otherwise the wool would
"go Boston" and "give your opinion
quick." H telegraphed back "No
money in It; better let it go to Bos-
ton." Nevertheless C bought It at a
slight reduction from price named
and drew on H for the price. Plain-
tiff a Montana bank bought the draft.
Il an action to recover of H held,
that Cs authority to buy was re-
voked by the telegram of H. First
Nat Bank v. Hall, 8 Mont 341.
Notice given by another agent of
the principal authorized to give It, is
sufficient Freeland v. Hughes, 109
111. App. 73.
Notice that the principal has done
some act which works a revocation,
is enough. Faraday Coal Co. v.
Owens, 26 Ky. L. Rep. 243, 80 S. W.
1171.
Where the authority of the agent
is revpked within the presence and
hearing of the other party, no fur-
ther or formal notice need be given
to the latter. Byrne v. Realty Co.,
120 N. Y. App. Div. 692.
MBee Shuey v. United States* 92
U. S. 78, 23 L. Ed. 697.
453
§ 637]
THE LAW OF AGENCY
[book I
States, that powers of attorney or other instruments conferring au-
thority upon the agent to deal with the principal's real estatti shall or
may be recorded in the proper recording office of the county or dis-
trict in which the land is situated.^* These statutes commonly pro-
vide also that any instrument revoking such a power shall or may be
recorded in the same oBict, and make such recording in either case
constructive notice of the facts which the record discloses. Where
such statutes prevail, the recording of a revocation of the agent's
authority is notice to all who may subsequently have occasion to deal
with him ; ^^ and where the statute is imperative, the revocation cannot
be given effect in any other way, unless by express notice.**
§ 637. Notice of revocation should be unequivocal — ^But what-
ever may be the form adopted, the notice should be unequivocal and
not leave the parties in doubt as to the principal's intentions. Any
ambiguity or uncertainty in such a case should be construed most
strongly against the principal, in whose power it lay to prevent such
a result.
As was said by a distinguished judge in a case involving the revoca-
tion of an express power to draw bills, "Nothing could be more in-
consistent with that candor and good faith which ought to mark the
transactions of mercantile men, than to favor the revocation of an
explicit contract on the construction of a correspondence nowhere
avowing that object. It was in the defendant's power to have re-
voked his assumption, at any time prior to its execution; but it was
incumbent on him to have done so avowedly, and in language that
could not be charged with equivocation." ••
B« See Williams v. Blrbeck, 1 Hoff.
N. Y. Ch. S59.
The statute of Michigan, for ex-
ample, provldea that "No letter of
attorney or other Instrument bo re-
corded, shall be deemed to be revoked
by any act of the party by whom it
was executed, unless the instrument
containing such revocation be also
recorded In the same office in which
the instrument containing the power
was recorded." How. Stats., i 5G92.
s7 Arnold v. Stevenson, 2 Nev. 234.
But in Best V. Qunther, 126 Wis. 518,
110 Am. St R. 851, 1 L. R. A. (N. S.)
577, It Is h^d that under a statute
similar to that above quoted, a
power of attorney is not required to
be recorded, and that though it be
recorded, a recorded revocation is not
constructively notice of that fact. A
provision that a revocation shall not
be operative in a given case unless
recorded is held not equivalent to a
declaration that it shaU be operative
if recorded.
•sOrats V. Land, etc. Imp. Ck>., 82
Fed. 381, 53 U. S. App. 499, 27 C. C.
A. 805, 40 L. R. A. 393.
89 Johnson, J., in Lanussc v. Bar-
ker, 3 Wheat (U. S.)..101, 143, 4 L.
Ed. 343. See also Hatch v. Codding-
ton, 95 U. S. 48, 56, 24 L. Ed. 339;
Claflin v. Lenheim. 66 N. Y. 301; Mo-
Neilly v. Ins. Co., 66 N. Y. 23.
454
CHAP. VIIl]
TERMINATION OF THB RELATION
[§§ 638-640
§ 638. How sufficiency of notice detenmnecL^-Where the circum-
stances are controverted, or where notice is sought to be inferred as a
fact from circumstances, and more than one inference can reasonably
be drawn from the facts, the question is for the jury;*' they must de-
termine as a question of fact whether the party claiming against the
principal did or did not have notice of revocation; and if there be
some evidence of this fact, it must be submitted to the jury. Where,
however, the facts are undisputed, and the only question is whether
they amount to constructive notice, or are sufficient to put the party
upon inquiry, the question is not for the jury, but for the court.*^
§ 63^. Burden of proof as to notice. — ^Where authority has ex-
isted, but the principal claims that it was revoked and proper notice
g^ven, the burden of proof is upon the principal to establish it.**
2, Public Agency.
§ 640. Statutory agency not revocable at will of principal. —
Where the state requires the creation 'and maintenance of an agency
to subserve some purpose in which its citizens may have an interest,
the authority of an agent appointed in pursuance of such a require-
ment cannot be revoked at the mere will of the principal, unless for
the appointment of another in his place, while the exigency continues
against which the statute was intended to provide.**
Thus where a statute required any foreign insurance company do-
ing business within the state, to appoint an agent within the state upon
whom process against the company might be served, it was held that
the company having appointed such an agent, could only revoke his
authority upon the appointment of another. Said the court : ^Taking
into consideration its evident purpose, and its utter futility if a com-
pany appointing an agent to receive service could by any act, known
only to tiie agent and itself, withdraw his powers, it must be held that
this appointment was irrevocable, unless the revocation might be made
•0 Perrlne v. Jermyn, 163 Pa. 497;
Grauley v. Jermyn, 163 Pa. 501.
•1 Claflln V. Lenhelm, 66 N. Y. 301.
•2 Perrlne v. Jermyn, 163 Pa. 497;
Grauley v. Jermyn, 163 Pa. 501;
Foddrill v. Dooley, 131 Ga. 790.
•9 See, In the case of insurance
companies required to appoint an
tigent to receive service of process.
Gibson y. Manufacturers' Ins. Co.,
144 Mass. 81; Michael v. Mutual Ins.
Co., 10 La. Ann. 737; Groel v. United
Electric Co., 69 N. J. Dq. 397; Per-
vangher v. Union Casualty Co., 81
Miss. 32; MagoflQn v. Mutual Reserve
F. L. Ass'n, 87 Minn. 260, 94 Am. St
R. 699; Woodward v. Mutual Reserve
F. L. Ass'n, 178 N. T. 485, 102 Am.
St. R. 519; Biggs v. Mutual Reserve
F. L. AsB'n, 128 N. C. 5.
But there may be revocation 80 far
as non-residents are concerned. Hun-
ter V. Mutual Reserve L. Ins. Co., 184
N. Y. 136, 30 L. R. A. (N. S.) 677, 6
Ann. Cas. 291, ard 218 U. S. 573, 64
L. Ed. 1155, 80 L. R. A. (N. S.) 686.
455
§ 641]
THE LAW OF AGENCY
[book I
by the appointment, duly notified upon the records, of a new agent,
who should be competent to receive service of process' in regard to any
controversies arising upon contracts previously entered into." *^
C Renunciation by the Agent.
§ 641. General rule— Agent may renounce at any time. — It has
already been seen that agency depends usually upon the assent of both
parties. It has been seen also that the principal may, in general, with*
draw his assent at any time, subject to liability in damages in case he
does so in violation of his agreement. Substantially correlative is the
situation of the agent. He may, in general, renounce his agency at
any time. His power to do this, in the sense that his further per-
formance will not be specifically enforced, is co-extensive with the
principal's power to revoke ; but his right to do so, is, like the princi-
pal's right to revoke, limited by his contracts in the premises. Where
the agency is indefinite in duration the agent may, upon giving rea-
sonable notice, sever the relation at any stage without liability to the
principal,** and will be entitled to compensation and reimbursement
for his services and expenses up to that time.*' Where, however, the
agency was created for a definite period, or the accomplishment of a
particular result was undertaken for a valuable consideration, the
agent who renounces before the expiration of that period, or before
MOtlMon Y. Mannfocturers' Ins.
Co., tupra.
tts Barrows v. Cushway, 37 Mich.
481; United States v. Jarvis, Davies,
274, 2 Ware, 278, 26 Fed. Caa. 687;
Owensboro Wagon Co. v. Hall, 143
Ala. 177; Security Trust Co. v. Ells-
worth, 129 Wis. 349. See also Coffin
▼. Landis, 46 Pa. St 426.
In Owensboro Wagon Co. y. Hall,
9Upra, contract created an agency to
sell for no definite period, but gave
the principal a right after twelve
months to treat the agent as a pur-
chaser of the merchandise unsold,
held, that a sale by the agent of his
business and notification thereot be-
fore the expiration of twelve months,
was a renunciation of the agency and
did not obligate the agent to answer
as a purchaser of the unsold wares.
Notice of renunciatian, — It is not
essential in the ordinary case that
there shall be any formal or par-
ticular notice of an intention to re-
nounce. A stipulation in the contract
may make it necessary, or custom
may require it. But even though the
agency is at will and the agent may
renounce it without liability, there
are many cases wherein reasonable
notice of the intention to renounce
is necessary. Thus, an agent having
the custody of property would not be
justified under many circumstancea
in summarily abandoning it without
reasonable notice; a locomotive engi-
neer would not be justified in leaving
his engine in a dangerous position
having given no notice which would
enable the company to provide other
means of caring for the property and
protecting the lives entrusted to It;
a teamster would not be justified in
abandoning his team upon the high-
way without reasonable notice; and
the liha See Toledo, etc., R. R. Co.
V. Pennsylvania Co., 54 Fed. 746, 19
L. R. A. 395.
M See po9t, Booh IV» Chap. IV.
456
CHAP. VIIl]
TERMINATION OF THE RELATION
[§642
the performance of his undertaking, will be liable to his principal for
the damages he may sustain thereby.*^
§ 642. Enforcement of contract — Specific performance — ^Injime-
tion to prevent breach. — ^The action for damages, as suggested in the
last section, is, moreover, ordinarily the only remedy for the breach of
the contract, for it is well settled, as a general rule, that courts will not
luidertake to enforce the specific performance of contracts for per-
sonal service, or interfere by injunction to prevent their breach." In
a leading case before the United States court of appeals it was said
by Mr. Justice Harlan, "The rule, we think, is without exception that
equity will not compel the actual, affirmative performance by an em-
ploye of merely personal services, any more than it will compel an
employer to retain in his personal service one who, no matter for what
cause, is not acceptable to him for service of that character. The
right of an employe, engaged to perform personal service, to quit
that service rests upon the same basis as the right of his employer to
discharge him from further personal service. If the quitting in the
one case, or the discharging in the other, is in violation of the contract
between the parties, the one injured by the breach has his action for
•7 United States v. Jarvls, 8vpra;
Coffin V. lAndis, $upra; Cannon Coal
Co. Y. Taggart, 1 Colo. App. 60;
White Y. Smith, 6 Lans. (N. Y.) 6,
alTd 54 N. Y. 522.
Implied covenants far continuance,
— ^An undertaking upon the part
of the agent to serve for a par-
ticular time may, of course, like the
correlative undertaking of the prin-
cipal to employ him for a definite
time (see ante, § 600), be implied
from the facts and circumstances of
the case. But it is not likely to be
implied, '^he doctrine of implied
covenants Is In a sense an equitable
doctrine, and Is enforced upon the
broad principle that the law implies
a covenant in the agreement where It
is clear that if the attention of the
party had been called to it he would
have expressly agreed." In Security
Trust Co. V. Ellsworth, 129 Wis. 849,
109 N. W. 126, the court refused to
Infer an agreement upon the part of
the agent to serve at least until the
business could be successfully estab-
lished.
99 See Fry on Specific Performance
(4th Bng. Bd.), 11 110-115.
By agent against principal, — Brett
V. BSast India, etc., Co., 2 H. ft M. 404;
Chinnock v. Sainsbnry, SO L. J. Ch.
409; B4$rtram v. Ball» 27 Sol. Jour.
39; Alworth v. Seymour, 42 Minn.
526; Cobum v. Cedar Valley Co., 25
Fed. 791; Thomas v. Supervisors, 56
ni. 351; Bronk v. Riley, 50 Hun (N.
Y.), 489; Healy v. Allen, 38 La. Ann.
867; Healey v. Dillon, 39 La. Ann.
503, 2 So. 49; Elwell v. Coon (N. J.
Eq.), 46 Atl. 580.
By principal against agent, — ^To-
ledo, etc., R. Co. V. Pennsylvania Co.,
54 Fed. 730, 19 L. R. A. 387; Same v.
Same, 54 Fed. 746, 19 L. R. A. 395;
Arthur v. Cakes, 63 Fed. 310, 11 C.
C. A. 209, 25 L. R. A. 414; Rogers
Mf^. Co. v. Rogers, 58 Com. 856, 18
Am. St Rep. 278, 7 L. R. A. 779; Cort
v. Lassard, 18 Or. 221, 17 Am. St
Rep. 726, 6 L. R. A. 653.
See Columbia College of Music v.
Tunberg, 64 Wash. 19.
457
§§ 643> 644] THE LAW OF AGENCY [BOOK I
damages; and a court of equity will not, indirectly or negatively, by
means of an injunction restraining the violation of the contract, com-
pel the affirmative performance from day to day or the affirmative
acceptance of merely personal services. Relief of that sort has al-
ways been regarded as impracticable." ••
§ 643. Injunction where services unique and damages not
adequate. — There may, however, be cases wherein, by reason of the
peculiar circumstances, the remedy by the award of damages will not
be adequate and the party will suffer irreparable loss if no other rem-
edy be afforded. Ordinary services are presumptively always in the
market and the person who has been deprived of the particular ones
to which he was entitled may presumptively, with the damages awarded,
make himself whole by engaging others* Where, however, the serv-
ices stipulated for were unique, individual, peculiar, not capable of
being adequately replaced, and the difficulty of estimating the actual
loss which the employer will suffer is great, a different rule ought to
be applied. In such cases it is now well settled that, while a court
will not undertake to compel specific performance, it may, certainly
where the contract contains negative covenants not to be employed by
others,^ and, by the weight of American authority, at least, even with-
out them if the fair construction of the contract implies such cove-
nants," interfere by injunction to prevent the party employed from
serving another in violation of his agreement with the complainant.
§ 644. ■ Mutuality. — ^Whether the court will even nega-
tively interfere — that is, by injunction though not by an affirmative
00 Arthur v. Oakee, supra. The principle of Lumley v. Wagner,
iLumley y. Wagner, 1 DeGez, M. ought not to be applied to any cove-
4b G. 604; Whltwood Chemical Co. v. nant which though negative In form
Hardman, [1891] 2 Ch. 416; Daly ▼. Is affirmative In substance. Davis v.
Smith, 49 How. Pr. 150, 6 J. ft Sp. Foreman, [1894] 3 Ch. 654.
158; Philadelphia Ball Club v. Lajole* Where the parties have fixed liqul-
202 Pa. 210» 90 Am. St 627, 68 U R. dated damages for the breach of the
A. 227; Canary v. Russell, 9 N. T. contract. Injunction will not Issue.
Misc. 558; McCauU v. Braham (Rua- Hahn v. Concordia Society, 42 Md.
seU), 21 Blatcht 278, 16 Fed. 37; 460.
DufT Y. RusaeU, 14 N. Y. Supp. 184 2 Daly v. Smith, 49 How. Pr. 150, 6
(afTd 133 N. Y. 678); Fredrlcks v. J. & Sp. 158; Duff v. Russell. 14 N.
Mayer, 13 How. Pr. 566. Y. Supp. 134 (affirmed without opln-
In England, not without the nega- ion 133 N. Y. 678) ; Pratt v. Monte-
tlve covenant Whltwood Chemical griff o, 10 N. Y. Supp. 903; Keith v.
Co. V. Hardman, supra, Kellermann, 169 Fed. 196; Cort v.
But the prohibition must not be Lassard, 18 Or. 221, 17 Am. St Rep.
unreasonable, as a prohibition upon 726, 6 L. R. A. 653. See also McCaull
being employed In any other business y. Braham» 16 Fed. 37, and note,
for a term of ten years. Ehrman y.
Bartholomew, [1898] 1 Ch. 671.
458
CHAP. VIIl]
TERMINATION OF TH£ RELATION
[§645
decree of specific performance, — ^where the obligations of the contract
are not "mutual," as, for example, where the employer who is seeking
to enforce the ccwitract has himself the right to terminate it either at
pleasure or upon the happening of certain events, has been much dis-
puted.' It is urged on the one hand that the remedy of specific per-
formance or injunction to restrain breach, is not a matter of strict
right but of sound discretion, and that it is unreasonable and unfair
to restrain the defendant from accepting other employment where t!ie
employer may later, and possibly when the employee cannot find other
employment, discharge him by virtue of the right reserved.* It is
replied on the other hand that the court is but simply enforcing the
contract as the parties made it ; that if there are any such inequalities
they are such as the parties themselves created ; and that, if the con-
tract is not on the whole ineqtiitable, the mere fact that the employee
has not reserved as efficient a remedy against the employer as he has
given the employer against himself is no reason why the contract
should not be enforced according to its terms so long as it remaiiK in
force." The weight of authority seems to be with the latter view.
§ 645. Renunciation by mutual consents— -Even though there was
a contract by which the agent undertook to act for a definite time not
s See an article by Prof eesor Ames
in 3 Columola Law Review, 1, 10; a
note by Professor Lawson, in 54 Cen-
tral Law Journal, 446, 451 ; and a note
presumptively by Mr. A. C. Freeman
in 90 Am. St. Rep. 684» 651.
4 Brooklyn Baseball Club v. Me-
Quire (U. S. C. C, Pa.), 116 Fed. 788
[relying upon Rutland Marble Go. v.
Ripley, 10 WalL (U. S.) S89, 19 L.
Ed. 955; citing Sturgis v. Qalindo, 59
GaL 2S, 48 Am. Rep. 239, and Rust v.
Conrad, 47 Mlcdi. 449, 41 Am. Rep.
720; distinguiahing FrankUn Tele-
graph Co. V. Harrison, 145 U. S. 459,
36 L. Ed. 'i76; and disapproving
Singer Sew. Mach. Co. v. Union But-
ton Hole Co., Holmes, 253, Fed. Cas.
Na 12,904] ; American Baseball Co. v.
Harper (C. C St Louis), 54 Cent. L.
Jour. 449; Philadelphia Ball Club v.
Hallman, 8 Pa. Co. Ct. 57; Harris^
burg Baseball Club v. Athletic Ass'n,
8 Pa. Co. Ct 337; but these Pennsyl-
vania cases must be regarded as over*
ruled by Philadelphia Ball Club v.
Lajole, cited In the Hollowing note.
Professor Lawson and Mr. Free-
man in their notes above referred to
approve this view; Professor Ames
apparently approves the other.
B Singer Sew. Mach. Oo. v. Union
Button Hole Co., Holmes, 258, Fed.
Cas. No. 12,904; Philadelphia Ball
Club V. Liajoie, 202 Pa. 210, 90 Am. St
Rep. 627, 68 L. R. A. 227, 64 Cent L.
Jour. 446 [disapproving Rust v, Con-
rad, cited in preceding note, approv-
ing Singer Sew. Mach. Co., tupra,
and regarding Rutland Marble Oo. v.
Ripley, 10 Wall. (U. S.) 839, 19 L.
Bd. 955, as modified by Franklin Tel.
Co. V. Harrison, 145 U. 8. 459, 36 L.
Ed. 776]. See also Keith v. Keller-
mann, 169 Fed. 196.
Professor Ames (3 Columbia L.
Rev. 10, 11), also disapproves of Rust
V. Conrad, and approves Singer Sew.
Mach. Co. V. Union Button Hole Co.,
tupra, and Philadelphia Ball Club v.
I^oie, 9Upra*
459
§§ 646-648]
THE LAW OF AGENCY
[book I
yet expired, the agent may renounce or the contract may be termi-
nated without liability by the mutual consent ol both parties.*
§ 646. Abandonment may be treated at renunciation^— -If the
agent abandon the agency he may not complain if the principal treats
this as a renunciation, and appoints another in his stead. Thus where
an agent in Philadelphia wrote to his principal in New York that he
had decided to give up the business and requested him to come or to
send some one to take charge of it, it was held that the principal might
treat this as an abandonment and appoint a new agent.^ So where an
agent was arrested upon a criminal charge and kept in jail for two
weeks during the busiest part of the season, it was held that the prin*
cipal might lawfully treat the employment as abandoned, although it
subsequently proved that the imprisonment was unauthorized/
§ 647. Agjent may lawfully renounce if required to dQ unlawful
act. — If the principal requires of the agent the performance of an
illegal or immoral act, the agent may lawfully renounce his agieiicy.
As is said by a learned judge: "Hone^te vivere is a part of tha law of
principal and agent." *
§ 648. Agent's abandonment xnasy be juatlfied by principal'a mis-
coadnct or defaults— The agent's abandonment oi hia employment*
even though for a definite time, may also be justified by the principal's
misconduct or default. Thus, the repudiation by the principal of es-
sential obligations on his own part, as, for example, his refusal to pay
the agent his compensation, will justify abandonment by the agent.**
oConrey v. Brandegee, 2 La. Aan.
132. In New York Life Ina Co. y.
Thomas, 47 Tex. Clr. App. 150, held,
a voluntary resignatioa, if accepted,
terminates the relation. In Messer-
rio V. Atchinaon, etc., Ry. Co., 60 N.
T. Misc. 317, the plaintiiE was hired
indefinitely as an expert workman;
he was found incompetent and waa
given another job; Aeld» his acc^t-
ance of this terminated the first con-
tract. In Blum V. Nebraska Cream-
ery Co., 82 NeK 110, Aekf, a resigna*
tion must be accepted according to
the conditions therein.
7 Stoddart v. Key, 62 How. Pr. (N.
y.) 137.
« Leopold V. Salkey, 89 III 412, 31
Am. Rep. 93.
A real estate broker who, with the
consent of the owner, turns the prop-
erty over to another agent for sale,
and thereafter does nothing toward
a sale, will be deemed to have abaa«
doned the agency. Munson v. Ma*
bon, 135 Iowa, 336. See also Jackson
V. Parrish, 167 Ala. 684, where a let-
ter wrtttsn by a broker to his princi-
pal abandoning the nndertaking was
held operative from the time of mail-
ing it
oConrey v. Brandegee, 2 La. Ann.
182.
10 Duflield V. Michaels, 97 Fed. 826.
An absolute refusal or failure to par
the agent what he is entitled to wi-
der the contract wiU justify an aban-
donment Dunn V. Crichfield, 214
lU. 292; Tait Mfg. Co. v. Tinsman,
188 111. App. 76; Tilton v. Gates Land
Co., 140 Wis. 197; Dore v. GUenn
Rock Spring Co., 147 Wis. 168.
460
CHAP. VIII ] TERMINATION OF THE RELATION [§§ 649-651
And so of course will brutal and inexcu^ble language/^ or physical
violence," by the principal toward the agent.
§ 649. Notice of renunciation. — Notice of the renunciation must
in general be given by tlie agent to the principal in all cases in which
such notice is material for the protection of the principal's interests
and he is not otherwise advised of it ; ^' and as against the principal
the renunciation will be operative from the time the principal receives
such notice of it.^^ The principal must also for his own protection
give notice to third persons of the termination of the authority by
renunciation in the same manner as where the authority is revoked."
Notice may also in some cases be required from the agent to third
persons where his change of attitude may affect his relations to them.
11.
BV OPERATION OF LAW.
8 650. In general.-^But the intentional act of the parties does not
furnish the only means by which the relation of principal and agent
may be dissolved. Such changes in the condition, capacity and sur-
roundings of the parties, or in the subject-matter may occur as to
render the further continuance of the relation inconsistent or impos-
sible, and the agency will thereupon be terminated or dissolved. Such
a termination, to distinguish it from termination by the mere act of
the parties, is often called termination by operation of law.
Thus one or both parties to the relation may die, or become insane,
or bankrupt. War may interrupt the commercial transactions be-
tween citizens of different states or countries, or the subject-matter of
the agency may cease to exist or the authority become impossible or
tmlawful to be performed. Each of these contingencies it is important
to consider.
1. By Death of One of the Parties.
a. By the Death of the Principal.
§ 651. In generaL — ^The relation of principal and agent neces^
sarily presupposes at least two existing and competent parties, — one
11 Cody ▼, Raynaud, 1 Colo. 272. Is, as to the agent, operative from
12 Bishop V. Ranney, 69 Vt 316; the time of mailing it Jackson v.
EMckflon V. Sorby, 90 Minn. 827; Parrish, 157 Ala. 584.
Horn y. Lunta, 125 N. Y. Supp. 786. " Capen ▼. Pacific Mut Ins. Co., 25
IB Ante, § 641, note. N. J. L. 67, 64 Am. Dec. 412.
14 A letter abandoning the agency
461
§ 652]
THE LAW OF AGENCY
(book I
competent to act for himself and in his own behalf, but preferring for
reasons of convenience or otherwise to delegate this power to another ;
the other likewise competent, ordinarily, though not necessarily, to act
for himself, but undertaking for the time being to assume a repre-
sentative character and to act in the name and for the benefit of the
person represented; — one supplying authority, the other exercising it.
The situation presupposes a principal capable of doing the act at the
time it is done, and who, upon the doctrine of qui facit per alium facif
per se, does in law then perform it.
By the death of either of these parties, therefore, it is obvious that
the relation must ordinarily be terminated. If the principal dies, there
is thenceforward no one to be represented ; no one in whose name the
agent can act ; no one from whom the supply of power can continue to
flow, and unless there is something in the nature of the authority by
which it can survive a severance from its source, it must perish with it.
§ 65a. General rule— Death of principal terminates agency. — It
is therefore the general rule that the authority of an agent, not
coupled with an interest, is instantly terminated by the death of the
principal, even though it may have been irrevocable in his life-time;
and that any attempted execution of the authority after that event is
not binding upon the heirs or representatives of the deceased princi-
pal."
i« Boone t. Clarke, 3 Cranch (U. 3.
CO, 3S9, Fed. Cas. No. 1,641; Hunt
V. Rousmanier, 8 Wheat (U. S.) 174»
5 I*. Ed. 589; Scruggs v. Driver, 31
Ala. 274; Saltmarsh v. Smith, 32 Ala.
404; Traven t. Crane, 15 Cal. 12;
Ferris v. Irving, 28 Cal. 645; In re
Kilborn, 5 Cal. App. 161; In re Mc-
Phee's Estate, 156 Cal. 336; Dieter v.
Riser, 158 Cal. 259; McGriff v. Porter,
5 Fla. 373; Dallam v. Sanchez, 56
Fla. 779; Wellborn v. Weaver, 17 Ga.
267, 63 Am. Dec. 235; Anderson v.
Goodwin, 125 Ga. 663; Turnan v.
Temke, 84 111. 286; Mecartney v.
Carbine's Estate, 108 lU. App. 282;
Wallace v. Bozarth, 228 IlL 339; Lan-
caster V. Springer, 239 111. 472; Tru-
bey y. Pease, 240 111. 518; Johnson v.
Wilcox, 25 Ind. 182; Lewis v. Kerr,
17 Iowa, 73; Darr v. Darr, 59 Iowa,
81; Condon v. Bamum (Iowa), 106
N. W. 514; CampbeU T. Faxon* 78
Kan. 675, 6 L. R. A. (N. S.) 1002;
Holmes T. Murdock, 126 La. 916;
Harper v. Little, 2 GreenL (M&) 14,
11 Am. Dec 25; Staples v. Bradbury,
8 Greenl. (Me.) 181, 23 Am. Dec. 494;
Merry v. Lynch, 68 Me. 94; Tyson v.
George's Creek Coal Ck>., 116 Md. 564;
Marlett v. Jackman, 3 Allen (Mass.),
287; Lincoln v. Emerson, 108 Mass.
87; Mills v. Smith, 193 Mass. 11, 6 L.
R. A. (N. S.) 865; Courser ▼. Jack-
son, 159 Mich. 119; Weaver v. Rich-
ards, 144 Mich. 395; Clayton v. Mer-
rett, 52 Miss. 353; State v. Riley, 219
Mo. 667; Chicago, etc., Ry. Co. v.
Woodson, 110 Mo. App. 208; Gale v.
Tappan, 12 N. H. 146, 37 Am. Dec
194; Wilson v. Edmonds, 24 N. H.
517; In re Bensel, 68 Misc. 70; Oat-
man V. Watrous, 120 App. Div. 66;
Lalor ▼. Tooker, 130 App. Div. 11;
People V. Bellando, 137 App. Div.
777, 199 N. Y. 533; In re Robbins, 61
Mlsc 114; Doe v. Smith, 1 Jones (46
N. a)« 135» 59 Am. Dec 581; Brown
462
CHAP. VIIl]
TERMINATION OF THE RELATION
[§653
The authority being thus terminated by the act of God, the agent
can ordinarily maintain no claim for damages thereby^ although he
had been employed for a fixed term which had not yet expired."
Of course where the authority has been fully executed before the
principal's death, that event cannot affect the rights of the other party.
So if before the principal's death, the authority has been executed in
part, his death cannot operate as a revocation of the executed por-
tion/^ nor, it is held, if the authority be entire, of that which yet re-
mains tmexecuted.^*
This general rule, that the death of the principal terminates au-
thority, so far as it is applied to a mere power to do something for the
benefit of the principal, even though the agent was to be compensated
for his services, — to what is sometimes called a "bare" or "naked"
power, is generally recognized and followed in the United States,
though a few states make an exception, as will be seen, where the fact
of the death was imknown.*^
Aside from that, the only exception is said to be "the case of a
naked power or authority given by one by his last will to his executors
to sell his estate for the payment of debts, etc., in which case the
authority is expressly given to be executed after his death, and the
act may be done in the name of the executors, and not in the name
of the testator." "
§ 653. Even though not tenxiinable by principal's act in
his life time.— Moreover, even though the authority may have been
more than a mere "bare" or "naked" power, and arose to the rank of
a power which might be irrevocable by the act of the principal in his
V. Skotland, 12 N. D. 445; Moore v.
Weston, 13 N. D. 674; Eiaston v. BUla,
1 Handy (Ohio), 70; McDonald v.
Black, 20 Ohio, 18S, 65 Am. Dec. 448;
Casto v. Murray, 47 Or. 57; Cassiday
V. McKenzie, 4 W. A S. (Pa.) 282, 39
Am. Decr 76; Frederick's Appeal, 52
Pa. 338, 91 Am. Dec. 159; Jenkins v.
Atkins, 1 HumphT (Tenn.) 294, 34
Am. Dec. 648; Primm v. Stewart, 7
Tex. 178; Clereland Y. Williams, 29
Tex. 204, 94 Am. Dec 274; WiUiamB
T. ArmlBtead, 41 Tex. Civ., App. 35;
Skirvin v. O'Brien, 43 Tex. Civ. App.
1; Wall ▼. Lubbock, 52 Tex. Civ. App.
405; Michigan Ins. Co. v. Leaven-
worth, 30 Vt. 11; DftviB V. Windsor
Savings Bank, 46 .Vt 728; Welto v,
Fobs, 81 Vt 16; Huston v. Cantril, 11
Leigk (Va.)» 136; Legan v. Diskman,
Barr. 2 Va. Col. Dec. 254; Qilmore t.
Casualty Co., 58 Wash. 203.
17 As to this. Bee poaU 9 668.
As to the effect of the death of a
partner or other Joint principal. Bee
post, i 669.
i» Frederick's Appeal, 52 Pa. 338»
91 Am. Dec. 169.
18 Garrett v. Trabue, 82 Ala. 227^
where goods ordered the day before
the principal's death, were shipped
in pursuance of the order on the day
after his death but in ignorance of it.
20 See post, § 664.
21 Thompson, J., in McQritf v. Por-
ter» 5 FIa» 37a.
463
§• 6S4]
THE LAW OF AGENCY
[book I
life time, e, g,, a power given by way of security considered in an
earlier section, it is still said that, unless "coupled with an interest" in
the sense to be hereafter considered, it is nevertheless terminated by
the principal's death.** Althqugh given as a security or conferred
"for a valuable consideration," it is still only an authority over the
subject-matter and not an estate or interest in it. While death will
not revoke an estate, it does revoke an authority, is the contention.
§ 654. Consideration of rule. — ^While this doctrine seems firmly
fixed by the authorities, it is certainly questionable if it be sound as an
invariable rule. Its application often not only disappoints expecta-
tions but produces hardship,*' as it did in the famous case in which
Chief Justice Marshall first formulated it in the United States.** The
person who loses by it has given a valuable consideration for the
power, while the persons who benefit by it are either general creditors
who are not purchasers for value, or heirs or distributees who are mere
donees. A contract made by the decedent in his life time may be
enforced in many cases after his decease. Why not a power for which
a valuable consideration has been given? Where the exercise of the
power would result in creating new obligations, there may be serious
difficulties ; but where the only act contemplated is to deal with prop-
erty, or to receive payment, and the like, the objections seem largely
22 Hunt V. Rousmanler, 8 Wheat.
(U. S.) 174, 6 L. Bd. 589; McOriff v.
Porter, 5 Fla. 373; Huston v. Cantrll,
11 Leigh (Va.), 142; Hunt v. Ennis, 2
Mason, 244, 12 Fed. Cas. p. 913; and
other cases cited post, { 662.
28 Thus In Huston v. Cantril, «upra,
Stanard, J., while recognizing It as
sound law, said: "I apply it with the
more reluctance, seeing that by it the
creditor will be deprived of a secur-
ity which he and the court below,
and one at least of the defendants,
supposed to exist"
24 Hunt V. Rousmanier, 8 Wheat
(tr. S.) 174, 5 L. Ed. 589. (In the cir-
cuit court 2 Mason, 244, 12 Fed. Cas.
913). A clearer case of the disap-
pointment of reasonable expectations
would be difficult to imagine. Rous-
manier applied to Hunt for a loan,
and offered a bill of sale or mortgage
on certain vessels to secure the same.
The loan was made and notes given.
On advice of the attorney, it was
agreed by the parties that Rousman-
ier should execute to Hunt a power of
attorney to sell the vessels if default
were made on the notes. This step
was taken in preference to the execu-
tion of a mortgage security, in order
that certain shipping inconveniences
be avoided. Rousmanier died insol-
vent, having made only a small pay-
ment on the notes. Hunt took posses-
sion of the vessels in pursuance of his
power of attorney to sell, and now
brings a bill in equity to compel the
administrators of Rousmanier to Join
in the sale. To the bill disclosing
these facts a demurrer was filed, and
Marshall, C. J., held that the power
of attorney, given as it was by way
of security, was irrevocable by Rous-
manier during his life-time, but that
it could not operate after his death.
An amended bill for the correction
of the instrument also failed. Hunt
V. Rousmanier, 1 Pet (26 U. S.) 1. 7
Li. Bd. 87.
4^
CHAP. VIIl]
TERMINATION OF THE RELATION
[§655
if not wholly technical. The contract as such, that the power may be
exercised (where no purely personal considerations were involved)
would be binding upon the estate if those who represented it refused
to permit the power to be exercised, and damages might be recovered
for its breach, but, in any case in which the question would be im-
portant, the estate would be insolvent, and damages for its breach
would be a wholly inadequate remedy. What is needed is specific
performance of the legal and binding agreement, given for a valuable
consideration, respecting a specific chattel or chose in action or a
specific act, in a case in which damages for the breach of the agree-
ment would be inadequate. Although there seems to be no case di-
rectly in point, there are certainly analogies which are suggestive.''
If it should be held that, by the contract and the power, an equitable
estate or interest in the subject-matter was created, then there are
authorities '• (whether really consistent with Huat v. Rousmanier or
not),*^ which would hold the power to be one coupled with an interest,
and therefore irrevocable by the grantor's death.
§ '655. Authority not iwocable by death when coupled with an
interest. — Notwithstanding the general rule that the death of the
principal operates per se to terminate authority, there is, as has al-
ready been suggested, a well settled, though not always clearly defined,
exception to it, based upon the fact that in the given case the agent is
not simply an agent — ^perhaps properly speaking not an agent at all —
but a person having some interest of his own in the subject-matter of
the agency for the protection of which an authority like the one con-
ferred which shall survive the death of the principal is an essential
incident This situation is commonly described, in the United States
at least, as the case of an agent having ''an authority coupled with an
interest," and the general rule of law is that where the authority of
the agent is so "coupled with an interest in the subject-matter of the
agency," it is not terminated by the death of the principal, and a sub-
sequent execution o£ it by the agent will be good.**
2s See Cowles y. "pitman, 10 Conn.
121, 25 Am. Dec. 60; Parker v. Gar-
rison, 61 111. 250; Triebert v. Burgess,
11 Md. 452; Gottschalk v. Stein, 69
Md. 61; Clark v. Flint, 22 Pick
(Mass.) 231, S3 Am. Dec. 733; Peer v.
Kean, 14 Mich. 354; Furman v.
Clark, 11 N. J. Bq. 806; Cutting ▼•
Dana, 25 N. J. Bq. 265.
See also the dlscuBslon on equitable
liens In Walker y. Brown» 166 U. 8.
664, at p. 664.
sft See Osgood v. Franklin, 2 Johns.
Ch. (N. Y.) 1, 20, 7 Am. Dec. 613
(affirmed 14 Johns. 627) ; Shepard v.
McNiiil, 122 Mo. App. 418; Pacific
Coast Co. V. Anderson, 47 C. C. A.
106, 107 F6d. 973; Keys' Estate, 137
Pa. 665, 21 Am. St R. 896; Farmers'
Bank v. Kansas City Pub. Co., 8 Dil-
lon, 287, Fed. Cas. No. 4,662.
ST See post, | 657.
tBHunt v. Rousmanier, 8 Wheat
(U. S.) 174, 5 L. Ed. 689; Merry v.
30
465
§ 656] THE LAW OF AGENCY [bOOK I
§ 656. What constitutes such an interest — ^The difficulty
in defining what is meant by the expression "a power coupled with an
interest/' and the difference in usage of the English and the American
courts, have already been somewhat discussed.** In the present connec-
tion, however, there is substantial harmony among the American courts
in their statements of the rule. The interest, it is said, which will pre-
serve the power from termination by the principal's death must, in gen-
eral terms, be an interest in the thing itself which is the subject-matter
of the agency and the power must be capable of execution in the name
of the agent. A mere power to be executed in the name of the principal,
though it may perhaps be irrevocable by the principal in his life-time, is,
nevertheless, terminated by his death. But as is said by Chief Justice
Marshall in the leading case *^ already referred to, "This general rule,
that a power ceases with th6 life of the person giving it, admits of one
exception. If a power be coupled with an 'interest* it survives the per-
son giving it and may be executed after his death. As this proposition
is laid down too positively in the books to be controverted, it bccwnes
necessary to inquire what is meant by the expression *a power coupled
with an interest ? ' Is it an interest in the subject on which the power
is to be exercised, or is it an interest in that which is produced by the
exercise of 'the power? We hold it to be clear that the interest which
can protect a power after the death of a 'person who creates it, must
be an interest in the thing itself. In other words, the power must be
engrafted on an estate in the thing.
"The words themselves would seem to import this meaning. 'A
power coupled with an interest' is a power which accompanies or is
connected with an interest. The power and the interest are united in
the same person. But if we are to understand by the word 'interest
an interest in that which is to be produced by the exercise of the power,
then they are never united. The power to produce the interest must
be exercised, and by its exercise is extinguished. The power ceases
when the interest commences, and therefore cannot, in accurate law
language, be said to be 'coupled' with it.
"But the substantial basis of the opinion of the court on this point
is found in the legal reason of the principle. The interest or title in
the thing being vested in the person who gives the power, remains in
Lynch, 68 Me. 94; Bergen v. Bennett, Ing ▼. Marvin, 7 Barb. (N. Y.) 412;
1 Caines' Cases (N. Y.) 1, 2 Am. Dec Dlzon v. Dixon, 85 Kan. 379.
281; Knapp v. Alvord, 10 Paige (N. 2» Ante, SS 572, 573.
Y.), 205, 40 Am. Dec. 241; Lieavitt v. toHunt v. Rousmanier, 8 Wheat.
Fisher, 4 Duer (N. Y.), 1; Houghtal- (TJ. S.) 174, 5 L. Ed. BS9.
466
CHAP. VIIl] TERMINATION OF THE RELATION [§ 657
him, unless it be conveyed with the power, and can pass out of him
only by a regular act in his own name. The act of the substitute,
therefore, which in such a case is the act of the principal, to be legally
effectual, must be in his name, and must be such an act as the prin-
cipal himself would be capable of performing, and which would be
valid if performed by him. Such a power necessarily ceases with the
life of the person making it. But if the interest or estate passes with
the power, and vests in the person by whom the power is to be exer-
cised, sudi person acts in his own name. The estate being in him,
passes from him by a conveyance in his own name. He is no longer
a substitute acting in the place and name of another, but he is a prin-
cipal acting in his own name in pursuance of powers which limit his
estate. The legal reason . which limits the power to the life of the
person giving it, exists no longer; and the rule ceases with the reason
on which it is founded."
Again it is said by a learned judge, ''A power is simply odlateral
and without interest, or a naked power, when to a mere stranger, au-
thority is given to dispose of an interest in which he had not before,
nor has by the instrument creating the power, any estate whatsoever ;
but when the power is given to a person who derives under the instru-
m^t creating the power or otherwise, a present or future interest in
the property, the subject on which the power is to act, it is then a
power coupled with an interest." •*
§ 657. — — What meant by interest— Difficulty of applying
rule. — ^The test suggested by Chief Justice Marshall, of the neces-
sity of an estate or interest, is not easy to apply. If the grantee of the
power has such an estate or interest as is required, what is the neces-
sity of the annexed power? Why may not the grantee of the estate or
interest deal with it because he is the owner or holder of it without
reference to the power? Take the case of a pledge of property with a
power of sale, for example. The law would gi^'e a power of sale even
though none had been expressly conferred. The power g^ven by the
pledgor might, however, be more advantageous (as by waiving demand
and notice) , than that which the law alone would given. A power of
sale attached to a mere common law lien — ^a mere right of detention —
would also be a distinct advantage.
Where the interest transferred does not embrace the entire prop-
erty in the thing, some questions may arise. What estate or interest
may the grantee of the power transfer? Apparently such as may be
«t Thompson, J., In McOriff v. Porter, 6 Fla. 373, 379.
467
§§ 658, 659]
THE LAW OF AGENCY
[book I
necessary to make the power e£Fectual — ^tfaat is to say, if it is necessary
to deal with the entire property in order to protect the interest, flie
grantee of the power may do that, being accountable for any surplus.
It is sometimes said that the "interest" or "estate" must be a legal
one, but that does not seem every where to be regarded as essential.
An equitable estate has been held sufficient in many cases,'* though it
is not easy to see how a purely equitable interest can suffice to presenre
the power to convey the legal estate. Certainly the holder of the
equitable interest can not convey the legal title in his own name.
It is also sometimes said that the "interest" and the "power" must
be created by the same instrument ; '* but no good reason appears for
that position, and there are cases in which the power was held irrevo-
cable though this supposed requirement was not satisfied.*^
§ 658. — — ~— ^ The real reason — ^That the agent may act in bis
own name. — But the substantial ground and the real reason of the
rule, as it is stated by Qiief Justice Marshall, are found not merely in
the fact that the agent has an interest or estate, but in the fact that he
has such an estate or interest that he may execute the power in his
own name and right and as his own acf As stated by Chief Justice
Marshall, "If the interest or estate passes widi the power, and vests
in the person by whom the power is to be exercised, such person acts
in his own name. The estate being in him, passes from him by a con-
veyance in his own name. He is no longer a substitute acting in the
place and name of another, but he is a principal acting in his own name
in pursuance of powers which limit his estate."
While the present conception continues, this requirement must prob-
ably be deemed an indispensable part of it.
§ 659. What interest sufficient — Instances. — Cases in which the
power has been held to be one coupled with an interest are numerous.
S2ln Osgood v. Franklin. 2 Johns.
(N. Y.) Ch. 1. 20, 7 Am. Dec 613 (af-
fllmed 14 Johns. 527); it is said: "It
is not necessary that the Interest
coupled with the power should be a
legal Interest. An equitable estate is
sufficient, and is regarded in this
court as the real interest" See also
Shepard v. McNail, 122 Mo. App. 418;
Pacific Coast Go. v. Anderson, 47 C.
C. A. 106, 107 Fed. 978; Keys' Estate,
137 Pa. 565, 21 Am. St R. 896; Farm-
ers ft Drovers Bank v. Kansas City
Pub. Co., 8 DUlon, 287, Fed. Cas. No.
4,652.
"As for example, per Hooker, J.,
in Weaver v. Richards, 144 Mich. 896,
6 L. R. A. (N. S.) 855.
s«As for example, Babrowsky v.
Grand Lodge, 129 N. Y. App. Div.
695; Keys' BsUte, 137 Pa. 566. 21 Am.
Dt xC. o9o*
»8See the opinion of Story, J., at
the Circuit in the same case of Hunt
V. Rousmanier's Adm'rs (Hunt v. Bn-
nis, et ah Adm'r), 2 Mason, 244, 18
Fed. Cas. p. S18; Sulphur Mines ▼.
Thompson, 93 Va. 293.
468
CHAP. VIIl]
TERMINATION OF THE RELATION
[§6S9
tbot^h it may not be easy in all of them to square the holding with
the rules laid down by Chief Justice Marshall. Thus, where a debtor
delivered property to his surety with power to sell die property to pay
the debt or reimburse himself in case he paid it, it was held that the
pledge and the authority constituted a power coupled with an interest
within Chief Justice Marshall's definition and was therefore not re-
voked by the grantor's death.'* So where there was an assignment of
a cause of action upon which suit was pending, by way of security,
with power to settle the suit and apply the proceeds upon the debt
secured, the same ruling was made.'^ So, also, where leases were as-
signed as security with power to collect the rents and apply in pay-
ment of the debt secured.'*
For similar reasons, the transferee of shares of stock with power to
transfer them upon the books of the corporation has a power coupled
with an interest not revoked by the death of the transferrer before
transfer on the books.**
So the power of sale conferred by a mortgagor upon the mortgagee
is almost universally held to be one coupled with am interest and,
therefore, not revoked by the mortgagor's death.**
MKnapp V, AlYord, 10 Paige (N.
Y.), 206, 40 Am. Dec. 241. .'See also
Merry v. Lynch, 68 He. 94, where
there was authority to sell goods, pay
certain debts to third persons, then
debts due the donee, and turn over
balance to donor.
»T HiUiard ▼. Beattle, 67 N. H. 671.
See also Morgan v. CHbson, 42 Mo.
App. 234.
sa Stevens v. Sessa, 60 N. T. App.
Dlv. 547.
••Leavitt V. Flsker, 4 Duer <N.
Y.), 1; Eraser v. Charleston, 11 8.
Car. 486; United States ▼. Gutts, 1
Sumn. 183, 25 Fed. Cas. 746; Fisher
▼. New York, etc., Co. (Pa.), 31 Wk.
N. Cas. 502.
Moeh the same doctrine was ap-
plied to a transfer of land scrip with
a power to locate land under It Hog-
ers V. Iron Co., 104 Minn. 198.
MOonners v. Holland, 113 Mass.
60; Vamum v. Meserve, 8 Allen
(Mass.), 168; Berry v. Skinner, 30
Md. 667; Beatle ▼. Butler, 21 Mo. 813;
White V. Stephens, 77 Mo. 462; Brad-
ley y. Chester Valley R. R. Co., 86
Penn. St 141; Bergen v. Bennett 1
Caines' Cas. (N. Y.) 1, 2 Am. Dec.
281; Wllsdn v. Troup, 2 Cow. (N. Y.)
IM, 14 Am. Dec. 468; Hodges v. QUI,
9 Baxt (Tenn.) 878; Wilbum v. Spof-
ford, 4 Sneed (Tenn.), 698; Hudglns
V. Morrow, 47 Ark. 516; More v. Cal-
kins, 96 Cal. 436, 29 Am. St. R. 128;
Carter v. Slocomb, 122 N. C. 476, 66
Am. St R. 714; Orandin v. Bmmons,
10 N. D. 228, 88 Am. St R. 684, 64 L.
R. A. 610; Sulphur Mines Ca y.
Thompson, 98 Va. 293; Mutfa v. God-
dard, 28 Mont 287, 98 Am. St R. 658.
Contra^ the mortgage being only a
security. Johnson y. Johnson, 27 8.
C. 309,- 13 Am. St R. 636; Wllkins y.
McGehee, 86 Oa. 764.
In Texas, see Robertson y. Paul, 16
Tex. 472; McLane y. Paschal, 47 Tex.
866; Rogers v. Watson, 81 Tex. 400;
Whitmire y. May, 29 Tex. Civ. App.
244; Texas Loan Agency y. Dingee»
33 Tex. Civ. App* H^.
Where P mortgages land to X to
seeure the debt of A and in the mort-
gage provides that X and A may ex-
tend the time of payment by certain
469
§' 666]
THE LAW OP AGENCY
[book I
§ 660.
So, again, where one who was entitled to "enter"
or locate government land, in consideration that another would per-
form the labor, make the proof and pay the expense, gave him a deed
of an interest and an "irrevocable" power of attorney to act in the
grantor's name and to sell the land and divide the proceeds, it was held
that by virtue of the deed the agent acquired a present interest to
which the authority was coupled, and that this authority was not re-
voked by the grantor's death.*^
And, so, where a debtor, in order to secure his creditor, expressly
assigned a claim to him and gave him an "irrevocable" power of at-
torney to collect it, ft was held that the power was not terminated by
the grantor's death.**
So where an attorney was authorized to prosecute a claim for a
share of the proceeds and was given express power to compromise, it
was held that he had a power coupled with an interest which was not
revoked by the principal's death.** But it is difficult to sustain this
conclusion unless it be thought that the contract gave the attorney an
interest in the claim as well as a power over it. Where such an in-
terest is assigned, the power to collect is held irrevocable.**
So a power given in a conveyance to one of an estate for life to disr
prescribed metbods, this is beld to be
a power coupled wltb an Interest and
not revoked by the death of P. Ben-
neson v. Savage, 130 111. 352. Where
a landowner and his tenant unite In
a mortgage, an agreement that the
lessee may arrange for an extension
of time and that the mortgage shall
still stand as a security Is an agree-
ment coupled with an interest and
not revoked by the owner's death.
Prusslng V. Lancaster, 234 111. 462.
^i-Hennessee v. Johnson, 13 Tez.
Civ. App. 530.
«s Norton v. Whitehead, 84 Cal. 263,
18 Am. St R. 172. See also Shepard
V. McNail, 122 Ma App. 418; Crowley
V. McCambridge, 154 111. App. 185.
4t Jeffries v. Mut Life Ins. Co., 110
U. S. 305, 28 L. £7d. 156.
*»Oulf, etc, Ry. Co. v. Miller, 21
Tex. Civ. App. 609; American Loan
ft Trust Co. V. Billings, 58 Minn. 187.
Where one advances money to an-
other upon an agreement that the
lender shall be entitled to collect in-
surance money and reimburse him-
self out of the same, a formal power
to receive the money giv^i in pursu-
ance of the agreement is T^eld to be
coupled with an interest and irrevoc-
able. The transaction was said to be
"a virtual assignment of the fund."
Babrowsky v. Grand Lodge, 129 App.
DIv. 695.
In Keys' Bstate, 137 Pa. 665, 21 Am.
St R. 896, a letter accompanying a
power of attorney in which letter the
writer Indicated a purpose that the
person to whom it was sent should
collect a certain sum of money and
out of it pay himself a debt which
the writer owed him, was held to
be at least an equitable assignment
of the claim and thiia to create an in-
terest which would preserve the
power. See also Stover v. Bycles-
hlmer, 46 Barb. (N. Y.) 84, & 0. 3
Keyes, 620.
470
CHAP. Vlll]
TERMINATION OF THE RELATION
[§§ 66l, 662
pose of the fee by will, has been held to be irrevocable by the death of
the grantor, as a power coupled with an estate.**
If, under an authority valid, though revocable by death, the donee,
in pursuance of the authority, and in the life-time of the donor, takes
possession of the chattel or thing to which the authority applies, the
authority would thereafter doubtless be deemed to be one coupled with
an interest, and therefore irrevocable by death.
g 661, Usually the power and the interest are vested in
the same person, but that is not indispensable. A power given to one
to be exercised for the benefit of another who has an interest, is ir-
revocable.** Usually this takes the form of an express trust, though
the form is not material. The power of sale under a deed of trust is
therefore not revocable by the death of the grantor.*^
So the indorsement and delivery for the purpose of collection of a
promissory note passes the legal title in trust;, and the agent may sue
upon it in his own name after the death of the principal.*^
§ 662. What interest not sufficient— Instances. — Illustrations of
what is not a sufilicient interest to preserve the power from revocation
by death are also numerous. Thus a power of attorney not contain-
ing any words of conveyance or assignment but a simple authority to
sell and convey, although given as collateral security for the payment
of certain notes executed by the principal to the attorney and authoriz-
ing him to sell the property named in case of default and reimburse
himself, is not a mortgage but a bare power and is terminated by the
death of the principal before execution ; *• so where to secure the loan
of money the borrower executed an instrument in writing, authorizing
the lender, upon default in payment, to enter upon the premises of the
borrower and take away certain slaves therein specified, and to sell
and dispose of them and out of the proceeds of the sale to reimburse
himself for the loan and all expenses, and to return the surplus, if
40 Dixon T. Dixon, 85 Kan. 879. The
court said: "A power of attorney au-
thorizing another to act for the one
granting the power, must not be con-
fused with a power vesting an abso-
lute authority in another to act for
himself.''
4« Durbrow v. Eppens. 65 N. J. Jo,
10 (where the power given by each
associate in a "Lloyd's" Insurance as-
sociation to the managers to pay out
of a common tund contributed to by
each the losses upon which all were
liable, was held not revocable by the
death of one) ; American Loan &
Trust Co. V. Billings, 58 Minn. 187.
47 See the cases under power of
sale in mortgages in the preceding
section.
« Moore v. Hall, 48 Mich. 143;
Boyd V, Corbltt, 37 Mich. 52.
♦•Hunt V. Rousmanier, 8 Wheat.
(U. S.) 174. 5 L. Ed. 589. The court
later refused to reform the instru-
ment. Hunt V. Rousmanier* 1 Pet.
(U. a) 1, 7 L. Ed. 27.
471
§ 663]
THE LAW OP AGENCY
[book I
any, to the borrower, the same ruling was made ; "• and again where a
principal debtor gave his surety a written power of attorney authoriz-
ing him to sell certain lands to pay the debt, but the surety did not ex-
ercise the power during the grantor's life-time, it was held that the
authority was utterly dissolved by the latter's death.'^ So a power
given by a debtor to his creditor authorizing him to collect a debt, due
to the debtor, and to apply it on his claim, but containing no convey-
ance or assignment of the debt ; '* and a power given by a debtor to a
bank to apply his deposits to the payment of his notes held by the bank
and to do so before maturity if the bank so desired, but making' no
assignment of the fund,*' is terminated by the debtor's death.
§ 663. ■ A fortiori, is the power revoked by death where the
authority conveyed is a mere power, or where the only interest is that
in compensation to be gained from the proceeds of the sale of prop-
erty or the collection of a debt.**
Of the former class, an authority to occupy land as an agent ;•• a
power to sell a chattel," or to sell and convey land,*^ an authority by a
landlord to his tenant to make repairs ; •• a power of attorney to de-
mand payment of a note,** or to receive notice of its dishonor;** a
power of attorney to procure a patent,** an authority to carry on one's
50 McGrlft v. Porter, 6 Pla. 873. .
51 Huston V. Cantril, 11 Leigh
(Va.), 142.
Bs Houghtallng v. Marvin, 7 Barb.
(N. Y.) 412. See also Garber v. My-
ers, 32 111. App. 175.
Bs Gardner v. First Nat Bank, 10
Mont 149, 10 L. R. A. 45.
M Harper v. Little, 2 Greenl. (Me.)
14, 11 Am. Dec. 25; Saltmarsh v.
Smith, 32 Ala. 404; Travers v. Crane,
15 Cal. 12; Ferris v. Irving, 28 Cal.
645; Coney v. Sanders, 28 Ga. 511;
Lewis y. Kerr, 17 Iowa, 78; Primm v.
Stewart, 7 Tex. 178; Waliiwright v.
Massenburg, 129 N. Car. 46; Fisher
V. Trust Co., 138 N. Car. 90; Weaver
V. Richards, 144 Mich. 396, 6 L. R. A.
(N. S.) 855; SchiUing v. Moore, —
Okla. , 126 Pac. 487.
BB Lincoln v. Bmerson, 108 Mass. 87.
«• McDonald v. Black, 20 Ohio, 185;
Brown v. Cushman, 178 Mass. 368;
In re Kern's Estate, 176 Pa. 873.
•V Paeiflc Bank v. Hannah, 90 Fed.
72, 69 U. S. App. 457, 82 C. G. A. 622;
Tuttle V. Green, 6 Ariz. 179; Connor
V. Parsons (Tex.), 30 S. W. 83;
Fisher v. Trust Co., 138 N. Car. 90;
Gilmer v. Veatch (Tex. Civ. App.),
121 S. W. 546; Kent v. Cecil (Tex.
Civ. App.), 26 S. W. 715.
The case of Shepard v. McNail, 122
Mo. App. 418, is apparently contra,
unless it is to be sustained upon the
ground, stated by the court, that the
effect of the arrangement was to con-
vey an equitable estate in the ac-
counts. The citations of the first edi-
tlon of this work are to sections deal-
ing with irrevocability by the act of
the principal, and not to Irrevocabil*
ity by death.
•• Wilson V. Bdmonds, 24 N. H. 617.
»• Gale V. Tappan, 12 N. H. 146, 87
Am. Dec. 194.
«oBank of Washington v. Feirson,
2 Cranoh (U. 8. C. C), 686.
•^ Bagleston Mfg. Co. v. West Mfg.
Co., 18 Blateh. (U. a a a) 228.
47^
CHAP. VIII ]
TERMINATION OF THE RELATION
[§664
business during his disability,*' to deliver property to complete a gift/'
to renew a note/^ to draw money from the principal's funds in bank
for the principal's use,** or to collect rents,** or to borrow money and
mortgage land as security for its repayment,*^ are examples, and ex-
pire with the life of him who granted them.
§ 664. How when death unknown* — ^When the authority has thus
been dissolved by the death of the principal, all subsequent attempts
to execute it, or to act by virtue of it, even though made in good faith
and in ignorance of the fact of the death, are ineffectual to bind the
estate of the principal. Where the authority is o|ie which must be
executed in the name of the principal, as by executing deeds, this rule
is tmquestioned ** but where the act is one which, while it is done for
the principal, is not expressly required to be done in his name, it has
been criticised and even denied by some text-writers and judges.**
Even in the latter case, however, the rule is supported by an undoubted
preponderance of authority.^*
By the civil law, the act of an agent done in good faith in ignorance
of the death of the principal, is binding upon his representatives.
There the death does not necessarily and ipso facto operate as a dis-
scdution of the agency, but the agency, as in the case of an express
revocation, determines only from the time of notice." But by the
common law, the rule is different, as has been seen, and the death,
except in cases coupled with an interest, works an instantaneous dis-
••Knimdlck ▼. White, 92 Cal. 143.
See also Triplett v. Woodward, 98 Va.
187.
M Duckworth t. Orr, 126 N. Car.
874.
MHome Nat Bank v. Waterman,
134 111. 461.
M Hoffman v. Sayings Institution,
109 (N. Y.) App. Dlv. 24.
••Farmers Loan ft Tr. Co. ▼. Wil-
son, 139 N. Y. 284, 36 Am. St. R. 696.
•7 Brown T. Skotland, 12 N. D. 446.
«« Harper v. Little, 2 Greenl. (Me,)
14, 11 Am. Dec. 25; Travers ▼. Crane,
16 Cal. 12; Ferris t. Irving, 28 Cal.
646; Coney y. Sanders, 28 Ga. 511;
Lewis y. Kerr, 17 Iowa, 73.
•0 Story on Agency, fi 495 ; Wharton
on Agency, § 102; Cassiday y. McKen-
sle, 4 W. A S. (Penn.) 282, 39 Am.
Dec. 76; Dick y. Page, 17 Mo. 234;
l8h T. Crane, 8 Ohio St. 520, b. 0. 18
Id. 674; Deweese y. M«ff, 67 Neb. 17,
73 Am. St R. 488, 42 L. R. A. 789;
Meinhardt y. Newman, 71 Neb. 532.
TO Long y. Thayer, 160 U. S. 620, 37
L. Bd. 1167; Weber y. Brldgman, 118
N. Y. 600; Farmera Loan ft Trust Co.
y. Wilson, 139 N. Y. 284. 36 Am. St
696; Hoffman y. Sayings Institution,
109 (N. Y.) App. Diy. 24; Clayton y.
Merrett, 52 Miss. 353; Oalt y. Gallo-
way. 4 Pet (U. S.) 331; Cleyeland v.
Williams, 29 Tex. 204, 94 Am. Dec.
274; Michigan Ins. Co. y. Leayen-
worth, 80 Vt 11; Dayis y. Windsor
Sayings Bank, 46 Vt 728; Jenkins y.
Atkins. 1 Humph. (Tenn.) 294, 34
Am. Dec. 648; Rigs y. Cage, 2
Humph. (Tenn.) 850, 37 Am. Dec.
559.
Tilnst 3, 27. 10; Digest 17, 1, 6;
1 Domat b. 1, Tit 15. % 4.
473
§ 665] THE LAW OF AGENCY [bOOK I
solution of the relation. Some tendency has been manifested to apply
the rule of the civil law in certain cases as being more consonant with
reason and justice. Thus in Cassiday v. McKenzie,^* it was held that
the payment made by an agent after the death of the principal, but in
ignorance of it, was good. So in Dick v. Page," the deposit of col*
laterals made by an agent as security for advances made after the
principal's death, but all the parties being in ignorance of it, was held
to be valid as against the executor of the principal, and the same prin-
ciple was enforced in Ish v. Crane.^*
§ 665. But these cases have not been followed by other
courts, and it is said oi them by a learned judge, that "in as far a^
least as they announce the doctrine under discussion they are excep-
tional. The Pennsylvania case is believed to stand almost i£ not quite
alone, in announcing the principle in its broadest scope. The over-
whelming weight of authority is to the effect that the death of the
principal operates as an instantaneous revocation of the agency where
it is a naked power unaccompanied with an interest, and every act of
the agent thereafter performed is null so far as the estate of the prin-
cipal is concerned. This rule frequently operates very unjustly and
produces very great hardships. A party dealing with an insolvent
agent, upon the faith of his well known authority from a wealthy and
distant principal, is suddenly confronted with the fact that the author-
ity had ceased by the death of the principal, one day or perhaps one
hour before his transactions occurred. Impressed with the hardship
of such a case, the civil law adopts the rule contended for in the case
at bar and renders valid a contract executed or a payment made under
such circumstances," but he goes on to say that "however great the
injustice produced in particular cases, undoubtedly the common law
rule is that death revokes the agency and nullifies all acts thereafter
performed. This doctrine rests upon the obvious principle that as a
dead man can do no act for himself, so no man can do an act for him.
When, therefore, the agent undertakes to act in his name, he is acting
for a being not in existence. To hold his act valid is not to bind the
dead man but his heirs and representatives, who are thus held liable
for the acts of one whom they never appointed and whom perhaps
they would be unwilling to trust. Whether a system of jurisprudence
which would accomplish this result would be foimd in the long run
Tt Supra. The Nebraska cases cited t4 Supra, See McClaskey T. Barr,
MUpra were of this sort. 60 Fed. 712.
f* Supra.
474
CHAP* VIIl]
TERMINATION OF THE RELATION
[§§ 666, 667
less productive of injustice than our present rule may weU be doubted.
At all events we are satisfied that such is not the law." "
§ 666w ' ■ Instances. — ^In accordance with the rule of the com-
mon law, therefore, it has been held that a payment made to an agent
after the death of his principal, though the party paying^did so in good
faith and without notice of the death oi the principal, was not suffi-
cient, and that the administrator of the principal was entitled to re-
cover it ; '• that the discount in good faith and without notice of the
principal's death, of a note put into circulation by an agent after that
event, conferred no right against the estate of the principal ; ^^ that the
sale of real estate by an agent after the death of his principal, but in
ignorance of it, was not binding upon the estate,^' and hence not upon
the purchaser ; ^* that the act of an agent in separating, measuring and
delivering, after the death of his principal^ a quantity of com that had
been bargained by the principal in his life time, but the title to which,
by want of such separating, measuring and delivering, had not passed
to the other party, was not good against the principal's estate ; •** that
an agent's power to buy goods for his principal ceases with his death,
and that the seller could not recover against the administrators of the
principal's estate, though the fact of the death was vmknown both to
the seller and the agent.**
§ 667. — — But where an agent, authorized to buy goods, sent
an order for them by mail on the day before the principal died, to a
non-resident merchant with whom he had a general arrangement to
supply goods on such orders, and the merchant filled the order within
a reasonable time in ignorance of the principal's death, it was held
that the contract was binding as of the day on which .the order was
deposited in the mail, and that the principal's estate was bound, not-
withstanding the order was not received by the merchant until after
the death of the principal."
76 Chalmers, J., in Clayton v. Mer-
rett, 52 Miss. 353, supra,
7e Davis v. Windsor Savings Bank,
46 Vt 728; Clayton v. Merrett, 52
Miss, 353; Long v. Thayer, 150 U. S.
620, 37 L. Bd. 1167; Weber v. Bridg-
men, 113 N. Y. 600; Farmers Loan &
Trust Co. V. Wilson, 139 N. Y. 284,
36 Am. St. 696. (See the arguments
contra, in Deweese v. Muff, 57 Neb.
17, 73 Am. St R. 488, 42 L. R. A. 789.)
So, of a power to draw money from
a savings bank. Hoffman v. Union
Dime Savings Institution, 109 App.
Div. 24.
77 Michigan Ins. Co. v. Leaven-
worth, 30 Vt IL
T8 Jenkins v. Atkins, 1 Humph.
(Tenn.) 294, 34 Am. Dec. 648.
70 Lewis V. Kerr, 17 Iowa, 73.
80 Cleveland v. Williams, 29 Tex.
204, 94 Am. Dec. 274.
81 Rigs V. Cage, 2 Humph. (Tenn.)
350, 87 Am. Dec. 559.
82 Garrett v. Trabue, 82 Ala. 227;
Hatchett v. Molton, 76 Ala. 410;
Davis V. Davis, 93 Ala. 173.
475
§ 668 J THE LAW OF AGENCY [BOOK I
§ 668. Effect of principal's deadi upon contract of employments^
Where, however, the transaction is more than the mere creation of a
power, and amounts to a mutual and binding contract of emplo^ent
for a definite time or the performance of a specific act, the effect of
the principal's death upon the continuance of the contract depends
upon a variety of considerations. Most contracts for personal serv-
ices so evidently involve personal considerations and are so clearly
dependent upon the continuance of the lives of the parties, as to be
fairly subject, where no express provision is made, to the implied con-
dition that the death of the principal or master as well as that of the
agent or servant shall terminate the contract without liabilityr**
But, on the other hand, there may be contracts of employment which
involve no such considerations, and contemplate merely the accom-
plishment of certain objects which are not dependent upon the life of
the principal. Here the contract liability may survive even though
the power to act may not; the contract may impose upon the repre-
sentatives of the principal the obligation to renew or recognize the
authority or to permit it to be exercised ; and damages for the breadi
of the contract may be recovered against the representatives of the
deceased principal if, being in a situation to permit the performance
of the contract, they refuse so to recognize it.**
sa Yerrington v. Greene, 7 R. I. 589, — , 123 Paa 306. In Orapel ▼.
84 Am. Dec. 578. Plaintiff contracted Hodges, 112 N. T. 419, it appeared
to work on M's farm as a farm lab- that C lb Son were the holders of a
orer for a year and entered upon per- certain "Alabama claim." Tbey
formance in March. In July M died, made a contract with K, by which K
leaving a will by which the U9e of was to undertake the collection of
the farm for life and all the personal the claim, paying all costs, for a
property on the farm was given to share of the proceeds which he "and
M's wife. Plaintiff knew of the will his legal representatives or assigns"
and continued without any new ar- might retain. As part of the con-
rangement, to work on the farm un- tract, C ft Son made K their agent
der the direction of the widow, until to "ask, demand and receive," to
the close of the year. He sued the "take all lawful ways and means to
executrix to recover for the whole collect," etc., and gave him, and "his
year's service. Held, that upon the legal representatives and assigns,
death of M the contract was termi- full power and authority to do and
nated and that his estate was not lia- perform all and every act whatso-
ble for the services after his death, ever necessary and reaulsite to be
Lacy V. Getman, 119 N. Y. 109, 16 Am. done," etc. K proceeded with the en-
St. R. 806, 6 L. R. A. 728. To same ef- terprise, and presented the claim,
feet: Farrow v. Wilson. L. R. 4 C. P. with the evidence. The claim was
744. rejected by the Geneva tribunal, but
. See also Marvel v. Phillips. 162 Congress passed an act providing for
Mass. 399, 44 Am. St R. 370, 26 L. the allowance of such claims and K
R. A. 416. prepared to present the claim before
MDumont r. Heighten, — Ariz, the tribunal established by this act
476
CHAP. VII I ]
TERMINATION OF THE RELATION
[§669
§ 669. Death of partner or joint owner disserves agency^ — ^The
death of one partner ordinarily operates to dissolve the partnership,
and the partnership beir^ dissolved, the authority of an agent ap-
pointed by the firm thereupon ceases, where the authority is not coupled
with an interest." The same effect would also ordinarily follow from
the death of one of two joint owners, their joint interest being thereby
severed.*'
C died early In the proceeding and
the son, the surriylng partner, also
died before the act of Congress was
passed. K tendered to the adminis-
trator his services under the contract
to prosecute the claim before the
new tribunal, but the administrator
refused to permit him to proceed,
and employed another attorney who
presented the claim, which was al-
lowed and paid. The referee found
that K duly performed so far as he
was permitted, and was ready to per-
form the residue, but that the admin-
istrator refused to permit him to
perform. Held, that K was entitled
to damages for not being permitted
to perform. It was urged that K's
power was revoked by the dissolution
of the firm of C ft Son, by the death
of C, and by the death of the surviv-
ing partner. "But," said the court,
"the paper signed by the parties was
something more than a power of at-
torney. That was granted as inci-
dental to a complete contract for
services to be rendered on one side
and compensation to be paid on the
other. • ♦ ♦ They [C a Son] em-
ployed K to effect that object [the
collection of their claim]. Their con-
tract was with him, his assigns and
representatives, and it provided that
for service in that direction, ren*
dered and to be rendered, K should
receive twenty-five per cent, of the
sum ultinoately recovered* He en-
tered upon the service. * * * The
surviving partner of G a Ck>. had
died but his death did not dissolve
the contract On one side, by its
terms, it ran to those who might in
the end represent K, and, on the
other, beyond fiie death of 0, If that
occurred before the recovery was
reached, for its terminus was a re-
covery or a final abandonment of the
claim. By his services, K had ac-
quired an interest in the enterprise
contemplated by the contract, and a
right to continue Its prosecution to
reach and procure the compensation
agreed. ♦ • • The ownership of thf*
claim remained to the end in C ft
Co. and their representatives. The
latter could, as they did, refuse to
make K their attorney and so pre-
vent him from fully performing his
contract But he tendered that full
performance, and a recovery having
been had, he Is entitled to the stipu-
lated reward, less the further ex-
pense incurred in making the final
collection."
See also Wylie y. Coxe, 56 U. S.
(16 How.) 416, 14 L. Bd. 763; Mor-
gan V. Gibson, 42 Mo. App. 234; Price
V. Haeberle, 25 Mo. App. 201.
ssSee ante, § 620; McNaughton v.
Moore, 1 Hayw. (N. C.) 189. See
Bank of New York v. Vanderhorst,
82 N. Y. 553, where it was held that
an authorized agent of a firm who
continues to draw firm funds from a
bank and apply them to firm uses
after the death of one partner, both
he and the bank being ignorant of
the death, acts within the scope of
his authority and his acts bind the
firm.
80 See ante, ft 621; Rowe v. Rand,
111 Ind. 206. But not where the
power was Jointly and severally con-
ferred. Wilson V. 8tewart«*6 Penn, L.
Jour. Rep. 450.
477
§§ 670, 671]
THE LAW OF AGENCY
[book I
But while the authority is revoked, the question of the effect of the
death upon the contract of employment is not so clear.
It has been held that the death of one of two partners docs not re-
lieve the firm of liability to an agent who has been engaged for a defi-
nite period,®' but a contrary result has also been reached,** and it
would seem that the former holding could bie sustained only where the
firm is not in fact dissolved, but goes on with the business siibstan-
tially as before.®*
§ 670. Death of principal dissolves authority of substitute. — ^The
death of the principal not only dissolves the authority of the agent
within the limits referred to, but also, so far as his acts might affect
the principal, that of a substitute or subagent appointed by the agent,
whether appointed with the consent and authority of the principal or
not.**
b. By Death of the Agent
§ 671, General rule — Death of agent terminates agency. — ^Upon
the death of the agent invested with a mere power, the agency is termi-
nated. There is then no one to exercise the derivative authority which
must of course cease to flow. If the agent were one selected for his
skill, judgment or discretion, this furnishes an additional reason why
the authority should be held not to descend to the personal representa-
tives of the agent, with whom the principal may be unacquainted and
to whom he might be unwilling to confide the power.**
Where an agent holds property simply as agent his agency is ter-
minated by his death, and the property will not pass to his personal
representative.**
•TFerelra v. Sayres, 6 Watts ft
Serg. (Penn.) 210, 40 Am. Dec. 496.
ssTasker v. Shepherd, 6 H. ft N.
675; Burnet v. Hope, 9 Ont. Rep. 10;
Hoey V. MacEIwan, 5 Sc. Gt. Sess. (3d
ser.) 814 (but compare Brace v. Cal-
der, [1896] 2 Q. B. 253); Griggs v.
Swift, 82 Ga. 392, 14 Am. St Rep.
176, 6 L. R. A. 405; Greenburg v.
Early, 30 Abb. N. Gas. 300.
•B As in Hughes v. Gross, 166 Mass.
61, 55 Am. St Rep. 375, 82 L. R. A.
620.
A dissolution of the partnership
not by death but by the voluntary
retirement of a partner does not ter-
minate the contract so as to exempt
from liability. Brace v. Galder,
[1895] 2 Q. B. 253.
00 Peries v. Ayclnena, 8 W. ft Serg.
(Penn.) 64, 79.
•iGage Y. Allison, 1 Brev. (8. C.)
495, 2 Am. Dec. 682; Merrick's Es-
tate, 8 Watts ft Serg. (Penn.) 402;
Adriance v. Rutherford, 57 Mich. 170;
Kimmell v. Powers, 19 Okla. 339;
Love V. Peel, 79 Ark. 366; Bristol
Savings Bank y. Holley, 77 Gonn.
225; Tyson v. CJeorge's Greek Goal ft
Iron Go., 115 Md. 664.
92 Tyson v. George's Creek Coal
Co., supra.
478
CHAP. VIIl]
TERMINATION OF THS RELATION
[§§ 672-675
§ 67a.
Not when coupled with an iiitereat.*-Where, how^
ever, the agent has acquired with the power an estate or interest in the
thing which is the subject of the agency, his death will not necessarily
operate to defeat it. Thus the power of sale conferred upon a mort-
gagee is not revoked by his death, but may be exercised by his repre-
sentatives or assigns.*'
§ 673. When death of one of two agents terminates agency. — As
has been seen, a power confided to two or more private agents must
ordinarily be exercised by all of them jointly; the death of one of
them therefore, where the authority is joint, renders the further ex-
ecution of the agency as contemplated impossible, and it is therefore
terminated." Where however the agency is joint and several, or a
several execution is otherwise authorized, the death of one agent does
not terminate it.**
Even in the case of joint agents, moreover, since the rule requiring
joint execution is based upon the presumed intention of the principal,
the rule will not apply if, after the death of one, the principal recog-
nizes the continued existence of the agency of the survivor.**
A power coupled with an estate in several or a power in trust to
several, would however not ordinarily be terminated by the death of
one.*^
§ 674. Dissolution of artificial person which was the agent —
Where, instead of a natural person, an artificial person is constituted
the agent, as in the case of a corporation, the legal "death" or dis-
solution of that artificial person, would ordinarily terminate the agency.
The same result has been held to follow where a partnership had been
appointed the agent and the partnership was dissolved.**
§ 675. Effect on substitute. — Where the agent has appointed a
substitute or subagent without direct authority, and for his own con-
venience merely, the death of the agent annuls the authority of the
subagent or substitute,** and this rule also applies even though the
agent was expressly given the right of substitution.* Where, how-
M Collins T. Hopkfns, 7 Iowa, 463;
Harnlckell v. Omdorff, 35 Md. 841;
Merrin y. Lewis, 90 111. 506; Lewis T.
Wells, 50 Ala. 198.
•* Hartford Fire Ins. Co. ▼. Wilcox,
67 IlL 180; Martins v. International
L. Ins. Society, 53 N. T. 339, 13 Am.
Rep. 529; Rowe ▼. Rand, 111 Ins. 206.
95 See Wilson v. Stewart, 6 Penn.
L. J. Rep. 450; Douglass v. Baker, 79
Tex. 499.
•• Davidson r. Provost, 85 IlL App.
126.
•7 See In re Bacon, 76 L. J. Ch. 213.
••Larson v. Newman, 19 N. D. 153.
M Jackson Ins. Co. v. Partee, 9
Heisk. (Tenn.) 296.
i Lehigh Coal & Nav. Co. v. Mohr,
88 Penn. St. 228, 24 Am. Rep. 161;
Watt V. Watt, 2 Barb. (N. Y.) Gh.
371; Periea v. Aycinena, 8 Watts &
479
§§ 676, 677]
THE LAW OF AGENCY
[book I
ever, the subagent, though appointed by the agent, derives his author-
ity directly from the principal, it will not be affected by the death of
the agent*
S. By Insanity of One of the Parties.
a. By Insanity of the PrincipaL
§ 676. In general — ^The act of every agent exercising a bare
power or authority necessarily presupposes, as has been seen, the ex-
istence of a principal competent to perform the same act himself in
his own behalf. It is his will that is being carried out through the
medium of the agent. If for any reason, therefore, the principal be-
comes incapable of acting and exercising an intelligent will in regard
to the transaction, it is evident that an essential element in the relation
is lacking, and while that element remains absent, the further exercise
of the relation must be suspended.
§ 677. General rule. — It is the general rule, therefore, that the
after-occurring insanity of the principal, or his incapacity to exercise
any volition upon the subject by reason of an entire loss of mental
power, operates as a revocation or suspension for the time being, of
the authority of an agent acting under a bare power.' "If, on the
recovery of the principal," it is said, "he manifests no will to terminate
the authority, it may be considered as a mere suspension, and his as-
sent to acts done during the suspension may be inferred from his for-
bearing to express dissent when they come to his knowledge." *
The insanity here referred to, of course means something more than
mere mental weakness or delusions respecting particular matters. It
must be either general dementia or at least such unsoundness as ren-
ders the principal incapable of acting with reference to those matters
to which the authority relates.*
Serg. (Penn.) 79. See also Union
Casualty CJo. v. Gray, 62 C. C. A. 224,
114 Fed. 422.
sSmitli y. White, 5 Dana (Ky.),
a7B.
8 Davis v. Lane, 10 N. H. 166, 160;
Matthiesson, etc., Co. v. McMahon, 38
N. J. L. 636; HiU v. Day, 34 N. J.
Eq. 150; Bunco v. OaUagher, 6
Blatch. (U. S. a C.) 481; Drew ▼.
Nunn, 4 Q. B. Div. 661; Renfro v.
City of Waco (Tex. Civ. App.), 83 S.
W. 766; Spencer v. Reynolds, S Pa.
Co. Ct Rep. 249.
Cfises of attorney and client.—
Yonge y. Toynbee, [1910] 1 K. B. 216;
Joost v. Raclier, 148 111. App. 648; Me-
Kenna v. McArdle^ 191 Mass. 96;
Chase y. Chase, 168 Ind. 178.
« Davis y. LAne, 9upra,
» Drew V. Nuan, Mupra; Leggate t.
Clark, 111 Mass. 308.
480
CHAP. Vlll] TERMINATION OF THE RELATION [§§ 678-680
§ 678. Ignorance of insanity.^ — Bnt this general rule is
subject to the exception ordinarily made in dealing with an insane
person, that when third persons in good faith, relying upon an appar-
ent authority and in ignorance of the principars insanity have given a
consideration of value, they will be protected, where the contract is
fully executed, was fair and reasonable, and the parties cannot be
restored to their original situation.* "The liability of the lunatic in
such cases is upheld, not on the ground of the contract, but on the fact
that the lunatic has received and enjoyed an actual benefit from the
contract/' ^ And where the principal while sane has expressly ac-
credited an agent to the third person, the latter, it has been held, will
be protected in continuing to supply goods to the agent until he has
notice of the insanity.*
§ 679. When authority coupled with an interest. — And where the
authority of the agent is given by way of security, etc., as previously
explained, or is coupled with such an estate or interest that he may
exercise it in his own name, the after-occurring insanity of the prin-
cipal will not affect it* Thus a mortgagee's power of sale is not re-
voked by the after-occurring insanity of the mortgagor,^^ or a power
of attorney to confess judgment given as part of the security for
money loaned.**
Whether the same principle is applicable to those authorities which,
as has been seen^ are not revocable during the principal's life though
they may be revoked by his death, seems not to have been determined,
though it has been suggested, and it is tfaot^t rightly, tiiat such pow-
ers also would be preserved.*'
§ 680. What evidence of insanity sufficient*-- A judicial deter-
mination of insanity, after regular proceedings, is usually deemed evi-
dence to all the world,** and it has been held that the insanity of the
principal must be established as a fact by an inquisition before it would
revoke the agency.** This view is approved by Chancellor Kent ^^ in
• Matthiesson v. McMahon, 38 N. J. berg v. Davidson, 72 Minn. 49, 42 L.
L. 536; Merrltt v. Merrltt, 43 N. Y. R. A. 103; Laughlln v. Hlbben. 129
App. Dlv. 68; Davis v. Lane, 10 N. H. Ind. 5.
156; Drew v. Ntinn, 4 Q. B. Div. 661. " Spencer v. Reynolds, 9 Pa. Co.
T Matthiesson y. McMahon, 9upra. Ct Rep. 249.
• Drew V. Nunn, supra. Of. Yonge 12 Davis v. Lane, supra.
V. Toynbee, supra. i» See Hughee v. Jones, 116 N. Y.
• Davis V. Lane, 10 N. H. 156; Mat- 67, 15 Am. St. R. 386, 5 L. R. A. 637;
tbiesson v. McMahon, 88 N. J. L. 586; Joost v. Racfaer» 148 111. App. 648.
Hill V. Day, 34 N. J. Eq. 150. »* Wallis v. Manhattan CJo., 2 Hall
10 Berry v. Skinner, 30 Md. 567; (N. Y.), 495.
Van Meter v. Darrah, 116 Mo. 153; i»II Kenfs Com. 645.
Bevin v. Powell, 83 Mo. 365; Lund-
31 481
§§ 68 1, 682] THE LAW OF AGENCY [bOOK I
his Commentaries, but, as is declared by the court in New Jersey/* it
is believed that "the weight of authority, as well as sound reasoning,
leads to the conclusion that the after-occurring insanity of the prin-
cipal operates, per se, as a revocation or suspension of the agency,
except in cases where a consideration has previously been advanced in
the transaction which was the subject-matter of the agency so that the
power became coupled with an interest, or where a consideration of
value is given by a third person, trusting to an apparent authority, in
ignorance of the principal's incapacity." The mere fact that a guard-
ian has been appointed over the principal as an insane person is
not sufficient without proof that the insanity was of such a character
as disqualified him from making a valid contract." Nor the mere fact
that one has gone to a hospital or asylum for the care or cure of the
insane.^
b. By Insanity of the Agent.
§ 681* In general. — ^The proper exercise of the authority conferred
implies in every case the exercise of more or less intelligence upon the
part of the agent, and the subsequent loss of that intelligence by the
agent renders the proper performance of his duty thereafter impossible.
This is especially true where the agent was selected for his mental
capacity or endowments, as in the case of an attorney, architect or
author.
§ 682. General rule — ^Terminates agency unless coupled with an
interest. — ^The after-occurring insanity of the agent to such a degree
as to incapacitate him from further execution of the agency, operates
as a dissolution, or suspension for the time being, of his authority in
all cases, unless he has with it an estate or interest in the thing which
is the subject-matter of the agency.^® Mere partial derangement or
monomania would not necessarily have that effect, unless the mania
related to the subject-matter of the agency, or destroyed the agent's
capacity for its proper execution.
i« Matth lesson v. McMahon, 38 N. wlkere an attorney became tempora-
J. L. 536. See also Davis ▼. Lane, 10 rily Insane and his office was closed.
N. H. 156; Bunco v. Gallagher, 5 Held^ to annul the contract of em-
Blatch. (U. S. C. C.) 481. ployment.
17 Motley T. Head, 43 Vt. 633. But master was held liable for tort
18 See Leggate v. Clark, 111 Masa. of an insane servant, acting within
308; McKenna v. McArdle, 191 Mass. the course of his employment Ghesa-
96. peake, etc., Ry. Co. v. Francisco. 149
19 See Corson ▼. Lewis, 77 Neb. 446, Ky. 807.
482
CHAP. VIIl] TERMINATION OF THE RELATION [§§ 683-^7
§ 683. How when insanity unknown.— Execnted dealings had by
third persons with the agent in good faith and in Ignorance of his in-
sanity, could not be affected by it, where no advantage had been taken
of it and the parties could not be restored to their original situation.
§ 684. Insanity of one of two or more agents.— ^For the sarhe rea-
son that the death of one of two or more joint agents 'o]ierates to dis-
solve the agency, the insanity of one of twT) or more joint agents has
the same effect.** If, however, the agency was joint and several, it
may be executed by the others.
§ 685. Effect on subagents. — ^The termination of the agent's au-
thority would also bring to an end the authority of the substitutes and
subagents who derived their powers from him. But if the subagent
was appointed with the authority of the principal, and the authority of
the subagent was capable of an independent execiition, the insanity of
the agent would not necessarily operate to dissolve the subagent's
authority.
3. By Bankruptcy of One of the Parties. .
§ 686, In general — Effect of bankruptcy.— Bankfuptcy, m its
legal effect, differs obviously and radically from death or insanity. It
does not result in civil death or work a general legal incapacity. It
simply operates with reference to the bankrupt and his then estate, and
the claims of his then creditors. He is entirely free to erigaige in new
business and make new contracts either in person or through an agent.*
a. Bankruptcy of Priaicipal*
§ 687. General rule — Bankruptcy of principal terminates agfcnt's
authority. — The legal bankruptcy of the principal or his general ?is-
signment for the benefit of creditors operates to revoke the authority
of the agent for the transaction of the principal's business affected by
the bankruptcy or assignment. By this event the principal's control
and management of his affairs so affected is divested and confided to
the assignee or trustee for the benefit of his creditors, who is thereupon
entitled to collect and possess the bankrupt's credits and property, and
the subject-matter of the agency passes under his control.*^
«o Salisbury y. Brisbane, 61 N. Y. Where the agent. In pursuance of a
617; Rowe v, Eand, 111 Ind. 206. previous direction of his principal,
21 Minett v. Forrester, 4 Taunt, does an act which is In itself aja <u;t
541; Drlnkwater v. Goodwin, Cow- of bankruptcy, his authority does not
per, 251; Parker v. Smith, 16 East, terminate until the act is done, and
382; Wilson v. Harris, 21 Mont 374. then It is too late to question it Ex
parte Helder, 24 Ch. DIv. 339.
483
§§ 68&-69I]
TUE LAW OF AGENCY
[book I
The bankruptcy, however, would not terminate an authority re-
specting matters not affected by it, or for the performance of acts
which the bankrupt might still perform.-^
§ 688. Mere insolvency not enough. — The mere insolvency, or
inability of the principal to pay his debts when due, would not liave
this effect. It only results from the operation of the law when, either
voluntarily or involuntarily, the principal surrenders and tlie law as-
sumes the control of his affairs.
Particular situations may undoubtedly arise, in which continued sol-
vency on the part of the principal may expressly or by implication be a
condition to the continuance of the authority. And the insolvency of
the principal may justify the agent in refusing to continue ; but these
are not the questions here involved.
§ 689. Agent's authority not dissolved when coupled with an in-
terest.— ^Where however the authority of the agent is given by way
of security, or is "coupled with an interest," the bankruptcy of the
principal will not dissolve it.^' Thus the power of sale conferred upon
a mortgagee is not revoked by the mortgagor's bankruptcy.**
§ 690. How when bankruptcy unknown. — ^Where after the act of
bankruptcy but before adjudication, the agent deals by virtue of the
power with third persons who are ignorant of the bankrupcty, and who
with good faith part with value upon the strength of the agent's au-
thority, their rights — not acquired in violation of the terms of the
.statute — will ordinarily be protected."
6. Bankruptcy of the Agent.
§ 691. General rule. — ^The bankruptcy of a business agent, as for
example, an agent appointed to sell merchandise,*' or to receive pay-
ment of money due his principal,*'' operates as a revocation of his
authority, but not where his authority is merely to do some formal act.
22 See Dixon v. Ewart. 3 Meriv. 322.
SB Power of attorney to sell given
as adjunct to a pledge is not ter-
minated by bankruptcy. Rensbaw v.
Creditors, 40 La. Ann. 37; Dickinson
V. Central Nat Bank, 129 Mass. 279,
37 Am. Rep. 361.
So where authority to a bank to
collect was deemed coupled with an
equitable assignment of the debt
Farmers* Bank v. Kansas City Pub.
Co., 3 Dillon, 287, Fed. Cas. No. 4,652.
Same effect: Clark v. Iron Co., 26
C. C. A. 423, 81 Fed. 310.
s4Hall V. Bliss, 118 Mass. 554, 19
Am. Rep. 476.
"^4? parte Snowball, L. R. 7 Ch.
App. 534, 548; EUliott T. Turquand, 7
App. Cas. 79.
»«Audenrled v. Betteley, 8 Allen
(Mass.), 302; Scott v. Surman, Willes
(K. B.), 400; Hudson v. Granger, 5
Barn. & Aid. 27.
27 Hudson V. Granger, gupra.
484
CHAP. VIII ] TERMINATION OF THE RELATION [§ 69a
as the execution of a deed in the name of his principal, or the carrying
out of some existing trust which is incumbent upon him.^'
The mere insolvency of the agent would not of itself terminate an
authority, but a known or notorious condition of insolvency might very
well be deemed to terminate many sorts of authority, especially those
involving trust and credit in financial affairs.** It would doubtless be
good ground for the termination of definite contracts of employment in
any case in which keeping his credit good might fairly be regarded as
an implied term.
4. By Marriage.
§ 69a. a. Marriage o£ principaL — ^The marriage of the principal
will, in certain cases, operate to revoke a power previously given, that
is to say, where the execution of the power will defeat or impair rights
acquired by the marriage.
Thus where a man gave a power of attorney to another to sell his
homestead, but before a sale was effected the principal marriedi it was
held that the marriage operated as a revocation of the power. By the
marriage the wife acquired interests in the property of which she could
only be divested with her consent, evidenced 1^ her joining in the deed,
or in the power of attorney by virtue of which the deed was executed.*^
The rule would not apply, however, where the execution of the power
would not defeat or impair the rights acquired by the wife, as, for ex-
ample, where an executory contract for the saje of land may be ex*
ecuted by the husband which would leave the wife's dower rights
unimpaired.'^
So, at the common law, the subsequent marriage of a feme sole
<^rated to revoke a power of attorney previously given by her where
its execution would defeat the rights acquired by the husband^ and the
same rule would still apply wherever the modern married women's acts
have not clothed her with full capacity to deal as sole with reference to
the interests in question, or where, under the law, the husband acquires
an immediate interest in the property by the marriage."*
A power given by way of security, or a power coupled with an in-
M Dixon v. Ewart, 3 Mer. 322; Hud- si Joseph t. Fisher, 122 Ind. 399.
son V. Granger, Bwpra. »« Judson v. Sierra, 22 Tex. 365;
2» See McLeod v. Despaln, 49 Oreg. Brown v. Miller, 46 Mo. App. 1; Wam-
63C^ 124 Am. St R. 1066, 19 L. R. A. bole v. Foote, 2 Dak. 1; Gilmer v.
(K S.) 276. Yeatch, 66 Tex. Civ. App. 511.
so Henderson v. Ford, 46 Tex. 627.
485
§§ 693, 694]
THE LAW OF AGENCY
[book I
terest, however, like the power of sale contained in a valid mortgage,
would not be revoked by the marriage of the grantor."
§ 693. b. Marriage of agent. — The marriage of the agent is not
usually an event which, in itself, can affect the continuance of the
agency. There may be express stipulations for an unmarried agent,
and there may be cases, especially where the agent is a woman, in which
the legal subordination of the agent's will to that of the principal may
be inconsistent with rights or powers acquired by the other party to the
marriage. It is easier, however, to imagine cases in which the mar-
riage of the agent, and especially again a female agent, would be
likely to lead to situations justifying a termination of the relation than
it is to foresee cases in which the marriage renders the continuance of
the relation legally impossible.'*
5. By War.
§ 694. In generals-War between countries of principal and of
agent terminates commercial agency. — Every kind of trading, or
commercial dealing, or intercourse, whether by transmission of money
or goods, or of orders for the delivery of either, between two coun-
tries at war, directly or indirectly, or through the intervention of
third persons or partnerships, or by contracts in any form looking to
or involving such transmission are prohibited."
It results, therefore, that war between the state or country of the
principal and that of the agent, as a general rule, renders further pros-
ecution of the agency for such purposes unlawful and operates to
dissolve the relation.
Many other cases, than those involving war between the respective
countries of the principal and the agent, can easily be imagined in
which the breaking out of war would affect agency. Thus, a war in
their common country, or a war in the country in which the authority
••A power of attorney to confess
judgment has been put on the same
ground. Eneri v. Clark, 2 Pa. St
234, 44 Am. Dec. 191.
8* See Edgecomb v. Buckhout, 146
N. Y. 332, 28 L. R. A. 816, where it
was held that the mere fact that a
woman, engaged while single as
housekeeper for an unmarried man,
proposed to marry did not justify
her discharge where it appeared that
she promised and her proposed hus-
band was willing that she should
continue to render the same services
as formerly and where there had
been in fact no failure to render the
6ame service.
MWiliiams v. Paine, 169 U. S. 55,
42 L. Ed. 658; Kershaw v. Kelsey,
100 Mass. 561, 1 Am. Rep. 142; Wool-
sey, International Law, § 117; Mont-
gomery V. United States, 15 Wall. (U.
S.) 396, 400, 21 I> Bd. 97*
486
CHAP. VIIl] TERMINATION OF THE RELATION [§ 695
was to be exercised, may easily create such changes in the possibility,
desirability or risk of performance as necessarily to suspend, if not to
terminate, the prosecution of the enterprise contemplated before the
war occurred.
The case of war between their respective countries, however, is the
one which has chiefly been considered, and to which most of the
judicial utterances have applied.
§ 695. — — . It is said by a learned judge: •• "That war suspends
all commercial intercourse between the citizens of two belligerent
countries or states, except so far as may be allowed by the sovereign
authority, has been so often asserted and explained in this court within
the last fifteen years, that any further discussion of that proposition
would be out of place. As a consequence of this fundamental prop*
osition it must follow that no active business can be maintained either
personally or by correspondence or through an agent, by the citizens of
one belligerent with the citizens of the other. The only exception to
the rule recognized in the boc^s, if we lay out of view contracts for
ransom and other matters of absolute necessity, is that of allowing the
payment of debts to an agent of an alien enemy, where such agent re-
sides in the same state with the debtor. But this indulgence is sub*
ject to restrictions. In the first place it must not be done with the
view of transmitting the funds to the principal during the continuance
of the war, though if so transmitted without the debtor's connivance,
he will not be responsible for it.
"In the next place, in order to the subsistence of the agency during
the war, it must have the assent of the parties thereto, — the principal
and the agent. As war suspends all intercourse between them, pre*
venting any instructions, supervision, or knowledge of what takes
place on the one part, and any report or application for advice on the
other, this relation necessarily ceases on the breaking out of hostilities
even for the limited purpose before mentioned, unless continued by
the mutual assent of the parties. It is not compulsory ; nor can it be
made so on either side, to subserve the ends of third parties. If the
agent continues to act as such, and his so acting is subsequently rati-
fied by the principal, or if the principars assent is evinced by any other
circumstances, then third parties may safely pay money for the use of
the principal into the agent's hands; but not otherwise. It is not
enough that there was an agency prior to the war. It would be con-
trary to reason that a man without his consent should continue to be
bound by the acts of one whose relations to him have undergone such
M Bradley, J., in lasurance Co. v.Davls, 95 U. S. 425, 24 h. Ed. 4^3.
487
§695]
THE LAW OF AGENCY
[book I
a fundamental alteration as that produced by a war between the two
countries to which they respectively belong; with whom he can have
no correspondence, to whom he can communicate no instructions, and
over whom he can exercise no control. It would be equally unreason-
able that the agent should be compelled to continue in the service of
one whom the law of nations declares to be his public enemy. If the
agent has property of the principal in his possession or control, good
faith and fidelity to his trust will require him to keep it safely during
the war and to restore it faithfully at its close. This is all. ♦ * *
"What particular circumstances will be sufficient to show the con-
sent of one person that another shall act as his agent to receive pay*
ment of debts in an enemy's country during war may sometimes be
difficult to determine. Emerigon says that if a foreigner is forced to
depart from one country in consequence of a declaration of war with
his own, he may leave a power of attorney to a friend to collect his
debts and even to sue for them.'^ But though a power of attorney,
to collect debts, given under such circumstances, might be valid, it is
generally conceded that a power of attorney cannot be given during
the existence of war by a citizen of one of the belligerent countries
resident therein, to a citizen or resident of the other; for that would
be holding intercourse with the enemy which is forbidden. Perhaps it
may be assumed that an agent ante bcllum, who continues to act as
such during the war in the receipt of money or property on behalf of
his principal where it is the manifest interest of the latter that he should
do so, as in the collection of rents and other debts, the assent of the
principal will be presumed unless the contrary be shown; but that
where it is against his interests, or would impose upon him some new
obligations or burdens, his assent will not be presumed, but must be
proved, either by his subsequent ratification or in some other manner.
In some way, however, it must appear that the alleged agent assumed
to act as such and that the alleged principal consented to his so act-
ing
" S8
sTTraite dee Afisurancea, Vol. 1»
567.
38 Upon this question see also New
York L. Ins. Co. v. Statham, 93 U. S.
24, 23 L. Ed. 789; Ward v. Smith, 7
Wall. (U. S.) 447, 19 U Ed. 207;
Brown v. Hiatts, 15 Wall, (U. S.)
177, 21 L. Ed. 128; Fretz v. Stover,
22 Id. 198, 22 L. Ed. 769. The de-
cisions in the state courts do not
seem to be altogether harmonious.
See Shelby T. Offutt» 51 Miss. 128;
Darling y. Lewis, 11 Heisk. (Tenn.)
125; Howell v. Gordon, 40 Ga. 302;
Robinson v. Life Ass'n Co., 42 N. Y.
54, 1 Am. Rep. 490; Sands y. Life
Ins. Co., 50 N. Y. 626, 10 Am. Rep.
535; Manhattan Life Ins. Co. v. War-
rick, 20 Gratt. (Va.) 614, 3 Am. Rep.
218; Jones v. Harris, 10 Heisk.
(Tenn.) 98; Blackwell v. Willard, 65
N. C. 556, 6 Am. Rep. 749.
488
CHAP. YIIl] TERMINATION OF THE RELATION [§§ 696, 697
§ 696. In a later case '® before the same court, it is said :
"It is entirely plain, as we think, that the mere fact of the breaking
out of a war does not necessarily and as a matter of law revoke
every agency. Whether it is revoked or not depends upon the cir-
cumstances surrounding the case and the nature and character of the
agency." "Where it is obviously and plainly against the interest of
the principal that the agency sh6uld continue, or where its continu-
ance would impose some new obligation or burden, the assent of
the principal to the continuance of the agency after the war broke out,
will not be presumed but must be proved, either by his subsequent
ratification or in some other manner. And on the other hand, where
it is the manifest interest of the principal that the agency, constituted
before the war, should continue, the assent of the principal will be pre-
sumed. Or, if the agent continues to act as such, and his so acting is
subsequently ratified by the principal, then those acts are just as valid
and binding upon the principal as if no war had intervened."
In this case it was held that a power of attorney, executed in one of
the northern states before the civil war by a married woman then re-
siding there, was not revoked by the fact that, when the war broke
out, she and her husband remoyed to one of the southern states, where
he entered the confederate service and where she resided until the
close of the war. So a power of sale contained in a mortgage of lands
was not revoked by the war.**
6. By Destruction of Subject-matter.
§ 697* Destruction of subject-matter usually terminates agency
respecting it. — Where the authority is created to be exercised upon
or respecting some particular subject-matter, whose continued exist-
ence is essential to the exercise of the authority, the subsequent de-
struction of that subject-matter must ordinarily operate to terminate
the authority. Thus, for example, it is held that the destruction of a
house by fire will terminate an authority to sell it.*^
«»WiUiamB v. Paine, 169 U. S. 55, So where an attorney was em-
42 L. Ed. 658. ployed to protect and obtain sup-
^oUniveraity v. Finch, 85 U. S. posed interests of his client in land,
(18 Wall.) 106, 21 L. Bd. 818. his authority is terminated when it
41 Cox T. Bawling, 54 Mo. App. 289. is discovered that bis client has no
(Here all parties seem to have known interest Palms y. Howard, 129 Ky.
of the fire.) 668.
489
§§ 6^8r-70l] THE LAW OF AGENCY [bOOK I
Whether the principal would incur any liability for so terminating,
if the destruction were by his act, is a question not now involved.
7. By Termination of Principal's Interest in Subject-matter^
§ 698. Tennination of principal's interest usually terminates au-
thority.— It must also be true, as a general rule, that the termination
or extinguishment of the principal's interest in the subject-matter, over
or concerning which the authority is to be exercised, must operate to
terminate the authority.** Reference has already been made to this,
where the termination of the principal's interest results from his dis-
posing of such subject-matter or of his estate or interest therein.**
8. By Termination of Principalis Authority^
§ 699. Principars removal from office removes subordinates.-—
Where the principal's power of appointing agents is derived from his
occupying an office or position of a fiduciary character, his ceasing to
longer occupy the position operates to determine the authority of those
also who were his subordinates in the performance of the trust.**
P. By Change in Law.
§ 700. Change in law rendering prosecution of agency unlawful —
Although it were lawful when created, a subsequent change in the law
which makes the execution of the authority or the further prosecution
of the agency unlawful, must usually operate to terminate it.**
10, Notice of the Termination.
§ 701. Notice generally not necessary where authority terminated
by operation of law. — It is, in general, true that notice is not re-
quired to be given of the termination of authority by operation of law,
in order to prevent future acts which shall be binding upon those who
succeed in law to the principal's rights. The reason conmionly given
«>8ee Fbster v. Bookwalter, 152 ^^Llvermore on Xgdncy, { 307.
N. Y. 166; Kelly v. Brennan, 66 N. « See Justice v. Lalry, 19 Ind. App.
J. Gq. 423. 272, 66 Am. St R. 406 (a partnership
«s See ante^ % 619. case).
490
CHAP. VIIl]
TERMINATION OP THE RELATION
[§§ 702, 703
for this is, that the event which works the termination is either in it-
self of a public nature^ or is so associated with acts tending to public-
ity, that it may fairly be assumed that everybody will know of it.
Termination by the breaking out of war between the country of the
principal and that of the agent, would furnish a typical illustration.
The same principle is also said to apply to termination by death, which
usually involves elements of publicity; and by bankruptcy ; *• mar-
riage, perhaps;*^ judicial determination of insanity; and the like.
§ 702. The true reason in these latter cases may well be
practical necessity; but another reason may doubtless be found else-
where for certain of them. The case likely to present itself is not
whether the agent can continue to bind the principal but whether his
acts, done after the happening of the alleged terminating event, can
bind his estate in the hands of those who succeed by law to the in-
terests of the former principal — in the case of death, whether the heirs
or representatives are affected; in the case of insanity, whether the
estate is affected ; and the like. Assuming that the liability of the prin-
cipal who has not given notice is based upon the doctrines of estoppel,
it will be evident that there is here no room for their application. The
person who created the authority is not responsible for its termina-
tion. The persons sought to be estopped neither created the agency
nor terminated it; they have done no acts upon which the persons
asserting estoppel could rely; they have done nothing to mislead but
have simply succeeded to rights with which the law clothes them ; they
may have had no knowledge or means of knowledge of the existence
of the authority ; they have succeeded to property, not to personal re-
lations.
§ 703. If the question were whether in case of marriage
or bankruptcy the principal himself might continue to be bound, dif-
ferent considerations would apply. As to him, it might well be in
certain cases that the event did not dissolve the authority, however
49 Notice of the disBolution of a
partnership by bankruptcy, is held
not to be necessary. Eustls v. Hol-
ies, 146 Mass. 413, 4 Am. St R. 327.
But an assignment for the benefit
of creditors is held not to be an
event of which all persons are bound
to take notice. Kuser v. Wright, 52
N. J. Eq. 826.
«T In Little V. Haslett, 197 Pa. 691,
it was held by the court below that
marriage of a woman terminates a
partnership by operation of law with-
out notice. The Judgment below was
affirmed by a per curiam opinion
without discussion of this question.
In Henderson v. Ford, 46 Tex. 627,
the marriage of a man was said to
terminate an authority to sell a
homestead, but, although the grantee
did not know of the marriage at the
time of the purchase, be did know
of it before he accepted the deed and
paid the price.
491
§ 703] THE LAW OF AGENCY [bOOK I
much it might be held inoperative against those who had acquired
rights by the event. It would be conceivable, for example, that a
wholesale dealer might give such authority to his travelling salesman
to bind him by executory contracts of sale that he would continue to
be personally bound after his bankruptcy even though no damages
for the breach of such a contract could be allowed out of the estate in
the hands of the assignee. Marriage, at common law, of a male
principal would not affect his status as would the marriage of a female
principal, and the marriage of the latter, under modem statutes, might
have a very narrow effect upon existing agencies created by lier.
492
OF THE AUTHORITY CONFERRED; ITS NATURE AND
EFFECT
CHAPTER I
OF THE NATURE AND EXTENT OF THE AUTHORITY IN GENERAL
f 704. Purpose of Book II.
705. Scope of Um qaeetlons Ib^
volved.
706. Dlstlnctiong based upon na-
tnre and extent of authority.
I. KZPBJE88 AND IMPLIED AUTHOKITT.
707. Where anthority 1b expret»~~
Effect of UxultatioBB.
708. Where authority is implied.
n. THB ELBlOUfTB OF AUTHDRITY.
700. Authority an attribute of
character bestowed by prin*
clpal.
710, 711. Limitations — Apparent
authority cannot be limited
by secret instructions.
712. Distinctions between authority
and power.
718. What constitutes authority.
714. Elements of authority — I. Au-
thority intentionally and dl^
rectly conferred.
715. II. Incidental authority —
Ordinary and necessary acts.
716. in. Authority conferred
by custom or usa^e.
717. IV. The customs of the
particular business, or an
established course of deal-
ing in it
718. 719. V. Authority by ne-
cessity or special emer-
gency.
720, 721. VT. Apparent au-
thority.
722-726. VII. LlabUlty by es-
toppel.
727. VIII. Liability by ratification.
728, 729. Recapitulation.
730. The province of "Instruc-
tions."
731-735. What constitute in-
structions.
>
III. UMIVfiRSAI^ OKNKBAL ASD BPBCIAi;
AGENTS.
736. In general.
737. General and special agents.
738. Distinctions sometimes
made.
7S9- The true distinction.
740. Qeneral agency not unlimited.
741. General .agent, binds principal
only within scope of his au-
thority.
742. Special agent's atftborlty must
be strictly pursued.
IV. ASCERTAINING THE EXISTENCE
THE AUTHOBITT.
OF
743. Persons dealing with an agent
must ascertain his authority.
744. What Is meant by this.
746. What such person is
bound to ascertain.
746. Not an unfair rule,
747, 748. Other theories.
493
§• 704]
THE LAW OF AGENCY
[book II
749. The dilemma of choosing
between two Innocent per-
Bons.
750. Through whom must au-
thority be ascertained.
761. Persons dealing with agent
must act in good faith.
752. Must exercise reasonable pru-
dence.
•753. Notice of Umftations.
754. Notice of adverse In^
terests.
765. — ^ Effect of prlnclpars neg-
ligence.
756. Must ascertain whether neces-
sary conditions exist
lai, 758. Agent's representa-
tions as to his authority not
to be relied upon.
759, 760. Facts peculiarly
within agent's knowledge.
761. Fixed pecuiilary limits.
762. Corporate agents.
763. Authority of public agents
must be ascertained.
§ 704. Purpose of Book 11. — It has been seen in earlier chapters
how the relation of principal and agent may be created and how it
fnay be terminated. The purpose of creating the agency is to confer
authority upon the agent, — ^to clothe him to a greater or less extent,
and for a shorter or longer period, with a portion of that power with
which nature and the laws of society have invested the principal. For
the time being, and in some capacity, the principal has another Self,
who, by his will and act, is invested with the power to speak and do
with like effect as if he himself should speak or do.
It will be very evident that to those persons who may have occasion to
deal with the principal through this other self, the question of how fully,
how certainly and for how long a time, he has invested the latter with
his own personality, becomes exceedingly important And not only
this, but these matters being ascertained, it is no less important to
determine whether any given act assumed to be done by virtue thereof,
is, in reality, within the fullness, the certainty and the term of the
investment.
It will be equally evident that these are questions not always easy
of solution, not only because men are notoriously careless and indefi-
nite in their words and acts, but because even if, in a given case, a
power has been conferred in terms the most express and definite, the
questions may still arise whether the express words embrace the act
assumed to be done by virtue of them ; whether the mode of doing has
been that contemplated by the language used; wliether subsequent
changes in the circumstances of the parties, or the condition of the
subject-matter have warranted any departure from that mode; whether
in consideration of the nature of the act to be done, or the time and
place of doing it, custom or necessity have added to, or subtracted
from, the powers originally conferred.
It is the purpose of Book II to ascertain the principles upon which
the solution of these questions rests.
494
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 705-707
§ 705. Scope of the questions involved. — It will be evident, also,
upon reflection, that these questions can not well be considered in the
abstract. It may indeed seem at first thought that the authority of an
agent will always be a fixed and definite quantity, and that there must
be certain rules which may invariably be applied to determine its ex-
istence and to measure its scope and extent. Further consideration,
however, will show this to be an error. Authority, at least in the
practical sense in which it is here dealt with, is an exceedingly concrete
matter, it has very little abstract value, it is a variable quantity, it is
affected by relations, it may present one aspect to one person and a
diflFerent one to another person, it can not be separated from its en-
vironment. It will be evident, therefore, that we must consider not
only its relation to persons, but the relation of persons to it. We must
consider their duty to ascertain its existence, to interpret it properly,
and to apply it correctly to the affairs in question.
§ 706. Distinctions based upon nature and extent of authority. —
In doing this, aid may perhaps be derived from certain of the familiar
distinctions based upon the nature and extent of the authority. Thus
it is common to say that in its nature the authority may be express or
implied ; and, as to its extent, that it may be either universal, general
or special. It is certain that distinguishable ideas underlie these clas-
sifications, however much there may be diflference of opinion as to
their importance.
L
«
EXPRESS AND IMPLIED AUTHORITY.
§ 707. Where authority is express-^Bffect of limitations^-^-It has
been seen in another place how the creation of an authority may be
either express or implied, and nothing more need now be said upon
that particular subject. But in determining the scope of the authority
the question whether it is express or implied becomes important.
If the grant be an express one, the extent of the authority conferred,
and the time, place and manner of its exercise may be expected to be
clearly defined. And to the degree to which this is done, the limits
fixed are necessarily conclusive upon all parties who have or are
charged with notice of them.^ So, to .the extent to which the grant is
iTowle V. Leavitt. 23 N. H. S60, 55 back v. Read, 11 Gratt (Va.) 281, 62
Am. Dec. 195; Brown v. Johnson, 12 Am. Dec. 648; Bryant v. Moore, 26
Smedcs & M. (Miss.) 398, 51 Am. Dec. Me. 84, 45 Am. Dec. 96; Wood Mow.
118; Hurley v. Watson, 68 Mich. 531; ft Reap. Machine Co. v. Crow, 70
Chaffe v. Stubbs, 37 La. Ann, 65C; Iowa, 340; Siebold v. Davi«, 67 Iowa,
Rust v. Eaton, 24 Fed. 830; Stain 560; Bohart v. Oberne, 36 Kan. 284.
49S
§ 707]
THE LAW OF AGENCY
[book II
express it is exclusive of every other main authority,* for while usage
and necessity may often determine the mode in which the authority is
to be exercised, they cannot operate to change the essential character
of the authority conferred.^
Duty to observe extent. — Parties dealing with an agent known by
them to be acting only under an express grant, whether the authority
conferred be general or special, are bound to take notice of the nature
and extent of the authority conferred. They must be regarded as deal-
ing with that grant before them, and are bound at their peril to notice
the limitations thereto prescribed either by its own terms or by con-
struction of law,*
Where written authority exists. — So, where the act assumed to be
done by the agent is one for which the authority is required by law to
be conferred by a written instrument or by a writing under seal, the
parties dealing with him must take notice of that fact, and they will be
bound by any limitations or restrictions contained therein, although
they have not had actual knowledge of them.*
The fact that the agent signs "per power of attorney," • or, perhaps,
merely "per procuration'* ^ and the like, is ordinarily sufikient to put
the party dealing with him upon inquiry.
2 "No authority will be implied
from an express authority. Whatever
powers are strictly necessary to the
effectual exercise of the express pow-
ers will be conceded to the agent by
Implication." Jackson v. National
Bank, 92 Tenn. 154, 36 Am. St R.
81, 18 L. R. A. 663.
t Robinson v. MoUett, L. R. 7 H. of
Ii. 802, reversing the same case in
L. R. 7 C. P. 84.
4Mt. Morris Bank v, Gorham, 169
Mass. 519; Ferguson v. Davis. 118 N.
C. 946; Reeves v. Gorrigan, 8 N. Dak.
416; Gorham v. Felker, 102 Ga. 260;
Wells v. Mich. Mut. L. Ins. Co., 41 W.
Va. 131; Dyer v. Duffy, 39 W. Va. 148,
24 L. R. A. 3a9; Stalnbaok v. Read,
11 Gratt (Va.) 281, 62 Am. Dec. 648;
The Floyd Acceptances, 7 Wall. (U.
S.) 666, 19 L. Bd. 169; Whiteside v.
United SUtes, 93 U. S. 247, 23 L. Bd.
882; Lewis V. Cotamissloners, 12 Kan.
186; Craycraft v. Selvage, 10 Bush
(Ky.), 696; Dozier v. Freeman, 47
Miss. 647; Baxter v. Lamont, 60 111.
287; Cruzan v. Smith, 41 Ind. 288;
Black well v. Ketcham, 58 Ind. 184;
Silliman v. Fredericksburg, etc., R.
R. Co., 27 Gratt (Va.) 119; Snow v
Warner, 10 Mete. (Mass.) 132, 43 Am.
Dec. 417.
See also per Moulton, L. J., in
Smith V. Prosser, [1907] 2 K. B. 735.
s Mt. Morris Bank v. Gorham, 169
Mass. 619; Peabody v. Hoard, 46 tlL
242; Weise's Appeal, 72 Penn. St
351; National Iron Armor Co. v.
Bruner, 19 N. J. Eq. 331; Reese v,
Medlock, 27 Tex. 120, 84 Am. Dec.
Bll; Miller v. Wehrman, 81 Neb. 388;
Thompson v. Green River Power Co.,
154 N. Car. 13.
• Mt Morris Bank v. Gorham,
supra,
' So declared in Alexander v.
Mackenzie, 6 C. B. 766; Attwood v.
Munnings, 7 B. ft C. 278.
But in Smith v. McGuire, 8 H. ft
N. 554, it is said by Pollock, a B.:
"The expression 'per procuration'
does not always necessarily mean
that the act is done under procura-
tion. All that it in reality meana it
496
CHAP, l] NATURE AND EXTENT OF THE AUTHORITY
[§ 708
§ 708. Where authority is implied. — ^The same general principles
apply so far as possible where the authority is implied, though from the
nature of the case the limits of an implied authority cannot be defined
50 sharply as where the authority is express. As has been seen in an-
other place, authority is constantly implied from the words and con-
duct of the parties or from the circumstances of the case. Even here^
however, the authority so implied is not without limits; it cannot ex-
ceed the necessary and legitimate effect of the facts from which it is so
inferred, the facts must be given their natural and appropriate signifi-
cance, and when the authority is inferred from the recognition or
adoption of acts of a certain sort, its scope must be limited to the per-
formance of like acts under like circumstances.'
this: 'I am an a^^ent not having any
suthority ot my own.'"
The NegotiabJe Instruments Act
provides that "A signature by 'pro-
curation' operates as notice that the
agent has but a limited authority to
sign, and the principal is bound only
in case the agent in so signing acted
irithin the actual limits of his au-
thority." Section 21. ^ —
8 See Graves v. Horton, 38 Minn.
€6, where Mitchell, J., says: "It is
true that agency may be proved from
the habit and course of dealing be-
tween the parties; that is, if one has
usually or frequently employed an-
other to do certain acts for him, or
has usually ratified such acts when
done by him, such person becomes
his implied agent to do such acts;
as, for example, the case of the man-
ager of a plantation in buying sup-
plies for it, or the superintendent of
a sawmill in making contracts for
putting in logs for the use of the
mill, which are the cases cited by
respondent It Is also true, as was
said in Wilcox v. Railroad Co., 24
Minn. 269 (which involved the ques-
tion of the authority of the person
to whom goods were delivered to re-
ceive them), a single act of an as-
sumed agent, and a single recognition
of it, may be of so unequivocal and
of so positive and comprehensive a
character as to place the authority of
the agent to do similar acts for the
principal beyond question. It is also
trne that the performance ot sub-
sequent as well as prior acts, au-
thorized or ratified by the principal,
may be evidence of agency, where the
acts are of a similar kind, and re-
lated to a continuous aeries of acts
embracing the time of the act in con-
troversy, as Indicating a general
habit and course of dealing; as for
example, the acts of the president of
a railroad company in making drafts
in the name of the company, which
were honored by it, which was the
case of Olcott v. Railroad €0^ 27 N.
Y. 546, 84 Am. Dec. 298, cited by
counsel. But we think the books will
be searched in vain for a case where
it was ever held that authority to
negotiate for the sale of property to
one person at one time on certain
terms, the transfer to be made by the
principal in person, was evidence of
authority to sell and transfer the
same property at some former time
to another person on different terms."
See also McAlpln v. Cassldy, 17 Tex.
449; Gordon v. Loan & Tr. Co., 6 N.
Dak. 454; Gregory v. Loose, 19 Wash.
599; Hallady v. Underwood, 90 111.
App. 130; Rusby v. Scarlett, 5 Esp.
76; Baines v. Ewing, L. R. 1 Exch.
320; Day v. Boyd, 6 Helsk. (Tenn.)
458; Cooley v. WlUard, 34 111. 68, 86
Am. Dec. 296; Johnson v. Wingate,
29 Me. 404; Washington Bank v.
Lewis, 22 Pick. (Mass.) 24.
?i2
497
§ 709]
THE LAW OF AGENCY
[book II
And so, as has been elsewhere noticed, the authority, if implied at
all, can only be implied from facts. It is not to be created by mere
presumption, nor by any abstract considerations, however potent, that
it would be expedient or proper or convenient that the authority should
exist.^ The facts, moreover, must be those for which the principal is
responsible. The authority if it exists at all must find its source in the
act or acquiescence of the principal, either expressed or implied. If
such a source cannot be shown, the authority cannot exist.*®
II.
THE ELEMENTS OF AUTHORITY,
I
§ 709. Audiority an attribute of character bestowed by the prin*
cipal. — By the creation of the agency, the principal bestows upon
the agent a certain character. For. some purpose, during some time
and to some extent, the agent is to be the alter ego, — ^the other self, of
the principal. This purpose, time and extent are determined by the
principal to suit the needs or objects which he has in view, and which
the agent is expected to accomplish. These, however^ are matters i»
which third persons have no part ; they are considered and determined
by the principal alone. What third persons are interested in, is, not
the secret processes of the principal's mind, but the visible result of
those processes, — the character in which the agent is held out by the
principal to those who may have occasion or opportunity to deal with
him. This character is a tangible, discernible thing, and, so far as
third persons are concerned, must be held to be the authorized, as it is
the only, expression and evidence from which the principal intends
that they shall determine his purposes and objects. They must con-
clude, and have a right to conclude, that the principal intends die agent
to have and exercise those powers, and those only, which naturally
and properly belong to the character in which he holds him out."
Authority cannot usually be In-
ferred from the authorization or
adoption of a single act ■ (Green v.
Hinkley, 52 Iowa, 633, and other
cases cited ante, { 262) ; but It may
be If the adoption Is sufficiently com-
prehensive and positive (Wilcox v.
Chicago, etc., R. Co., 24 Minn. 269,
and other cases died ante, I 202).
No Inference of authority to sign
a contract can properly be drawn
from the fact that the alleged agent
had on two occasloQS drawn up and
signed contracts dictated by the prin-
cipal. Fadner v. Hlbler, 26 111. App.
639.
0 Blckford v. Menler, 107 N. Y. 490.
10 Law V. Stokes, 32 N. J. L. 249,
90 Am. Dec. 665.
"Cited and approved: Harrison ▼►
Kansas City Ry. Co., 60 Mo. App. 332.
498
<:hap, i] nature and extent of the authority [§ 710
The authority of an agent in any given case, therefore, is an attribute
-of the character bestowed upon him in that case by the principal.
Thus if the principal has by his express act, or as the logical and legal
result of his words or conduct, impressed upon the agent the character
of one authorized to act or spfeak for him in a given capacity, authority
so to speak and act, follows as a necessary attribute of the character,
and the principal having conferred the character will not be heard to
assert, as against third persons who have relied thereon in good faith,
that he did not intend to impose so much authority, or that he had
given the agent express instructions not to exercise it.^* The latter
•question is one to be settled between the agent and himself. It rested
with the principal to determine in the first instance what character he
would impart, but having made the determination and imparted the
<:haracter, he must be held to have intended also the usual and legal
attributes of that character.
§ 710. Limitations — '* Apparent authority'^ not to be limited by se-
cret instructions. — It is not to be inferred, however, that third per-
sons have the right to attribtxte to the agent any authority they please,
and by so doing bind the principal. It is lawful for the principal to
confer as much or as little authority as he sees fit. He may impose all
>6uch lawful restrictions and limitations upon it as he thinks desirable,
and these restrictions and limitations will be as binding and conclusive
upon third persons who know of them, or who are charged with notice
of them under the rules hereafter discussed, as they are upon the agent,
provided the principal has done nothing to waive or nullify them.**
But on the other hand, as will be seen, instructions or limitations which
are not disclosed cannot be permitted to affect an authority appar-
ently unlimited and attended by no circumstances which, according to
the ordinary habits and experiences of mankind, would suggest the
possibility of such limitations.
The criterion in this case, as in others, is the character bestowed by
the principal. He may not hold the agent out in the character of one
having a general or special authority, and bind third persons who have
relied thereon in good faith, by secret limitations and restrictions upon
the agent's authority which are inconsistent with the character be-
stowed. Although the agent violates his instructions or exceeds the
limits set to his authority, he will yet bind his principal to such third
"Cited and approved: Hn)bard T. I'See Van Santvoord t. Smith, 79
"Peek, 75 Wis. 619; Austrian T. Minn. 816; American Lead Pencil Co.
Springer, 94 Mich. 349, 84 Am. St. t. Wolfe, 30 Fla. 860, citing and ap-
R. 860. proving text
499
§ 7iiJ
THE LAW OF AGENCY
[book IX
persons, if his acts are within the scope of the authority which the prin-
cipal has caused or permitted him to appear to possess.** But if the
agent be not held out as one possessing other than the limited and re-
stricted authority, then the instructions and the authority may coincide.
§ 711. Rather anomalously, as it would seem, it is held that
these rules apply as strongly where the principal was undisclosed at
the time of the transaction as where he was disclosed," — a matter
14 Munn V. Commission Co., 15
Johns. (N. Y.) 44, 8 Am. Dec. 219;
Rossiter v. Rossi ter, 8 Wend. (N. Y.)
494, 24 Am. Dec. 62; Walker v. Slilp-
with, Meigs (Tenn.), 502, 33 Am.
Dec. 161; Commercial Bank v. Kort-
right, 22 Wend. (N. Y.) 348, 34 Am.
Dec. 317; Topham v. Roche, 2 Hill
(S. 0, 307, 27 Am. Dec. 387; Lob-
dell V. Baker, 1 Mete. (Mass.) 193,
35 Am. Dec. 358; Towle v. Leavitt,
23 N. H. 860, 56 Am. Dec. 195; Bryant
V. Moore, 26 Me. 84, 45 Am. Dec. 96;
Bentley v. Doggett, 51 Wis. 224, 37
Am. Rep. 827; Merchants' Bank v.
Central Bank, 1 Oa. 418, 44 Am. Dec.
065; Williams v. Getty, 81 Penn. St
461, 72 Am. Dec. 757; Lister v. Allen,
31 Md. 543, 100 Am. Dec. 78; Car-
michael v. Buck, 10 Rich. (S. C.) L.
332, 70 Am. Dec. 226; Butler y.
Maples, 9 Wall. (U. S.) 766, 19 L.
Ed. 822; Union Mut Ins. Co. v. Wil-
kinson, 13 Wall. (U. S.) 222, 20 L.
Ed. 617; Paine v. Tillinghast, 52
Conn. 532; Abbott v. Rose, 62 Me. 194,
16 Am. Rep. 427; Home Life Ins. Co.
V. Pierce, 75 " 111. 426 ; Murphy v.
Southern Life Ins. Co., 3 Baxter
(Tenn.), 440, 27 Am. Rep. 761; Cru-
zan V. Smith, 41 Ind. 288; Bell v. Of-
futt, 10 Bush (Ky.), 632; Cosgrove v.
Ogden, 49 N. Y. 256, 10 Am. Rep. 361;
Morton v. Scull, 23 Ark. 289; Furnas
V. Frankman, 6 Neb. 429; Willard v.
Buckingham, 36 Conn. 395; Golding
V. Merchant, 43 Ala. 705; Adams Ex*
press Co. v. Schlessinger, 75 Penn.
St. 246; Palmer v. Cheney, 35 Iowa,
281; Williams t. Mitchell, 17 Mass.
98; Odiorne v. Maxcy, 13 Mass. 178;
Hough V. Doyle, 4 Rawle (Penn.),
291; Shelhamer y. Thomas, 7 Serg.
& R. (Penn.) 106; Wilcox v. Routh,
9 Smedes ft M. (Miss.) 476; Howry
▼. Epplnger, 34 Mich. 29; Davenport
V. Peoria, etc., Ins. Ca, 17 Iowa, 276;
Kane v. Barstow, 42 Kan. 465, 16
Am. St. R. 490; Banks v. Everest, 35
Kan. 687; WInchell v. Nat. Expr. Co.,
64 Vt. 16; HIrschom v. Bradley, IIT
Iowa, 180; Pacific Biscuit CH). v. Dug-
ger, 40 Oreg. 302; Kansas City, etc.,
R. Co. V. Higdon, 94 Ala. 286, 33 Am.
St R. 119, 14 L. R. A. 615; LaFayette
Ry. Co. v. Tucker, 124 Ala. 514; Ro-
senberger v. Marshy 108 Iowa, 47;
Merchants* Nat. Bank v. Clifton Mf!g.
Co., 56 S. Car. 320; Allis v. Voigt, 90
Mich. 125; HamiU v. Ashley, 11 Colo.
180; Wilson v. ABSur. Co., 51 S. Car.
540, 64 Am. St R. 700; Ruggles v.
Ins. Co., 114 N. Y. 415, 11 Am. St R.
674; Wachter v. Assur. Co., 132 Pa.
428, 19 Am. St R. 600; Brown v. Ins.
Co., 165 Mass. 565, 62 Am. St R. 534;
Sanford v. Ins. Co., 174 Mass. 416, 7&
Am. St. Rep. 358; Austrian v.
Springer, sr4 Mich. 343, 34 Am. St
R. 350; Hall v. Hopper, 64 Neb. 633;
Smith V. Droubay, 20 Utah, 443;
Shaw V. Williams, 100 N. Car. 272;
Dispatch Printing Co. v. National
Bank, 109 Minn. 440.
"See post, I — ; Hubbard v.
Tenbrook, 124 Pa. 291, 10 Am. St 585,
2 U R. A. 823; Watteau v. Fen wick,
L. R., [1893] 1 Q. B. 346; McCracken
V. Hamburger, 139 Pa. 326; Lamb v.
Thompson, 81 Neb. 448; Patrick v.
Grand Falls Merc. Co., 13 N. Dak. 12;
Ernst V. Harrison, 86 N. Y. Supp.
247; Napa Valley Wine Co. v. Casa-
nova, 140 Wis. 289; Mississippi Val>
ley Const Co. v. Abeles, 87 Ark. 374;
Allison V. Sutlive, 99 Qa. 161.
500
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 712-714
which is more fully considered in a later chapter where the obligations
of an undisclosed principal are discussed.
712. Distinction between authority and power.-— Although the
two terms are constantly used synonymously, there are occasions in
which it may be helpful to draw a distinction between authority and
potvcr. There are undoubtedly many cases in which the agent may
have it in his power to bind his principal when it is not within his
authority as between the principal and the agent. Thus as has just
been pointed out, the agent may often bind his principal to third per-
sons by doing the very acts which the principal has expressly forbidden
the agent to do. So, although the agent's authority has terminated or
been revoked, as the agent knows, the agent may have it in his power
to continue to bind his principal to third persons until notice of the
revocation has been given to them, in accordance with rules consid-
ered in a preceding chapter. Many other illustrations will also sug-
gest themselves.
§ 713. What constitutes authority. — ^The point has now been
reached at which it becomes necessary to ascertain what constitutes the
authority of an agent. Enough has already been said to show that this
is a question which cannot be given a categorical answer. Authority
is almost if not quite always a conglomerate, made up of a variety of
elements which must be pointed out. It is also usually like a figure
with two unequal dimensions, — it has a narrower and a wider aspect,
the former of which is usually presented when looked at from the
standpoint of the agent's relations to his principal, and the latter — the
wider one, — when the question concerns the relations of third persons
to the principal.
§ 7x4. Elements of authority--rI. Authority intentionally and di-
rectly conferred. — In determining the question of the existence and
extent of the agent's authority, the starting point must, of course, al-
ways be to ascertain the authority, if any, which was expressly, con-
sciously and intentionally conferred by the principal upon the agent.
Any act so authorized binds the principal upon the clearest doctrines
of agency, and for this reason questions in this field very rarely arise.
Where the declared authority was a single and specific one, the as-
certainment of this starting point is usually not difficult. What was
the thing which the principal in terms authorized the agent to do ?
Where the declared authority was not thus to do a single and specific
act, but a series of acts or a group of acts or a class of acts, the ques-
tion is still the same, though it is often less definite and more difficult
to state in terms.
501
§ 7^51 THE LAW OF AGENCV [BOOK II
Where, however, there never was any express or declared authoriza-
tion, but the question whether the agent was authorized to act at all,
and if so in what field, must be determined from more or less con-
fused or conflicting acts or circumstances, the task of finding this
central body becomes often one of great difficulty. Nevertheless it
must be found, and segregated as in the preceding cases.
When this central authority has thus been ascertained, the determi-
nation of the authority has usually just begun, for, around this nucleus
of central or piain authority, there usually gathers an area of addi-
tional authorities just as important to be determined as the nucleus
itself.
§ 715. II. Incidental powers — Ordinary and necessary
acts. — It is a fundamental principle in the law of agency that every
delegation of authority whether "general" or "special," carries with it,
unless the contrary be expressed, implied authority to do all of those
acts, naturally and ordinarily done in such cases, which are reasonably
necessary and proper to be done in this case in order to carry into
effect the main authority conferred. This doctrine rests upon the
presumed intention of the principal that the main authority shall not
fail because of the lack of express authority to do the incidental acts
reasonably necessary to make that authority effective,** and also upon
the presumption that the principal expects the business to be done in
the usual and ordinary way.
The determination of this incidental authority is not a matter which
lends itself readily to any hard and fast rule. It is almost wholly a
question of fact. The authority here involved is not that which arises
from proof of a specific usage, or the existence of any special neces-
sity or emergency, — ^both of which will soon be considered. The acts
which are to be deemed authorized under this rule are those which are
naturally and ordinarily necessary, — which therefore are the usual in-
cidents of the act in question, — ^the acts which the principal presump-
tively would have included without question if his attention had been
called to them, — the acts which the ordinary competent person already
familiar with the situation and with the ordinary methods of business,
or a similar person having the situation made clear to him, — ^like a
juror, — ^and considering the matter in the light of every day experi-
i«*'An agent to conduct a given duties as agent" Baldwin v. Garrett,
business for his principal necessarily 111 Ga. 876; National Bank v. Old
has authority to do evenrthing which Town Bank, 50 C. G. A. 44S; Bayley
Is essential to the performance of his v. Wilklns, 7 Com. B« 886*
/
$02
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 716
ence, would say without serious hesitation formed a natural and ordi-
nary part of the main act authorized.*^
This is the most common and most familiar principle involved in the
construction of authority. The authority of an agent, for the sale
and conveyance of land, to make the conveyance ; of an agent, for the
sale and delivery of chattels, to receive so much of the price as is to be
paid at the time of delivery ; of a broker, to make the necessary mem-
orandum ; of an auctioneer, to accept a bid ; of the general manager of
a hotel, to contract for necessary supplies, — these are but few of the
almost countless illustrations of this rule, many more of which will be
found in the following chapter.
This rule ordinarily operates equally as between principal and agent
and between the principal and third persons. As to either the princi-
pal may narrow the range by express notice, but prohibitions given to
the agent alone, against the exercise of such incidental powers, could
not affect third persons reasonably dealing with the agent in ignorance
of them.
§ 716. III. Authority conferred by custom or usage. — A
particular usage or custom also may operate to affect the range of an
agent's powers. Where the principal confers upon his agent an au-
thority of a kind, or empowers him to transact business of a nature, in
reference to which there is a well defined and publicly known usage, it
is the presumption of the law, in the absence of anything to indicate
a contrary intent, that the authority was conferred in contemplation o^
the usage. This presumption affects agent and third persons alike,
but third persons who deal with the agent in good faith and in the ex-
IV See the elaborate discussion In
St Louis Gunning Adv. Co. v. Wan-
namaker, 115 Mo. App. 270.
"Reasonably necessary** — ^"To be
necessaiTf in this sense/' it Is said
In Murpby v. K. of C. Bldg. Co., 155
Mo. App. 649, 668, '*the act need not
be BO indispensable that without it
the agent can not move toward
achieving the main object of the
agency, or having commenced to
move, must stop; but it must have
been requisite for such achlevementi
according to the desire and intention
of the principal — ^necessary In the
sense that the main scope and object
of the a^^ncy must fail unless it is
done. Whether It was necessary in
that fense is a Question to be sub-
mitted to the Jury under proper In-
structions, where the conclusion to
be drawn from the fticts and circum-
stances is not obvious."
But In United States Bedding Co.
V. Andre, Ark. , 150 S. W. 413,
41 L. R. A. (N. S.) 1019, it is said:
"It is not sufficient that the act of
the agent is advantageous to or con-
venient for his alleged principal, or
even effectual in transacting the
business in which he is engaged. The
act of the agent must be practically
indispensable and essential, in order
•to execute the duty actually dele-
gated to him." There is also elab-
orate discussion of the question in
Rexroth v. Holloway, 45 Ind. App. 3C.
which, however, was a tort case.
S03
§ 7i6J
THE LAW OF AGENCY
[book II
ercise of reasonable prudence, will be protected against limitations
upon the usual authority, of which they had no notice.^*
In order to give the usage this effect it must be reasonable;^* it
must not violate positive law ; -^ it must be shown by clear and satis-
factory evidence ; ^^ and it must have existed for such a time, and be-
come so widely and generally known, as to warrant the presumption
that the principal had it in his view at the time of the appointment of
the agent.*^ But if the usage was a purely local and particular one.
the principal may ordinarily repel this presumption of knowledge by
showing that in fact he had no notice of it.^* Where, however, the
18 Watts V. Howard, 70 Minn. 122;
V^esturn v. Page, 94 Wis. 251; Mil-
waukee Invest. Co. v. Johnston, 36
Neb. 554; Durkee v. Carr, 38 Greg.
189; Rohrbough v. U. S. Expr. Co., 50
W. Va. 148, 88 Am. St R. 849; Reese
y. Bates, 94 Va. 321; Kansas City,
etc., R. Co. y. Higdon, 94 Ala. 28G, 33
Am. St 119, 14 L. R. A. 515; Mabray
V. Kelly-Goodfellow Shoe Co., 73 Mo.
App. 1; Cawthorn v. Lusk, 97 Ala.
674; Bailey v. Bensley, 87 111. 556;
Phillips V. Moir, 69 111. 155; Adams
V. Pittsburgh Ins. Co., 95 Penn. St
348, 40 Am. Rep. 663; Williams v.
Getty, 31 Penn. St 461, 72 Am. Dec.
757; Chouteauz v. Leech, 18 Penn.
St 224, 57 Am. Dec. 602; McMasters
V. Pennsylvania R. R. Co., 69 Penn.
St 374, 8 Am. Rep. 264; York County
Bank v. Stine, 24 Md. 447; Wright v.
Solomon, 19 Cal. 64, 79 Am. Dec. 196;
Minor v. Mechanics' Bank, 1 Pet (IT.
S.) 46, 7 L. Ed. 47; Mount Olivet
Cemetery v. Shubert, 2 Head (Tenn),
116; Schuchardt v. Aliens, 1 WalL
(U. S.) 359, 17 L. Ed. 642; Qreely v.
Bartlett, 1 Greenl. (Me.) 172, 10 Am.
Dec. 54; Day v. Holmes, 103 Mass.
306; Daylight Burner Co. v. Odlin,
51. N. H. 56, 12 Am. Rep. 45; Smith
V. Tracy, 36 N. Y. 79; Qoodenow v.
Tyler, 7 Mass. 36, 5 Am. Dec. 22;
Frank v. Jenkins, 22 Ohio St. 597;
Willard v. Buckingham, 36 Conn.
396; Randall v. Kehlor, 60 Me. 37,.
11 Am. Rep. 169; Upton v. Suffolk
County Mills, 11 Cush. (Mas&) 586,
59 Am. Dec. 163; Pickert v. Marston,
68 Wis. 465, 60 Am. Rep. 876; Larson
y. Aultman, 86 Wis. 281, 39 Am. St
R. 893; American Cent Ins. Co. v.
McLanathan, 11 Kan. 588; Brady v.
Todd, 9 C. B. (N. S.) 592; Pollock v.
Stables, 12 Q. B. 765; Sutton v. Tat-
ham, 10 Ad. & El. 27.
The other party, of course, cannot
rely on the usage in the face of a
known limitation. Smith v. Provi-
dent L. Ass'n Co., 65 Fed. 765, 13
C. C. A. 284.
The authority of a public agent
cannot be enlarged by custom. State
V. Chilton. 49 W. Va. 453; Walters v.
Sent 115 Mo. 6.24.
i» Merchants' Ins. C«b v. Prince, 50
Minn. 53, 36 Am. St 626; Knowles v.
Dow, 22 N. H. 387, 55 Am. Dec. 163;
Minnesota Cent R. R. Co. y. Morgan,
62 Barb. (N. Y.) 217; Wadley t.
Davis, 63 Barb. (N. Y.) 500.
20 Commonwealth v. Cooper, 130
Mass. 285; Raisin v. Clark, 41 Md.
158, 20 Am. Rep. 66; Farnsworth v.
Hemmer, 1 Allen (Mass.), 494, 79
Am. Dec. 756.
21 Greenwich Ins. Co. v. Waterman,
54 Fed. 839, 4 C. C. A. 600; Rhodes y.
Belchee, 36 Greg. 141.
22 Adams v. Pittsburgh Ins. Co., 95
Pa. 348, 40 Am. Rep. 662; Citizens'
Bank v. Grafflin, 31 Md. 507, 1 Am.
Rep. 66; Smith y. Wright, 1 Caines
(N. Y.), 43, 2 Am. Dec. 162; Porter
V. Hills, 114 Mass. 106; Fowler v.
Pickering, 119 Mass. 33; Milwaukee
Invest Co. v. Johnston, 36 Neb. 554.
28 Walls v. Bailey, 49 N. X- 464, 10
Am. Rep. 407; Bradley v. -Wheeler,
44 N. Y. 495; Higgins r. Moove* H
S<H
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 7^(>
agent, for example a broker or factor, is authorized to deal in a par-
ticular place or market, as upon a certain stock exchange, at which
particular rules or usages prevail, it is presumed, in the absence of
evidence to the contrary, that the principal expected and intended that
the agent should conform to such rules and usages, although in fact
the principal may have been ignorant of what they were. This is upon
the ground that the principal as a reasonable man must have anticipated
that such rules and usages were likely to prevail and therefore must
have authorized the dealing in contemplation of them, where no con-
trary intention was disclosed."
The same doctrine, with some conflict as to its application to the
usage of a single bank rather than to the usages of the place, has been
extended to the case of banks authorized to collect."
Usage may also operate to limit authority, as well as to enlarge it,
under the same conditions as in the latter case.*^ ^^
Usage, however, cannot operate to change the intrinsic character of
the relation,*^ nor will it be permitted as between the principal and the
agent, or as between the principal and third persons having notice of
them, to contravene express instructions,** or to contradict an express
N. Y. 417; Barnard v. Kellogg, 10
Wall. (U. S.) 383, 19 L. Ba. 987;
Fisher v. Sargent, 10 CuBh. (Mass.)
250; Caldwell v. Dawson, 4 Mete.
(Ky.) 121; Pennell v. Delta Tranap.
Co.. 94 Mich. 247.
In Oould v. Cates Chair Co., 147
Ala. 629, it la said that it cannot be
presumed that a manufacturer doing
business in North Carolina had
knowledge of customs prevailing at
one place in Alabama.
"Taylor v. .Bailey, 169 111. 181;
Cothran v. BfUis, 107 111. 413; Sam-
uels V. Oliver, 130 111. 73; Union
Stock Yards Co. v. Mallory, 157 111.
554, 48 Am. St R. 841; Bailey v.
Bensley, 87 111. 556; Lyon v. Culbert-
son, 83 111. 33, 25 Am. Rep. 349; TJ.
S. L. Insurance Co. v. Advance Co.,
80 111. 549; Byrne v. Schwing, 6 B.
Mon. (Ky.) 199; Skiff v. Stoddard,
63 Conn. 198, 21 L. R. A. 102; Penn-
sylvania R. Co. V. Naive, 112 Tenn.
239, 64 L. R. A. 443; Bayley v. W^il-
kins, 7 Com. B. 886.
23 See 1 Morse on Banks, \ 221;
Mills V. U. S. Bank, 11 Wheat (U. S.)
431, 6 L. Ed. 512; Washington Bank
V. Trlplett, 1 Pet (U. S.) 26, 7 L. Ed.
81; Fanners* Bank v. Newland, 97
Ky. 4G4; Carolina Nat Bank v. Wal-
lace, 13 S. Car. 347, 36 Am. Rep. 694.
Compare Jefferson County Bank v.
Commercial Bank, 98 Tenn. 337;
Sahllen v. Lonoke Bank, 90 Tenn.
221; Grissom v. Commercial Nat
Bank, 87 Tenn. 850, 10 Am. St 669, 3
L. R. A. 278; Mahal we Bank v. Doug-
lass, 31 Conn. 170; Bank of Com-
merce ▼. Miller. 105 111. App. 224.
20 Where the principal relies upon
custom to Impose restrictions he
must show that It was so universal
that the other party can well be pre*
sumed to have known of It Bentley
V. Doggett, 51 Wis. 224, 37 Am. Rep.
827.
27 Robinson v. Mollett U R. 7 H.
of L. 802; Gates Iron Works v. Den-
ver Engine Works, 17 Colo. App. 15.
ssBarksdale v. Brown, 1 Nott k
M. (S. C.) 517, 9 Am. Dec. 720; Hall
V. Storrs, 7 Wis. 253 ; Bliss v. Arnold,
8 Vt 252, 30 Am. Dec. 467; Hutch-
ings V. Ladd, 16 Mich. 493; Leland
505
§ 7^7] THE LAW OF AGENCY [bOOK II
contract ^* to the contrary. So a usage not known to the principal,
cannot operate to authorize the making of an invalid instead of a valid
contract^ or to bind him to take one thing when he has ordered an-
other.***
These doctrines apply to "special" as well as to "general" agents.
§ 717. IV. The customs of the particular business, or an
established course of dealing in it. — The customs of a particular
trade, or the habits of dealing of the particular parties, may also, in
accordance with well settled rules, be material where the parties are
found to have dealt with reference to them.
But more than this is true. The methods of dealing of the par-
ticular principal may be material, frequently by way of estoppel as
shown in a later section, but often also to show actual authority. For
it is entirely clear that the continued conduct of the principal may be
used to show how a grant of power was intended to be interpreted,
and, further, the voluntary acquiescence of the principal in the known
course of conduct of the agent may serve to show that such conduct
was in fact authorized.'* This does not depend upon estoppel but is
an inference of fact to be drawn from conduct. It is, therefore, not
essential — as it is in cases resting upon estoppel — that the other party
shall have known of the facts at the time and relied upon them, but
he may, as in other cases of actual authority, prove the authority
though he was ignorant of it at the time of the act."* A very good
statement of this rule by Justice Pitney may be found in a late case "
in New Jersey: "Normally, an agency arises from some contract or
other transaction or transactions that are between the principal and
the agent, and not ordinarily known to outside parties, and a third
party is entitled to hold the principal on a contract made by the agent
in the name of the principal, even though the' party does not at the
time of making the contract know the particular source of the agent's
authority. In cases of the class now before us the third party, when
v. Douglass, 1 Wend. (N. Y.) 490; «oPerry v. Barnett, 15 Q. B. Dlv.
Olark V. Van Northwick, 1 Pick. 388.
(MaBS.) 348; Catlln v. Smith, 24 Vt 31 Murphy y. Cane (N. J. U), 82
85; Day v. Holmes, 103 Mass. 30G; Atl. 854; Blake v. Domestic Mf^ Co.,
Parsons v. Martin, 11 Gray (Mass.), 64 N. J. Eq. 480; Fifth Ward Sayings
111. Bank v. First National Bank, 48 N.
29 Brown v. Foster, 113 Mass. 136, J. L. 513; Fifth Nat. Bank v. Navassa
18 Am. Rep. 463; Randall v. Smith, Phosphate Co., 119 N. Y. 256; Martin
63' Me. 105, 18 Am. Rep. 200; Rogers v. Webb, 110 U. S. 7, 28 L. Ed. 49.
y. Woodruff, 23 Ohio St. 632, 13 Am. s^ See Murphy y. Cane, tupra;
Rep. 276; Grlnnell y. Western Union Blake y. Domestic Mfg. Co., supra,
Tel. Co.» 113 Mass. 299, 18 Am. Rep. » Murphy y. Cane, 8upr€L
485.
506
CHAP. l] NATURE AND EXTENT OP THE AUTHORITY
[§ 718
litigation necessitates proof of the agency, may adduce evidence of the
customary exercise by the alleged agent of the authority appropriate
to such an agent under circumstances that give rise to the inference of
knowledge and acquiescence on the part of the principal — not neces-
sarily to show that the principal is estopped in favor of the third party
to deny the agency, but rather to show that such agency was in fact
created."
This rule has undoubtedly been usually applied to cases in which the
principal was a corporation, but it does not depend upon that fact.
§ 718. V. Authority by necessity — Emergency.— Within
a limited area, more sharply defined in England than in the United
States, the authority of an agent may be enlarged by some particular
necessity or by some sudden emergency, arising under circumstances
in which it is still the duty of the agent to act, and in which the advice
or directions of his principal cannot be obtained. It is, of course, ordi-
narily for the principal to determine what shall be done in such cases
of necessity or emergency as were not provided for by the original
authorization. He may prefer that nothing shall be done, or, if some-
thing must be done, that the situation shall be met by means of his
own devising. He certainly will be vitally interested in being informed
of the situation and given an opportunity to deal with it himself. If,
however, there be a real necessity or emergency, and the principal
cannot be communicated with because of the limitations of time or
place or means, and sometliing must be done to protect the interests
of the principal, authority to do a fair and reasonable act, apparently
adapted to the needs, and not going beyond the demands of the occa-
sion, may properly be implied.^*
8* See ante, | 339 et seq.; Georgia
Pac. R. Co. V. Propst, 85 Ala. 203;
Tennessee Riv. Transp. Co. v. Kava-
nangh, 101 Ala. 1; Sloan v. Central
Iowa Ry. Co., 62 Iowa, '?28; Fox v.
Chicago, etc., Ry. Co., 86 Iowa, 368,
17 L. R. A. 289; Terra Haute, etc., R.
Co. V. McMurray, 98 Ind. 358, 49 Am.
Rep. 752 (for other cases of this sort,
see post, § 994) ; Short v. Del. ft Hud.
Co., 41 Pa. Super. 141; Evans v.
Crawford County Mut. F. Ins. Co., 130
Wi8. 198, 118 Am. St. R. 1009, 9 L. R.
A. (N. S.) 485. ^
"The emergency of an accident or
an unusual condition which requires
prompt action, may invest the rep-
resentative of the company higliest
in authority who is then present with
power to do such things as are rea-
sonable to meet the emergency."^
Short V. Del. &. Hud. Co., supra (cit-
ing Bank v. Reed, 1 W. & S. 101;
Quinn V. Ry. Co., 7 Pa. Super. 19;
Heinrlch v. Ry. Co., 36 Pa. Super.
612; Terre Haute, etc., R. Co. v. Mc-
Murray, supra; Northern Ry. (3o. v.
State, 29 Md. 420).
In Jackson v. Bank, 92 Tenn. 154,
36 Am. St. R. 81, it is said: "No au-
thority will be implied from an ex-
press authority. Whatever powers
are strictly necessary to the effectual
exercise of the express powers will
507
§ 7i8J
THE LAW OF AOENCY
[book II
All of these conditions are essential. There must be a real neces-
sity or emergency, judged by the reasonable interpretation of the facts
as they appear to those who have to deal with tliem. Inability to com-
municate with the principal is an indispensable condition.'^ The need
of action for the principal's protection must be apparently unquestion-
able. The means adopted to meet the situation must not be extreme
or fanciful or unreasonable. The act must go no further than to rea-
sonably meet the exigency,'' and the implied authority must cease with
the passing of the emergency.
The necessity here considered is obviously not the ordinary neces-
sity of doing the business in the usual way, which has previously been
considered, but some special and unusual necessity or emergency.
Neither, it would scarcely seem necessary to say, is it the necessity
of dealing with a particular person in a particular way simply because
he happens to be unwilling to deal upon any other basis. It must be
a general necessity, — ^a necessity inhering in the sittiation or in the
very nature of the case.
The authority here involved, as will also be obvious, is one implied
in fact from the general act of the principal, and does not rest for its
validity upon any doctrine of "appearances*' or upon the doctrine of
be conceded to the agent by implica-
tion. In order, therefore, that the
authority to make or draw, accept
and indorse commercial paper as the
agent of another may be implied
from some other express authority,
it must be shown to be strictly nec-
essary to the complete execution of
the express power. The rule is strict-
ly enforced that the authority to
execute and indorse bills and notes
as agent will not be implied from an
express authority to transact some
other business, unless it is absolutely
necessary to the exercise of express
authority."
Where the transaction of business
aoBolutely requires the power to bor-
row money in order to carry it on,
then the power is conferred as an
incident to the employment. But it
must be absolutely necessary not
merely more effectual, convenient or
advantageous. Consolidated Nat Bank
V. Pac. Coast Steamship Co., 95 Cal.
1, 29 Am. St. R. 86.
"There is no rule of law that an
agent may, in a case of emergency
suddenly arising, raise money and
pledge the credit of his principals for
its repayment." Per Alderson, B., in
Hawtayne v. Bourne, 7 M. 4b W. 695.
SB "The impossibility of communi-
cating with the principal is the
foundation of the doctrine of an
agent of necessity." Per Smith, L. J.,
in Gwiniam v. Twist, [1895] 2 Q. B.
84. So in Hawtayne v. Bourne, 7 M.
ft W. 695, Alderson, B., said of an
agent's alleged power to borrow
money because of emergency sudden-
ly arising, that it could not arise in
that case because ''there was ample
time and opportunity for him to have
applied to his principals."
86 "This power must be prudently
exercised, and must not be carried
beyond the real or apparent neces-
sity." Tennessee Riv. Transp. Co. v.
Kavanaugh, supra.
508
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 719, 72O
estoppel. It may be just as applicable to a "special" as to a "general"
agent.
§ 719. It is to be observed also that emergency may con-
ceivably operate to diminish rather than to enlarge authority; for it
may be entirely clear, in view of the special circumstances in ques-
tion, that it could never fairly have been within the contemplation of
tlie principal that so wide an authority, as tliat originally conferred,
should continue to be exercised in the face of the emergency which has
radically changed the contemplated conditions. This is a matter of
which both agent and third persons may fairly be required to take
notice.
§ 720. ■ VI. Apparent authority. — It is also frequently said
that the principal will be bound to third persons by acts within the
^'apparent authority" of the agent, even though they would not be
within his real authority. The expression "apparent authority," how-
ever, though ope of constant use in tliis connection, seems unfortun-
ately to have no fixed meaning. It seems naturally to suggest a dis-
tinction between what is real and what is only apparent; though such
a distinction is not essential, since what is apparent may be real and
what is real may be apparent. Another use is, to designate that class
of incidental autlwrities which are implied from the express or de-
clared authority, and which the third person dealing with the agent
may properly assume to go with the declared authority unless the con-
trary is made known. Another use is that of the California code
(followed in several of the neighboring states) that "an agency is
ostensible [apparent] when the principal intentionally or by want of
ordinary care, causes a third person to believe another to be his agent
who is not really employed by hin;^" Other authorities, still, divide
the cases covered by this statutory definition into two classes, thus:
''*Apparent authority is that which, though not actually granted, the
principal knowingly permits the agent to exercise, or holds him out
as possessing ;*.' while "Agency, or authority, by estoppel arises in those
cases where the principal by his culpable negligence permits his agent
to exercise powers not granted to him, even though the principal have
no notice or knowledge of the conduct of the agent." "Apparent au-
thority is not founded in negligence of the principal, but in the con^
scious permission of acts beyond the powers granted, whereas the rule
of estoppel has its basis in the negligence of the principal in failing
properly to supervise and control the affairs of the agent/' ^ J
«T Dispatch Printing Co. y. Na- In Columbia Mill Co. v. National
tional Bank, 109 Minn. 440, s. o. 116 Bank, 52 Minn. 224, however, cited
Minn. 157. by the court, it Is said: "The rule
§§ 721, 722] THE LAW OF AGENCY [bOOK II
§ 721. The distinction last mentioned, however, is not en-
tirely satisfactory. Either sort of act, — if amounting to a course of
conduct as opposed to an isolated instance, at least, — is undoubtedly
enough to actually create a new authority or enlarge an existing one ;
and there can probably be no doubt, as a matter of contract, that a
contract may be formed either by consciously or by negligently as-
senting to terms, and this is true whether it be done in person or
through an agency or an agent.
Unless the conduct therefore is such as to raise an inference of
agency in fact, or unless the act can be treated as the direct act of the
principal, it is difficult to see how the act can be sustained as the act
of an agent, where the person who did it was not an agent of the al-
leged principal. If, for example, A is really the broker of Y and
knows nothing of X, but X sends B to A to make a contract upon the-
assurance that A is the agent of X, and a contract is made which A
intends and supposes to be for Y, but which B intends and supposes to
be for X, can B hold X upon the contract? Must not B's remedy
against X be based upon some theory of estoppel, or else upon some
other theory of misrepresentation?
If, in the cases contemplated by the rule quoted, it be assumed that
the agent is implicated in the "appearance;" — that is, if with the lat-
ter's consent he is being treated by the alleged principal as his agent,
is there not the foundation for the inference of real agency and not
merely an "apparent" one?
The only legitimate use of this expression, then, if it has any, would
be either, (i) that referred to in the preceding section, namely, to
designate that class of incidental and usual powers, already consid-
ered, which, it is presumed, attach to the express authority, unless the
principal has made known a contrary intention. (These, however, as-
has been pointed out, are not simply apparent: they are objectively
real until the contrary has been made known.) Or, (2) and more
properly, to designate the class of cases referred to in the following
section.
If the conclusions here presented are sound, there is no room for the
proposed classification, *. e., as a separate and distinct class, and the
cases which can not be disposed of on the other grounds suggested
must be referred to the following section.
§ 722. VII. Liability by estoppel. — So far as powers de-
pend upon what is usual or necessary in special cases, and so far as
as to apparent authority rests essen- In North Dakota, Bee Corey v:
tially on the doctrine of estoppel." Hunter, 10 N. Dak.
CHAP. I J NATUR£ AND EXTENT OF THE AUTHORITY [§ 722
they are regarded as incidental to tlie main authority conferred be-
cause that is the regular and ordinary way of doing the business, they
<lo not rest upon any doctrine of estoppel, but are inferences of fact
tracing their origin to the same source as the main power itself. So
far as third persons are concerned, who can know only that which is
open to be learned, they constitute part of the actual authority though
commonly included under the description of apparent authority. In
other words, so far as third persons are concerned, this apparent au-
thority is included in the real authority. There seems to some to be
an inconsistency here which has given rise to considerable discussion,'*
but the situation is believed to be no more anomalous than in the
numerous other cases in the law of contract and of crime wherein for
practical purposes it is essential that the law shall determine inten-
tion from the voluntary manifestations of it by the person concerned.'"
It is said in one case,*® 'To lead a person reasonably to suppose that
you assent to an oral arrangement, is to assent to it, wholly irrespective
of fraud. - Assent, in the sense of the law, is a matter of overt acts,
not of inward unanimity in motives, design, or the interpretation of
words.''
When, however, the authority is not one included within the fore-
^ing categories, but is one sought to be deduced from special cir-
cumstances of recognition, acquiescence or holding out, the principle
of estoppel or something akin to it at least, must be invoked. The act
is not within either the real or the apparent authority (using apparent
in the sense above indicated) but the party insists that he was led by
the special circumstances reasonably to believe that the authority ex-
isted in that particular case and that he has acted upon that belief in
such a way that he will be prejudiced if the authority be denied.
The chief practical difference between the two cases is found in the
fact that in the former it is not essential that the person seeking to en*
force the authority should actually have known and relied upon the
circumstances from which the inference of authority in fact is based *^
^any more than it is essential in any case of authority that the person
MSee 13 Green Bag, 50; 15 Har- ^oCDonnell y. Clinton, 146 Mass.
vard Law Review, 324; 16 Harvard 461.
liEW Review, 186; 5 Columbia Law *i See Murphy v. Cane, — N. J. L.
Review, 36; 5 Columbia Law Re- — , 82 Atl. 854; Blake v. Domestic
view, 354; 5 Columbia Law Review, Mfg. Co., 64 N. J. Eq. 480. Compare
456; 5 Columbia Law Review, 261; 6 Jackson Paper Mfg. Co. v. Commer-
Columbla Law Review, 34. cial Nat. Bank, 199 IlL 151, 59 L. R.
M See Holland's Jurisprudence ( 9th A. 657.
«d.) p. 250; Pollock on Contract (7th
ed.) pp. 2, 5.
§§ 723» 724] THE LAW OF AGENCY [bOOK IJ
who ultimatefy seeks to enforce it shall have relied upon it at the time
as, for example, in the case of an undisclosed principal), while in the
latter case it is the essence of his complaint that he was led by the
circumstances in question to rely upon the existence of the authority^
and proof of his knowledge and reliance upon them must be made/*
In this respect the case is like that of the liability of an "apparent*''
partner; where knowledge of the "appearances" and reliance upoa
them is essential to the plaintiff's case.*^
Estoppel, it may be noticed, may operate as strongly between the
principal and the agent, as between the principal and third persons,,
though the occasion for its exercise is not so frequent.
§ 723* There is, in many places, a tendency to include
under the one head of "apparent powers" those deduced from usage
or from the character in which the agent is authorized to act, and also*
those resulting from estoppel. In very many cases it is entirely im-
material practically, because there is enough in the proof to satisfy the
requirements of either rule ; and in many cases also usage and estoppel
may unite to account for the powers exercised.
In its legitimate sphere, however, there is a distinct field for the
operation of estoppel, and it is constantly relied upon to sustain powers-
in whose existence the party complaining has reasonably been led to-
believe by the words or conduct of the alleged principal.
§ 724. Inasmuch as the whole doctrine of powers by es-
toppel rests upon the theory that the other party has been led to rely^
upon appearances to his threatened detriment, it is obvious that the
doctrine can apply only in those cases in which this element of reli-
ance was present. It can therefore apply only to cases in which
credit has been extended, action has been induced, delay has been ob-
tained, or some other change of position has occurred, in reliance upon
the appearance of authority,** and not to cases of mere tort, such a^
negligence, trespass, assault. Actions based upon the contract fur-
nish, of course, the most frequent opportunity, but actions for deceit
or misrepresentation may also be included within the category.*' Re-
« See Domasek v. Kluck, 113 Wig. ** It is perhaps questionable
336; Gosliner v. Grangers' Bank. 124 whether the mere making of an ex-
Cal. 225; Rodgers v. Peckhani, 120 ecutory contract can be regarded as
Cal. 238; Maxey v. Heckethorn, 44 IH. a prejudicial act within the rule. Mr.
437; RawBon v. Curtlss, 19 111. 456; Ewart In his article seems to be of
Cash v. Taylor. 8 L. J. K. B. 262. opinion that it is enough.
*8See Thompson v. First National « See Oriswold v. Gebbie, 126 Pa.
Bank, 111 U. S. 536, 23 L. Ed. 507; 353, 12 Am. St R. 87S.
Hahlo y. Mayer, 102 Mo. 93.
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 725-728
• 1
liance upon appearances, however, does not ordinarily induce to as-
sault, slander, trespass, or negligent injury, and the cases must be
very rare, if any, in which it could be an element.**
§ 735. It is indispensable to keep in mind here that, as
against the principal, there can be reliance only upon what the prin-
cipal himself has said or done, or at least said or done through some
other and authorized agent. The acts of the agent in question can
not be relied upon as alone enough to support an estoppel. If his acts
are relied upon there must also be evidence of the principal's knowl-
edge of and acquiescence in them.*^
§ 726. — — — Moreover, in any case, the reliance must have been
a reasonable one, consistent with the exercise of reasonable prudence,
and the party who claims reliance must not have closed his eyes to
warning or inconsistent dircumstances. Authority is not "apparent"
simply because the party claiming has acted upon his conclusions.
It is not "apparent," in contemplation of law, simply because it looked
so to him. It is not a situation where one may read while he runs. It is
only where a person of ordinary prudence, conversant with business
usages and the nature of the particular business, acting in good faith,
and giving heeft not only to opposing inferences but also to all re-
strictions which are brought to his notice, would reasonably rely, that
a case is presented within the operation of the rule. If the infer-
ences against the existence of the authority are just as reasonable as
those in favor of it, there can be no reliance within this rule.**
§ 727. VIII. Liability by ratificatioiL — And, lastly, it
must be kept in mind, in making up the extent of the liability which
may exist in a given case, that subsequent ratification may supply the
lack of prior authorization. What the circumstances are under which
this principle may be invoked have been so fully treated in another
place that they do not need to be considered here.**
§ 728. What constitutes authority — ^Recapitulation. — Putting all
of these principles together, it will be seen that the authority of the
4« Stables ▼. Eley, 1 C. A P. 614, did
of course give some color to the op-
posite view, but that case has long
since been repudiated. See Pollock's
Dig. Partn. (6th ed.) 54; Llndley,
Partn. 214; Smith v. Bailey, [1891]
2 Q. B. 403. Compare Sherrod ▼.
Langdon, 21 Iowa, 518; Maxwell v.
Gibbs, 32 Iowa, 32; Shapard v. Hynes,
104 Fed. 449, 45 C C. A. 271, 62 L. R.
A. 675.
4T See Farmers' Co-operative Ship-
ping Ass'n T. Adams, 84 Neb. 752, and
many other cases cited in earlier
chapters.
«BSee Johnston v. Milwaukee In-
vestment Co., 46 Neb. 480; General
Cartage Co. v. Cox, 74 Ohio St 284,
113 Am. St. R. 959; Corey v. Hunter,
10 N. Dak. 6.
49 See ante, Book I, Chapter YII.
33
513
§. 729] THE LAW OF AGENCY. [bOOK II
agent, so far as it concerns the rights of third persons, may be a
composite matter made up of a number of elements. It may consist :
First, and primarily, of the authority directly and intentionally con-
ferred by the voluntary act of the principal.'^"
Second, of those incidental powers which naturally and ordinarily
attend such an act, and which are reasonably necessary and proper to
carry into effect the main power conferred and which are not known
to be prohibited.
Third, of those powers which particular usage or custom has added
to the main power, and which the parties are to be deemed to have
had in contemplation. at the time of the creation of the agency, and
which are not known to have been forbidden.
Fourth, of powers justified by the particular course of dealing or
the customs of the particular business. ,
Fifth, of those powers which sorhe special necessity or emergency
may justify the agent in exercising.
Sixth, of all such other powers as the principal has, by his direct
act or by negligent omission or acquiescence, caused or permitted the
person dealing with the agent reasonably to believe that the principal
had conferred, and upon which that person has reliedi
Seventh, (so far as result is concerned, though ratification is a means
of curing the lack of authority rather tlian a means of conferring it)
of all those other powers whose exercise by the agent, the principal
has subsequently, with full knowledge of the facts, ratified and con-
firmed.
This may, perhaps, be rendered somewhat clearer by the diagram on
the following page.
§ 729. For the acts done in pursuance of those powers
which were directly conferred or which were incidental to those pow-
ers and not prohibited, the principal is of course responsible, because
they are the direct result of his voluntary and intentional act. He is
likewise responsible, and for the same reasons, for those acts which he
has intentionally led third persons to believe that he had authorized.
He is responsible for the acts of the agent which he has, by negligent
omission or acquiescence, led tiie persons dealing with the agent to
believe he has authorized, because to deny them would be a fraud
upon innocent persons.'^ He is responsible for those acts which he
50 This of course follows directly S Vroom (N. J.), 249, 90 Am. Dec.
as the result of the maxim. Qui facit 655, as to warrant its full quotation:
per alium, facit per ae. "A principal is bound by the acts of
61 The general rule is so well his agent within the authority he has
stated by Depue. J., in Law v. Stokes, actually given him, which includes
Chap, i] nature and extent of the authority
[§ 729
has subsequently ratified and confirmed, upon the ground that such
a ratification is equivalent to a precedent authority.
As between the agent and the principal, the authority would consist
of the same elements as in the case of third persons, with the .excep-^
tion that the forbidden powers and secret limitations, which would not
aflFect third persons who wcr^ ignorant of them, bind the agent who
must necessarily have knowledge of them.
not only the precise act which he ex-
pressly authorizes him to do, but also
whatever usually belongs to the do-
ing of it or is necessary to its per-
formance. Beyond that he is liable
for the acts of the agent within the
appearance of authority which the
principal himself knowingly permits
the agent to assume, or which he
holds the agent out to the public as
possessing. For the acts of his agent,
within his express authority, the
principal is liable, because the act of
the agent is the act of the principal.
For the acts of the agent within the
scope of the authority he holds the
agent out as having, or knowingly
peimits him to assume, the principal
is made responsible; because to per-
mit him to dispute the authority of
the agent In such cases would be to
enable him to commit a fraud upon
innocent persons. In whichever way
the liability of the principal is estab-
lished, it must flow from the act of
the principal. And when established
it cannot, on the one hand be quali-
fied by the secret instructions of the
principal, nor on the other hand be
enlarged by the unauthorized repre-
sentations of the agent*'
515
§§ 730-732] THE LAW OF AGENCY [BOOK II
§ 730. The province of '^ixistructions'' — ^Authority cannot be lim-
ited by secret instructions. — As has already beeii pointed out, a con-
flict IS often deemed to arise between "authority" and "instructions,"
and^the rule is constantly declared to be that "an apparent authority
cannot be limited by secret instructions." Many cases have already
been cited in which such a rule, though in varying forms, has been
declar^.
§ 731- — — What constitute instructions*^ — ^When, however, it
is thus said tbab an apparent authority cannot be limited by secret
instructions, it stifl remains to determine what is meant by "secret in-
structions" within the purview of the rule. In the first place it is
necessary to free the case of any odium necessarily to be attached to
the word "secret.". To do this, the meaning and import of "instruc-
tions" must be determined. Here, as in so many other cases, it will
be found that the same word is used in a variety of senses. Thus, a
master who has a servant already employed and authorized generally
to act, may give him "instructions" as to the manner in which he shall
act either regularly or upon particular occasions. In this case the in-
structions constitute no part of the authority: they are shnply direc-
tions as to how an authority already existing shall be exercised. They
may or may not be designed to be kept secret. If, for example, a mas-
ter puts into the charge of his servant a team of horses and directs him,
because the day is hot or the load heavy, to drive slowly, or cautions
him, on meeting other teams, to keep to the right, these directions
have no secret character, they do not go to the root of the authority,
and the master would undoubtedly be liable to a third person injured
because the servant negligently disregarded his instructions and drove
too rapidly or ignored the rule of the road. If, on the other hand, a
master, who manufactures goods by a secret process, directs his serv-
ant how to act but enjoins secrecy as to methods, the secrecy of the
instructions may be material to the preservation of the master's mo-
nopoly, but that fact neither makes the instructions the authority, nor
changes the master's liability for injuries caused by their violation.
§ j32^ Suppose also that an insurance company puts an
agent into the field with apparent authority to accept applications,
issue policies, receive payment of premiums, and the like, but then or
later instructs him not to accept certain risks, not to make oral con-
tracts to insure, not to waive certain conditions, and the like; these
directions are instructions merely, they are designed merely to control
the manner of acting, and a disobedience of them, while it might make
the agent liable to the company, would not relieve the company of lia*
516
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 733
biHty to a third person who had dealt with the agent in ignorance of
them."
Suppose that an implement company sends out an agent to make
ordinary contracts of sale, and supplies him With a blank form of coh-
tract which by reason of its protective phrsLseology it directs him to
use ; the agent nevertheless makes a contradt of sale in the usual terms
and of the general sort contemplated but writes it on other blanks or
uses no blank at all. Certainly the direction to use the printed form
supplied must usually be regarded as a mere instruction, and the com-
pany will be bound to a person who was ignorant of it.**
So if a person puts another in general Charge of his store with au-
thority to carry it on in the usual way, but directs him not to buy
goods of a certain person, not to exceed a certain amount, not to carry
certain ordinary goods in stock, and the like, these directions are usu-
ally simply instructions and not limitations upon authority.**
Further illustrations of this sort are needless, as an indefinite num-
ber will immediately suggest themselves. The instructions in these
cases have no necessarily secret character. The principal's purposes
would be furthered rather than hindered by their disclosure, and he
may have relied upon the agent to make them known.
§ 733. — ^ But suppose that a principal who has a horse for
sale authorizes an agent to sell it, but because of certain tmsoundness,
"instructs" him to be careful not to say or do anything which may be
construed as a warranty, or not voluntarily to disclose the age or de-
fects of the horse; these instructions may well be intended only for
the secret ear of the agent, but they like the others do not go to the
matter of the authority to sell.
Suppose again that a principal who has a horse for sale employs an
agent to sell it, and as to the price directs him to endeavor to get $150,
but, if he cannot get that, to sell for $100 ; these directions as to price
are certainly mere instructions and are as certainly designed to be kept
secret, because the principal never intended that the agent should say
to a prospective purchaser, "the price is $150, but if you will not pay
that, you may have the horse for $100."
B*See, for example, Brown v.
Franklin Mut. Ins. Co., 165 Mass. 565»
52 Am. St R. 534; Sanford ▼. Orient
Ins. Co., 174 Mass. 416, 76 Am. St R.
358; Rnggles v. American Cent Ins.
Co., 114 N. Y. 415, 11 Am. St R. 674;
Wachter v. Phoenix Ins. Co., 132 Pa.
428, 19 Am. St R. 600; Wilson y.
Commercial Un. Aesur. CO., 61 S. Car.
540, 64 Am. St R. 700. See also Van
Santvoord v. Smith, 79 Minn. 316.
B8 See Armour y. Ross, 110 Oa. 403.
B4 Harrington v. BronBon, 161 Pa.
296; Hubbard ▼. Tenbrook, 124 Pa.
291, 10 Am. St R. 585, 2 Ln R. A. 823 ;
Wattean v. Fenwlck, h. R., [1893] 1
Q. B. 346; Rhodes Furniture Co. v.
Weeden, 108 Ala. 252.
517
§ 734] THE LAW OF AGENCY t^OOK II
On the other hand, suppose one man to say to another, whom he
has not previously employed and who is not a horse buyer or dealer,
"Buy for me A's black horse." Here clearly is pot authority to buy
a. horse with instructions to buy a certain one^ but the authority is to
buy a certain one only, and the purchase of any other would not bind
the principal. Suppose again that one man says to another, whom he
has not previously employed and who is not a horse buyer, "Buy for
me a black horse, five years old, fifteen hands high, of Morgan stock,
for not more than $150." What have we here? Is there authority
to buy a horse, with instructions that it shall be black, of certain age,
height, breed and price, or is there authority to buy such a horse and
none other? Test.it in this way: A proposed seller, endeavoring, as
he must, to ascertain the agent's authority, may ask the agent for his
authority. What will the agent say? "I am instructed to buy a
horse," or "I am instructed to buy a certain sort of horse?" But in-
asmuch as what the agent may say as to his authority is not conclusive,
the proposed seller may inquire of the principal. What will the latter
naturally say ? "I instructed him to buy me a horse," or, "He is au-
thorized to buy only a horse with these characteristics, etc." If tlie
principal is likely to say the former, he clearly regards the specifica-
tions as mere instructions. If he is likely to say the latter, as it is
believed he would be, then we have a different case. Here the in-
structions constitute the "authority." They are not secret because
the agent's authority can only be shown by disclosing them, they
bound and limit the authority, and a departure in any particular would
not bind the principal. The instructions here, then, would constitute
a real limitation upon the authority.
§ 734. It will be apparent upon reflection that directions
are more frequently mere instructions (rather than limitations upon
authority) in the case of an agent already autliorized to do the act
than in the case of an agent then for the first time authorized; and
more frequently in the case of a "general" agent than a "special" one ; "
? but neither of these facts after all is the test. The test is, Were the
, alleged instructions designed and calculated to fix and determine the
I character of the agent, or merely to prescribe the manner in which he
I shotald exercise the powers incident to a character already or other-
' wise imposed? As bearing upon this, were the alleged instructions
Bs Letters which amount merely to on the part of the principal to direct
a "communication of speculation and them in the exercise of it/' are prop-
advice from the principal to his erly regarded as instructiona and not
brokers, which presume a general au- as limitations. Whitehead v. Tuckett
thority in the brokers* with a desire 15 East» 400.
S18
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 735, 736
designed to be made known to those dealing with the agent or con-
cealed, and, as bearing upon this, would their disclosure promote or
defeat the purposes which the principal had in mind? Where their
disclosure would defeat his purposes, as it pretty clearly would in
some of the cases supposed, it is certain that the principal never in-
tended them to be made known. They are in such a case simply in-
structions and not limitations upon authority.
§ 735. — — ^— Within the same category must be included such
attempted limitations upon authority as, according to tiie usual prac-
tice and experience of mankind, are not to be anticipated in such a
case. Agency is pre-eminently a practical matter. Agents are ap-
pointed to be dealt with, and third persons must be able, in the exer-
cise of reasonable prudence^ to deal with them with ordinary safety.
A principal who sends an agent out to deal with third persons must be
deemed to represent that there are no unusual, whimsical or fanciful
limitations upon the agent's authority, unless the principal makes that
fact known. Most authorities are not unlimited; many kinds of lim-
itation are so usual and to be expected that there is nothing unreason-
able in the assumption that the person who deals with the agent will
anticipate their possibility, and protect himself against them; others
may be so unusual and so unexpected that it is only fair to require the
principal to disclose them, if he desires them to be observed. His
failure to do so may fairly be regarded as a representation that none
of that sort exist
III.
UNIVERSAL, GENERAL AND SPECIAL AGENTS.
§ 736. In general, — ^The common classification of agencies, based
upon the extent of the authority conferred, into universal, general
and special, has already been referred to in another place.*' As has
been stated, cases of true universal agency are very rare. They can
only be created by clear and unequivocal language and will not be in-
ferred from any general expressions, however broad.'^ No special
attention therefore will be given to them in this connection, what may
be said in reference to general agencies applying a fortiori to the uni-
versal.
The more or less vague nature of the distinction between the gen-
eral and the special agency, and the difficulty experienced in defining
M See ante, \ 58 et $eq. bt Oullck v. Grover, 38 N. J, L. 468,
97 Am. Dec. 728.
§ 737] THE LAW OF AGENCY [bOOK II
it, have also been referred to in another place. Notwithstanding this
difficulty, however, the distinction has a root in a certain real differ-
ence— albeit a difference of degree and not of kind — ^though, as will
be seen, the distinction has doubtless often been too greatly magnified.
It has, at any rate, such a place in our law that any gperal discussion
of the existence, nature and extent of an agent's authority must take
it into account.
§ 737. General and special agent8.r-^Consideration has already
been given to the question of the general nature of authority, and the
elements which compose it, and some general principles have been
stated which were deemed applicable to the subject. These principles
apply to all cases. If by express appointment, or by long acquies-
cence, recognition or course of dealing, one man has conferred upon
another the character of one possessing the requisite authority to rep-
resent him in a general way during some more or less continuous pe-
riod in the transaction of all of his business of a certain kind, or at a
particular place, or to perform all acts of a certain kind or class, he
must be held to have conferred upon him the attributes and powers
inherent in the character so bestowed. Such an agent, the law de-
nominates, for convenience sake, a general agent.
But if, on the other hand, in a single instance, either by express
terms or by his conduct, he confers upon the other the character of
one having authority to do a single thing, perhaps in a specific way,
he must be held to have conferred, upon him those attributes and pow-
ers, and those only, which are inherent in that character. This agent,
for the same convenience, is termed a special agent.
In either case, the question of the authority of the agent must de-
pend, so far as it inyolves the rights of innocent third persons who
have relied thereon, upon the character bestowed and not merely upon
the instructions given or upon the authority as it was declared to the
agent in express terms. In other words, the principal is bound to
third persons who have acted in good faith and in justifiable ignorance
of any limitations or restrictions, by the authority he has apparently
given to the agent, and not by the express or declared authority where
that differs from the apparent, and this, too, whether the agency be a
general or a special one.*'
OB Smith T. McGuire, 3 H. ft N. 554; action within the scope of it The
Whltton y. Sullivan, 96 Cal. 480. It limitation of his authority may be
has been Bald by a learned judge: publU; or private. If it be public,
"The authority of a general agent those who deal with him must regard
may be more or less extensive; and it, or the principal will not be bound,
he may be more or less limited in his If it be private the principal will be
520
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 738
§ 738.
Distinctions made. — ^The distinction between a gen-
eral and a special agency has been deemed to be one of great im-
portance, and a large number of decisions have been made to turn
upon it. It is believed, however, that the distinction, as it is ordi-
narily drawn, is highly artificial and unsatisfactory, if not positively
misleading, and that it might well be dispensed with.
The importance of this distinction, has been said by Mr. Parsons,"**
whose language has been much quoted, to lie in the rule that "if a
particular agent exceed his authority, the principal is not bound; but
if a general agent exceed his authority, the principal is bound, pro-
vided the agent acted within the ordinary and usual scope of the busi-
ness he was authorized to transact, and the party dealing with the
agent did not know that he exceeded his autTiority." This rule, how-
ever, cannot be regarded as strictly accurate. So far as the rights of
third persons, who have no knowledge of limitations on his authority
are concerned, — ^and this is v/hB.t the rule given contemplates, — the
agent must be deemed to have authority to do those acts which are
bound wh«n agent is acting within
the scope of his authority, although
he should violate his secret instruc-
tions. A special agent is one em-
ployed for « particnlar purpose only.
He also may have a general authority
to accomplish that purpose, or be lim-
ited to do it in a particular manner.
If the limitation respecting the man-
ner of doing it be public or known to
the person with whom he deals, the
principal will not be bound if the
instructions are exceeded or violated.
If such limitation be private, the
agent may acoomplish the object in
Yiolatlon of his instructions, and yet
bind his principal by his acts." Shep-
ley, J., In Bryant v. Moore, 26 Me. 84,
45 Am. Dec. 96. And by another:
''Where the authority is limited in a
l>ona fide manner, and the limitation
Is to be disclosed by the agent and is
disclosed either with or without in-
qulry, any departure from such au-
thori^ or instructions will not bind
the principal; but where the author-
ity or instructions given are in the
nature of private instructions and so
designed to be, they will not be bind-
ing upon the parties dealing with the
agent And if the InstructionB are of
such a nature that they would not be
communicated if an inquiry was
made (even though it be the duty of
the person dealing with the agent to
make the inquiry), it is not neces-
sary that it should be made for it
would not be communicated if
made." Eastinan, J., in Towle v.
Leavitt, 23 N. H. 360, 65 Am. Dec.
"While the rule is that an agent
must act within the scope of his au-
thority, yet when the agent's act af-
fects innocent third parties the prin-
cipal win be bound to the extent of
the apparent authority conferred by
him on his agent. A principal is
bound equally by the authority which
he actually gives, and by that which
by his bwn act he appears to give."
Webster v. Wray, 17 Neb. 679. See
also Van Duzer v. Howe, 21 N. Y. 531;
Redlich v. Doll, 64 N. Y. 234, 13 Am.
Rep. 573; Garrard v. Haddan, 67 Pa.
82, 6 Am. Rep. 412; Hatch v. Taylor,
10 N. H. 538; Carmichael v. Buck, 10
Rich. (S. C.) 832, 70 Am. Dec. 226.
B<> Parsons on Contracts (9th Ed.)
Vol. I, p. 42. Same, Broom on Com-
mon Law (8th Ed.) 575.
S2I
§' 738] THE LAW OF AGENCY [BOOK II
within the ordinary and usual scope of the business he was empowered
to transact. Such an act therefore cannot be deemed to be in excess
of his authority.
But many statements of the rule go still further and it is frequently
declared that if the special agent exceeds his instructions the princi-
pal is not bound; while if the general agent exceeds his instructions,
the principal will be bound. This statement is still more misleading
than the other, and no little confusion has crept in to the books be-
cause of it As has been seen instructions, even in case of a special
agent, are not in every case the measure of authority. They may ex-
actly encompass the authority, but they do not necessarily do so. They
may be intentionally or negligently waived or disregarded by the act
of the principal. Even in the case of a special agent, it is the charac-
ter bestowed, — the authority apparently conferred, — which is the test,
and not the instructions given.
Mr. Parsons himself says further on : "We think the distinction be-
tween a generaP agency and a-special agent useful, and sufficiently
definite for practical purposes, although it may have been pressed too
far, and relied upon too much in determining the responsibility of a
principal for the acts of an agent. It may, indeed, be said that every
agency is, under one aspect, special, and under another, general. No
agent has authority to be in all respects and for all purposes an alter
ego of his principal, binding him by whatever the agent may do in
reference to any subject whatever ; and, therefore the agency must be
special so far as it is limited by place or time, or the extent or charac-
ter of the work to be done. On the other hand every agency must be
so far general that it must cover not merely the precise thing to be
done, but whatever usually and rationally belongs to the doing of it.
Of late years, courts seem more disposed to regard this distinction
and the rules founded upon it, as altogether subordinate to that prin-
ciple which may be called the foundation of the law of agency, namely,
that a principal is responsible, either when he has given to an agent
sufficient authority, or, when he justifies a party dealing with his agent
in believing that he has given to this agent this authority." •^
•
«o Contracts (9th Ed.) Vol. I., pp. found quite insufScient to solve a
43, 44, quoted with approval in Gore great variety of cases. It Is unprofit-
V. Canada L. Ins. Co., 119 Mich. 136. able to dwell on that distinction."
"There are in the books many loose Comstock, X, in Mechanics* Bank v.
expressions concerning the distinc- New York, etc., R. R. Co., 13 N. V.
tion between a general and a special 599. See also Cross v. Atchison, etc.,
agency. The distinction itself is Ry. Co., 141 Mo. 132.
highly unsatisfactory and will be
522
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§ 739
§ 739- — The tnic distinction. — But it is none the less true
that the scope of the authority of a special agent is ordinarily much^
more restricted than that of a general agent. The fact that the au-
thority is conferred not for a continuing term but in a special instance,
to do a specific act naturally leads to, if it does not positively require,
much more minuteness of direction and much greater restrictions and
limitations. From the very nature of the case, particularity of in-
structions and singleness of method are to be expected, and of this
persons dealing with the agent may well be required to take notice.**
On the other hand, where the agent is authorized to transact all the
principal's business of a certain kind, or all the acts of a certain class,
the very breadth of the employment, the duration of time involved and
the variety of the duties to be performed necessarily involve more or
less of discretion and choice of methods, and render impracticable, if
not impossible, much of particularity or precision, either as to the
exact means and method to be employed, or as to the scope or extent
of the authority itself. Where so little is expressed, more may well
be implied. The fact of such an authority, of itself, presupposes a
general confidence bestowed upon the agent, and a general committal
to his discretion and judgment of all beyond the essential objects to be
' attained and the outlines of the course to be pursued. It may not un-
reasonably be presumed, where nothing is indicated to the contrary,
that such an agent possesses those powers which are commensurate
with his undertaking, and which are usually and properly exercised
by other similar agents under like circumstances. Tliis presumption
may well be and is constantly relied upon by persons dealing with
such agents, and so reasonable, proper and necessary is this reliance,
that it may justly be required that if the principal would impose un-
usual restrictions upon the authority of such an agent, he should make
them known to persons who may have occasion to deal with the agent.
And herein, it is believed, lies the true distinction between these
two classes of authority. One is in its nature temporary, special and
naturally suggests limitations of power. Of these limitations thus
suggested third persons must inform themselves, unless the principal
has by his words or conduct held out the agent as one upon whose
authority such limitations are not imposed.** The other is, in its na-
•1 Quoted with approval In Bleeker West, 69 Vt 440; Montgomery Fur-
V. Satsop R. Co., 3 Wash. 77. nitnre Co. v. Hardaway, 104 Ala. 100;
•aDyer v. Duffy, 39 W. Va. 148, 24 Yates v. Tates, 24 Pla. 64; Baldwin
L. R. A. 339; Ferguson t. Davis, 118 FertUlzer CJo. v. Thompson, 106 Ga.
N. C. 946; Cleveland r. Pearl, 68 Vt 480.
127, 25 Am. St B. 748; Brown r.
523
§ 740]
THE LAW OF AGENCY
[book II
.ture, general^ continuing and unrestricted by other limitations than
those which confine the authority within the bounds of what is usual,
proper and necessary under like circumstances. If there are other
limitations^ the principal must disclose them.**
Neither of these rules denies even to the special authority its natural
and ordinary incidents^ and neither dispenses with that which devolves
upon every person the duty of ascertaining not only the fact of the
agency but also the nature and extent of the authority which the prin-
cipal has apparently conferred. And neither of them permits that
authority to be defeated by secret limitations.
§ 740. General agency not unlimited. — It is not, however, to be
supposed that the general agent's authority is entirely unlimited. He
is far from being a universal agent or a mere autocrat, and while his
apparent authority is not to be restricted by undisclosed limitations,
it must, on the other hand, be confined to such transactions and con-
cerns as are incident and appurtenant to the business of his principal
and to that branch of the business which is entrusted to his care;**
unusual and unnatural acts are not to be tolerated ; strained construe *
tions are to be avoided; inferences of fact are to be limited to those
which are reasonable, natural and ordinary ; and, as has been so often .
pointed out, inferences are to be drawn only from facts for which the
«« HlrBchhom v. Bradley, 117 Iowa,
130; Liddell v. Sahline, 55 Ark. 627;
CathoUc Bishop v. Troup, 61 111. App.
641; Harrington y. Bronson, 161 Pa.
296; Hall ▼. Hopper, 64 Neb. 688; Pot-
ter V. Springfield Milling Co., 75 Misa.
632; Whaley v. Duncan, 47 S. Car.
189; Smith v. Droubay, 20 Utah, 443;
Hall v. Union Cent L. Ins. Co., 28
Wash. 610, 51 L. R. A. 288, 83 Am.
St. R. 844; AUis v. Volgt, 90 Mich.
125; Hamill v. Ashley, 11 Colo. 180;
Ruggles V. Am. Cent. Ins. Co., 114 N.
y. 415, 11 Am. St R. 674; Brown v.
FVanklin Mut L. Ins. Co., 165 Maw.
565, 52 Am. St R. 534; Wachter v.
Phoenix Assur. Co., 132 Pa. 428, 19
Am. St R. 600.
Presumption tliat known agency
general rather than $peciat — Aa has
already been seen (S 69), it is some-
times said that agency is presumed
to be general rather than special.
But the law never makes an abstract
presumption one way or the other.
If, however, agency is admitted, but
nothing more is known* the court can
not, without proof, presume any par-
ticular limitations, except such as in-
here in the very nature of such an
agency as this is admitted to bei In
that sense only, it would be presumed
to be general. See Trainer v. Mori-
son, 78 Me. 160, 57 Am. Rep. 790;
Sharp V. Knox, 48 Mo. App. 169; Mis-
souri Paa R. Co. v. Simons, 6 Tex.
Civ. App. 621; Oak Leaf Mill Co. v.
Cooper, — Ark. — , 146 S. W. 130;
Austrian v. Springer, 94 Mich. 343,
84 Am. St R. 360; Hillyard v. Hew-
itt 61 Or. 58; Midland Sav. A L. Co.
v. Sutton, 30 Okla. 448.
MSee Odiorne v. Maxcy, 13 Mass.
178; Stewart v. Woodward, 50 Vt 78.
28 Am. Rep. 488; Shaw v. Stone, 1
Cush. (Mass.) 228; Holloway v.
Stephens, 2 Thomp. ft Cook (N. Y.),
562; Ripker Nat. Bank v. Stone, 21
Okla. 833; Pacific Lumber Co. v. Mof-
Xatt, 67 C. C. A. 442, 134 Fed. 836; and
many other cases.
524
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 74I, 742
principal is responsible and hot from mere considerations of conven-
ience or policy. The mere fact that one is found to be a general agent
justifies neither court nor jury in guessing that given acts are within
the scope of his authority.*'
§ 741. General agent binds principal only within the scope of his
authority.— The general agent, therefore, binds his principal when,
and only when, his act is justified by the authority conferred upon him.
This authority being in its nature general and not specific, being
often gathered from a variety of sources and composed of different
elements, the question of its sufficiency becomes largely one of fact,
and may be stated thus :
Having in mind the powers expressly conferred, making all justifi-
able inferences, taking into consideration the object to be attained and
the means open to adoption, giving due weight to such usages as were
had in contemplation, considering whatever of extension or of modifi-
cation has been wrought by subsequent conduct, is the act in contro-
versy fairly included within the limits, or, as it is ordinarily stated,
within the scope, of this authority? If it is, the principal is bound;
if it is not, the act of the agent binds himself alone or no one.**
§ 74a. Special agent's authority must be strictly pursued. — ^The
authority of the special agent being in its nature limited, — suggesting
restrictions and qualifications which may be discovered upon investi-
gation^— its scope is much more easy of determination and must not
be exceeded ; or, as the rule is ordinarily stated, his authority must bfe
strictly pursued, and if it is not, the principal will not be bound.*^ A
wGore ▼. Canada Life Assur. Co.»
119 Mich. 186.
MMunn y. Comtnlssion Ck)., 15
Johns. (N. Y.) 44, 8 Am. Dec. 219;
Roflsiter v. Rossiter, 8 Wend. (N. Y.)
494, 24 Am. Dec 62; Jeffrey v. Blge-
low, 18 Wend. (N. Y.) 518, 28 Am.
Dec. 476; Goodloe T. Qodley, 13
Smedes 6 M. (Miss.) 233, 51 Am. Dec.
159; Ke^er v. Harrod, 2 Md. 63, 56
Am. Dec. 706; McCoy v. McKowen, 26
Ml88. 487, &9 Am. Dec. 264; Carmich-
ael Y. Buck, 10 Rich. (S, C.) L. 832,
70 Am. Dec. 226; Savings Fund So-
ciety y. Savings Bank, 36 Pa. 498, 78
Am. Dec. 390; Coweta Falls Mfg. Co.
V. Rogers, 19 Oa. 416, 65 Am. Dec
602; Asher t. Sutton, 31 Kan. 286;
Robinson v. Chemical Nat Bank, 86
N. Y. 404; Reed v. Ashburnham R. R.,
120 Mass. 43; Abrahams v. Welller,
87 111. 179; Lewis v. Shreveport, 108
U. S. 282, 27 L. Bd. 728; Booth v.
Wiley, 102 111. 84; Nicholson v. Moog,
65 Ala. 471; American Express Co. v.
Milk, 73 m. 224; Kelton v. Leonard,
54 Vt 230; Lewis v. Bourbon, 12
Kans. 186; Dodge v. McDonnell, 14
Wis. 553; Rhoda v. Annis, 75 Me. 17,
46 Am. Rep. 354; Ward's, etc., Co. v.
Elklns, 34 Mich. 439, 22 Am. Rep.
544; New York Life Ins. Co. v. Mc-
Gowan, 18 Kan. 300; Morton v. Scull,
28 Ark. 289; Massachusetts Life Ins.
Co. V. Eshelman, 80 Ohio St 6(47;
Planters' Ins. Co. v. Sorrells, 1 Baxter
(Tenn.), 352, ^5 Am. Rep. 780;
Noble V. Cunningham, 74 111. 51.
•7Blane v. Proudflt, 3 Call. (Va.)
207, 2 Am. Dec. 546; Thompson v.
525
S 7431
THE LAW OF AGENCY
[book. II
person dealing. with a special agent, it is constantly said, "acts at his
own peril," •* he is "put upon inquiry,""- he is "chargeable with no-
tice of the extent of his authority,"^** "it is his duty to ascertain," ^^
"he is bound to inquire," " "and if he does not,, he must suffer the
v^consequenc^s." "
It is none the less true, however, as has been seen, that the scope of
the . general agent's authority must not be exceeded. Each acting
within the scope of the authority conferred, binds his principal; each
acting beyond that scope binds himself only pr no one. But while
these rules applying to the two classes are alike in kind, they differ, as
has been shown, in degree. It is believed, however, that the differ-
ence is one of degree only, and not of principled*
IV.
ASCERTAINING THE EXISTENCE OP AUTHORITY.
§ 743. Person dealing with agent must ascertain his aadiority.p—
In approaching the consideration of the inquiry whether an assumed
authority exists in a given case, there are certain fundamental prin-
Stewart, 3 Conn. 171, 8 Am. Dec. 168;
Beals V. Allen, 18 Johns. (N. Y.) 368,
9 Am. Dec. 221; Towle v. Leavitt. 23
N. H..3G0, 65 Am. Dec. 195; Baring Y.
Pelrce, 5 Watta & Serg. (Penn.) 548,
40 Am. Dec. 534; Brown v. Johnson,
12 Smedes ft M. (Mise.) 398, 51 Am.
Dec. 118; Pursley v. Morrison, 7 Ind.
356, 63 Am. Dec. 424; Carmichael y.
Buck, 10 Rich. (S. C.) L. 332, 70 Am.
Dec. 226; Savings Fund Society v.
Savings Bank, 36 Pa. 498, 78 Am.
Dec 390; Thomas v. Atkinson, 38
Ind. 248; Blackwell v. Ketcham, 53
Ind. 184; Baxter v. Lament, 60 111.
237; Adama v. Bourne, 9 Gray
(Mass.), 100; SllUman v. Fredericks-
burg, etc., R. R. Co., 27 aratt. (Va.)
119; Wooding v. Bradley, 76 Va. 614;
Strawn v. O'Hara, 86 111. 53 ; Campbell
V. Sherman, 49 Mich. 534; Saginaw,
etc., R. R. Co. V. Chappell, 56 Mich.
190; Cleveland v. Pearl, 63 Vt 127.
25 Am. St. R. 748; Yates v. Yates, 24
Fla. 64; Montgomery Furniture Co. v.
Hardaway, 104 Ala. 100; Baldwin
Fertilizer Co. v. Thompson, 106 Oa.
480; Sioux City, etc., Co. t. Magnes,
5 Colo. App. 172; History Co. v. Flint
(Tex. Civ. App.), 16 S. W. 912; Cox
V. Albany Brewing Co., 56 Hun (N.
Y.), 489; Americus Oil Co. v. Gurr,
114 Ga. 624; Brown v. West, 69 Vt
440.
«s Sioux City, etc., Co. ▼. Magnes, 5
Colo. App. 172; Cleveland v. Pearl, 63
Vt 127. 25 Am. St Rep. 748; Mont-
gt>mery Furniture Co. v. Hardaway,
104 Ala. 100; Schaeffer v. Mutual
Ben. L. Ins. Co., 38 Mont 459; Moore
V. Skyles, 33 Mont 135, 114 Am. St
R. 801, 3 L. R. A. (N. S.) 136.
w Michael v. Eley, 61 Hun (N. Y.),
180.
■0 Baldwin Fertilizer Co. v. Thomp-
son, 106 Ga. 480.
71 Yates V. Yates, 24 Fla. 64; Amer-
icus Oil Co. V. Qurr, 114 Oa. 624.
T» Michael v. ETley, 9upra; Rawson
V. Curtiss, 19 111. 455.
78 Young V. Harbor Point Club
Ass'n, 99 111. App. 290.
74 See the discussion in Manchester
Bldg. ft L. Ass'n V. AUee, 81 N. J. L.
605.
526
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 744
ciples which must not be overlooked. Among these are, as has been
seen, (i) that the law indulges in no bare presumptions that an agency
exists: it must be proved or presumed from facts; (2) that the agent
cannot establish his own authority, either by his representations or hy
assuming to exercise it; (3) that an authority Cannot be established
by mere rumor or general reputation ; (4) that even a general author-
ity is not an unlimited one; and (5) that every authority must find its
ultimate source in some act or omission of the principal. An assump-
tion of authority to act as agent for another of itself challenges in-
quiry. Like a railroad crossing, it should be in itself a sign of danger
and suggest the duty to "stop, look and listen." It is therefore
declared to be a fundamental rule, never to be lost sight of and not
easily to be overestimated, that persons dealing with an assumed
agent, whether the assumed agency be a general or special one, are
bound at their peril, if they would hold the principal, to ascertain not
only the fact of the agency but the nature and extent of the authority,
and in case either is controverted, the burden of proof is upon them to
establish it.**
§ 744. What 18 meant by this rule. — It is material, how-
ever, in dealing with this rule to see what is meant by it. As has al-
ready been seen, the person who asserts agency has usually the burden
of proving it. Where he can prove an actual authority, under any of
the rules above referred to, it is not usually necessary that he should
have known of it, or relied upon it, at the time of dealing with the
TB •'Whoe-v'c^r deals with an agent Is
put on his gaard by that very fact,
and does so at his risk. It is his
right and duty to inquire into and as-
certain the nature and extent of the
powers of the agent, and to determine
whether the act or contract about to
be consummated comes within the
province of the agency and wUI or
not bind the principal." Bermudez,
C. J., in Chaffe ▼. Stubbs» 37 La. Ann.
656. It is the duty of third persons
at their peril to ascertain what kind
of an agent one is who represents
himself as such and the extent of his
powers. Tompkins Mach. ft Imple.
Co. V. Peter, 84 Tex. 627.
To same effect: Gore v. Canada L.
Ins. Co., 119 Mich. 136; Rice v. Pen-
insular Club, 52 Mich. 87; Busch v.
Wilcox, 82 Mich. 336, 21 Am. St. 563;
Hurley v. Watson, 68 Mich. 581;
Snow V. Warner, 10 Mete. (Mass.)
132, 43 Am. Dec. 417; Metzger v.
Huntington, 139 Ind. 501; Dickinson
County V. Mississippi Valley Ins. Co.,
41 Iowa, 286; Roberta v. Rum ley, 58
Iowa. 301; Berlnger v. Meanor, 85
Penn. St 223; Welse's Appeal, 72 Pa.
351; Dozier v. Freeman, 47 Miss. 647;
Davidson v. Porter, 57 111. 300; Reltz
V. Martin, 12 Ind. 306, 74 Am. Dec.
215; Bleeker v. Satsop R. Co., 3 Wash.
77; Rosendorf v. Poling, 48 W. Va.
621; Lester v. Snyder, 12 Colo. App.
351; LaPayette Ry. Co. v. Tucker,
124 Ala. 514; and scores of others too
numerous to mention.
Judge Philips says; "An exception
to this general rule is found in the
dealings of Insurance agents." Potter
V. Phenix Ins. Co., 63 Fed. 382.
527
§ 745] '^^^ ^*^W OF AGENCY [BOOK II
agent Even a then undisclosed principal may ordinarily be held,
when subsequently discovered. Where the person asserting agency
can not prove an actual authority, but relies upon an apparent one to
estop the principal, it is then part of his case that he so relied at the
time.
But the difficulty at which the rule of the preceding section is aimed,
does not usually arise in the cases just referred to, but attends upon
this situation: — In many of the cases which come before the courts,
the act in controversy can not be shown to have been authorized;
the actual or apparent authority is not enough to sustain it, neither
are there any of the ordinary elements of estoppel. The act in
fact was not authorized, yet the party seeking to recover believed it
wa¥ authorized^ and acted upon that belief. Not to enforce it now,
causes disappointment or loss to him. To enforce it now, causes dis-
appointment or loss to the principal. Which one shall suffer? Over
this question, a perpetual warfare wages ; it is urged, on one side, that
the party dealing with the agent shall be protected ; on the other, that
the principal who has not authorized the act can not be held ; and the
victory goes here to one party and there to the other, as one or the
other of these demands secures recognition. The party dealing with
the agent says to the principal, "You selected this agent and sent him
out, and you should answer for his defaults." The principal replies,
"Even if I did, it was lawful to employ him ; I used due care ; and the
loss you complain of would not have happened if you had used due
care not to trust him without investigating his authority, as you miglit
have done." The situation, in some respects, is not dissimilar to cases
of negligence. The plaintiflf charges the defendant with negligence.
The defendant replies, "If it had not been for your contributory neg-
ligence, my alleged negligence would not have harmed you." It is
here that the rule laid down in the preceding section is invoked. The
party dealing with the agent must ascertain his authority; if he had
made due investigation, he would have found that there was no au-
thority, and he would thus have saved himself from loss.
§ 745. — — What such person is bound to ascertain. — ^Under
this rule, the person dealing with an alleged agent is bound to ascer-
tain, 1. e., be prepared to prove, (i) that the alleged agent is really
such, (2) that he is an agent of the sort he purports to be (or at least
of the sort that the third person deals with him as being), and (3) that
the act done is within the limits of his authority, as already explained.
This includes (a) the observance of known limitations, and (b) the
ascertainment and observance of those limitations with the knowledge
528
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§§ 746, 747 ^
of which third persons are charged. These, as has been pointed out,
include, but go no further than, such limitations as, according to the
ordinary experience and practice of mankind, may not unreasonably
be expected to exist in such a case. Even in the case of the so-called
special agent this is true. A third person, dealing with a special agent
to sell, may fairly be charged with notice that there may be limitations
as to kind, amount, price, or credit, because such limitations are not
unusual; but he is not bound to anticipate or inquire after unusual,
whimsical or fantastic limitations, as that the agent shall deal only
with people of an arbitrary class, or write his contracts only upon
paper of a certain hue, or, to borrow an illustration from Justice
Cowen, to write his acceptances only with a steel pen. If the princi-
pal wishes such limitations observed, he must make them known.
§ 746. — — Not an unfair rule. — This is not, in general, an un-
fair or unreasonable rule. In many cases the persons dealing with
an alleged agent are in a much better situation to protect themselves
than the principal is to protect either himself or them. In the case of
the mere pretender this is most strikingly true. The alleged princi-
pal may have had no sort of dealings with the pretended agent, and
be wholly ignorant of his claims to authority or of his very existence.
Unless the party dealing with the pretended agent in such a case pro-
tects himself, nobody can protect him. It is, moreover, in any case
entirely within the power of the person dealing with the agent to sat-
isfy himself that the agent has the authority he assumes to exercise,
or to decline to enter into relations with him.
So far as the law imposes upon the person dealing with an alleged
agent the burden of ascertaining that he is an agent, there seems to
be but little room for question.
But our actual law goes further. It requires not only that the per-
son so dealing shall ascertain the fact of the agency, but also, — subject
to the rules respecting "general agents," "apparent authority," and
"secret limitations," as already explained, — ^imposes upon such person
the burden of observing the nature and the extent of the authority
conferred, within the limits stated in the preceding section.
It is here, as has been seen, that the real difficulty presents itself,
and many other methods of dealing with it have been suggested.
§ ^4^. .....^ Other theories.*-It is frequently said that if the
person acting be in fact an agent, and especially if he be in fact an
agent of the sort which he pretends to be, the question whether he
keeps within the limitations prescribed by his principal oug^t to be one
to be solved between the principal and the agent alone. If such an
34 529
§ 748] THE LAW OF AGENCY [bOOK II
agent exceeds his authority, where the other party has acted in good
faith, let the principal be bound and seek redress against the agent.
Such a rule, it is urged, will niake the principal more careful in the
selection of his agents, and principals, if such a rule be enforced, will
learn to protect themselves by requiring security from their agents,
and thus the loss caused by their agents' defaults will be made to fall —
where of course it belongs, — upon the agent through the principal,
rather than primarily upon the other party who may then seek redress
from the agent.
This suggestion has plausibility. In the case of agents who are
regularly employed, it would be entirely feasible for the principal to
require security; but in the case of the occasional agent, or the one
casually employed, — and it is as to this class that the need of the rule
is greatest, since they are almost always "special** agents whose au-
thority is narrowest and most strictly construed,— it would put such
an impediment of inconvenience, expense and delay in the way of tfie
employment of a most natural and useful instrumentality, as to either
make it impracticable or lead the principal to take the risk without
security.
It is not to be forgotten also that this means of protection is open
to the party who deals with the agent as well as to the principal.
It is also to be borne in mind that, if a rule is unfair or unjust, its
nature is not changed by the fact that people may learn how to guard
themselves against its consequences.
§ 748. It is often suggested that the case of an agent ex-
ceeding his authority should be dealt with like the case of the servant
who is guilty of negligence in the course of his employment. Mak-
ing an unauthorized contract or otherwise exceeding or violating his
authority, it is urged, is simply a wrongful act, and like other wrong-
ful acts of a servant or agent should be dealt with under the tort rule
rather than the contract one. Let the principal respond for this as he
responds for other torts in the course of the employment.
Two answers to this suggestion may be made: i. It would be a
marked extension of an already over-worked rule. 2. It is inappro-
priate.
The distinction between the case of a person having contractual
relations with an agent and that of the person injured by the tort of a
servant, is usually an obvious and significant one. The person in-
jured by the trespass or negligence of the servant is frequently, if not
generally, a total stranger to the servant. He may never have con^
sented to come into any relations either with the servant or his master.
He has ordinarily no warning, and no time or opportunity to protect
530
CHAP, ij NATURE AND EXTENT OF THE AUTHORITY
[§ 749
himself, by stipulation, or otherwise. He usually h^s no expectation
of profit to himself from any aspect of the situation, but is merely an
unwilling, unconsenting victim of another's wrongful act.
The case of the person dealing with an alleged agent iis very differ-
ent. He need not de?il with the agent unless he so desires. The whole
matter is voluntary. Hie has ample time to investigate. He can re-
quire the alleged agent to. produce his credentials or refuse tp treat
with him. He may exact warranties, pledges or assurances to suit
his wishes. He decides to deal, presumably, because he thinks it ad-
vantageous to himself to do so. He anticipates profit or gain to him-
self as the result of the transa.ction. It surely is no hardship to re-
quire him to exercise care for his own protection.
§ 749. The dilemma of choosing between two innocent
persons. — It is also frequently said that these cases are to be solved
by the "general principle" that "when one of two innocent persons
must suffer the loss should be borne by him whose act made the loss
possible," or, "who first trusted," etc., etc., practically all of which
forms hark back to the statement of Holt, C. J., in Hem v. Nichols,''*
T«l Salk. 289. In Mussey v.
Beecher, 8 Gush. (Mass.) 611, Shaw,
C. J., stating the maxim bb being that
"where one of two innocent persons
must suffer, he who reposed confi-
dence in the wrongdoer must bear
the loss/' held that the person who so
reposed the confidence in that case
was not the principal, but the per-
son dealing with the agent Wilde,
J., however, stating tha maxim in
the form given in Lickbarrow v. Ma-
son, following, held that it was the
principal who was affected. Various
statements of the maxim have been
made as will be seen in the follow-
ing, which are a few of the many
cases.
In L»ickb£irrow v. Mason, 2 T. R.
63, at page 70, Ashhurst, J., says:
"Wherever one of two innocent per-
sons must suffer by the acts of a
third, he who has enabled such third
person to occasion the loss must sus-
tain it" This is a most common
form. In County of Macon v. Shores,
97 U. S. 272, 279, "Where a loss Is to
be suffered through the misconduct
of an agentp it should be borne by
those who put it in his power to do
the wrong, rather than by a
stranger." And in Bank of Kentucky
V. Schuylkill Bank, 1 Parsons' (Pa.)
Eq. Cas. 180, 248: "Where one of two
innocent persons Is to suff^ from
the tortious act of a third, he who
gave the aggressor the means of do-
ing the wrong must alone bear the
consequences of the act" In O'Con-
nor V. Clark, 170 Pa. 318, 321, 29 L. R.
A. 607, "Where one of two Innocent
persons must suffer loss by reason of
the fraud or deceit of another, the
loss should fall upon him by whose
act or omission the wrongdoer has
been enabled to commit the fraud."
In Bartlett v. First Nat Bank, 247 111.
490, 498, "Where one of two innocent
parties must suffer loss by reason of
the wrongful acts of a third party,
the rule is almost universal that the
party who has made it possible, by
reason of his negligence, for the third
party to commit the wrong must
stand the loss."
How easy it Is to misapply as well
as to misstate the rule in question,
Is shown in the recent case of Hlgtn-
531
§ 750] I'HE LAW OF AGENCY [bOOK II
"for, seeing somebody must be a loser by this deceit, it is more reason
that he who employs and puts a trust and confidence in the deceiver
should be a loser, than a stranger." A moment's reflection, however,
will suffice to show that, as stated in some of its most common forms,
there is no such general principle. The simple case of the conflict
between the innocent bailor — lender, hirer, conditional seller — of a
chattel, which is wrongfully sold by the bailee to an innocent pur-
chaser, will suffice as an illustration. Here, according to many state*
ments of the alleged "principle,** the innocent purchaser ought to suc-
ceed, whereas every one knows that in our law the precisely opposite
result is reached. The maxim is often put in the form of "one of two
equally innocent parties," etc. ; but for this case it is clear that, in gen-
eral, there is no reason for preferring one of two equally innocent
parties, and the loss must in general lie where it has fallen. It seems
perfectly clear that the incidence of the loss can only be shifted where
the parties were not equally innocent, and that, before the loss can be
thrown upon the principal, he must be shown to have been guilty of
some misconduct, — that his conduct must have contributed in some
way, which reasonable care would have avoided, to the perpetration
of the wrong. Certainly the mere employment of an agent in tlie
ordinary way is not such misconduct, unless we are 'prepared to say
that one avails himself of this common, useful and supposedly lawful
instrumentality at his risk, and this has not hitherto been deemed to
be the law.
§ 750' Through whom must ascertainment be sought. —
Attention must also be given to the question. Of whom shall inquiry
as to authority be made? Must the other party go to the principal
or may he rely upon the statements of the agent or of strangers? To
this question, the law in general gives but one answer : The party deal-
ing with the agent must not rely on what the agent alone nmy say or
do, and a fortiori not on what mere strangers say or do, but he must
be able to trace the authority on which he relies back to some word or
deed of the principal.
botham v. Pauch, 282 Pa. 620. "It ment of the rule that where one of
was said In the charge* that If one two equally Innocent parties must
of two Innocent parties must suffer suffer by reason of the fraud of an-
loss, the loss must be borne by the other, the loss should fall upon him
one least to blame, and that it was whose negligent act or omission has
for the Jury to determine which of enabled the wrongdoer to commit
the parties to the action was least the fraud, and it was a mlsappUca-
to blame and to find a verdict accord- tion of the rule to the facts of the
ingly. This was an inaccurate state- case."
533
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§ 75I
It IS not meant by this that the party dealing with the agent must
always go and make inquiries of the pfincipal in person. Such a rule
would often be inconvenient and impracticable. What is meant, as
has been stated, is, that the party dealing with the agent must be able
to deduce the authority relied upon from the acts of the principal
whom he seeks to charge. He may rely on evidence furnished by the
principal, and that evidence may consist of facts and circumstances,
of things done and things omitted, of words and acts, — provided al-
ways that it can be shown that the principal did in fact supply this
evidence, that it was adequate to the purpose, and that it had not
spent its force. What the agent himself said or did is ordinarily im-
material, unless the principal's assent or acquiescence in it can also
be shown. Limitations upon the agent's authority cannot be defeated
simply because the agent failed to disclose them or even denied their
existence/^ There must be some act of the principal reasonably to
be construed as waiving their operation or as indicating their non-
existence.
Ordinarily in our law it is not within the power of an agent to bind
his principal by the evidence which he alone puts forward as to his
own authority. The principal may, of course, give him that power.
He may supply him with documentary or other evidence to be ex-
hibited ; he may refer persons to him to disclose his authority ; he may
agree to be bound by whatever the agent may assume to do ; and all
this may be done expressly or impliedly, and where it is done the prin-
cipal will be bound accordingly. These cases, however, are excep-
tional and anomalous.
§ 751. Persons dealing with agent must act in good faith.«^It is
evident that the rules which have been discussed are established for
the protection of third persons who act in good faith. Collusion with
the agent to take advantage of the apparent at the expense of the real
authority, the willful shutting of eyes to restrictions which would other-
wise be obvious, or any other practice or device to pervert the rules of
law to a purpose not contemplated by them, should be fatal to a recovery.
This is especially true where the party seeking to recover claims the
benefit of an apparent authority, a holding out, or any conduct alleged
T7 Since an agent cannot bind his no Fruit Packing Co., 123 Cal. 879.
principal by any express statement Neither can tbe principal be bound
as .to his authority he "cannot by merely because the agent falsely as
mere silence concerning limitations serts that a given act is within his
on his authority, render such limita- authority. Edwards v. Dooley, 120 N.
tions inefifective." Mltrovich ?. Fres- Y. 540.
533
§ 752]
THE LAW OF AGENCY
[book II
to work an estoppel : only those who have relied in good faith are en-
titled to protection.''*
§ 752. Persons dealing with agent must exercise reasonable pru-
dence.— The person dealing with the agent must also act with ordir
nary prudence and reasonable diligence. Obviously, if he knows or
has good reason to believe that the agent is exceeding his authority,
he can not claim protection.''* So if the suggestions of probable lim-
itations be of such a clear and reasonable quality, or if the character
assumed by the agent is of such a suspicious or unreasonable nature,
or if the authority which he seeks to exercise is of such an unusual, or
improbable character, as would suffice to put an ordinarily prudent
man upon his guard, the party dealing with him may not shut his eyes
to the real state of the case, but should either refuse to deal with the
agent at all, or should ascertain from the principal the true condition
of affairs.®^
This is particularly true where the agent is a stranger or one with
whom the party has not dealt as agent. Care should be taken in such
a case not to rely upon appearances which may be as consistent with
78 Schneider y. Lebanon Creamery
Co., 73 111. App. 612; Rail v. City Nat
Bank, 8 Tex. Civ. App. 657; Jacoby v.
Pay son, 85 Hun (N. Y.), 367; Pea-
body V. Hoard, 46 Ul. 242; Proctor v.
Bennis, 36 Ch. Div. 740.
T9 *'No principle is better settled in
law, nor is there any founded on
more obvious Justice, than that If a
person dealing with an agent knows
that he is acting under a circum-
scribed and limited authority, and
that his act is outside of and tran-
scends the authority conferred, the
principal is not bound, and it Is Im-
material whether the agent is a gen-
eral or a special one, because a prin-
cipal may limit the authority of the
one as well as that of the other."
Quinlan v. Providence, etc., Ins. Co.,
138 N. Y. 356, 28 Am. St. 645. Same
effect: Brown T. West, 69 Vt 440;
Wood Mow. & Reap. Mach. Co. T.
Crow, 70 Iowa, 340; In re Kern's
Estate, 176 Pa 373; Lewis v. Lewis,
203 Pa. 197; Littleton v. Loan Ass*n,
97 Ga. 172; Carter v. Aetna Loan
Co., 61 Mo. App. 218; National
Union F. Ins. Co. v. Spry Lumber
Co., 285 111. 98; Ryan v. American
Steel ft Wire Co., 148 Ky. 4^1.
•o"The law is well settled," says
Champlin, J., in Hurley v. Watson, 68
Mich. 531, '^hat a person who deala
with an agent is bound to inquire
into his authority, and ignorance of
the agent's authority is no excuse.
♦ • ♦ The principal may be careless
In reposing confidence in his agent,
yet this does not make him liable to
a third party, who, in dealing with
such agent fails to exercise the dili-
gence usual with good business men
under the circumstances. If there
Is anything likely to put a reason-
able business man upon his guard as
to the authority of the agent, it is the
duty of the third party to inquire
how far the agent's acts are in pur-
suance of the principaVs limitation."
See also National Bank v. Munger, 95
Fed. 87, 36 C. C. A. 659 (approving
text); The Thos. Gibson Co. v. Car-
lisle, 1 Ohio N. P. 398 (approving
text); Baldwin ▼. Tucker, 112 Ky.
282, 67 L. R. A. 451; Savage v. PeUon,
1 Colo. App. 148.
534
CHAP. I] NATURE AND EXTENT OF THE AUTHORITY [§§ 753, 754
Other conditions as with the relation of principal and agent. Thus the
mere fact that a stranger has in his possession and offers for sale the
property of another as his agent, is as consistent with the fact that the
pretended agent is a mere bailee or perhaps a thief, as that he actually
has the authority which he assumes to possess.
§ 753- — — ^ Notice of limitations. — No particular method of
giving notice of limitations upon the agent's authority can be insisted
upon. Express and actual notfce will, of course, suffice, but where
the principal relies upon something less than that it must be of such
a nature that failure to observe it is not consistent with the good faith
and reasonable prudence which the law requires. It ig frequently at-
tempted to give notice by terms inserted in or warnings printed upon
the contracts, orders, bill-heads or other papers made or used by the
parties. Such a notice is efficacious if actually observed, or if so
plain and obvious that the other party, as a reasonable man, cannot be
heard to say that he did not observe it.*^
§ 754. Notice of adverse interests. — It is fundamental that
an agent, without the full knowledge and consent of his principal,"
will not be permitted to act as agent in transactions in which he is
personally interested. It is often said that his endeavor to do so
operates as an immediate revocation of his authority.''^ That an agent
undertakes to do so is therefore enough to put the other party on his
guard. This is clearly so where they are negotiating directly, and
even where the other party claims rights traced through an agent's
acts he must take warning when the chain of title shows that the agent
has been exercising his powers in his own behalf.'*
»i Law V. Stokes, 32 N. J. L. 249. 90
Am. Dec. 656; McKIndly v. Dunham,
.55 Wis. 515, 42 Am. Rep. 740; Gorham
V. Felker, 102 Ga. 260; Reeves v. Cor-
rigan, 3 N. D. 415; Wood Mow. ft
Reap. Mach. Co. v. Crow, 70 Iowa,
340. Not when obscurely printed or
otherwise not reasonably noticeable.
Kinsman v. Kershaw, 119 Mass. 140;
Putnam v. French, 53 Vt. 402, 38 Am.
Rep. 682; Trainer v. Morlson, 78 Me.
160, 57 Am. Rep. 790; Luckle v.
Johnston, 89 Ga. 321.
82 "If such a power Is intended to
be given it must be expressed in lan-
guage so plain that no other inter-
pretation can rationally be given it,
for it is against the general law of
reason that an agent should be in-
trusted with power to act for his prin-
cipal and for himself at the same
time.*' Per Peckham, J., in Bank of
N. Y. v. Am. Dock & Trust Co., 143
N. Y. 659.
«3"A8 long as the apent is con-
ducting negotiations for his princi-
pal with third parties, he may act
on his behalf: but the moment he un-
dertakes, without the knowledge of
his principal, to conduct them with
himself, his agency ceases and the
powers and liabilities of that relation
no longer exist." Pine Mt. Iron ft
Coal Co. V. Bailey, 94 Fed. 258, 30 C
C. A. 229. See also Metzger v. Hunt-
ington, 189 Ind. 501.
84 Com Exchange Bank v. Amer.
Dock ft Trust Co., 163 N. Y. 332;
535
§ 755]
THE LAW Ot AGENCY
[book II
§ 755-
Effect of principal's negligence. — It has been said
in one or two cases that "the scope of an agency is to be determined
not alone from what the principal may have told the agent to do, but
from what he knows, or in the exercise of ordinary care and prudence
ought to know, the agent is doing in the transaction." •• On the other
hand, where the trial court had charged the jury that if the principal
knew the agent was violating his instructions "or could have known it
by the exercise of ordinary diligence, he is estopped to deny the au-
thority," the supreme court of Alabama said, "Though mere negli-
gence, mere want of ordinary diligence, may furnish the agent an op-
portunity of undue assumption of authority, it does not of itself work
an estoppel. A principal is not required to distrust his agent, nor to
keep a vigilant watch over the manner in which he exercises his au-
thority, and to see that' his instructions are obeyed. He may act on
the presumption that third parties, dealing with his agent, will not be
negligent in ascertaining the extent of his authority, as well as the
existence of his agency. And negligence, to constitute a ground of
liability, must have caused the plaintiff to repose trust on the authority
of the agent, and the negligence of plaintiff must not have proximately
contributed to the loss. The charge exacts of the principal a degree
of diligence not required by the law." "
The truth of the matter undoubtedly lies in the combination of these
rules. The principal is not obliged to suspect his agent or to set an-
other agent to watch him. He has a right to rely upon the other
Bank of N. T. t. Am. Dock ft Trust
Co., 143 N. T. 569; Hanover Nat
Bank v. Am. Dock ft Trust Co., 148
N. Y. 612, 61 Am. St R. 721; Gorard
V. McCormlck, 130 N. Y. 261, 14 L. R.
A. 234; Wilson v. MetropoL El. Ry.
Co.. 120 N. Y. 146, 17 Am. St R. 626;
Farrington v. South Boston R Co.,
160 Mass. 406, 16 Am. St R. 222, 6 L.
R. A. 849; Moores v. Citizens Nat
Bank, 111 U. S. 156, 28 h. Ed. 885;
Lee ▼. Smith, 84 Mo. 304, 64 Am. Rep.
101; State v. Miller, 47 Or. 662, 6 L.
R. A. (N. S.) 366; Hier y. Miller, 68
Kan. 258, 63 L. R. A. 952; Stalnback
V. Bank, 11 Oratt (Va.) 269; Stain-
back y. Read, 11 Gratt 281, 62 Am.
Dec. 648.
But see Cheeyer y. Pittsburg, etc.,
R. Co., 160 N. Y. 69, 66 Am. St R. 646,
34 L. R. A. 69; where it was held that
the mere fact that a note drawn by
the president of a corporation had
later been endorsed by the firm of
which he was a member (but which
was not the payee) was not enough
to charge a holder with notice.
•oKlngsley v. Fltts, 51 Vt 414;
quoted with approval In Little Pitts-
burgh Mine Co. y. Little Chief Mln.
Co., 11 Colo. 225, 7 Am. St R. 226.
89 Wheeler y. McGulre, 86 Ala. 398,
2 L. R. A. 808. The court quotes the
rule laid down by Mr. Wharton In his
work on Agency, § 123: "When a
principal conducts his affairs so neg-
ligently as to lead third persons to
reasonably suppose that his agent has
full powers, then if the agent exceeds
his authority the principal must bear
the loss. It is true that the principal
is not chargeable with culpa levis-
8ima, He is not chargeable, in other
words, with the consequences of
536
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY
[§ 756
party's diligence to protect his own interests. He is not charged with
knowledge of every departure by the agent from his authority. But
it must be held that he is aware of the general method in which his
business is being conducted, and if he leads reasonably prudent men to
believe that such method meets with his approval, he cannot complain
if they are held entitled to rely upon it*^
§ 756. Must ascertain whether necessary conditions exist-—
Again, where the nature of the authority is such that it must have been
conferred by written instrument, or must be a matter of public record,
the party dealing with the agent must, at his peril, take notice of this
fact, and ascertain whether the instrument or record is sufficient for
the purpose.
For similar reasons, if the authority is known to be open for exer-
cise only in a certain event, or upon the happening of a certain con-
tingency, or the performance of a certain condition, the occurrence of
the event or the happening of the contingency or the performance of
the condition, must ordinarily be ascertained by him who would avail
himself of the results ensuing from the exercise of the authority.*®
The subjects to which these conditions may relate may, of course,
be of great variety. Thus, there may be conditions of time, amount,
interest, person, territory, and the like. In many cases the question,
whether the condition is being complied with, will, the facts being
known, be entirelv obvious. If it be one of a fixed and ascertained
territory, for example, there can usually be no difficulty in observing
whether the act is being done within that territory.** If the condition
those negligeiices into which good
buBlness men are liable to fall. But*
if he is negligent to an extent beyond
what is usual with good business
men In his department, and if in con-
sequence of his negligence, third par-
ties repose trust on the supposed
agent, then tha loss, if loss accrue,
must fall on the principal."
«TSee St Louis Packet Co. ▼.
Parker, 59 111. 23; Golding v. Mer-
chant, 43 Ala. 705; Martin v. Webb,
110 TJ. S. 7, 15, 28 L. Ed. 49; Hanover
Nat Bank v. American Dock ft Trust
Co., 148 N. Y. 612, 51 Am. St R. 721.
A principal may be bound by the
authority which through culpable
negligence he permits the agent to
appear to have. Columbia Mill Co. v.
National Bank, 62 Minn. 224; Eggle-
Bton v. Advance Thresher Co., 96
Minn. 241.
M Baines v. Ewing, 4 H,. fr C. 511,
L. R,, 1 Exch. 320; Attwood v. Mun-
nings, 7 B. & C. 278, 1 M. ft R. 66;
Musscy V. Beecher, 3 Cush. (Mass.)
511; Craycraft v. Selvage, 10 Bush
(Ky.), 696; Weise's Appeal, 72 Pa.
351.
89 Territorial limitations. — Author-
ity may be subject to territorial lim-
itations or it may not Some such
limitations must be express; some
would be implied; some would na-
turally be anticipated; others would
not be. Much would depend upon
circumstances and the established
methods of procedure. Would the
state agent of an insurance company
be thought to have equal authority
537
§' 757]
THE LAW OF AGENCY
[book II
be one of a prescribed amount, and the agent is attemptiiw in the given
case to exceed that amount, the case is equally clear. So, of a fixed
time limit, which is plainly being exceeded.
On the other hand, there may be many cases in which, though the
limit is known, the fact whether it is being exceeded may not be easy
to ascertain. Thus, though it may be known that an agent is author-
ized to borrow a certain sum only, and he attempts to borrow that sum
or part of it of X, the question whether he is exceeding the known
limit may depend upon whether he has already borrowed part or all of
that sum of other persons, who are unknown to X, and whom he would
have no means of identifying if he should seek to make inquiries.
The same situation may exist in a great variety of other cases which
will at once suggest themselves.
§ 757» Agent's representations as to his authority not to
be relied upon. — ^And not only must the person dealing with the
In another state? Would a local
agent, residing and appointed in
Portland, Maine, be thought to have
the same authority in Portland, Ore-
gon, if he should chance to be there?
Would a clerk in a department store
or the ticket agent of a railroad com-
pany be thought to have the same
authority to sell goods or tickets
when he was at his home, as when
he was in his appointed place behind
the counter or in the ticket office?
In Insurance C!o. ▼. Thornton, 130
Ala. 222, 89 Am. St R. 30, 65 L. R. A.
547, it was held that the local agent
of a fire Insurance company ap-
pointed for the town of Dothan "and
vicinity'* could not be deemed to have
authority to do business in the town
of E^nterprlse, thirty-live miles away,
unless It could fairly be found under
the circumstances that the latter
place was within the "vicinity."
But in Lightbody v. North Am. Ins.
Co., 23 Wend. (N. Y.) 18, an insur-
ance agent appointed for "Troy and
vicinity" was held to have power to
bind the company by a policy upon
property In Utica, one hundred miles
away, the policy being Issued at Troy,
and the agent claiming to have au-
thority to issue it, and the insured
not being shown to have known that
the company had an agent at Utica.
Where the Insured knows of the
territorial limitation* there can be no
recovery in violation of It. B^re
man's Fund Ins. Co. v. Rogers, 108 Ga.
191. So where he knows of the stat-
utory policy of the state to require
local agents, who have been ap-
pointed, he may not deal with agents
in other states. PMter v. Pheniz
Ins. Co., 68 Fed. 382.
In several cases policies Issued
upon property outside the actual ter-
ritory of the agent have been held
binding, upon proof of reeognition by
the company of the policy as a valid
one. Aetna Ins. Co. v. Maguire, 51
III. 342.
An agent subsequently appointed
may act with reference to a policy
upon property now in his territory,
though It was not within his terri-
tory when the policy was issued. St
Paul, etc., Ins. Co. v. Parsons, 47
Minn. 352; Hahn v. Guardian Assur.
Co., 23 Or. 576, 87 Am. St R. 709.
Mr. Wood's statement in g 529 of
his work on Insurance quoted In
some of the cases is surely too broad.
In German F. Ins. Co. v. Columbia
Tile Co., 15 Ind. App. 623* sometimes
cited in this connection, there was
no express territorial limit pre-
scribed.
538
CfaAP. i] NATURE AND EXTENT OF THE AUTHORITY [§§ 758, 750
agent ascertain the existence of the conditions, but he must also, as in
other cases, be able to trace the source of his reliance to some word or
act of the principal himself if the latter is. to be held responsible. As
has often been pointed out, the agent alone can not enlarge or extend
his authority by his own acts or statements, nor can he alone remove
limitations or waive conditions imposed by his principal. To charge
the principal in such a case, the principal's consent or concurrence must
be shown.
§ 758. — — ^ Notwithstanding this difficulty in ascertaining,
however, the general rule is that the person who deals with the agent
takes the risk. To the objection that no one would be willing to deal
with the agent upon this basis, it was replied by Chief Justice Shaw
(in a case ^ in which the agent was known to have authority to buy
goods upon credit, provided he did not exceed a certain amount at any
one time) : "This objection, we think, is answered by the consideration
that no one is bound to deal with the agent ; whoever does so is ad- ^
monished of the extent and limitation of the agent's authority, and
must, at his own peril, ascertain the fact upon which alone the author-
ity to bind the constituent depends. Under an authority so peculiar
and limited, it is not to be presumed that one would deal with the
agent who had not full confidence in his honesty and veracity, and in ^
the accuracy of his books and accounts. To this extent the seller of
the goods trusts the agent, and, if he is deceived by him, he has no
right to complain of the principal. It is himself, and not the prin-
cipal, who trusts the agent beyond the expressed limits of the power ;
and therefore the maxim, that where one of two innocent persons
must suffer, he who reposed confidence in the wrongdoer must bear
the loss, operates in favor of the constituent, and not in favor of the
seller of the goods."
g y^g. — ^— Facts peculiarly within agent's knowledge. — An
exception to this general rule has been established in New yo^^ «^fter
"an inquiry of the most exhaustive character, and an assaiyt remark-
able for its persistence and vigor." Stated in the language of one of
the leading cases "^ it is that "where the principal has clothed his agent
with power to do an act upon the existence of some extrinsic fact,
necessarily and peculiarly within the knowledge 'of the agent, and of
the existence of which the act of executing the power is itself a repre-
sentation, a third person dealing with such agent in entire good faith,
pursuant to the apparent power, may rely upon the representation, and
the principal is estopped from denying its truth to his prejudice."
•0 Mussey V. Beecher, 8upra. etc., R. Co., 106 N. Y. 195, 60 Am. Rep.
•iBank of Batavia v. New York, 440.
530
§ 759] '^^^ ^AW OF AGENCY [bOOK II
This, obviously, is not intended to be a general rule. On the con-
trary it is an exceptional one. It rests upon the hypothesis that, in
certain cases, the question of the existence of the conditions is so "nec-
essarily and peculiarly" within the knowledge of the agent that the
principal must be deemed to have authorized third persons to rely
upon the agent's representations concerning it. Unless this situation
exists, the exception would not be made.
It must also be kept in mind that the question here is not as to the
terms or extent of the authority, — ^that is not a matter necessarily or
peculiarly within the knowledge of the agent. It is only as to the ex-
istence of extrinsic facts or conditions, upon the presence of which the
proper exercise of the authority depends, and of the existence of which
the agent, because he is the man in charge, the man on the ground, must
be deemed to have peculiar, if not exclusive, knowledge, that the ex-
ception here considered applies.
The typical cases have been those wherein an agent, authorized to
issue notes only in his principal's business and for his account, has
issued notes ostensibly for the principal's account but really for his
own,"' or wherein the freight agent of a railroad company, authorized
to issue bills of lading for goods received for carriage, has issued one
when no goods were in fact received,®* or where the transfer agent of
a corporation authorized to issue new certificates upon the surrender
of old ones has issued certificates when no old one was in fact surren-
dered,** and the note, bill of lading or new certificate has come into
the hands of a bona fide holder who relied upon its recitals. Ware-
house receipts for goods not deposited raise the same question, and
much the same situation is presented where the cashier of a bank au-
thorized to certify as good a check drawn upon funds certifies to one
when no funds are present, though some courts distinguish upon the
true negotiable character of the check which the bill of lading, ware-
house receipt or certificate of stock does not possess.
There seems to be very little question respecting the strictly nego-
tiable instruments, like promissory notes and bills of exchange, as will
be seen in the cases referred to above. But with reference to such
•» North River Bank t. Aymar, 8 etc., R. Co., supra; Armour v. Mlchi-
Hill (N. Y.), 362. gan Central R. Co., 65 N. Y. Ill, 22
See also the elaborate discussion Am. Rep. 603.
in In re Troy ft Cohoes Shirt Co., •♦New York, etc., R. Co. v. Schuy-
136 Fed. 420, aff'd on opinion below, ler, 34 N. Y. 30; Fifth Ave. Bank v.
142 Fed. 1038. See also Fillebrown Forty-Second St. Ry. Co., 137 N. Y.
▼. Hayward, 190 Mass. 472. 231, 33 Am. St R. 712, 19 L. R. A.
MBank of Batavla v. New York, 331.
540
CHAP. l\ NATURE AND EXTENT OF THE AUTHORITY
[§760
matters as the bill of lading, the warehouse receipt, and the certificate
of stock, there is much question.
§ 760. — — The views of the New York courts have been ap-
proved in several of the other states in the bill of lading cases,*' and
have been adopted in the Uniform Bills of Lading Act,** but they are
opposed by the English and Canadian courts,*'' the supreme court of
the United States,** and a number of the state courts,** and these op-
posing courts undoubtedly represent the weight of authority. Never-
theless the New York rule is believed to be sound. Although not
strictly negotiable, the bill of lading has a well known commercial
character which can not be ignored. The companies which issue them
are not ignorant of it. The agent is put there to receive goods and
issue bills of lading. His act of issuing one is a representation of a
fact peculiarly within his own knowledge and which he is put there to
determine. It is an act apparently within his actual authority. There
IS nothing to apprise a person relying upon it of the real state of the
case. Suppose he undertakes to investigate : of whom shall he inquire
whether the goods have actually been received ? He would naturally
go to the very agent who has already made a written certificate that
the goods have been received. Why ask for further assurances? If
he goes to the railroad company, at its principal office, and inquires,
the course of business would be for a superior agent to inquire of the
•• Brooke ▼. New York, etc., It Co.,
lOS Pa. 529, 56 Am. Rep. 2S5; Sioux
City R. Co. V. First Nat. Bank, 10
Neb. 556, S5 Am. Rep. 4S8; Wichita
Sayings Bank v. Atchison, etc., R.
Co., 20 Kan. 519; Fletcher v. Elevator
Co., 12 S. D. 643 (a warehouse receipt
case). See also St Louis, etc., R.
Co. V. Larned, 103 111. 293; Sears v.
Wingate, 3 Allen (Mass.), 103. By
statute: LAzard v. Merchants' Transp.
Co., 78 Md. 1.
The same principle has been ap-
proved in Wisconsin, though in cases
involrlng dlfferetit facts. Arnold y.
Waupaca Bank, 12G Wis. 362, 3 L. R.
A. (N. S.) 5S0.
M Section 23.
»T Grant t. Norway, 10 C. B. 665;
Hnbbersty v. Ward, 8 E*x. 330; Mc-
Lean y. Fleming, L. R. 2 H. L. Sc
128; Brown y. Powell, L. R. 10 C. P.
562; Cox V. Bruce, 18 Q. B. Diy. 147,
In Canada: Erb y. Gt West Ry. Co.,
42 U. C. Q. B. 90, 3 Ont. App. 446, 6
Can. S. C. 179.
MFriedlander y. Railway Co., 130
U. S. 416, 82 L. Ed. 991; St. Louis,
etc., Railway Co. y. Knight, 122 U. S.
79, 30 L. Ed. 1077; Pollard y. Vinton,
105 U. S. 7. 26 L. Ed. 998; The Free-
man V. Buckingham, 18 How. (TJ. S.)
182, 15 L. Ed. 341; American, etc.,
Co. V. Maddock, 36 C. C A. 42, 93 Fed.
980.
09 National Bank of Commerce y.
Chicago, etc., R. Co., 44 Minn. 224, 20
Am. St. R. 566, 9 L. R. A. 263; Wil-
liams, Black & Co. y. Wilmington R.
Co., 93 N. Car. 42, 53 Am. Rep. 450;
Baltimore, etc., R. Co. y. Wllkens, 44
Md. 11, 22 Am. Rep. 26 (immediately
changed by statute); Louisiana Nat.
Bank y. Layeille, 52 Mo. 380 (see
Smith y. Missouri, etc., R. Co., 74 Mo.
App. 48); Hunt y. Railroad Co., 29
La. Ann. 446; Dean y. King, 22 Ohio
St. 118.
S4I
§ 761]
THE LAW OF AGENCY
[book II
very agent who issued the bill of lading. Why inquire of him again
when his assurance is already in hand?
Suppose an agent is placed in charge of a store with authority to
buy, upon his principars credit, such goods as are needed to keep up
the stock. He buys of A all the goods which are actually needed, and
then buys more of B telling him that the goods are needed and B re-
lies in good faith upon his statement. Should not B recover of the
principal, even though the goods were not needed and never came to
his use ? ^ Suppose an agent is authorized to issue notes in his prin-
cipal's name for use in his business. He issues one in his principal's
name, saying to the person who receives it, and who acts in good faith,
that it is for use in the principal's business. Should not the princi-
pal be liable although the note was really put to an unauthorized use ? *
The rule of the New York courts does not apply where it appears
upon the face of the transaction that the agent was dealing with him-
self.*
§ y6i. Fixed pecuniary limit. — It is not infrequently said
that, however sound the New York rule may be when applied to the
sort of cases already referred to, it should have no application to cases
in which there is a fixed pecuniary or numerical limit, as where the
agent is authorized to buy or borrow or obtain credit to a certain pre-
scribed amount but no furtlier. It is true that where the limit is so
fixed it is easier to compare the act with the authority, but there seems
to be no other essential difference. A striking case in which the
stricter rule was applied, though the New York rule might have been
^A iMutner In a firm of harness-
makers who buys bits, ostensibly for
the firm, binds the firm even though
he appropriates the bits, when
bought, to his own use. Bond v. Qib-
son, 1 Camp. 186.
2 One who loans money to an agent
authorized to borrow it, Is not
obliged to follow the money to see
that it is properly applied. Donnell
V. Lewis C!ounty Sav. Bank, 80 Mo.
166.
sSee Corn Exchange Bank v.
American Dock & Trust Co., 163 N. Y.
8S2; Hanover National Bank v. Am.
Dock A Trust Co., 148 N. Y. C12, 61
Am. St R. 721; Bank of New York
▼. Am. Dock ft Trust Co., 143 N. Y.
669; Gerard Y. McCormtck, 180 N. T.
261. 14 L. R. A. 234; Wilson v. Metro-
pol. El. Ry. Co., 120 N. Y. 146, 17 Am.
St. R. 626.
Same: Farrington v. South Boston
R. Co., 160 Mass. 406, 16 Am. St R.
222, 6 L. R. A. 849; Moores ▼• Citi-
eens Nat Bank; 111 U. 8. 166, 28 L..
Ed. 8S6.
But In Cheever y. Pittsburg, eta,
R. Co., 160 N. Y. 69, 66 Am. St R. 646,
34 L. R. A. 69, it was held that the
mere fact that a note, drawn in the
name of a railroad company by its
president, was subsequently indorsed
by a firm (not the payee) of which
he was a member, was not enough to
defeat the rights of an otherwise
hona fl4e holder.
0
542
CHAP. l] NATURE AND EXTENT OF THE AUTHORITY [§ 762
fitted to the facts, is the early case of Mussey v. Beecher * already re-
ferred to. There Beecher had, by formal writing, with whose terms
plaintiff was acquainted, authorized one Pierce to buy goods upon
Beecher's credit for a certain business carried on in another town,
"provided, however, that said Pierce shall not make purchases or in-
cur debts exceeding in amount at; any one time the sum of two thou-
sand dollars." Pierce bought goods from time to time of the plaintiff,
whose contention was that he inquired on these occasions of Pierce
whether the limit had been reached, and Pierce had replied that it had
not. As a matter of fact it had been exceeded, at the time of the pur-
chase in question, and this was the defense relied upon. The trial
court instructed the jury, in effect, that if plaintiff inquired of Pierce
and relied upon his statement in good faith he could recover even
though the limit had then been exceeded. This was held to be er-
roneous in an opinion written by Chief Justice Shaw, who relied upon
the general rule that such a known limit must be observed by the per-
son dealing with the agent, and that the agent could not enlarge his
authority by his own statements. One judge dissented. It will be
observed that, under the circumstances, this was a case in which the
essential fact, namely, of the extent of the credit already obtained,
was one peculiarly within the knowledge of the agent. If plaintiff
had inquired of defendant, the principal, in person, the latter could
only reply by inquiring of Pierce, and plaintiff had no other means of
learning, except by an examination of Pierce's books and accounts
which might easily have been misleading even if he could have ob-
tained access to them. To the argument that no one could safely deal
with the agent under such a rule. Chief Justice Shaw replied that no-
body was bound to deal with him, but that if any one chose to deal
with him, with this limitation in his mind, he must be deemed to deal
at his own risk of the ageitf's honesty and not at the principal's risk.
g y53, CorpOftate agent& — A doctrine somewhat similar
to that employed in the New York cases has sometimes been applied
to corporations. Thus where the authority of tlie corporation, or of
its chief officers or agents, to act in a given situation depends upon
some fact or condition which concerns what may be called the internal
♦ Mussey v. Beecher (1849), 3 Ctish. This case, however, \» clearly dls-
(Mass.) 511. Persons who deal with tlngnishable from Mussey v. Beecher,
an agent knowing that his authority hecaase here. If the third person had
Is snhject to a fixed pecuniary limit ascertained the limit, the act on its
are hound by it, even though they do face would have shown that it was
not actually find out what it Is. in violation of it
Balnes v. Ewlng, 4 Hurl. Sb C 511.
543
CHAPTER II
OP THE CONSTRUCTION OP THE AUTHORITY IN GBNEIlAIi
I 764. Purpose of this chapter.
I. WHEN
AUTHOBITT IS
WRITINO
OONFEBRED BT
765. Construction of writing for
court.
766. Intention to govern.
767. How intention discovered —
Language used.
768. Entire writing— Other writ-
ings.
769. When drawn with reference
to statute, to be interprets
in light of statute.
770. Admissibility of parol evi-
dence— To show surround-
ings of the parties.
771. Latent and patent am-
biguities.
772. Identifying subject-mat-
ter.
773. To show usage of busi-
ness or of agents of a par-
ticular class.
774. Parol evidence cannot
enlarge authority.
775. Parol evidence cannot
contradict writing.
776. £3frect must be given to every
word and clause.
777. Transaction to be upheld
rather than defeated.
778. Authority to be interpreted
in light of lex loci.
779. Authority limited by ordi-
nary meaning of words and
by plain import of lan-
guage.
780. General powers limited by
specific object or recital.
781. Authority by Joint principals
usually to be exercised only
in behalf of all Jointly.
782. Power of attorney referring
to several Interests can not
be applied to Joint inter-
ests.
783. Power construed to apply
only to principal's private
business.
784. Formal powers strictly con-
strued—Only those powers
expressly given or neces-
sarily implied.
785. Practical construction by the
parties may aid.
II. WHBBB
▲UTHORXTT IS
OR IMPLISD
UNWBITTBW
786. Where authority is unwritten
but express.
787. Where authority is unwritten
but implied.
788. Authority to be construed in
the light of established
usages.
789. Authority carries with it
every power necessary to
accomplish object.
790. Implied authority not to be
extended beyond its legiti-
mate scope.
791. Implied power limited to
principal's business.
ni. WHEKS AUTHORITY IS AMBIGUOUS.
792. Duty of principal to make his
instructions clear.
793. When ambiguous, construc-
tion adopted in good faith
sufficient.
546
CHAP. II ]
CONSTRUCTION OF THE AUTHORITY [§§ 764-767
§ 764, Purpose of this chapter. — ^An authority having been con-
ferred and an attempt made to exercise it, it becomes important to de-
termine whether the act assumed to be done by virtue of the given
power is, in reality, embraced within it. This leads to the necessity of
construction or interpretation of the authority.
In the main, the principles governing the construction of a power do
not differ from those which prevail in regard to the interpretation of
contracts generally. It is proposed in this chapter, to refer briefly to
some of these and also to consider in full some of the more important
rules that apply to it. In pursuance of this purpoise the subject will,
for convenience sake, be divided thus: I. When authority is conferred
by written instrument. II. When authority is unwritten or arises from
implication, and III. When authority is ambiguous.
I.
WHEN AUTHORITY IS CONFERRED BY WRITING.
§ 765* Construction <rf writing for court. — ^The construction or
interpretation of writings is for the court. Hence where the authority
is created by a written instrument, tlie writing must, in general,, be
produced, and the nature and extent of the authority thereby con-
ferred must be determined by the court.^
§ 766. Intention to govern. — ^As has been seen, agiei>cy is, in gen-
eral, the creature of intention. Courts sit, not to make contracts be-
tween parties, but to construe and enforce the contracts which the
parties have themselves made. The same principle applies to instru-
ments conferring authority. Hence the first and most important rule,
in the construction oiE writings creating an authority, is to ascertain
what authority the parties intended to create, and to give that intention
effect,* provided it can be done consistently with the language used.
But even though the intention to convey a certain power may be clear,
the court can not read it into the instrument where the plain and un-
ambiguous language used will not support it.*
§ 767. How intention discovered — Language used. — The inten-
tion of the parties is primarily to be determined from the language
1 Savings Fund Society v. Savings
Bank, 86 Pa. 4^, 78 Am. Dec. 890;
Keating Implement Co. v. Terre
Haute Carriage Co., 11 Tex. Civ.
App. 216; Tarbox v. Cruzen, 68 Minn.
44; White v. Fnrgeson, 29 Ind. App.
144; Petteway v. Mclntyre, 131 N. 0.
432.
2 Marr v. Given, 23 Me. 65, 39 Am.
Dec. 600; Vanada v. Hopkins, 1 J. J.
MarBh. (Ky.) 285, 19 Am. Dec. 92;
Commonwealth v. Hawkins, 83 Ky.
246; White v. Purgeson, 29 Ind. App.
144; McClanahan v. Breeding, 172
Ind. 467.
A Minnesota Stoneware Co. v. Mc-
CroBsen, 110 Wit. 816, 84 Am. St. R.
927.
.. »
547
§§ 768^770]
THE LAW OF AGENCY
[book II
used by them. And as a mistake of law docs not ordinarily constitute
a valid objection, parties cannot usually be heard to complain tliat they
did not contemplate the legal effect of the language whicli they have
deliberately chosen.*
§ 768. Entire writing — Other writings, — In this, as in other cases,
the in'tention is to be gathered from the whole instrument, whether it
be made up of one piece of paper or of many, provided that the several
papers are either so physically attached, or so connected by reference,
or so obviously relating to the same subject, that they must all be read
together.** However much the agent might be bound by them, a third
party dealing with the agent in good faith, and in the exercise of rea-
sonable prudence, in reliance upon an apparently complete document,
could not be bound by limitations contained in other writings of which
he had no notice.*
§ 769. When drawn with reference to statute, to be interpreted
in light of statute. — Where the authority is given to do some act
provided for by a statute, or is otherwise related to the terms or pur-
poses of the statute, the language and object of the statute are to be
taken into account in determining the intent and tlte extent of the
power.^
§ 770. Admissibility of parol evidence — ^To show surroundings of
the parties. — And so, in doubtful cases, resort must be had to. evi-
dence of the situation, surroundings, and relations of the parties; for
though the writing cannot, in general, be contradicted by oral evidence.
* Hunt V. Rousmanier, 1 Pet. (IT.
S.) hi L. Ed. 27; Holmes v. HaU,
8 Mich. 66, 77 Am. Dec. 444.
s Mexican National Coal Co. ▼.
Frank, 154 Fed. 217 (power of at-
torney and contemporaneous letr
ter); McClanahan v. Breeding, 172
Ind. 457.
e In Farrington v. Hayes, 65 Vt.
153, a principal telegraphed B, his
agent to "Employ Farrington &
Post. Letter will follow." B showed
the telegram to the plaintiffs and
employed them. Plaintiffs did not
inquire for the letter or see it; the
letter contained limitations as to
compensation. It was held that the
tolegram was sufficient authority for
plaintifts retainer, and that as rea-
sonable business men the plaintiffs
were not put on inquiry as to the
terms of the letter. To same effect
on facts practically Identical is
Haubelt v. Rea ft Page MiU Co., 77
Mo. App. 672. But In Butler v.
Standard Guaranty Co., 122 Ga. 371,
a pasty dealing with an agent was
held bound by limitations upon the
agent's authority printed on tbe
back of the contract made with him.
7 McClanahan ▼. Breeding, 172
Ind. 457.
Authority to sign "any and all
remonstrance or remonatranees**
against granting licenses for the sale
of liquor is a continuing power and
will justify signing a remonstrance
against a renewal as well as In the
first Instance. McClanahan v. Breed-
ing, supra; White y. Furgeaon, 29
Ind. App. 144.
548
CHAP. Il]
CONSTRUCTION OF THE AUTHORITY [§§ TJl-JJ^
yet the circumstances may properly be used as aids, and, by putting
the court more or less fully into the exact situation of the parties, to
enable it to see the subject-matter as they saw it.
§ 771. Latent and patent ambiguities. — In the same man-
ner, an ambiguity or uncertainty not arising upon the face of the in-
strument, may be explained by parol." Where, however, the ambiguity
is in the writing itself, resort cannot thus be had to the aid of parol
explanation.*
§ 772. Identifying subject-matter. — If the subject-matter
be not identified with sufficient certainty, parol evidence may be al-
lowed to apply the description and identify the thing intended.^®
But this would not ordinarily be true where there is an entire absence
of any description whatever." There is then nothing to apply.
§ 773- To show usages of business or of agents of a particu-
lar class. — In as much as authority is ordinarily to be exercised in
conformity with the established usages of business or of particular
classes of agents, and may usually be supposed to have been conferred
with such usages in view, parol evidence of these usages would ordi-
narily be admissible, not for the purpose of adding to or altering the
writing, but for the purpose of showing the situation with reference to
which the language used is to be interpreted."
§ 774. ■ Parol evidence cannot enlarge authority. — In gen-
eral, parol evidence is not admissible for the purpose of enlarging or
extending the powers conferred by the written instrument, and the
nature and extent of the authority' must be ascertained from the instru-
8 Bishop on Contracts, % 374.
• Idem, § 375.
10 Pope V. Machias, etc., Co., 62 Me.
535; Norris v. Spofford, 127 Maas.
85; Linton v. Moornead, 209 Pa.
646; Janney v. Robblns, 141 N. C.
400; Rownd v. Davidson, 113 La.
1047; McDonald v. Hanks, 52 Tex.
Civ. App. 140.
11 A power to sell land which con-
tains no description is void, at least
in the absence of some showing that
the land claimed was the only land
the maker owned. Stafford v. Lick^
13 CaL 240. In Ashley v. Bird, 1 Mo.
640, 14 Am. Dec. 313 the power ran
"to act in all my business, as if I
was present myself, and to stand
good in law in all my land and other
business in the Missouri Territory."
Said the court: "We are entirely at
a loss to know what effect this
power of attorney is to have. Shall
we say that this gives any power to
sell land, or to make any covenant
for the sale of land? The power
does not give the least hint as to
what this business is. Shall we
guess at it? If the court should un-
dertake tx) guess, we might entirely
fail. There is such a thing as a
power of attorney being void for un-
certainty, and this one is nearly
so." And they held It gave no au-
thority to sell lands though it might,
perhaps, give authority to pay taxes
and take possession of land.
12 See Frink v. Roe, 70 CaL 296.
549
§ 775l
THE LAW OF AGENCY
[book 11
ment itself." But, except where writing is indispensable, the princi-
pal may, notwithstanding this general rule, expressly extend or change
the agent's powers by parol ; or he may hold the agent out as possessing
greater powers than those conferred by the writing; or he may so
conduct himself as to be estopped from asserting that they were not
greater.**
§ 775' Parol evidence cannot contradict writing — ^Parol
limitations on written powers. — It is also a familiar rule that, in the
absence of fraud or mistake, parol evidence cannot be admitted for the
purpose of varying or contradicting the written instrument." This
rule however, in its application to the law of agency, is substantially
the same as the preceding, and is subject to the same exceptions.
So also secret reservations, qualifications or conditions cannot be
set up to affect apparently unlimited powers conferred by the instru-
ment.*"
"Ashley V. Bird, 1 Mo, 640, 14
Atti. Dec. S13; State ▼. Bank, 45 Mo.
52$; Meohanlcs' Bank v. Scbaum-
burg, 38 Mo. 228; Pile v. Bright, 156
Mo. App. 301.
Where a power Is "plain and un-
ambiguous/' parol evidence of its
purpose or meaning is Inadmiasibje.
Rogers v. Tompkins (Tex. Civ. App.),
87 S. W. 879.
A power of attorney, in plain
terms, "to sell and convey" lands,
can not, upon parol proof of inten-
tion, be construed to authorize a
mortgage. Minnesota Stoneware Co.
V. McCroasen, 110 Wis. 316, 84 Am.
St. R. 927.
1* Hartford Ins. Co. v. Wilcox, 57
111. 180; Williams v. Cochran, 7 Rich.
(S. C.) 45; Coleman v. National
Bank, 53 N. Y. 388.
15 Bishop on Contracts, § 169. In
Piano Co. V. Blch (Iowa), 97 N. W.
1106, an action by the principal
against the agent, it was held that
parol evidence was inadmissible on
behalf of the agent to prove that the
principal consented to accept three
notes in payment, when the written
authority provided for an acceptance
of but two. (See also Superior Drill
Co. T. Carpenter, 150 Mich. 262.)
In an action by an agent against
his principal for commissions for
•ervioea performed under a written
contract parol evidence of different
terms agreed upon at the time of
the execution of the contract is not
admlasible. Loxley v. Studebaker, 75
N. J. L. 599; McFadden v. Pyne, 46
Col. 319, See also Welke v. Wacker-
shauser, 143 Iowa, 107.
In Haas v. Malto-Grapo Co., 14S
Mich. 358, It was held that letters
antedating and leading up to the
execution of a written contract are
Inadmissible to vary its terms.
In Alvord v. Cook, 174 Mass. 120>
parol evidence was held admissible
to show the situation of the parties
at the time the writing was made,
in order to aid in its interpretation,
but not admissible to enlarge, vary
or contradict the writing itself.
i»See Mabb v. Stewart, 147 Cal.
418; Kllpatrlck ▼. Wiley, 197 Mo.
123; Furnace Run, etc.. Lumber Co.
V. Heller, 84 Ohio St. 201 (where
the court said: "Certainly the plain-
tiffs in error are estopped to assert
a limitation upon the written au-
thority with which they clothed
their agent, by proof of a parol un*
derstanding neither carried Into the
S50
CHAP. Il]
CONSTRUCTION OF THE AUTHfORITY [§§ Tj6j jyj
§ 776. E^ect must be given to every word and clause. — ^Wher^-
cvcr it is possible, effect is to be given to every word and clause used
by the parties. It is to be presumed that the parties used the word or
clause with some purpose, and that purpose is^ if possible, to be ascer-
tained and enforced.^^
The mere fact that powers conferred are wide, or are subject to
abuse, is no ground for not sustaining them, if they have clearly been
conferred."
§ 777. Transaction to be upheld ratlier than defeated. — ^So the in-
tention of the parties is to be sustained rather than defeated if it can
be done consistently with sound rules of construction.** If the writing
be open to two reasonable constructions, one of which would uphold
while the other would overthrow the contract, the former is, where pos-
sible without extending the scope of the power, to be chosen.*** So if
by one construction the contract would be illegal, and by another
equally permissible construction it would be lawful, the latter is al-
ways to be chosen, as it will not be presumed that the parties intended
to violate the law.**
So, in accordance with well settled rules, if the authority will justify
the performance of a portion of an act but not the whole of it, and if
the authorized portion can be separated from the residue, and given
an effect consistent with the principal's purpose, that much will ordi-
narily be allowed to stand.. So, if there be an excessive execution,
but the excess can be severed from the residue, and there will then be
left a proper execution of the power, that will be done.** And so,
although the principal has attempted to authorize more, if execution
instrument, nor communicated to
one who relied upon it").
iTMcCIanahan v. Breeding, 172
Ind. 467.
18 Daughters of Amer. Revolution
V. Schenley, 204 Pa. 584.
i» HoUaday v. Daily, 19 Wall. (U.
S.) 606, 22 L. Ed. 187.
But of two constructions, one of
which enlarges the power and the
other of which confines it strictly to
the powers conferred and those nec-
essarily to be implied, the latter Is
to be adopted. Stokes y. Dewees. 24
Pa. Super. 471.
2oMuth ▼. Goddard, 2S Mont. 237,
98 Am. St. Rep. 553; Hemstreet v.
Burdick, 90 lU. 444; Wapples-Plat-
ter Qrocer Go. y. Kinkaid, 86 Kan.
167. In the Illinois case, it is said:
'*But it ia said the power must be
strictly construed. This may be
true, but it does not require that it
shall be so construed as to defeat
the intention of the parties. WEere
the intention fairly appears from
the language employed, that inten-
tion must control. A strained con-
struction should never be given to
defeat that intention, nor to em-
brace in the power what was not in-
tended by the parties."
21 Bishop on Contracts, %% 391,
392.
"2 Commonwealth y. Hawkins, 83
Ky. 246.
551
§§ 77^. 779]
THE LAW OF AGENCY
[book [I
to the full extent contemplated is found to be impossible or unjustified,
an act less than full execution, but within the general act contemplated
and consistent with the principal's purpose, may be allowed to stand.-*
§ 778. Authority to be interpreted in light of lex loci. — With re-
spect of the construction of powers of attorney, it must be assumed,
in the absence of anything to show a contrary intention, that the par-
ties intended the power to be construed in accordance with the law
under which it was made and with which they were presumptively
familiar.^* Where the authority is to be executed under a diflFerent
law or where it is to deal with immovable property in another juris-
diction, the law of that place may be deemed to have been intended.-*
With respect of shipmasters, the general rule seems to be that the ex-
tent of the master's authority is to be determined by the law of the
m
country to which the ship belongs, of which country the ship's flag is
deemed to give notice.^®
With respect of the manner of execution every authority given to
an agent to transact business for his principal, must, in the absence of
anything to show a contrary intent, be construed to empower him to
transact it according to the laws of the place where it is to be done, of
which laws the principal is presumed to have knowledge.^^
§ 779. Authority limited by ordinary meaning of words and by
plain import of language. — Formal instruments conferring power
are, as will be seen, ordinarily, subject to a strict construction.'^*
Words used will be presumed to have their ordinary meaning, and the
authority itself will be confined to the plain import of the language,
and will not be extended by mere construction to embrace that which
is not fairlv included within the terms of the instrument."
38 Thus a power of attorney to
make a conveyance of realty, but de-
fective because of improper ac-
Knowledgment, may be upheld to
the extent of authorizing the agent
to make an executory contract and
to receive the purchase price. Jo-
seph V. Fisher, 122 Ind. 399.
2* See Hastings v. Hopkinson, 28
Vt. 108; King v. Sarrla, 69 N. Y. 24,
25 Am. Rep. 128; Chatenay v. Bra-
zilian Telegraph Co., [1891] 1 Q. B.
79; In re Cunningham, 36 Ch. Div.
632; Kerslake v. Clark, More's
Notes 6.
See also Bar's Private Interna-
tional Law, (2d Ed.) 591; Savigny's
Private International Law, (2d Ed.>
234.
2B Morris v. Linton, 61 Neb. 537;
Linton V. Moorhead. 209 Pa. 646.
2« See Pope v. Nickerson, Fed. C^.
No. 11.274, 3 Story, 465; Lloyd v.
Guibert,'6 B. & S. 100; The Karnak^
L. R. 2 P. C. 505; The Gaetana, 7
P. Dlv. 137; The August, [1891] P.
Div. 328.
•-'TQwIngs V. Hull, 9 Peters (U. S.),
607, 9 L. Ed. 246.
-»« See post, § 784.
20 Porges V. United States Mort-
gage Co., 203 N. Y. 181; Henry v.
Lane, 62 C. C. A. 625, 128 Fed. 243;
Reese v. Medlock, 27 Tex. 120, 84
552
CHAP. Il]
CONSTRUCTION OF THE AUTHORITY
[§ 780
§ 780. General powers limited by specific object or recitaL— The
meaning of general words used in the instrument must be construed
with reference to the specific object to be accomplished and be limited
by the recitals made in reference to such object.'^ Thus, in a case
already referred to, the recital by the principal in the preamble of the
power of attorney, that he designed appointing an agent to act for him
during his absence from England, was held to limit the general words
used in the appointing part of the instrument to the period of his ab-
Am. Dec. 611; Skaggg v. Murchlson,
63 Tex. 348; Wynne v. Parke, 89
Tex. 413; Sklrvin v. O'Brien, 43
Tex. Civ. App» 1; Prost v. Erath
Cattle Co., 81 Tex. 505, 26 Am. St.
R. 831; Oouldy v. Metcalf, 75 Tex.
455, 16 Am. St R. 912; Baker ▼.
Balrd, 79 Mich. 255; GoHnsky v. Ai*
lison, 114 CaL 458.
In Porges v. United States Mort-
gage Co., supra, the conrt said: "The
power of attorney, like any other
contract, 1b to be construed accord-
ing to the natural meaning of the
words in view of the purpose of the
agency and the needs to its fulfill-
ment The authority within It un-
der such construction is not to be
broadened or extended and the sole
right of a court ia to ascertain,
through the rule stated, and apply
the authority. The extent to which
a principal shall authorize his agent
Is completely within his determina-
tion, and a party dealing with the
agent must ascertain the scope and
reach of the powerg delegated to
him and must abid6 by the conse-
quences if he transcends them."
soRountree v. Etoiuson, 69 Wis.
522; Berry V. Harnage, 39 Tex. 638;
Coquillard y. French, 19 Ind. 274;
Hodge V. Combs, 1 Black (U. S.),
192, 17 L. Bd. 167; Frost v. Cattle
€0., 81 Tex. 505, 26 Am. St R. 831;
Reynolds v. Rowley, 4 La. Ann. 896;
Taylor v. Burns. 208 U. S. 120. 61 h,
CkL 116; Mexican National Coal Co.
V. Frank, 164 Fed. 217; First Na-
tional Bank v. Kirkby, 43 Fla.. 376;
Perry v. Holl, 2 DeGex, F. 6 J. 48;
£sdaile ▼. La Nauz^ 1 Y. 4b C. 394;
Attwood v. Munnings, 7 B. ft C. 278;
Geiger v. BoIIes, 1 ThOmp. ft C. (N.
Y.) 129.
In White y. Young, 122 Ga. *30,
51 S. E. 28, it was held that a
power of attorney authorizing the
agent to institute suits for the re-
oovery of certain land did not au-
thorize him to take steps to defend
suits in relation to the same land.
"This was a formal power of attor-
ney, apparently deliberately exe-
cuted, attested and recorded. It will
therefore be strictly construed in
view of the controlling purpose; and
the addition of general words will
not be construed to extend the au-
thority, so as to add new and dis-
tinct powers different from those ex-
pi^esbly delegfiterd/' la Welch v. Mc*
Kenzie, 66 Ark. 251, a general power
of attorney, given by a widow, "to
represent me and my interest in the
estate of my- late hu^and," was held
not to authorize the agent to relin-
quish dower in lands her husband
had coaveyed in his lifetime. In
Harrison y. Ma«:oon, 14 Hawaiian,
418, a general power to act "in all
matters oannected with" a certain
partnership business, was beld not
to authorize the formation of a new
partaierBhip Including the old and
new members. In Jacobs v. Morris,
[1901] 1 Ch. 261, a p^wer ot attorney
in very general terms to act with
reference to parchaaea, a^d giving
wide authority^ to execute bills,
notes, etc., was held to be confined
to such bills, etc., as mlghjt be made
in purchasing,, and not to warrant
the borrowing of money.
553
§ 78i]
THE LAW OF AGENCY
[BOOK 11
isence.** So where an agent was appointed to accomplish Ac adjust-
ment of his principars affairs in the state of New York, and the in-
strument concluded with a general authority "to do any and every act
in his name which he could do in person/^ it was held that this broad
general power must be limited to the doing of those acts only which
were contemplated by the specific object of the appointment." And a
power of attorney granting authority to the agent to ask, demand and
receive of a debtor all money due from him to the principal, will be
limited to this specific object, although it also confers in general terms
power "to transact all business ;" the words "all* business" must be
confined to business necessary for the receipt of the money."
§ 781. Authority by joint principals^ ustially to be exercised only
in behalf of all jointly. — As has already been seen in a preceding
section,'* an authority conferred by two or more principals jointly is
usually deemed to be one to be exercised only in the name of all
jointly, and with reference to property or other interest in which they
are jointly interested. Thus a power of attorney to convey lands, ex-
ecuted by two or more jointly, is usually deemed to be confined in its
operation to lands in which they are jointly interested, and does not
justify the conveyance of lands belonging to one of them only."
Where husband and wife join in the execution of a power of attor-
ney, the wife apparently joining for the purpose of authorizing the
release of her dower interest, the case falls \yithin this rule and a con-
. veyance of the husband's land, in which the wife has a dower interest,
is justified."
siDanby y. Coutts, U R. 29 Ch.
DlY. 500. But this case was distin-
guished in Fell T. Puponga Coal Oo.,
24 New Zeal. 75S, where the grantor
In a power of attorney recited that
he was about to leave the colony,
and was desirous of appointing an
agent to act for him In relation to
certain afTairs, but did not state that
such agent was to aot only in his
absence.
ssRoesiter v. Rossiter, 8 Wend.
(N. T.) 494, 24 Am. Dec. 62.
M Hay v. Goldsmidt, cited in Hogg
▼. Snaith, 1 Taunt. 849.
9^ Ante, § 194.
>8See Gilbert v. How, 45 Ifinn.
121, 22 Am. St R. 724 (where the
power of attorney gave authority to
sell all lands "to which we are or
may be in any way entitled or inter-
ested" and **for us and in our
names" to execute and deliyer deeds,
it was held that no authority was
conferred to deal with land owned
by either principal separately);
Dodge T. Hopkins, 14 Wis. 630
(where husband and wife gave a
power to sell "our right" in any
land, particularly certain lots "con-
veyed to us," and the agent sold
land belonging to the husband, the
contract was held Invalid in the ab-
sence of any evidence "that there
was no joint estate to which the let-
ter of attorney could be applied").
■•Tuman v. Plllsbury, 60 Hlnn.
620 (where the power referred to
SS4
CHAP. Il]
CONSTRUCTION OF THE AUTHORITY
[§ 78^
Such a power of attorney would not however authorize the convey-
ance of land which the wife owned alone.*^ But where a statute re-
quires the husband to join in a deed of the wife's land, and he joins in
a powder of attorney, apparently for that reason, authority is conferred
to sell her land, in which he has no interest, and to sign his name to
the deed.'*
§ 78s. Power of attorney referring to several interests can not
be appUed to joint intere8ts.^~On the other hand, it has been held
that a power of attorney, in which a single principal authorities an
agent in terms to deal with his interest, must, unless th^e is some-
thing to indicate a wider scope, be deemed to refer to his separate and
individual interest only.^^ Thus it is stated sls the general rule that
"where in powers, covenants, releases, or other contracts, a several in-
terest is alone expressed and referred to, no general terms will allow
the meaning to be extended to a joint interest" *•
land which "we may hereafter ac-
quire" or become "in any way in*
tereated" under act of congress
granting homesteads to soldiers);
Snell y. Weyerhauser, 71 Minn. 67
(a similar power); Finnegan ▼.
Brown, 90 Minn. 396 (certain land,
described as in "our possession,"
owned by husband as homestead,
and also a similar homestead con-
veyed under joint authority from
husband and wife to sell land which
should come into "his possession");
Piatt V. Finck, 60 N. Y. App. Div.
312 (where the power was to "our
attorney" to seU and convey "my
real or personal property/' giving
deeds "in- our names," and there
was no evidenoe that the wife had
any interest except her dower rights
in any property such as was de-
scribed).
But In HoUaday v. Dally, S6 U. S.
<19 Wall.) 606, 22 L. Ekk. 187, where
the wife had no dower, owing to a
peculiar statute, it was held that a
power, speciflciilly referring to land
vested in the husband, authorised a
Bale of his separate interest notwith-
standing that the authority read
from husband aftd wife to "our
agent"
<TRoy y. Harrison Iron Mining
Co.* 113 Minn. 143, in which case the
husband and wife "have appointed
♦ ♦ * attorney for me ♦ • ♦ [to
sell land] which I now own" and it
appeared that only the wife owned
any land. The trial court consid-
ered this to be "the ordinary case
of a married woman joining with
her husband in the execution of an
instrument afCecting his lands .and
her dower interest therein" and a
deed of her land was held invalid.
S8 Ellison V. Branstrator, 153 Ind.
146, where a deed of the wife's land,
made under a joint power, was con-
sidered in equity to be valid under
the statute, in spite of the neglect
of the agent to sign for the husband.
MSteinback v. Bead, 11 Gratt.
(Va,) 281, 62 Am. Dec. 6i8.
40 Johnston v. Wright, 6 Cal. 373
(release of rent due to tenants in
common, executed under power re-
ferring to debts "due to me"). In
Attwood v. Munnings, 7 Barn, lb
Ores. 278, 1 M. ft R. 66, there was a
power of attorney by the principal
to accept bills "for him and on his
behalf," which should be drawn "by
his agents or correspondents*" The
bills in (question had been drawuj by
555
§ 783J
THE LAW OF AGENCY
[0OOK U
So, where authority is separately conferred upon the same agent by
several principals having distinct interests, the agent would not ordi-
narily be justified in binding them by a joint obligation, and thus make
one liable for the performance of the others/*
§ 783. Power construed to apply only to principars private busi-
ness.— A power of attorney given to an agent to act in the name
and on behalf of his principal, though couclied in general language,
must, in the absence of anything showing a contrary intent, be con-
strued as giving authority to act only in the separate, individual busi-
ness of the principal and for his benefit. It cannot be construed as
permitting the agent to engage in transactions foreign or repugnant to
that business, or to bind the principal by acts done not for his benefit
and in his behalf, but for the private benefit of the agent himself or of
third persons."
his partner and were drawn to take
up other bills, the proceeds of which
had been applied to the partnership
debts. It was held that there was
no authority to accept these bills,
both because the bills had been
drawn by a partner, not by an agent
or correspondent, and because they
were for the benefit of the partner-
Rhip. Bayley, J., said, "The power
gave an express authority to accept
bills for the defendant and on his
behalf. No such power was requis-
ite as to partnership transactions,
for the other partners might bind
the firm by their acceptance. The
^ords, therefore, must be confined
to that which Is their obvious mean-
ing."
<i Servant v. McCampbell, 46 Colo.
292 (several stockholders authoriz-
ing same agent to sell stock of
each ) . Where each of several tenants
in common makes a power of attor-
ney to the same agent to sell his in-
terest, and, if he takes a note for
him for part of the purchase price,
to endorse and sell it; and the agent
takes a note payable to them all
jointly, he Is not authorised to en-
dorse it by them all Jointly. Harris
y. Johnston, 54 Minn. 177, 40 Am.
St. R. 312. See also, The Guiding
Star, 10 C. C. A. 464, 62 FeS. 407,
where the masters of several ves-
sels attempted to authorize one agent
to bind them by Joint bills of lad-
ing. Beldy that he could not create
a Joint maritime lien without re-
gard to whether one or the other
carried the goods.
*2 Piatt V. Francis, — Mo. ,
152 S. W. 332; Lewis v. Lewis, 203
Pa. 194; Stainback v. Read, 11 Gratt.
(Va.) 281, 62 Am. Dec. 648; North
River Bank v. Aymar, 3 Hill (N. Y.),
262; Wood T. McCain, 7 Ala 800, 42
Am. Dec. 612; Wailace v. Branch
Bank, 1 Ala 565; Adams Express
Co. V. Trego, 35 Md. 47; GuHck v.
Grover, 33 N. J. L. 463, 97 Am. Dec.
728; Camden Safe Dep. Co. v. Ab-
bott, 44 N. J. L. 267; Sewanee Min-
ing Co. V. McCall, '3 Head (Tenn.),
619; Hazeltine v. Miller, 44 Me. 177;
Robertson v. Levy, 19 La. Ann. 327;
Bank of Hamburg v. Johnson, 3
Rich. (S. C.) L. 42; Attwood v. Mun-
nlngs, 7 Barn. & Ores. 278.
In Muth V. Goddard, 28 Mont. 237,
98 Am. St. R. 558, one C, expecting
to be absent during the winter had'
given to his son a power of attor-
ney in very' comprehensive terms,
authorizing among Other things the
execution of notes and mortgages.
Nin6 years lat^, while the principal
was in his last illness, the affairs of
SS6
CHAP. II ]
CONSTRUCTION OF THE AUTHORITY
[§ 784
§ 784. Formal powers strictly construed — ^Only those powers ex-
pressly given or necessarily implied. — »Formal instruments confer-
ring autiiprity will be strictly construed ** and can be held to include
only those powers which are expressly given and those which are nec-
essary, essential and proper to carry out those expressly given.** It
will indeed be presumed that the principal in conferring a power, in-
tended to confer with it the right to do tlK)se things witliout which
the object contemplated could not be accomplished, but beyond this the
authority will not be extended by construction. The principle is an-
a partnership of which he and one
R were members, became Involved,
a creditor of the firm demanded im*
mediate adjustment, and threatened
immediate attachment of C's prop-
erty. In order to meet this demand,
notes for the amount due were ex-
ecuted In the firm name, and en-
dorsed by the son under this power
of attorney, and the son as such
agent made a deed of trust of his
father's land to secure the notes. At
substantially the same time the
other partner, R, made an assign-
ment of aU of his interest In the
property of the firm to C, which as-
signment was accepted by the son as
agent for his father, this, however
without any assumption of the debt
by C. In an action after C's death
to restrain an enforcement of the
deed of trust, it was held that this
exercise of the power by the son did
not conflict with the principle stated
in this section. The court distin-
guished the present case from that
of Attwood v. Munnlngs, resting its
finding on the practical emergency
in which the agent found his prin*
cipal involved, and said: "Such ac-
tion [immediate attachment] might
have entailed great loss upon the
solvent partner^ Clarke; and it ap-
pears that this state of affairs
would inevitably have resulted, had
it not been for the prompt action of
Clarke's attorney in fact, and, un-
der these circumstances, tt seems
clear, that be acted for his princi-
pal's use and benefit.'
48 Mexican, etc., Iron Co. v. Frank,
154 Fed. 217; Welch v. McKenzie.
66 Ark. 251; White v. Young, 122
Ga. 830; Young v. Harbor Point
Club House Ass'n, 89 111. App. 290;
Penfold T. Warner, 96 Mich. 179, 35
Am. St Rep. 591; Kulte v. Lage, 152
Mich. 638; Gilbert v. How, 45 Minn.
121, 22 Am. St Rep. 724; Coulter v.
Portland Trust Co., 20 Oreg. 469:
Campbell v. Foster Home Ass'n, 163
Pa. 609, 40 Am. St R. 818, 26 L. R.
A. 117; Wilson v. Wilson-Rogers,
181 Pa. 80; Union Trust Co. v.
Means, 201 Pa. 374; MaoDonald ▼.
O'Nell, 21 Pa. Sup. Ct 364; Califl v.
First Nat Bank, 3l Pa. Sup. Ct
412; Frost v. Erath Cattle Co., 81
Tex. 505, 26 Am. St R. 831; Skirvin
V. O'Brien, 43 Tex. Civ. App. 1; Tea-
garden V. Patten, 48 Tex. Civ. App.
571; Hotchkiss v. Middlekauf, 96
Va. 649, 43 L. R. A. 806; Winfree v.
Finit Nat Bank, 97 Ta, 83; Bowles
V. Rice, 107 Va. 61; Dlmmick v.
Sprlnkel, 59 Wash. 329.
44Vanada v. Hopkins, 1 J. J.
Marsh. (Ky.) 285, 19 Am. Dec. 92;
Wood V. Goodridge, 6 Cush. (Mass.)
117, 52 Am. Dec. 771; Reese v. Med-
lock, 27 Tex. 120, $4 Am. Dec. 611;
Craighead v. Peterson, 72 N. Y. 279.
28 Am. Rep. 150; Franklin v. Ezell,
1 Sneed (Tenn.), 497; Strong v.
Stewart, 9 Helsk. (Tenn.) 137; Far-
rar v. Duncan, 29 La. Ann. 126; Mc-
Alpin V. Cassldy, 17 Tex. 449; Me-
chanics' ' Bank V. Schaumburg, 38
Mo. 228.
»»
557
§§ 785» 786] THE LAW OF AGENCY [b^OK II
alogous to the one which applies to the powers of corporations, 1. e.
those powers only which are expressly given or which arise from nec-
essary implication. The rule has been thus stated by a learned judge : —
"A formal instrument delegating powers is ordinarily subjected to
strict interpretation, and the authority is not extended beyond that
which is given in terms, or which is necessary to carry into effect that
which is expressly given. They are not subject to that liberal inter-
pretation which is given to less formal instruments, as' letters of in-
struction, etc. in commercial transactions which are interpreted most
strongly against the writer, especially when they are susceptible of two
interpretations, and the agent has acted in good faith upon one of such
interpretations." *•
§ 785. Practical construction by the parties may aid. — Even
though authority be conferred by written instrument, its meaning may
often be made more clear by showing what the parties have uniformly
recognized as acts properly falling within it. Where, though the au-
thority was conferred by writing, an oral authorization would have
sufficed, the field for the application of this rule is wider, for conduct
may often serve to show an enlarged authority, as has been already
seen. But even where writing is required, a long practical construc-
tion may serve to aid in the interpretation of the language, though of
course not to so change it that it can no longer be deemed to be an
authority in writing,
II.
WHBRB AUTHORITY IS UNWRITTEN OR IMPLIED.
§ 786. Where authority is unwritten but expreas.-*Where the
authority, though not conferred by written instrument, is express and
limited, it is, so far as the meaning of the words is concerned, subject
to the same general rules of construction that apply to a written power.
When not so expressly limited, a more liberal rule of construction ap-
plies than in those cases wherein the authority is conferred by a formal
instrtunent in writing. The rules, however, which are based merely
upon the fact that the instrument is in writing, would have no applica-
tion here.
4B Craighead v. Peterson, 9upra; Informal documents, like letters*
ctted and foUowed in Forges ▼. are more liberally construed. Ameri-
Unlted States Mortgage Co., 203 N. can Bonding Co. v. Ensey, 105 Md.
T. 181. 211, 11 Ann. Cas. 888.
SS8
CHAP« U]
CONSTRUCTION OP THE AUTHORITY [§§ 787, 788
§ 787. Where authority is unwritten but implied^ — ^As has been
seen, a large part of the authority exercised in the modem business
world is not expressly conferred, but arises from the conduct and re-
lations of the parties. Some of the rules which govern in determin-
ing whether an agency has been created or not, have heretofore been
referred to. When it has been found that an agency has been so cre-
ated, it then becomes as necessary to rightly interpret the authority so
conferred, as in those cases in which it is evidenced by a written in-
strument. And in general the same rules apply. But it is obvious
from the very nature of the case that greater liberality of construction
may often be indulged in. If the principal desires to set exact and
definite limits to the authority, he may do so by conferring it only by
express and definite action ; but where he leaves it to be inferred from
his conduct, he cannot complain if the rules of interpretation applied
are more flexible than might have governed had the authority been
express.
If from his neglect to make the limits certain, it is difficult to deter-
mine exactly along what lines they lie, it is but just to innocent per-
sons who may be misled thereby, to give them the benefit of the doubt,
and construe the authority most strictly against him.
§ 788. Authority to be construed in the light of established usages.
In determining the extent of the authority of the agent, it is often nec-
essary and proper to take into account the usages and customs pre-
vailing in similar cases. Mere usage, of course, does not of itself
confer power, nor can usage contravene express terms ; but where au-
thority is given, either expressly or by implication, to do an act of a
certain sort, it is frequently necessary to determine what are the lim-
its of the act so authorized. In such a case, a determination of what
is usually, ordinarily or by the established custom deemed to be a part
of such an act, is directly pertinent in deciding what was tlte scope of
the authority conferred in the case at hand.** The doctrine is one of
4«See Keith ▼. Atkinson, 4S Colo.
480, 139 Am. St R. 284 (a traveler
who goes to an hotel has the right
to assume, until notified to the con*
trary, that the clerk and bell boys
have the authority usually exerdsed
by Bueh employees at similar hotels,
aad may prove such usage in Order
to enforce liability for loss of bag-
gage having given his check to a
bell boy to be delivered to the clerk
in order that the latter might cause
the baggage to be delivered at the
hotel); Lanchheimer v. Jacobs, 12G
Ga. 261 (proof of custom was held
admissible to show that a travel-
ing salesman, at the close of a sea-
son, has Implied aathority to sell
his samples); Gould v. CoVAb Chair
Co., 147 Ala. 629 (authority to take
orders, subject to confirmation,
could not be enlarged by proof of a
custom in Alabahia, the principal
residing in North Carolina; nor by
559,
§ 789]
THE LAW OF AGENCY
[book II
wide application. In determining the authority of a partner, for ex-
ample, it is often necessary to determine the "scope" of the business
carried on. By "scope," in that case and in this, is meant the range
of such a business as ordinarily carried on at that time and {dace.
Moreover, not only the general usages prevailing in similar cases
may be thus used, but also the established and customary method, if
any, of dealing between the particular parties. Thus a recognized
course of dealing may determine, as to other like cases between the
same parties, how the authority in the given case is to be construed.''^
It is, of course, true that, notwithstanding the existence of such a
general or particular custom or course of dealing, tlie parties may, in
the particular case, have attempted to exclude its operation ; and such
an exclusion will be effective as between the parties themselves and
those having knowledge of the facts; but, as has been often pointed
out, secret limitations upon established methods of procedure are not
effective against those who deal in ignorance of them.
It will be obvious that the question here is not the same as that con-
sidered in the following section. Here the question is, what was the
authority conferred ; in the next section, how wide a range of means
for executing that authority will be permissible.
§ 789. Authority carries with it every power necessary and proper
to accomplish object. — As has already been pointed out, every dele-
gation of authority, whether it be general or special, express or im-
plied, unless the contrary be made known, carries with it, as an inci-
dent, the power to do all those acts, naturally and ordinarily done in
such cases, and which are necessary and proper to be done in the case
in hand in order to effectuate the purpose for which the authority in
question was created. It embraces all the necessary and appropriate
means to accomplish the desired end. This principle is founded on
the manifest intention of the party creating such authority and is in
furtherance of such intention.**
proof of a custom prevailing Bimply
among agents. The custom must in
some way have been brought home
to the principal) ; Anglo-Calif ornian
Bank v. Cerf, 147 Cal. 393 ("Where
an agent is expressly authorized to
deliver deeds absolute on their face
as security for his own indebted-
ness, as is admitted here, and no
express limitation is placed upon
him aa to the particular indebted-
ness to be secured thereby, as the
court was at liberty to conclude was
the case here, any arrangement as
to amount, terms, and character of
his indebtedness to be secured
which under the circumstances ex-
isting would not be unreasonable
would appear to be within the au-
thority conferred"). See also Hop-
kins V. Armour, 8 Ga. App. 442.
47 See ante, § 716.
"LeRoy v. Beard, 8 How. (U. S.) '
451, 12 L. Bd. 1151; National Bank
560
CHAP, n]
CONSTRUCTION OF THE AUTHORITY [§§ 79O, 79 1
§ 790. Implied authority not to be extended beyond its legiti-
mate scope. — But while, as has been seen, authority is often to be
implied from the conduct of the parties, yet, as has often been pointed
out, it is a necessary and logical limitation upon the construction of
such an authority, that the power implied shall not be greater than
that fairly and legitimately warranted by the facts. The reason of
this rule is so apparent and so just that it needs no argument to sup-
port it.
If the authority arises by implication from acts done by tlie agent
with the tacit consent or acquiescence of the principal, it is to be lim-'
ited in its scope to acts of a like nature ; if it arises from the general
habits of dealing between the parties it must be confined in its opera-
tion to dealings of the same kind; if it arises from the previous em-
ployment of the agent in a particular business, it is, in like manner, to
be limited to that particular business. In other words, an implied
agency is not to be extended by construction beyond the obvious pur-
pose for which it is apparently created.**
§ 791. Implied power limited to principaFs business.! — So, too,
where authority is implied, as well as where it is express, it is to be
construed as conferring authority to act only in the separate, individual
business of the principal and for his benefit unless there be something
to give it a wider scope, as stated in a previous section."'
T Old Town Bank, 60 C. C. A. 448,
112 Fed. 726; Roach v. Rector, 93
Ark. 521; St. Louis, etc., Ry. y.
Jones, 96 Ark. 58; Benjamin v. Ben-
jamin, 15 Conn. 347, 39 Am. Dec.
384; Kearns v. Nickse, 80 Conn. 23,
10 L. R. A. (N. S.) 1118, 10 Ann.
Cas. 420; Bass Dry Goods Co. v.
Granite City Mfg. Co., 119 Ga. 124;
McDonald v. Poarre Bros., 5 Ga.
App. 130; Halladay v. Underwood,
30 111. App. 130; Shackman v. Little,
S7 Ind. 181; Hardee v. Hall, 12
Bush (Ky.), 327; Joyce y. Duplessls,
15 La. Ann. 242, 77 Am. Dec. 185;
Farrar v. Duncan, 29 La. Ann. 126;
Star Line v. Van Vliet, 43 Mich.
^64; Despatch Printing Co. y. Bank,
109 Minn. 440; Hackett v. Van
Frank, 105 Mo. App. 384; Murphy v.
Knights, 155 Mo. App. 649; Huntley
v. Mathlas, 90 N. C. 101, 47 Am. Rep.
516; Craighead y. Peterson, 72 N. Y.
279, 2S Am. Rep. 150; Benninghoff
y. Agricultural Ins. Co., 93 N. Y.
495; Ricker National Bank y. Stone,
21 Okl. 833; Lauer Brewing Co. v.
Schmidt, 24 Pa. Super. Ct. 396;
Macke y. Camps, 7 Philip. 558; Boyd
V. Satterwhlte, 10 3. C. 45; McAl-
pin V. Cassldy, 17 Tex. 449; Birge-
Forbes Co. v. St Louis, etc., Ry., 53
Tex. Civ. App. 65.
ioMcAlpin y. Cassldy, 17 Tex.
449; Graves y. Hortpn. 38 Minn. 66«
see ante, ft 273.
ooAn^e, S 783.
36
561
§§ 79^* 793] TI^2 LAW OF AGENCY [DOOK II
III.
WHERE AUTHORITY IS AMBIGUOUS,
§ 793. Duty of principal to make his instructions clear. — Tt is the
duty of the principal, if he desires an authority to be executed in a
particular manner, to make his terms so clear and unambiguous that
they cannot reasonably be misconstrued. If he does this, it is the
. agent's duty to the principal to execute the authority strictly and faith-
fully ; and third persons who know of the limitations, or who from the
circumstances of the case ought to have known of them, can claim na
rights against the principal based upon their violation.**
§ 793. When ambiguous, construction adopted in good faith, suf-
ficient.— But if, on the other hand, the authority be couched in such
uncertain terms as to be reasonably susceptible of two different mean-
ings, and the agent in good faith and without negligence adopts one of
them, the principal cannot be heard to assert, either as against the
agent or against third persons who have, in like good faith and with-
out negligence, relied upon the same construction, that he intended
the authority to be executed in accordance with the other interpreta-
tion." If in such a case, the agent exercises his best judgment and
an honest discretion, he fulfills his duty, and though a loss ensues, it
cannot be cast upon the agent.'*
An instrument conferring authority is generally, it is said, to be
construed by those having occasion to act in reference to it, "as a plain
man, acquainted with the object in view, and attending reasonably to
the language used, has in fact construed it. He is not bound to take
the opinion of a lawyer concerning the meaning of a word not tech-
nical and apparently employed in a popular sense," **
fti See ante, H 761, 762. Whltemore, 21 Wall. {U. S.) 178;
»« Ireland v. LlvingstoD, L. R. 6 H. Loralne v. Cartwright, Fed. Cae. No.
L. S95: FalBken ▼. Falls City Bank, 8,500, 3 Wash. (U. S. C. C.) 151; De-
71 Neb. 29; Anderson v. First Nat Tastett v. Grousillat, Fed. Cas. No.
Bank, 4 N. D. 182; Oxford Lake 8,828, 2 Wash. (IT. S. O. C.) 132; Me-
Line V. First Nat Bank, 40 Fla. 349; chanics' Bank ▼. Merchants' Bank, e
Berry v. Haldeman, 111 Mfoh. 667; Mete. (Mass.) 13; Foster v. Rock-
Hopwood y. Corbin, 63 Iowa, 218. well, 104 Mass. 167; Long v. Pool, 68*
Bs Bessent v. Harris, 63 N. c: 542; N. C. 479; Shelton ▼. Merchants' Dfs-
National Bank v. Merchants' Bank, patch Transportation Co.» 69 N. Y.
91 U. S. 92, 104, 23 L. Ed. 208; Le- 258.
Roy V. Beard, 8 How. (U. S.) 451, 12 »* Curtis J., in Very v. Levy, su-
L. Ed. 1151; Very v. Levy, 13 How. pro, citing Withington v. Herring,.
(U. S.) 345, 14 L. Ed. 178; Marsh v. 5 Bing. 442.
562
CHAPTER III
OF THE CONSTRUCTION OF AUTHORITIES OF CERTAIN KINDS
1 794. Purpose of this chapter.
795. In general.
X. OF AQENS ATTTH0BI2EI> TO SELL LAND.
796. What here included,
797. Authority to sell rather
than merely to find a pur-
chaser— Mere broker no au-
thority to make a binding
contract.
798. But authority to make
a binding contract may be
found to exist.
799. Agent usually a special agent
— Authority strictly con-
strued.
SOO. Mere preliminary correspond-
ence or negotiations not
enough to confer authority.
€01. Conditional authority.
802, 803. Authority to sell land
not ordinarily to be in-
ferred from mere general
authority to act
S04, 805. What may be sold.
306. When authority to be exer-
cised.
807, 808. What execution author^
ized.
809. Authority to make represen-
tations as to yalue, quan-
tity, location, boundaries or
Utle.
1810. Authority to make contract
of sale Justifies written con-
tract, in usual form.
311. Authority to sell and dispose
of land Implies right to con-
vey.
312. To insert usual covenants of
warranty.
818. Authority to sell does not Jus-
tify a mortgage.
^14. Authority to receive payment.
815.
816.
817.
818.
819.
820.
821.
822.
823.
824.
825.
826.
827.
828.
829.
II. OF
830.
831.
882.
883.
834.
Conveyance must be for con-
sideration moving to prin-
cipal.
Authority to give credit.
Authority to sell does not au-
thorize exchange or barter.
Or gift.
Or giving option to buy.
— — Or permitting waste or
sale of timber separate
from land.
Or changing boundaries
of land.
— Or partition.
— Or dedication to public
use.
— Of conveyance to. pay
principal's debts, or assign-
ment foi* creditors.
— Or conveyance in pay-
ment of agent's debts.
— Or conveyance in trust
for support of principal's
child, etc.
— Or rescinding or alter-
ing contract.
— Or discharge of mort-
gage.
— Or investment of pro-
ceeds of sale.
AQENT AVTHOBIZED TO LEASE
LAin>.
In general.
What execution authorized.
Authority to execute a lease,
in the usual form, with
usual terms.
Authority to make represen-
tationa as to condition of
premises* ownership, etc.
Authority to receive payment
of rent
563
THE LAW OF AGENCY
[douk II
835. Authority to lease does not 860.
authorize lease to hegin in
future.
836. Authority to change terms. 861.
substitute tenants, accept
surrender of lease, or give 862.
notice to quit.
837. To renew or extend a
lease. 863.
838. Authority to bind principal to
furnish irrigation, supplies,
stock, etc. 864.
839. Authority to waive liens.
840. Authority to mortgage, or to
impair or defeat the prin- 865.
cipal's title.
lU. OF AGKKT AUTHOBIZED TO PUB- ^66.
CHASE LAND,
867,
841. When authority exists.
842. Authority to make a binding 869.
contract.
843. Authority to agree upon
terms.
844. Authority to bind principal
for ordinary expenses in 870.
purchase.
845. Authoilty to receive the deed. 871.
846. Authority to assume mort-
gages. 872.
847. No authority to sell or mort-
gage land purchased. 873.
ly, OF AGENT AUTHORIZES) TO SELL PER-
SONAL PBOPEKTY. S7^-
848. When authority exists. 875-
849. Limited or qualified au-
thority.
860. What may be sold— All— - 878.
Part.
851. Ck)mmingling with other 879.
goods for sale.
852. Authority when to be exe- 880.
cuted.
858. No authority to sell at auc- 881.
tion — When.
854. Authority to fix price and 882.
terms of sale.
865-867. Further as to price. 883.
858, 859. Terms or conditions
attached.
Failure to impose coudl-
tions prescribed by princi-
pal.
Authority to make binding
contract.
To execute and deliver
necessary documents or
memoranda.
Authority of selling agent to
receive payment-^In gen-
eral.
Authority to receive payment
not implied ftom posses-
sion of bill.
Agent authorized to deliver
possession may receive' pay-
ment.
Payment to general sales-
agent.
868. Payment to agent as os-
tensible owner.
Agent to sell merely or ta
solicit orders, without po»
session of goods, not au-
thorized to receive pay-
ment.
When traveling salesmen
may receive payment.
When payment to agent
part of terms of sale.
Notice of want of au-
thority.
— What may be received in
payment when receipt Isp
authorized.
— Purchaser cannot set off
debt due from agent.
877. Implied authority of tra-
veling salesmen to hire
horses.
— Authority to procure
personal supplies.
No implied authority to
sell his samples.
Implied authority to warrant
quality.
Authority to warrant as
a necessary incident.
Authority to warrant be-
cause warranty usual.
Authority to give warranties
which the law would Im-
ply.
564
CHAP. Ill]
COXSTUUCriON OF AUTHORITIES
884. Authority to warrant in ac-
cordance with descriptions
furnished by principal.
885. Illustrations of rules— Com-
mercial paper — Agricul-
tural implements — Sample,
etc.
886. Horses.
887. 888. Limitations upon
custom.
889. Limits of this rule— No extra-
ordinary warranty.
890. Authority to make represen-
tations concerning goods.
891. Authority to warrant title.
892. Authority to advertise the
property.
893. No implied authority to give
credit.
894. No authority to appropriate
to his own use.
895. No implied authority to ex-
change or barter.
89i^. No authority to buy goods.
897. No authority to pledge goods.
898. No authority to mortgage.
899. No authority to promise com-
missions for sub-sales.
900. Authority to guarantee exclu-
sive markets, particular
prices, etc.
901. No implied authority to com-
promise, release princlpars
rights, or pay his debts.
902. Authority to rescind the sale.
903. Authority to waive perform-
ance of terms of contract.
904. 905. Alterations of con-
tract.
906. May not sell to or deal with
himself.
907. Authority to receive notice.
V. or AGENT AUTHORIZED TO PURCHASE
PERSOXAL PROPERTY.
908. When authority exists.
909. Authority from conduct.
910. Limitations.
911. Ratification.
912. Powers and limitations in-
cident to authority to pur-
chase.
913. Agent with general authority
may buy on credit.
914-917. May not buy on credit,
when furnished with funds.
918. May buy on credit when not
supplied with funds.
919. Agent with general authority
to purchase has authority
to agree upon price and
terms.
920. May not exceed limits as to
quantity.
1^1. Must observe limits as to
quality or species.
922. Must observe limits - as to
price.
923. May be restricted as to per-
sons with whom to deal.
924. May make representations as
to princlpars credit.
925. May not borrow money to pay
for goods.
926. May not execute negotiable
paper.
927. May not guarantee payment
by his vendor.
928. May not sell goods.
929. Authority to alter or cancel
contract.
930. Authority to make admis-
sions after the purchase.
931. Agent can buy only for prin-
cipal.
VI. OF AGiSNT AUTHORISED TO COLLECT
OR KECEIVB PAYMRNT.
932. What here involved.
93l What constitutes such au-
thority.
934. When implied from making
the loan or negotiating the
contract.
935. When implied from posses-
sion of the securities.
936. Possession by agent who
negotiated loan evidence of
authority.
— Possession indlspensa-
937.
ble.
938. Authority by conduct inde-
pendent of possession.
939. Estoppel to deny author-
ity.
565
THE LAW OF AGENCY
[book II
940. — Limitations.
941. Payment to agent of the
owner of record.
942. Payment to agent as ostensi-
ble principal.
943. Authority to receive proceeds
of securities entrusted to
agent for delivery.
944. When authority implied from
having sold the goods or
land.
945. Authority to receive interest
does not authorize receipt
of principal.
946. Can receive nothing but
money.
947. Debt payable In goods.
948. Enlarged authority — ^Au-
thority by conduct or rati-
fication.
949-951. No authority to take
' checks, certificates of de-
posit, etc.
952, 953. If authorized to take
check or note, has no au-
thority to indorse and col-
lect it.
954. No authority to release or
compromise the debt.
955. Authority to receive part pay-
ment
956. May not extend time.
957. Or otherwise change the
terms of the contract.
958. Not authorized to receive be-
fore due.
959. Not authorized to accelerate
maturity.
960. Authority to collect does not
authorize sale of debt
961. No authority to deal with
funds collected.
962. May give receipt or dis-
charge.
963. Authority to sue.
964. Authority to sue in his own
name.
965. Authority to foreclose mort-
gages.
966. May not submit claim to ar-
bitration.
967. May employ counseL
968. Authority to employ sub-
agents.
VIL OF AGKNT AUTHOBIZED TO MAKE
OS INPORBE NEGOTIABLE PAPES.
969. An Important power, not
lightly Inferred.
970. How authority conferred.
971. 972. When authority implied.
973. Authority strictly construed.
974. Illustrations of acts not
authorized.
975i Illustrations of acts au-
thorized.
976. Must be confined to princi-
pal's business.
977. Execution must be confined
to limits specified.
978. Negotiable paper delivered to
agent in blank.
Vni. or AGENT AtTTHOBIZED TO MAN-
AGE BUSINESa.
979. What Is meant
980. Extent of authority depends
on nature of business.
981. Execution must be confined
to principal's business and
for his benefit
982. Authority to pledge prlncl-
pal's credit — Supplies for
store or business.
983. Supplies for hotel.
9S4. Supplies for farm or
plantation.
— Board and provisions
for help.
— Supplies procured by
htifl^band as manager of
wife's business.
— Supplies procured by
985.
986.
987.
wife as domestic manager.
988. Hiring help.
989. Other incidental contracts.
990. 991. Authority to waive liens,
rights, conditions, notices,
etc.
992. Contracts by architects, su-
perintendents, etc.
993. Contracts by station and
ticket agents.
994. Contracts for medical aid or
nursing.
996. Implied authority to sell pro-
duct of business.
$66
£HAP. Ill]
CONSTRUCTION OF AUTHORITIES
996. Authority to collect or re-
ceive payment.
997. Authority to revive debt
barred by limitation.
998-1000. Authority to make nego-
tiable instruments.
1001, 1002. When may borrow
money.
1003. May not make accommoda-
tion paper.
1004. May not pledge or mortgage
the property of his princi-
pal.
1005. May not sell or lease princi-
pal's land.
1006. May not embark In new and
different business;
1007. May not sell the business or
property.
1008. Authority to pay debts.
1009. Authority to make assign-
ment for creditors.
1010. Authority to sue.
1011. To employ attorney.
1012, Of the nature of the author-
ity.
1013. Burden of proof.
1014-1016. When authority exists.
1017, 1018. What terms of settle-
ment binding.
1019-1021. IlluBtrations.
1022. May receive the proceeds.
1023. May not submit to arbitra-
tion.
1024. May not assign the demand.
1025. May not assign or transfer
proceeds.
Xr. OF AGEKT AtmiORlZED TO LEND
HONEY.
1031. When authority exists.
1032. What execution authorised.
1033. Authority to take usurious
Interest.
1034. Authority to receive pay-
ment.
1035. Authority to extend time or
change terms.
1036. No authority to loan to him-
self.
1037. Authority to purchase secur-
ities.
Xn. OV AOBlfT AtlTHOBIZEO TO BI2fI>
PRINCIPAL AB BUIUSTT.
' 1088. When authority exists.
1039. Authority strictly construed.
yiTT, OF AGENT AUTIIOBIZED TO BMPIX>Y.
1040.
1041,
1043.
XX. OF AGBlfT AUTHORIZED TO SETTLE. SV. OF
1044.
1045.
1046.
X047.
What here Included.
1042. When authority exists.
What employment author-
ized.
AGENT AUTHOBIZBD TO SHIP
GOODS.
How authority arises.
How authority to be exer-
cised — Agreeing upon
terms of shipment
Agreements limiting li-
ability of carrier.
XV. OP AGENT AUTHORIZED TO CARE FOR
PROPKRTT.
1048. Nature and extent of author-
ity.
X. OF AGENT AUTHOBIZXD TO BOBBOW
MONET.
ZVI. OF AOENT AUTHORIZED TO BEPRB-
BENT INSURERS.
1026. When the authority exists. 1049.
1027. What execution authorized. 1050.
1028. Authority to give necessary 1051.
securitled. 1052.
1029. Authority to receive the 1053.
money. 1054.
1030. Liability of principal for
money borrowed without 1055.
authority.
What here included.
How classified.
How appointed.
Whose agent is he.
What kind of an agent is he.
Authority to appoint sub-
agents.
Authority to make oral con-
tracts.
567
§§ 794, 795]
THE LAW OF AGENCY
[book 11
1056. Authority to renew issuance.
1057. Authority to make altera-
tions — Waiver — Estop-
pel^— In general.
1058. Authority at time of issuance
to alter policy or waive
provisions therein.
1059. 1060. By parol.
1061. Waiving prepayment of
premiums.
— Restrictions on author-
1067, 1068. Facto affecting the
risk.
1069, 1070. Statemento in ap-
plication.
— Express restrictions.
— Subsequent causes of for-
feiture.
— Collusion.
1062.
ity.
1063. Authority after issuance —
Waiver of forfeitures.
1064. Waiving proofs of loss.
1065. Express restrictions on
authority.
1066. Knowledge of agent imputed
to principal.'
1071.
1072.
1073.
1074. Authority to adjust lossea
1075. Miscellaneous cases — Institut-
ing legal proceedings.
1076. Authority to Jsind principal
by admissions, representa-
tion.
1077. Territorial limitations.
1078. May not act in his own be-
half.
§ 794. Purpose of this chapter. — Having in the preteding chap-
ters considered the question of what constitutes authority, as well as
some of the rules which govern its construction and interpretation, it
is now proposed to see how these principles are applied.
It is obviously impossible, however, within the limits of such a work
as this, to treat at length of all the various matters which may involve
this question. What will be attempted is to consider those classes of
cases which most frequently arise, and to deal with the most important
points which arise in them.
§ 795. In general — In considering the questions discussed in this
chapter, the rules already referred to must be kept in mind. Promi-
nent among these, as has been seen, are, that express and formal
grants of power are strictly construed ; ^ that every grant of power is
to be interpreted, in the absence of anything to show a contrary intent,
as conferring authority to act only in the private, individual business
of the principal, and for his benefit ; - that grants of power, though
couched in general language, are to be limited to the particular object
contemplated by the power ; * that every power carries w-ith it, as an
incident, where no limitations appear, the implied authority to do those
things which are. necessary and proper to be done in order to accom-
plish the object sought and which are usually done in the execution of
a like authority ; * and that a well-defined and publicly known usage
may confer incidental powers unless the parties have excluded it.*
1 See ante, $ 784.
•- See ante, § 783.
s See ante, If 780.
* See ante, § 789.
• See ante, § 281.
568
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 796, 797
I.
OF AGENT AUTHORIZED TO SELL LAND.
§ 796. What here included. — It will be borne in mind that the
question here to be considered is not in what form, or in what manner,
authority to "sell land may be conferred, e, g,, whether it must be by
writing or may be by word or act, but whether an authority properly
created and unquestionably existing for some purpose will include this
one, whether authority unquestionably relating in some form to land
confers authority to sell it, and whether an authority clearly authoriz-
ing a sale of land confers authority to do some other act relating to it.
So far as form is concerned, it will be recalled that parol authoriza-
tion ordinarily suffices for a mere broker ; usually, but not universally,
written authority is requisite for a binding contract to sell ; while au-
thority under seal is usually requisite for the execution of instruments
necessarily under seal, as usually in the case of deeds of conveyance
of land.
§ 797- Authority to sell rather than merely to find a pur-
chaser—Mere broker no authority to make a binding contract. — It
is to be noted also that the case here contemplated is that in which the
agent is really authorized to sell, and not merely employed to find a
purchaser to whom the principal may sell. The distinction is one of
consequence, because one employed as a mere real esate broker to "sell*'
land, even though employed by writing, is usually held to have no
power to make a binding contract (much less a deed of conveyance),
but is confined to the finding of a person ready, willing and able to buy
from the principal on the terms proposed by him.* The cases taking
• CarstenB v. McReavy, 1 Wash, vendsen, 9 N. D. 285; Brandrup v.
359 (distinguished in Littlefield T. Britten, 11 N. D. 376;' Campbell v.
Dawson, 47 Wash. 644); McReaty v. Galloway, 148 Ind. 440; Furst v.
Eshelman, 4 Wash. 757; Armstrong Tweed, 93 Iowa, 300; Balkema v.
▼. Oakley, 23 Wash. 122 (see also Searle, 116 Iowa, 374; Halsey v.
Scully V. Book, 3 Wash. 182); Don- Monteiro, 92 Va. 581; Simmons v.
nan v. Adams, 30 Tex. Civ. App. 615; Kramer, 88 Va. 411, 13 S. B. 902;
Dickinson v. Updike (N. J.), 49 Atl. Kramer v. Blair, 88 Va. 456; Chad-
712; Stengel v Sergeant, 74 N. J. Eq. burn v. Moore, 61 L. J. Ch. 674, 67 L.
20; Scull V. Brinton, 55 N. J. Bq. T. (N. S.) 257, 41 Wkly. Rep. 39;
489; Lindley v. Keim, 54 N. J. Eq. Glentworth v. Luther, 21 Barb. (N.
418; Tyrrell v. O'Connor, 56 N. J. Y.) 145; Gilmour v. Simon, 37 Can.
Bq. 448; Morris v. Ruddy, 20 N. J. S. C. 422, s. c. again, 15 Manitoba,
Eq. 236; McCullough v. Hitchcock, 205; Boyle v. Grassick, 6 Terr. L. R.
71 Conn. 401; Armstrong v. Lowe, 232, 2 West L. R. 284. Contra: Com-
76 Cal. 616; Grant v. Ede, 85 Cal. pare cases cited In first note to fol-
418, 20 Am. St. R. 287; Lambert v. lowing section.
Gemer, 142 Cal. 399; Ballon v. Berg-
569
§798]
THE LAW OF AGENCY
[book II
this view proceed upon the theory that the character of the undertaknig
of the real estate broker is well known, and presumptively his em-
ployment, though by writing, is in his capacity as a negotiator merely,
and not as an agent to close a contract in writing.''
§ 798. But authority to make a binding contract may be
found to exist. — But even if it be conceded that the mere employ-
ment of a real estate broker does not confer upon him the power to
make a binding contract, it is still true that the language employed or
the circumstances of the case may be such as to show that such a power
was intended." Of course a mere request to "list** property,* a mere
request to endeavor to find a purchaser,^" mere inquiries as to the pos-
sibility of a sale, the mere stating of terms upon which the owner
YTJius in McCullough ▼. Hitch-
cock, 71 Conn. 401; Halsey v. Mon-
telro, 92 Va. 581, and many other
cases, in practically identical lan-
guage, it is said: "A real estate
broker or agent is one who negoti-
ates the sales of real property. His
business, generally speaking, is only
to find a purchaser who is willing to
buy the land upon the terms fixed
by the owner. He has no authority
to bind his principal by signing a
contract of sale. A sale of real es-
tate involves the adjustment of
many matters besides fixing the
price. The delivery of the posses-
sion has to be settled; generally the
title has to be examined, and the
conveyance with its covenants is to
be agreed upon and executed by the
owner. All of these things require
conferences and time for completion.
These are for the determination of
the owner, and do not pertain to the
duties and are not within the au-
thority of a real estate agent For
these obvious reasons, and others
which might be suggested, it is a
wise provision of the law which
withholds from such agent as we
think it does, any implied authority
to sign a contract of sale in behalf
of his principal."
One of several tenants in common
authorized to sell the whole prop-
erty is not a broker within the
meaning of this rule: Vermont Mar-
ble Co. V. Mead, Vt. — , 80 Atl.
852.
8 See Pringle t. SpauMtng, 68
Barb. (N. Y.) 17; Jackson v. Badger,
36 Minn. 52; Stewart v. Wood, 63
Mo. 252; Smith v. Allen, 86 Mo. 178;
Glass ▼. Rowe, 108 Mo. 518; Farrell
V Edwards* 8 S. D. 486; ColYin ▼.
Blanchard, 101 Tex. 231; Donnell t.
Currie, — Tex. Civ. App. , 131 S.
W. 88; Peabody v. Hoard, 46 111. 242;
Haydock v. Stow, 40 N. T. 363; Roa-
enbaum v. Belson, [1900] 2 Ch. 267.
» In Halsey v. Monteiro, 92 Va. 581,
a letter from the owner telling the
broker to list it for twelve months
on certain terms, or that he would
take so much cash, was held not to
suggest an authorization to bind the
owner by contract.
See also Ballou v. Bergvendsen, 9
N. Dak. 285; and Brandrup v. Brit-
ten, 11 N. Dak. 376 (where the lan-
guage used was ''I hereby grant to
I the agent] the sale of the follow-
ing described property," etc.3.
10 In McCullough v. Hitchcock, 71
Conn. 401, this language was held
insufficient to authorize a sale. "I
have a building lot I would like to
sell. ♦ ♦ • I do not know the value
of said lot, but could you not look at
the lot and give me an idea of Its
value» and if possible find a pur-
chaser for same."
570
CHAP, III]
CONSTRUCTION OF AUTHORITIES
[§ 798
wotdd be willing to sell," and the like, will not of themselves constitute
an authority to sell. It is, however, entirely clear that the correspond-
ence or negotiations between the parties may be such as to create the
authority to make a binding contract to sell." It is not necessary that
11 In Watkins Land Mortgage Co.
V. Campbell, 100 Tex. 642, real es-
tate brokers submittecl to their prin-
cipal an offer and said: "Shall we
close the deal?" The principal re-
plied that if the brokers could get
the cash pasnaent Increased "we
would be willliig to accept the offer.
• • ♦ Awaiting your further report
we are, etc." Held, not to authorize
the making of a binding contract.
So In Simmons ▼. Kramer, 88 Va:
411, the broker wrote to his princi-
pal reporting an offer; the principal
replied that he would not accept the
offer, but stated the price and terms
at which he would be willing to sell,
concluding thus: "Will give you 2
per cent, commission, awaiting a re-
ply." Held, not to be sufHcIent to
justify the making of a contract.
See also Lambert t. Gerrier, 142
Cal. 390; Armstrong v. Oakley, 28
Wash. 122 (where a letter of the
owner was held to merely express
the terms upon which the owner
would be willing to enter into a con-
tract with a purchaser); Kramer v.
Blair, 88 Va. 456; Campbell v. Gallo*
way, 148 Ind. 440.
An attorney wrote asking the de-
fendant if he would accept |360.
Defendant telegraphed that he
would take $450, whereupon the at-
torney sold the property for $500
and converted it to his own use. In
action for specific performance.
Held, that the correspondence did
not amount to an authorization to
sell. Prentiss y. Nelson, 69 Minn.
496.
In answer to a letter inquiring at
what price the defendant would sell,
written by real estate brokers, the
defendant replied, "$4200 on time
♦ • * or $4100 cash is the lowest
price I will take." Brokers sold on
terms given; Beldy that the sale was
unwarranted, the correspondence
having amounted only to an offer.
Jahn V. Kelly, 58 111. App. 670.
In Donnan v. Adams, 30 Tex. Civ.
App. 615, it was held that a mem-
orandum, containing description and
price, executed and signed by the
owner and accompanied by oral in-
struction to sell, did not constitute
an authority in the agent to make
a contract binding the principal.
In Sullivan v. Leer, 2 Colo. App.
141, it was held that following
correspondence under the circum-
stances did not constitute authority
to sell. March 30, defendant wrote
the agent "I will be In Denver last
of April — wish you would have a
purchaser, think I ought to get
$17,000 for the house." April 20th,
agent telegraphed: "Lot sold for
$16,000 cash." Owner replied April
24th : "Won't sell for less than $17,-
000— be there May 1st." On May
Srd, the day of the defendant's ar-
rival in Denver, the agent tele-
graphed: "Sold property, $17,000.*'
In Jones v. Howard, 234 111. 404,
defendant wrote to real estate
agents, "please assist me to sell my
property described below until sale
is made and properly closed. I
hereby authorize you to sell same."
Held, that an authority of this sort
should be strictly construed, and
that the letter in question did not
confer authority to make a contract.
Followed in Thome v. Jung, 253 111.
584, where the principal, having"
befen advised of a prospective buyer,
wrote that he would sell on certain
terms, that the papers should be
made out and earnest money re-
ceived by a title and trust company,
"to whom I will give the necessary
instructions," and that he gave this
information, "to save time, should
the deal be made."
S7I
§ 798]
THE LAW OF AGENCY
[bCX)K II
any particular phraseology be used, or that the authorization be in any
formal terms. The question is, does the language used sufficiently in-
dicate that the party is authorized to close a binding contract of sale ?
This may be merely a question of the construction of tlie words used,
or it may be an inference of fact as to intention to be decided like other
similar questions. Naturally enough, as in other similar cases, dif-
ferent courts may draw different inferencts from substantially similar
facts, and many instances are to be found of apparently irreconcilable
conclusions, although the courts purported to apply the same princi-
ples. It is not to be denied, however, that there are some cases in
which the courts have proceeded upon wholly irreconcilable theories,
IS In Jackson v. Badger, 35 Minn.
52, a letter reading, "You may sell
my 40 acres, $2,000 hand money, and
the balance in three years with in-
tcrestp" was held to authorize a
binding contract* though not suffi-
cient to authorize a conveyance.
In Stewart v. Wood, 63 Mo. 252, it
was held that this language in a let-
ter conferred power to make a bind-
ing contract: "Sell my farm for me
at ten dollars per acre, or as much
more as you can get."
In Smith v. Allen, 86 Mo. 178, the
defendant, residing in Chicago,
wrote to W, a real estate agent in
Kansas City, in response to an in-
quiry about selling defendant's prop-
erty there: "I am sick and not able
to write; * • • I will leave the sale
of the lots pretty much with you;
if the party or anyone is willing to
pay * • ♦ I think I am willing to
have you make out a deed and I will
perfect it. * * * If you think I bet-
ter try the spring market, hold till
then." W showed this, letter to the
plalntifts, executed a contract of
sale and received earnest money. W
then wrote defendant that he had
sold on the terms submitted, "sub-
ject to your approval." In subse-
quent correspondence, it appeared
that W, through misapprehension or
equivocation, led his principal to be-
lieve he had not made a binding con-
tract. Heldt that the defendant's
letter was a sufficient authorization
to the agent to bind his principal,
and that the letters thereafter did
not explain the meaning of the au-
thority but Indicated merely the
opinions of the writers* as to the
consequences of their act
In Glass v. Rowe, 103 Mo. 513, a
letter in these words was held to
confer a power to bind the princi-
pal by contract: "Will now sell |350
per foot. A regular commission of
two and a half per cent to you after
sale is made and closed. Terms,
• • ♦ »»
In Farrell v. Edwards, 8 S. D. 425,
sufficient authority was found in
two letters, the substantial portions
of which are as follows: "If you
find a buyer, you can fix up the pa-
pers at any of the banks. I want
300 down, and my share of the crop;
balance, 900, at 8 per cent" and "if
you make the deal, you better write
me before making out the papers to
send to me to sign." The court
also relied upon a ratification.
. In Colvin v. Blanchard, 101 Tex.
231, the principal wrote to a firm
of real estate dealers in whose
hands the property had been placed
for sale: "I will sell the lots for
119,000 and pay you a 5 per cent,
com. plus $50, or $1,000 com. in all
for making the sale. • • * Terms,
$3,000 cash, bal. long time." Held,
that the letter conferred a pow^er to
contract There was evidence of
subsequent assent on part of the
572
CHAP. Ill]
CONSTRUCTION OF AUTIIORTTIES
[§ 798
and, of course, have reached conflicting results.'" Thus, in a few
cases, express authority to sell, even though all the terms were speci-
fied, has been held to be a mere authority to "sell" as a broker, that is,
to find a purchaser, but not to close a binding contract with him.^*
seller, but as matter of ratification
it was not noted by the court
See also Donnell v. Currie,
Tex. Civ. App. , 131 S. W. 88.
In Hawaiian Agricultural Co. ▼.
Norris, 12 Haw. 229, the principal
wrote to the agent, "I wish to sell,"
he refused to make contracts him-
self and referred all purchasers to
the agent, and never objected when
letters of the agent indicated that
he was negotiating for a contract
It was held that authority to make
a binding contract had been shown.
The court reviewed many cases
from the United States, on both
^ides, and concluded that "an au-
thority to sell may very naturally
in any particular case be intended
to carry with it a power to contract
and that such intention may be
shown by slight circumstances."
In Winch v. Edmunds, 34 Colo.
359, \V, living in Chicago had H in
Colorado in general charge of his
real estate there. On request, W
sent H prices on certain parcels, one
of which was sold by contract ac-
cording to the price quoted. On
similar prior occaalons W had con-
firmed such sales. Reld, that H had
authority to make a binding con-
tract of sale.
J» Thus, for example, an un-
doubted majority of the courts, gen-
erally following the case of Duffy v.
Kobson, 40 Cal. 240, 6 Am. Rep. 617,
have put such a construction upon
the employment of the ordinary real
estate broker as to exclude his au-
thority to make a binding contract
imless there be something in the
case to alter the ordinary presump-
tion. (See also Armstrong v. Lowe,
76 Cal. 616; Grant v. Ede, 85 *Cal.
418, 20 Am. St R. 237: Lambert v.
Gerner, 142 Cal. 399.)
McCullough V. Hitchcock. 71 Conn.
401; Buckingham v. Harris, 10 Colo.
455; Ryon v. McGee, 2 Mack. (D.
C.) 17; Mannix v. Hildreth, 2 App.
D. C. 259; Jones v. Holladay, 2 App.
D. C. 279; Balkema v. Searle, 116
Iowa, 374; Campbell v. Galloway,
148 lud. 440; Milne v. Kleb, 44 N. J.
Eq. 378; Lindley v. Kelm, 54 N. J.
Eq. 418; Dickinson v. Updike (N.
J.), 49 Atl. 712; ScuU v. Brlnton, 55
N. J. Eq. 489; Tyrrell v. O'Connor,
56 N. J. Eq. 448; Ballou v. Bergvend-
sen, 9 N. Dak. 285; Donnan v.
Adams, 30 Tex. Civ. App. 615; Hal-
sey V. Monteiro, 92 Va, 681; Car-
stens V. McReavy, 1 Wash. 359;
Barnes '^, Grerman Sav. Soc, 21
Wash. 448; Armstrong v. Oakley, 23
Wash. 122.
i*In Armstrong v. Lowe, 76 Cal.
616, the defendant employed real es-
tate agents to sell property and gave
them this memorandum: ''You are
hereby authorised to sell my prop-
erty and to receive deposit on the
same, situated * * * for the sum of
two hundred dollars per acre, cash.
I hereby agree to pay you the sum
of five per cent for your services in
case you effect a sale or find a pur-
chaser for the same, or will pay you
two and one-half per cent of above
commission should I sell the same
myself or through another agent"
Held, that this writing did not au-
thorize the making of a binding
contract
On the other hand, in Haydock v.
Stow, 40 N. y. 363. a writing in
language almost Identical was held
to confer a power to make a con-
tract "I hereby authorize and em-
power Peck, Hellman and Parks,
agents for me, to sell the following
described property [described and
terms J."
573
§§ 799. 8oo]
THE LAW OF AGENCY
[book If
Where authority to make a binding contract can be conferred only
by writing," parol authority, which would suffice in many states, would
not be adequate.*^
§ 799- Agent usually a special agent — Authority strictly con-
strued. — In all cases of this sort, in which written authority is
requisite to justify a contract of sale, the person dealing with the agent,.
is, in contemplation of law, charged with knowledge of that fact and
presumptively deals with the agent's credentials before him." These
agents, moreover, are usually special agents," and their authority is to
be deemed to be strictly limited to that which is either expressly given
or necessarily implied.**
§ 800. Mere preliminary correspondence or negotiations not
enough to confer authority*— It is obvious also that before the ques-
tions here suggested can be determined, the authority intended to be
conferred must be completely agreed upon and vested. If, therefore,
the dealings between the principal and the agent have not passed be-
8ee also Jackson v. Badger, 35
Minn. 52.
IB As to which, aee antCf § 22j5.
^9 Deed executed in blank, — In
Blackn^ll y. Parish, 6 Jones Eq. (N.
C.) 70, 78 Am. Dec. 239, where the
prindiMtl executed a deed of the
lands, leaving the name of the gran-
tee and the amount of the price in
blank, and delivered the deed to an
agent with parol authority to find a
purchaser, put his name and the
consideration in the deed, and de-
liver it, it waa held that while this
could not be a good deed, because he
did not have authority under seal
to fill the blanks, it was good as a
contract to sell, for the making of
which the agent might be author-
ized by parol/ since the statute did
not reauire that such an authority
should be conferred by writing.
But where the statute required
that an agent to execute written in-
struments shall be authorized by
writing, such a deed, so executed
and deUvered, was held not suffi-
cient to Justify a binding contract
in writing. Ballou v. Garter, — - S.
Dak. . 137 N. W, 603, relying
upon Lund v. Thackeray, 18 B. Dak.
113, and Dal v. Fischer, 20 8. Dak.
426.
Power of attorney insufficient to
support deed may sustain contract
to sell. — It has been held in several,
cases that a power of attorney In*
tended, but Insufficient in form, to
authorize the execution of a deed of
conveyance, may sustain a written
contract to sell where its form is-
adequate for that purpose. Josepli
v. Fischer, 122 Ind. 399 (where deed
was enforced as contract) ; Little-
field V. Dawson, 47 Wash. 644; Van-
ada v. Hopkins, 1 J, J. Marsh. (Ky.)
28b, 19 Am. Dec. 92. See rIbo Jones
V. Marks, 47 Cal. 242.
17 Schaeffer v. Mutual Ben. L, Ins.
Co., 38 Mont 459; Miller v. Wehr-
man, 81 Neb. 388; Coulter v. Port-
land Trust Co., 20 Or. 46^; Rawson
V. Curtiss, 19 111. 455.
18 Swift V. Erwln, Ark, ^
148 S. W. 267, and cases In follow-
ing note.
10 Pentold V. Warner, 96 Mich. 179,.
35 Am. St. R, 591; Thomas v. Jos-
lln, 30 Minn.' 388; Schaeffer v. Mu-
tual -Ben. L. Ins. Co., supra; Moore
v. Skyles, 33 Mont 135, 114 Am. St
Rep. 801; 3 L. R. A. (N. S.) 136;
Brown v. Grady, 16 Wyo. 151.
S74
CHAP, jnj
CONSTRUCTION OF AUTHORITIES
[§ 800
yond the stage of preliminary correspondence, if the terms upon which
the authority is to be executed or the property sold are not yet fully
determined, if further communications are to be had with the principal,
or further assent giveh, before the authority is to be exercised,'^ and
the like, there can ordinarily be no present authority to sell in such
wise as to bind the principal.*^
20 As for example, where the prln- of the lands in this county belon
cipal's approval is to be given be
-fore the sale is made. Burlington,
etc., R. Co. Y. Sherwood, 62 Iowa,
309; Alcorn y. Buschke, 133 Cal.
655; Johnson v. American Freehold
L. Mtg. Co., Ill Ga. 490.
In Furst v. Tweed, 93 Iowa, 300,
the principal wrote saying that he
asked a certain sum; that he would
sell "on almost any terms to suit
purchaser,*' and "if you succeed in
selling, I am willing to allow you"
a certain commission. Heldy that the
language used respecting the terms
indicated that this matter was to be
referred to him, and that the agent
had no authority to close a binding
<iontract.
In Balkema v. Searle, 116 Iowa,
374, there was correspondence stat-
ing terms, part cash, "balance given
on time," but the time was not
stated. The court said: "In the
correspondence, some matters were
left indeAnite, to be settled by de-
fendant, doubtless, when the pur-
chaser appeared." Held, that agent
had no authority to make a binding
•contract.
In Grant v. Bde, 85 Cal. 418, 20
Am. St. R. 237, where the owners
^rote, "we will sell" at a certain
price at any time before a given
•date, the court said that the agent
was not thereby authorized to sell,
and in any event material terms
-were not agreed upon, e. g., the form
•of deed, the time of payment, and
^he time of delivery of possession.
SI See, for ezampl0, Stewart v.
Pickering, 73 Iowa, 652. In this
■case the defendants, land brokers in
Iowa, wrote to the plaintiffs attor-
jiey in fact: "Do you have charge
ing to the estate of S? If so, are
they for sale? ♦ ♦ ♦ If the title is
al] right, we can possibly find a cus-
tomer for the list this year. Let us
hear from you as to prices, etc."
The reply thereto was as follows:
"I herewith Inclose you a price-list
of our lands In your county. My
Mother is the widow of S, and Is the
sole devisee by will which is re-
corded in your county. I am exe-
cutor of my father, and attorney in
fact of my mother. The titles are
all strictly clear and good." At-
tcuihed to this letter was the follow-
ing: "Western land for sale, Winne-
bago county, Iowa." [Here followed
a list of the land with the prices.]
VApply to D. S., Falls City, Pa., etc.
Terms ^ down, balance in 4 equal
annual payments, with 5 per cent,
interest," etc. Held, that this cor-
respondence gave no authority to
the defendants to bind the owner by
a sale at the prices named, but was
at most an authority to sell only
subject to her approval or that of
her attorney in fact.
See also Stillman v. Fitzgerald, 37
Minn. 186, where a firm of real es-
tate brokers wrote to the defendant
saying: "We have a customer
[meaning the plaintiff] who would
buy your lot if offered at a fair
price," and asking him to state best
price and the terms, for which he
would sell, and pay their commis-
sion, which was stated. The defend-
ant answered by letter stating price,
and, in part only, the terms, for
.which he would sell, and that he
would pay their commission. It
was held that the brokers were not
thereby constituted the defendant's
S75
§§ 8oi, 802]
THE LAW OF AGENCY
[book II
§ 801. Conditional authority. — The authority may, of course, be
a qualified or conditional one. As long as the conditions or limitations
are lawful, there is no reason why the principal may not limit or qualify
the authority to any extent which suits his pleasure. Such limitations
or conditions, unless waived, will be operative against the agent, and
also against third persons who have, or are charged with, notice of
them. The authority may thus be limited as to time, price, subject-
matter, terms, and the like, and many illustrations of such limitations
will be found in the following sections. It may also require the prin-
cipal's approval before a particular execution shall be deemed author-
ized.^'
§ 802. Authority to sell land not ordinarily to be inferred from
mere general authority to act. — Authority to sell real estate must
ordinarily be conferred in clear and direct language; for, although
there are cases in which it may arise by implication,*" it is not lightly
to be inferred from express power to do other acts, or brought within
the operation of mere general terms. A power of attorney, therefore,
'*to act in all my business, in all concerns, as if I were present, and to
stand good in law, in all my land and other business," gives no author-
ity to sell land ; ** nor does a power "to ask, demand, recover or receive
the maker's lawful share of a decedent's estate, giving and granting to
his said attorney his sole and full power and authority to take, pursue
agents, with a power to bind him by
a contract of sale.
Where an agent, after having ne-
gotiated a sale of the property and
given a receipt, communicated the
general terms of the sale to the
owner and the latter replied request-
ing full information about the price,
about the terms of the sale, and about
the date when the deed should be
made out, as well as requesting that
a blank deed or two be sent him with
the purchaser's name, it was held
that such letter was no evidence of
any authority in the agent to sell the
property. Smith v. Browne, 132 N. C.
365.
An owner wrote, In reply to a
broker's request for a price, that he
would take |1,000, and. If the broker
could sell or rent it, the owner
would do What was right by him.
The agent made a sale. Held, that
there had been no authoriEation.
Riley v. Grant, 16 S. D. 653.
22 See Alcorn v. Buschke, 133 Cal.
655.
2»ComynB, Dig. VII, Polar, A 2,
declares, "So, if a man expresses the
power only by implication, it is
well; as, provided that he shall not
have power to alien, etc., otherwise
than to make a jointure, and leases
for 21 years; it is a good power to
make a jointure and leases. I Leo.
14S." See also Marr v. Given, 23-
Me. 55, 39 Am. Dec. 600.
Compare Bosseau ▼. O'Brien, 4
Biss. (U. 8.) 395.
The mere fact that the owner of
land gives an option to buy, does
not make the one to whom the op-
tion Is given the owner's agent if
the latter sells his option. Reeves:
v. McCracken, 108 Tex. 416.
24 Ashley v. Bird, 1 Mo. 640, 14
Am. Dec. 318.
576
CHAP, m]
CONSTRUCTION OF AUTHORITIES
[§ 802
and follow such legal course for the recovery, receiving and obtaining
the same as he himself might or could do were he personally present ;
and upon the receipt thereof, acquittances and other sufficient dis-
charges for him and in his name to sign, seal and deliver ;" " nor does
a power "to make contracts, to settle outstanding debts and generally
to do all things that concern my interest in any way real or personal,
whatsoever, giving my said attorney full power to use my name to re-
lease others or bind myself, as he may deem proper and expedient ;" *•
nor does a power "to attend to the business of the principal generally,"
or "to act for him with reference to all his business ;" *"' nor does au-
thority to locate and survey land ; *• nor does a power to sell "claims"
and "effects." =•
MHay V. Mayer, 8 Watts (Penn.),
203, 34 Am. Dec. 453. A power of
attorney "to ask. demand and re-
ceive of and from any person or
persons all such real and personal
estate as I may be entitled to by
virtue of my being a son and heir
at law of a named person, does not
authorize a sale and conveyance of
the principal's real estate. Hotch-
kiss V. Middlekauf, 96 Va. 649, 43
Li. R. A. 806. In Gee v. Bolton, 17
Wis. 604, a power "to b&rgaln, pur-
chase, sell, grant, release and con-
vey, to accept and receive all sums
of money, to collect and pay. to sue
and be sued, to give notes and re-
ceipts and to accept the same, and
in his name to make, seal, deliver
and acknowledge," etc., nothing be-
ing said about land, was held not
to give authority to sell and con-
vey land. See also Bean v. Bennett,
35 Tex. Civ. App. 398.
2« Billings V. Morrow, 7 Cal. 171,
68 Am. Dec. 235. Same power also
construed to the same effect in Hun-
ter V. Sacramento Valley Beet Sugar
Co., 11 Fed. 15, 7 Sawy. 498.
27 Coquillard v. French, 19 Ind.
274. Nor does a power of attorney
appointing one "general and spe-
cial agent to do and transact all
manner of business" necessarily
confer power upon the agent to sell
bonds belonging to his principal.
Hodge V. Combs, 1 Black (U. S.),
192, 17 L. Ed. 167. Such a power,
said the court, "may be construed to
confer almost any or no power."
28 Moore v. Lockett, 2 Bibb (Ky.)»
67, 4 Am. Dec. 683.
In Mitchell v. McLaren (Tex. Civ.
App.), 61 S. W. 269, it was held that
a power of attorney "to locate any
such certificate in my name or sell
and assign the same," did not au-
thorize the agent to locate land upon
the certificate and then to sell the
land.
wDeCordova v. Knowles, 37 Tex.
19. See also Berry v. Harnage, 39
Tex. 638, where a power of attor-
ney in the following terms was held
sufficient to authorize a sale of real
estate: "to ask, demand, sue for, re-
cover and receive all such sum and
sums of money, debts, goods, wares,
dues, accounts and other demands
whatever, which are or may be due,
owing, payable, and belonging to me,
or detained from me by any manner
of ways and means whatever, in
whose hands soever the same may
be found; giving and granting unto
my said attorney, by these presents,
my whole and full power, strength
and authority, in and about the
premises, to have, use, and take all
lawful ways and means, in my name
and for the purposes aforesaid, upon
the receipt of any such debts, dues
or issues of money, acquittances or
other sufllclent discharge, for me.
37
577
§§ 803, 804] THE LAW OF AGENCY [BOOK II
§ 803. — — But where A wrote to C, "I wish you to manage
(my property) as you would with your own. If a good opportunity
offers to sell everything I have, I would be glad to sell. It may be
parties will come into San Antonio, who will be glad to purchase my
gas stock and real estate," it was held that C was thereby authorized
to contract for the sale of the real estate, but not to convey it"® So
authority to "use" land to enable the donee of the power to extricate
himself from his financial embarrassments, was held to authorize a sale
or a mortgage of the land.*^ A power "to do any lawful act for and
in my name as if I were present/' was held to authorize a sale and
conve)rance of land.**
§ 804. What may be sold. — In order that the agent may lawfully
sell any particular parcel of land it is essential that that parcel be in-
cluded within the language of the power either expressly or by clear
implication. It is sometimes said that the land must be described in
the power with the same certainty which would be required in the
conveyance itself; and, though this may perhaps be too strict a rule^
it certainly is requisite that the instruments conferring the authority
shall show with reasonable certainty not only what lands are to be the
subject-matter of the power but also what interests or estates therein
are to be sold. A number of illustrations, more or less consistent, of
the actual holdings of the courts are appended.
A power of attorney authorizing the agent "to bargain, sell, grant,
release and convey, and upon such sales, convenient and proper deeds
with such covenants as to my said attorney shall seem expedient, in
due form of law, as deed or deeds, to make, seal, deliver and acknowl-
edge," although it is silent as to what the agent is to sell and convey,
clearly contemplates a sale of lands, and is held to be sufficiently broad
to authorize the agent to sell and convey whatever estate the principal
then had.**
and in my name, to make, seal, eze- ttVeatch ▼. Gilmer (Tex. Civ.
cute deedB of conveyance and de- App.), lU S. W. 746. The court said,
liver, and generally all and every "This is a universal power of attor-
act or acts, thing or things, device ney, but its operation will be by
or devices, in the law whatsoever law restrained to the particular
needful and necessary to be done in buaineas in which it is presumed
and about the premises, for me and the Intention was to delegate the
in my name to do and execute and authority."
perform." » Alarr v. Given, 2S Me. 55, 39 Am.
to Lyon v. Pollock, 99 U. S. 66S, 25 Dec. 600. When a power of attorney
L. Ed. 265. executed by a husband and wife au-
ti Baker v. Byerly, 40 Minn. 489. thoriases the agent to convey any
578
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 80s
So a power of attorney in due form^ authorizing the agent "to sell,
bargain and convey three certain lots of land in the village of Pent-
water belonging to me," but containing no other or further descrip-
tion, is sufficient where the principal had three such lots and only three
in that village ; •* but an authority "to convey a piece of land in Cole-
brook belonging to the Bank," there being more than one such piece
is too indefinite.*'
An authority to sell all the lands which the principal may own, or all
which he may own and lying within a certain territory, is good with-
out a more specific description.'* And an authority to sell any or all
of the principars "property," and to execute all necessary instruments
authorizes the sale of his real estate.*' Where the lands are suffi-
ciently described, the fact that the principal apparently intended to
add a more specific description but failed to do so, will not defeat the
power.**
§ 805. — — — A power of attorney authorizing an agent to sell
"the one-half" of a lot of land, without specif)ring which half, or
and all lands which may come into
"his" possession by reason -of cer-
tain homestead entries, "his" refers
to the hushand only, and land he-
longing to them Jointly or to the
wife alone cannot he included. Fin-
negan v. Brown, 90 Minn. 396.
M Vaughn y. Sheridan, 50 Mich.
155. See also Crimp v. Yokely, 20
Tex. Civ. App. 231.
MLumbard v. Aldrich, 8 N. H. 31,
28 Am. Dec. 381.
MMunger v. Baldrldge, 41 Kan.
236, 13 Am. St. Rep. 273; Roper y.
McFadden, 48 Cal. 346; Kane y.
Sholars, 41 Tex. Ciy. App. 154.
A power to conyey "all of our
land in the State of North Caro-
lina," held a sufficient description to
admit evidence aliunde to identify.
Janney v. Robbins, 141 N. C. 400.
"Authority to sell any or all of
plaintifTs land in the state, includes
authority to sell any specific tract
therein." Marshall y. Shibley, 11
Kan. 114.
Under a power to sell any of the
principaVs land "excepting the farm
occupied by me * * * as a home-
stead in Green River Valley • • •
to which land and farm this power
of attorney does not extend," justi-
fies the sale of a lot in that valley
never occupied as a homestead.
Cummings v. Dolan, 52 Wash. 496,
132 Am. St. R. 986.
«7 Gardiner v. Griffith (Tex. Civ.
App.), 56 S. W. 558.
A power of attorney to sell and
convey "any or all tracts, lots,
pieces or parcels of land or real es-
tate which have descended to, or
have been acquired by, the said
[ plaintiff ], in any of the States
• ♦♦ of the United States of Amer-
ica, ♦ • • excluding therefrom all
lots in the city of Omaha, State of
Nebraska," justifies a sale of land
in Pennsylvania which the principal
owns. Linton v. Moorhead, 209 Pa.
646.
A power to sell and convey all the
land of the principal within a cer-
tain parish is a sufficient descrip-
tion. Rownd v. Davidson, 113 La.
1047.
88 Bradley y. Whitesides^ 55 Minn.
455.
579
§ 8o6J
THE LAW OF AGENCY
[book II
whether in common or in severalty, empowers him to sell oue-half in
severalty and to exercise his own discretion as to which half.'*
An agent authorized to sell and convey a piece of land except such
parts as his principal had previously conveyed, may convey a piece pre-
viously sold by his principal but not conveyed ; *® and under a general
authority to sell any of his principal's real estate he may sell that which
the principal subsequently acquires ; *^ especially where the power ex-
pressly refers to lands which the principal "does or may" own.** But
where the power clearly contemplated the inauguration of a business
and authorized the agent to "buy and sell" lands, it was held that the
power to sell was to be limited to lands bought under it.*" And, clearly,
where the power is limited to land which the principal owns or is in-
terested in at the time of the execution of the power, a conveyance of
subsequently acquired land is not authorized.**
§ 806. When authority to be exercised. — Where a definite time
is fixed by the clear language of the power, any sale after that time
will be inoperative unless the principal waives the limitation or ratifies
the sale.*" An. authority to sell lands at a given sum, if they can be
sold "immediately," will not authorize a sale at that price a month
afterwards, without any further authority ;*• nor can an agent em-
powered to sell real estate at a given price, without further instruc-
tions, sell it a considerable time later at the same price when the land
89 Alemany v. Daly. 36 Cal. 90.
Although, where two parcels are
described in the power, the sale of
both, if any, may be required, the
principars parol consent to the sale
of one before the other will justify
such a sale. Campbell v. Beard, 57
W. Va. 501.
*o Mitchell V. Maupln, 8 T. B. Mon.
(Ky.) 185.
*i Fay V. Winchester, 4 Mete.
(Mass.) 513. See also Benschoter v.
Lalk, 24 Neb. 251; Benschoter v. At-
kins, 25 Neb. 645.
42Berkey v. Judd, 22 Minn. 287;
Bigelow y. Livingston, 28 Minn. 57;
Tuman v. Pillsbury, 60 Minn. 520
(where the authority was to enter
upon, sell, and convey all land
"which we now own, or which we
may hereafter acquire or become
seized of, or In which we may now
or hereafter be in any way inter-
ested, under the act of congress"
granting additional homesteads to
soldiers and sailors); Snell v. Wey-
erhauser, 71 Minn. 57 (where a
power to convey all land in which
"we may now or hereafter be in any
way interested" was held to author-
ize conveyance of land to which
the husband subsequently acquired
the title subject to the wife's right
of dower).
<s Greve v. Coffin, 14 Minn. 345, 100
Am. Dec. 229. See also Allis v. Gold-
smith, 22 Minn. 123.
4* Turner v. McDonald, 76 Cal.
177, 9 Am. St. R. 189 (even though
the land was subsequently acquired
by foreclosure of a mortgage which
the principal then owned); Penfold
V. Warner, 96 Mich. 179. 35 Am. St
R. 591.
« Henry v. Lane, 128 Fed. 243, 62
C. C. A. 625.
« Matthews v. Sowle. 12 Neb. 398.
.•>8o
CHAP. Ul]
CONSTRUCriON OF AUTHORITIES
[§ 807
« .
has greatly increased in value.*^ An authority to an agent to sell real
estate within "a short time" will authorize a sale made within two
weeks, even though in the meantime the property has enhanced in
value.*'
$ 807. What execution authorized.— The principal has the right,
in cases of this sort,- to prescribe the terms upon which he will sell,
and persons having or charged with notice of these terms can acquire
no rights against the principal upon a contract which ignores or sub-
stantially deviates from them. Thus, an agent authorized to make the
purchase price payable "in three years,*' has no implied authority to
make it payable "on or before three years." *•
So authority to sell real estate in "lots as surveyed by" a person
named, does not empower the agent to sell the whole tract for a gross
sum or at so much per acre ; ^^ a letter to an agent authorizing him to
sell "for $5,000, one-half cash, is not satisfied by an agreement to sell
for $5,000, $200 cash, $2,300 in three weeks and the balance on time ;" *^
nor does authority to sell on time with interest on deferred payments
justify a sale for cash ; ^^ an authority to sell lands if they could be sold
*f (Nine months later). Waawey*
ler V. Martin, 78 Wis. 59 (three
years later), Proudfoot v. Wight-
man, 78 111. 563. Same, where six
years had elapsed and the land had
changed greatly in value and state
of improvement: Hall v. Gambrill,
88 Fed. 709 (aff'd 92 Fed. 32). But
compare Hartford v. McGIllicuddy,
103 Me. 224, 16 L. R, A. (N. S.) 431,
12 Ann. Gas. 1083.
« Smith V. Fairchild, 7 Colo. 510.
*• Jackson v. Badger, 36 Minn. 52;
to the same effect, see, Dana v. Tur-
lay, 38 Minn. 106; Jones v. Holladay,
2 App. D. C. 279; Coleman v. Gar-
rigues, 18 Barb. (N. Y.) 60; Henry
V. Lane, 128 Fed. 243, 62 C. C. A. 625,
and Monson v. Kill, 144 111. 248.
»oRice V. Tavernier, 8 Minn. 248,
83 Am. Dec. 878.
Bi De Sollar v. Hanscome, 158 U.
S. 216, 39 L. Ed. 956; to the same ef-
fect, see, Speer v. Craig, 16 Colo.
478; Field v. Small, 17 Colo. 386;
Rundle v. Cutting, 18 Colo. 337; Mon-
son V. Kill, 144 111. 248; Staten v.
Hammer, 121 Iowa, 499.
In Hartenbower y. Uden, 242 111.
484, 28 L. R. A. (N. S.) 738, the
court says: ''If the written author-
ity to the agent to sell fixes the
amount of the cash payment, and
the amount and date of the defierred
payments, he has no authority to
make a contract for a different cash
payment, or for deferred payments
of different dates or amounts." See
also Oliver v. Sattler, 233 111. 536;
Hoyt V. Shipherd, 70 111. 309.
In Breese v. Lindsay, 8 Vict. 1*. R.
Eq. 232, it was held that an agent to
sell land for cash could not sell on
a month's credit. And in Gllmour v.
Simon, 15 Manitoba, L. R. 205, It
was held that an agent to sell land
on terms requiring "?1,000 cash"
cannot sell on terms that this sum
shall be paid "on acceptance of ti-
tle." But In Maffey v. Hobart, 14
Vict. L. R. 880, where the author-
ity was to sell land "one fourth
cash," a sale permitting the buyer
to pay the one fourth in two in-
stallments a few days aparlt "was
held to be substantially authorized.
82Everman v. Herndon, 71 Miss.
823.
581
§ 8o8]
THE LAW OF AGENCY
[book II
for a certain price does not justify a sale partly for cash artd partly on
time and binding the seller to furnish an abstract of title and pay taxes
and interest on an existing mortgage up to a future date;" an au-
thority to sell at auction does not justify a private sale ; ** authority to
sell to one person does not justify a sale to an entirely different per-
son ; ^^ an authority to sell for one price does not justify a sale for a
less price ; •• and an authority to sell, the vendee to pay certain mort-
gages, does not justify a sale, the vendee to "assume" the mortgages,
unless, perhaps, where they are not yet due.*^
§ 808. But where an agent is authorized to sell partly for
cash and partly on time, the proportions not being fixed, a sale with
more than one-third cash, one-half of the balance in three and the re-
nuinder in five years, with six per cent, interest, secured by a mort-
gage, is held to be within the terms of the authority ; *• where the au-
thority is to sell, the payments to be made in three equal installments,
a clause providing that if the installments are not paid at the time
specified, the contract shall be forfeited at the option of the seller is
within the authority;" where the agent is authorized to make "one-
half payable on or before one year," a contract to sell for "one-half
payable in one year," is within the terms of the authonzation ; •^ and
where the authority is to sell for a certain sum, "about one-half cash,"
a sale for that sum in cash is held to be within the terms of the au-
thority.^^
88 Staten v. Hammer, 121 Iowa,
499. To the same effect, see, Strong
V. Robs, 33 Ind. App. 686. See also
Brown v. Grady, 16 Wyo. 151; Mor-
ton V. Morris, 27 Tex. Civ. App. 262.
^* Davis V. Gordon, 87 Va. 559.
BBBreen v. Rives, 16 App. Div.
(N. T.) 632, to the same effect, see
Graves v. Horton, 88 Minn. 66.
M Field V. Small, 17 Colo. 386, to
the same effect, see, Philadelphia
Mortgage and Trust Co. v. Hardesty,
68 Kan. 683; Holbrook v. McCarthy,
61 CaL 216; Bush v. Cole, 28 N. Y.
261, 84 Am. Dec. 343; Wasweyler v.
Martin, 78 Wis. 69. But otherwise,
where the agent is given discretion,
as where he Is told that as soon as
he was satisfied that he was getting
"the top notch in price" he should
"close the deal." Vermont Marble
Co. V. Mead, 85 Vt 20.
" Schultz V. Griffin, 121 N. Y. 294,
18 Am. St Rep. 825.
Authority to sell subject *to a cer-
tain lease, will not Justify a sale
with warranty, as that the title is
free from all incumbrances. Thom-
as V. Joslin, 80 Minn. 388.
Authority to sell with part of the
price to remain on mortgage, will
not Justify giving the buyer the op-
tion to pay off the mortgage before
the time fixed. Jordan v. Walker,
11 Victorian L. R. 346.
See also Donaldson v. Noble, 14
Vict L. R. 1021.
M Smith v. Keeler, 151 111. 518.
50 McLaughlin v. Wheeler, 1 S. D.
497.
eoDeakin v. Underwood, 37 Minn.
98, 5 Am. St Rep. 827.
•iWitherell y. Murphy, 147 Mass.
417.
582
CHAF. Ill] CONSTRUCTION OP AUTHORIT|£S [§ 809
Under a power to convey when the sale has been made by certain
other persons^ a conveyance can only effectively be made when those
persons have made the sale.*'
§ 809. Authority to make representations as to value, quantity,
location, boundaries or title. — ^An agent authorized merely to sell
land has thereby, ordinarily, no implied power to bind his principal by
representations concerning the value of the land ; ** the same thing is
ordinarily true concerning representations as to the quality, or, per-
haps, the quantity, of the land, though such representations, while not
furnishing ground for action against the principal, might be sufficient
to justify a rescission of the contract.** Representations as to location
may be within the scope of such an agent's authority as being either
necessary or usual,** and the same thing may be true respecting bound-
aries. In a case of the latter sort it was said : "In the sale or exchange
of a tract of land, it is usual and necessary that the seller point out to
the prospective buyer the boundaries of the tract — ^that he exhibit the
thing he offers for sale to the view and inspection of the prospective
buyer." ••
Representations respecting title (other than the usual covenants of
warranty, hereafter referred to), or waivers of the principal's claim of
title are not usually within the power of an agent merely authorized
to sell."'
•>£)eputron v. Young, 134 T7. 8. 557. No rescisalon if there was no
241, S8 Li. Bd. 92S. agency. Reeves v. McCracken, 103
u See, Mayo ▼. Wahlgreen, 9 Colo. Tex. 416. Here A, contracted to sell
App. 506; Sanford v. Handy, 23 to X; X by misrepresentations in-
Wend. (N. Y.) 260; Lake v. Tyree, duced B to agree to buy from X. At
90 Va. 719 (that lots were "good X's request, to save one conreyance,
building lots and valuable"). Com- A conveyed directly to B. HeM, A
pare Mullens v. Miller, 22 Ch. Div. not responsible for fraud of X in-
194. duclng the sale to B.
•*Nat. Iron Armor Co. v. Bruner, «See, Sanford v. Handy, supra;
19 N. J. Bq. 331 (quantity and qual- McKinnon v. Vollmar, supra; Porter
ity); Bennett v. Judson, 21 N. Y. v. Beattie, 88 Wis. 22.
288 (location and quality); McKin- ••Green v. Worman, 83 Mo. App.
non V. Volhnar, 75 Wis. 82, 17 Am. 568.
SL R. 178, 6 L. R. A. 121 (ajnount Where principal refers a prospec-
of timber on it). In Oriswold v. tlve buyer to the agent to ascertain
Ctebbie, 126 Pa. 353, 12 Am. St R. the boundaries, he is bound by the
878, the court holds that an agent to agent's representations. Beatty v.
sell an estate has implied authority Ireland, 152 N. Y. App. Div. 588.
to represent its acreage. An agent «TTondro v. Cushman, 5 Wis. 279;
authorized to sell has no authority Iowa R. R. Land CJo. v. Fehrlng 126
to make representations as to the Iowa, 1.
nature or quality of a foundation So an agent authorized to sell has
walL Samson v. Beale, 27 Wash, no authority to promise that the
583
§§ 8io, 8iiJ
THE LAW OF AGENCY
[book XI
§ 8io. Authority to make contract of sale justifies written con-
tract, in usual form. — An authority to make a binding contract for
the sale of land will, where there is nothing to indicate a contrary in-
tention, carry with it by implication the authority to make a contract,
in writing, where that is requisite or proper ; •* to make it in the usual
form, and to include within it all usual and reasonable terms and pro-
visions to accomplish the desired end. Thus the common provisions
in well drawn contracts of this nature respecting remedies, time and
place of performance, the effect of failure to perform, and the like,
would doubtless be deemed authorized under this rule."
§ 8ii. Authority to sell and dispose of land implies right to con-
vey.—A mere authority to negotiate a sale of land, or even authority
to make a binding contract for its sale, of itself, involves no authority
to actually convey it.'" But, on the other hand, unless there be some-
thing in the instrument, or in the circumstances surrounding its ex-
ecution, by which its scope is limited, as to the mere finding of a pur-
chaser or the negotiation of a contract of sale, a general power to sell
and dispose of real estate, if executed with the necessary formalities,
carries with it the power to execute all the instruments necessary and
proper to complete the sale and carry it into effect in the ordinary
way.^^ Said Chief Justice Shaw, "where the term 'sale' is used in its
buyer shaU have a right of way over
adjoining land, owned by his prin-
cipal, or that such land will not be
fenced. Noftsger v. BarkdoU, 148
Ind. 531.
But where the vendor referred
the vendee to his local agent as one
acquainted with the land, and equip-
ped to explain its qualities, and the
agent in so doing misrepresented, it
was held a ground for rescission. A
sale of coal lands. Mather v.
Barnes, 146 Fed. 1000.
•s Johnson v. Dodge, 17 111. 433;
Blacknall v. Parish, 6 Jones Eq. (N.
G.) 70, 78 Am. Dec. 239; Keim v.
Undley (N. J.). 30 Atl. 1063, s. o.
54 N. J. Eq. 418.
wSee Kilpatrick v. Wiley, 197
Mo. 123; Gund Brew. Co, v. Tourte-
lotte, 108 Minn. 71, 29 L. R. A. (N.
S.) 210. But in Punk v. Church,
132 Iowa, 1, an agent authorized to
sell, made an agreement to reim-
burse the purchaser if he lost a half
of the land, and it was held that au-
thority to make such a contract was
not to be implied; and in Gund
Brew. Co. v. Tourtelotte,, supra, it
was held that an agent to sell had
no implied authority to agree that
the buyer might have the rents from
the property during the pendency of
the negotiations.
TO See Delano v. Jacoby, 96 CaL
275, 31 Am. St R. 201; Dayton v.
Nell. 43 Minn. 246.
71 Valentine v. Piper, 22 Pick.
(Mass.) 85, 33 Am. Dec. 715; Hem-
street V. Burdick, 90 111. 444; People
V. Boring, 8 Cal. 406, 08 Am. Dec.
331; Fogarty v. Sawyer, 17 CaL 589;
Marr v. Given, 23 Me. 55, 39 Am.
Dec. 600; Alexander v. Walter, S
GUI (Md.), 239, 50 Am. Dec. 688;
Farnham v. Thompson, 34 Minn.
330, 57 Am. Rep. 59. Of these cases,
8 Cal. 406, and 8 Gill, 239 were of-
ficial sales; 17 Cal. 589, was a sale
under a power conferred by mort-
584
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 8i2, 813
ordinary sense, and the general tenor and effect of the instrument is
to confer on the attorney a power to dispose of real estate, the author-
ity to execute the proper instruments required by law to carry such
sale into effect is necessarily incident." ^*
It is, of course, true in many cases, that an oral or written authority
may be sufficient to justify a written contract to sell, although it would
not be sufficient in form, as for example because of the lack of a seal,
to authorize the execution of a deed.
§ B12. To insert usual covenants of warranty. — Although the de-
cisions are not entirely harmonious, the better rule seems to be that a
general power to sell and convey land, without restrictions, as distin-
guished from a mere authority to release or quitclaim the principal's
interest therein, carries with it authority to insert in the conveyance
the ordinary covenants of general warranty, where such sales are usu-
ally made with such covenants,'* but not to make any unusual or
special warranty, as of the quantity or quality of the land sold.'* A
fortiori may the agent warrant where he is expressly authorized to sell
on such terms as he shall deem most eligfible.''*
The fact that the agent inserts an unauthorized warranty will not
ordinarily prevent the deed from having effect as a conveyance.'*
§ 813. Authority to sell docs not justify a mortgage. — A power to
sell, however, conveys no implied authority to mortgage." Said Judge
^age; the others were sales under
formal powers of attorney, all ap-
parently, under seal.
T« In Valentine v. Piper, supra.
A person entrusted with a deed
for the purpose of getting the grant-
or's signatures and then delivering
It, is clothed with at least apparent
authority *to close the deal" on
their part. Bretz v. Connor, 140
Wis. 269.
Secret instructions as to the con-
ditions upon which a deed is to he
delivered do not hind purchaser who
has no notice of them. Thornton v.
Pinckard, 157 Ala. 206.
Authority given to A to convey
land when sold by B, does not just-
ify a conveyance of any land not so
sold. Deputron v. Young, 134 U. 8.
241, 33 L. E7d. 923.
T'Vanada v. Hopkins, 1 J. J.
Marsh. (Ky.) 285, 19 Am. Dec. 92;
Peters v. Famsworth, 15 Vt. 165, 40
Am. Dec. 671; Le Roy v. Beard, 8
How. (U. S.) 451, 12 L. Ed. 1151;
Backman v. Charlestown, 42 N. H.
125; Famham v. Thompson, 34
Minn. 330, 57 Am. Rep. 59; Dimmick
V. Sprinkel, 69 Wash. 329; McLaugh-
lin V. Wheeler, 1 S. D. 497; Schultz
V. Griffln, 121 N. Y. 294, 18 Am. St.
Hep. 825. Same rule applies to an
authority to mortgage. Richmond v.
Voorhees, 10 Wash. 816. See also
Bronson v. Coffin, 118 Mass. 156; Cf.
Yazel V. Palmer, 88 111. 597. Con-
tra: Stengel v. Sergeant, 74 N. J.
Eg. 20.
T4 National Iron Armor Co. v.
Bruner, 19 N. J. Eq. 331.
TsLe Roy v. Beard, supra.
76 Kane v. Sholars, 41 Tex. Civ.
App. 154; Rohinson v. Lowe, 50 W.
Va. 76.
TTHawxhurst v. Rathgeh, 119 Cal.
531, 63 Am. St. R. 142; Jeffrey v.
Hursh, 49 Mich. 31; Wood v. Good-
585
§8i4l
THE LAW OF AGENCY
[book II
Cooley, "The principal determines for himself what authority he will
confer upon his agent, and there can be no implication from his au-
thorizing a sale of his lands that he intends that his agent may at dis-
cretion charge him with the responsibilities and duties of a mort-
gagor." "
§ 814. Authority to receive payment. — The receipt of so much of
the purchase money as is to be paid down, is within the general scope
of an authority to sell and convey,^* or to make a binding contract to
sell upon terms including a payment at the time of the execution of
the contract, but is held not to be within the power of an agent author-
ized merely by parol to contract for the sale,'® Mere authority to re-
ceive the immediate payment will not, however, warrant the receipt of
subsequent payments.'^ But an agent authorized to contract for the
ridge, 6 Cush. (Mass.) 117, 52 Am.
Dec. 771; Albany Fire Ins. Co. v.
Bay, 4 N. Y. 9; Ferry v. Lalble, 31
N. J. Eq. 866; Kinney v. Mathews,
69 Mo. 620; Patapsco, etc., Co. v.
Morrison, Fed. Cas. No. 10,792, 2
"Woods (U. S. C. C), 395; Devaynes
T. Robinson, 24 Beav. 86; Morris y.
Watson, 15 Minn. 212; Minnesota
Stoneware Co. ▼. McCrossen, 110
Wis. 316, 84 Am. St R. 927; Camp-
bell V. Foster Home Association, 163
Pa. 609, 43 Am. St R. 818, 26 L. R.
A. 117; Salem Nat Bank y. White,
159 111. 136; Morris v. Bwlng, 8 N.
Dak. 99; First Nat. Bank v. Hicks,
24 Tex. Civ. App. 269.
78 In Jeffrey v. Hursh, supra.
70 Peck V. Harriott, 6 Serg. ft R.
(Penn.) 146, 9 Am. Dec 415; Carson
V. Smith, 5. Minn. 78» 77 Am. Dec.
539; Mann v. Robinson, 19 W. Va.
49, 42 Am. Rep. 771; Alexander ▼.
Jones, 64 Iowa, 207; Yerby v. Qrig*-
by. 9 L«lgh (Va.), 887; Johnson v.
McGruder, 15 Mo. 365; Goodale y.
Wheeler, 11 N. H. 424.
80 Smith V. Browne, 132 N. C. 365;
Dyer v. Duffy, 39 W. Va. 148, 24 U
R. A. 339. See also Mann v. Robin-
son, supra; Stewart v. Wood, 63 Mo.
352.
One of three tenants In common
was given parol authority to agree
to sell their land. In the presenee
of the other two, the deeds were
made out; and one of the parties de-
livered them to the purchaser in the
presence of the one acting as agent,
but In the absence of the other. The
deed recited, in the usual manner,
the receipt of the purchase price.
The purchaser paid to the one acting:
aa agent, the share of the absent
one, although he had been expressly
directed not to receive it Held that
the absent one could recover her
share of the price of the purchaser,
because an authority to an agent to
make a contract of sale, does not
necessarily give an authority to re-
ceive payment Shaw v. Williams,.
100 N. C. 272. A fortiori a broker
who haa mere authority to bring^
the parties together, has no author-
ity to receive payment Halsell ▼.
Renfrow, 14 OkL 674, aff'd 202 U. S.
287.
n Mann's Ex'rs v. Robinson^ 1^
W. Va. 49, 42 Am. Rep. 771. See
Johnson v. Craig, 21 Ark. 533. No
authority in the face of an express
provision in the contract to the con-
trary. Mets V. Harbor, etc., Sav-
ings Ass'n, 117 N. T. App. Div. 825.
Of course, the agent's authority over
the matter of the sale of his princi-
pal's land may be so general as to
give him power to receive payments,
at any time, or to waive defaults in
paying at the time fixed. McDonald
V. Kingsbury, 16 Cal. App. 244.
586
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 8is, 8i6
sale, with the price to be paid in installments, and upon payment of
Uie installments to execute the conveyance, is held to have implied
power to receive the installments.'^
When authorized to receive payment he must, like other agents
similarly empowered, accept cash only or its equivalent, and he has no
implied power to receive in payment notes, checks, or other similar
tokens," and a fortiori not notes given by himself for which the prin-
cipal is not responsible.** Authority to receive such payments as are
to be made as incidents of the sale, does not justify the receipt of
payments before any sale is entered into, and, obviously, does not
justify the receipt of payments upon a contract which the agent had no
authority to make."
§ 815. Conve3rance must be for consideration moving to princi*
pal. — An agent authorized to sell and convey land will, unless the
contrary appears, be deemed. to be authorized to convey it only upon a
sale, that is, upon a transfer for a consideration, and for a considera-
tion which moves to the principal.** The land presumptively repre-
sents value and if the agent sells and conveys it, it must be expected
that he is to obtain something like a substantial equivalent.*^
§ 816. Authority to give credit — ^The power to sell land does not
of itself imply an authority to sell on credit. The presumption is that
the sale is to be for cash.** But where the agent is authorized to sell
"on such terms as to him shall seem meet," he may grant a reasonable
•*Peck ▼. Harriott, supra; Carson
T. Bmithf- supra.
MOrmsby v. Graham, 128 Iowa,
202; Wilkin v. Toss, 120 Iowa, 600;
Runyon v. Snen, 116 Ind. 164, S
Am. St R. 893. But compare Gal-
braith v. Weber, 68 Wash. 132, 28 L.
R. A. (N. S.) 341.
•«Rnnyon ▼. Sn^l, supra.
M Schaeffer v. Mutual Ben. L. Ins.
Co., 38 Mont 469; Brown T. Grady,
16 Wyo. 161 (receipt of earnest
money upon an unauthorized con-
tract does not bind principal);
Jackson t. Badger, 86 Minn. 68
(same).
••Alcorn T. Buschke, 138 Cal. 666;
Hunter ▼. Eastham, 96 Tbl. 648. In
Nelll ▼. Klelber, 61 Tez. Civ. App.
662, a power to sell and ''to do with
the said land as if the same were his
own property," was held to author-
ise a sale on credit for the agent's
own benefit
» Hunter v. ESastham, 96 Tex.
648; Lewis ▼. Lewis, 208 Pa. 194;
Alcorn v. Buschke, 188 Cal. 666.
88 Lumpkin v. Wilson, 6 Helak.
(Tenn.) 666; to the same elfect, see
Alcorn ▼. Gleseke, 168 Cal. 896;
Llghtfoot v. Horst, 103 Tex. 648;
Bowles ▼. Rice, 107 Va. 61; McKay
▼. McKinnon, Tex. Civ. App. — ,
122 S. W. 440; Edwards v. Darid-
son (Tex. Civ. App.), 79 S. W. 48;
Staten v. Hammer, 121 Iowa, 499;
Dyer v. Duflty, 39 W. Va. 148; Win-
ders V. Hill, 141 N. Car. 694; and* as
a matter of course, where the power
of attorney itself authorizes only a
sale for cash, a sale on credit may
be treated as void by the principal.
Whitley V. James, 121 Ga. 621.
The power will be strictly con-
587
§§ 8i7, 8i8]
THE LAW OF AGENCY
[book II
credit.®* An autliority to sell on credit, but not fixing the time to be
given, implies a power to grant a reasonable time.**^
§ 817. Authority to sell does not authorize exchange or barter. —
Neither will a power to sell and convey land imply an authority to
barter or exchange it for other property, or to take the pay in mer-
chandise, services, and the like. It is presumed, in the absence of
anything showing a contrary intent, that the land is to be sold only,
and sold for cash.*^
§ 818. Or gift.— ^ fortiori has the agent no authority to
give the land away, or to convey it without any consideration moving
to the principal.**
strued. A power to sell for cash at
any time within thirty days, will not
justify giving a credit for not more
than thirty days. Bowles y. Rice,
supra,
w Carson r. Smith, 5 Minn. 78, 77
Am. Dec. 539.
In Morton v. Morris, 27 Tex. Civ.
App. 262, the agent was given au-
thority to sell on such terms as '*to
htm shall seem meet." He sold the
land and took as part of the consid-
eration a non-negotiable note not
dne until one year after the removal
of an attachment lien in which the
purchaser was interested and of
which the owner had no notice.
The court said: "Were It not for the
fact that it [the power], empowers
the agent" to sell on. such terms as
to him shall seem meet, "there could
be no Implication that authority was
to sell on credit, but the presump-
tion would be that the sale should
be for cash. As it is he was author-
ized to sell on reasonable credit.
♦ ♦ ♦ Is twelve months after • ♦ •
the ending of a lawsuit a reasona-
ble credit to be given by an agent
for the payment of the purchsse
money due for the sale of his prin-
cipal's property? As a matter of
law, we think not"
90 Brown v. Central Land Co., 42
Cal. 257.
n Reese y. Medlock, 27 Tex. 120,
84 Am. Dec. 611; Trudo v. Anderson,
10 Mich. 367, 81 Am. Dec. 795; Mann
V. Robinson, 19 W. Va. 49, 42 Am.
Rep. 771; Lumpkin v. Wilson, 5
Heiak. (Tenn.) 555; Rhine v. Blake,
59 Tex. 240; Morrill v. Cone, 22
How. (U. S.) 75, 16 L. Ed. 253;
Hampton v. Moorhead, 62 Iowa, 91;
Dupont v. Wertheman, 10 Cai. 354;
Mott V. Smith, 16 Cal. 533; Paul v.
Grimm, 165 Pa. 139, 44 Am. St. R.
648; 8. 0. 183 Fa. 326; Mora v. Mur-
phy. 83 CaL 12; Chapman v. Hughes,
134 Cal. 641; Edwards v. Davidson
(Tex. Civ. App.), 79 S. W. 48; Kemp-
ner v. Rosenthal, 81 Tex. 12.
An agent, ta whom a deed has
been given with the name of the
grantee in blank, and who is author-
ised to insert the name of a pur-
chaser and deliver the deed to him,
has therefrom no implied authority
to deliver the deed upon an unau-
thorized exchange for other land, or
to bind his principal by an agree-
ment that the principal will assume
and pay a mortgage upon such other
land. Pease v. Pink, 3 Cal. App. 371.
»2ln Randall v. Duil, 79 Cal. 115,
3 li. R. A. 754, it was conceded that,
where the authority was to sell, a
conveyance by way of gift passed
no title, but that a bona fide mort-
gagee of the donee had a valid Uen
upon the land to the extent of his
money advanced; and in Van Zandt
V. Furlong, 63 Hun, 630, it was held
that, although an attorney with
mere authority to sell could not
make a valid transfer without val-
uable consideration, yet a subse-
quent purchaser from the transferee
588
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 819^24
§ 819.
Or giving option to buy.-*An agent with authority
to sell has, thereby, no implied authority to give an option to buy.
Such an option would usually be a hindrance rather than a help. It
would, during its term, prevait a sale to any other person, and, at the
same time, a sale to the one holding the option would not be insured.®*
§ 8aa — ^^^- Or permitting waste or sale, of timber separate
from land.— An agent or attorney who has power only to bar^in
and sell land subject to confirmation, has no authority to license any-
one to enter thereon and commit waste or cut timber, nor has he
ix>wer to sell the timber apart from the land.'*
§ 8ai. -^— ^ Or changing boundaries of land,-*-Nor has an
agent, authorized to sell or rent real estate, any implied authority to
agree with an adjoining land owner upon a change of the boundaries
of the principars land.*^
§ 823. Or partition* — Authority to sell and convey land
does not authorize a partition of the land, in which the principal has
an interest as tenant in common.'*
§ 833. — : Or dedication to public use. — Mere authority to
sell and convey land does not imply powcrito dedicate any part of it
to the public use 7 '^ but a power "to sell, convey, plat and subdivide in
such manner as to make the property marketable and to acknowledge
and record such plat," implies a power to dedicate such portion as may
be necessary to the public use.*' So a power to lay out land in order
to dispose of it, implies authority to dedicate the necessary high-
ways," and authority to purchase a town site and lay it out, implies
power to dedicate proper and appropriate streets.*
§ 834. ■ Or conveyance to pay principal's debts, or assign-
ment for creditors. — Authority to sell land does not authorize a con-
veyance of it in settlement of a pre-existing claim against the princi-
could not recover back hlB conald-
eration by offering to prove, simply
that the prior conveyance had been
made by an agent with mere author-
ity to sell and had, in fact, been
made without consideration, where
he himself had not been disturbed.
•3 Field V. Small, 17 Colo. 386;
Tlbbs V. Zirkle, 55 W. Va. 49, 104
Am. St R. 977; Swift v. Erwln,
Ark. — , 148 S. W. 267; Wynkoop v.
Shoemaker, 37 App. D. C. 25S. See
aiso Dyer v. Dii«y, 39 W. Va* 148, 24
L. R. A. 339.
8* Hubbard v. Elmer, 7 Wend. (N.
Y.) 446, 22 Am. Dec. 590; St. Louis
S. W. Ry. Co. V. Bramlette (Tex.
Civ. App.), 85 S. W. 25.
98 Fore V. Campbell, 82 Va. 808.
MBorel V. Rollins, 30 Cal. 408;
Wirt V. McEnery, 21 Fed. 233.
97 Wirt V. McEiiery, 21 Fed. 233;
Gosselin v. Chicago, 103 111. 623;
Anderson v. Bigelow, 16 Wash. 198.
98 Wirt V. McEnery, supra.
89 State V. Atherton, 16 N. H. 203.
1 Bartpau v. West, 23 Wis. 416.
589
§§ 825-827]
THE LAW OF AGENCY
[B(X)K II
pal,* nor an assignment of it for the benefit of the principal's cred-
itors.' But where the authority was to sell the land and pay the pro-
ceeds to the principal's creditor, it was held that a conveyance of the
land directly to the creditor in satisfaction of the debt, was within the
terms of the power.*
§ 835. — _ Or conveyance in payment of agent's debts* — An
agent authorized to sell and convey real estate can do so only for and
in behalf of his principal.' He may not convey it in trust for thfe pay-
ment of his own debts ; • nor may he make the conveyance directly,
for the payment of his own debt, or the joint debt of himself and one
of his principals**
§ 826. — — Or convesmnce in trust for support of princit>ar»
child, etc.— Where a wife was authorized to transact any business
in connection with buying, selling, transferring or mortgaging real
estate as agent of her husband, it was held that a conveyance in trust
for the support of their infant daughter for a period of fifteen years
was not within the authority given.* Neither may she convey it in
satisfaction of advances made to her by their son.*
§ 827. — — — Or rescinding or altering contract. — ^An agent, au-
thorized merely to make a contract for the sale of land, exhausts his
«Sklrvln v. O'Brien, 48 Tex. C!v.
App. 1; Frost v. Erath Cattle Co., 81
Tex. 605, 26 Am. St. R. 831.
sGouldy V. Metcalf, 76 lex. 466.
Neither does It authorize a con-
veyance In satisfaction of a debt
which has been barred by llmlta-
tlons. Smith v. Powell, 6 Tex. Civ.
App. 373. Nor does an authority to
one of several heirs to sell real es-
tate, authorize a conveyance of It In
satisfaction of a Judgment against
such heir and his mother. Folts v.
Ferguson (Tex. Civ. App.), 24 S. W.
657. But where the agent had a
partnership Interest In the land,
and had the complete management
and control of It, It was held that
a conveyance by him In considera-
tion of a cancellation of the part-
nership notes was authorized.
Kempner v. Rosenthal, 81 Tex. 12.
And where the authority was "to
make a sale or other disposition of
the" property, and "^o execute all
deeds." etc.. It was held that a con-
veyance to an attorney for legal
services in locating and establishing
a town site on the land, was within
the terms of the power. Jones v.
Gibbs, 18 Tex. Civ. App. 626.
«6ertschy v. Bank of Sheboygan,
89 Wis. 478.
i Agent to sell and take part pay-
ment in notes, may accept only
notes payable to his prlnclpaL
Gourlay v. Carson, 16 Victorian L.
R. 860.
• Frlnk v. Roe, 70 CaL 2S6; Ron-
yon V. Snell, 116 Ind. 164.
T Hunter v. Eastham, 96 Tex. 648.
Same case again (Tex. Civ. App.), 81
O. W. ooD.
• Coulter V. Portland Trust CJo., 20
Or. 469. Same case, 23 Or. 181.
There is good discussion of the
cases.
• Lewis V. Lewis, 808 Pa. 194.
The wife here was authorized to col-
lect certain debts, etc., for her sup-
port She was also authorized to
sell certain land. She made ths
conveyance in question in consld*
oration of certain payments made
by the son, out of his earnings, for
her support
590
CHAP, hi]
CONSTRUCTION OF AUTHORITIES
[§§ 828, 829
power with the completion of that contract; and has thereafter no
implied power to revoke or rescind it, or to release the purchaser from
its obligations.** So an agent, who has made a contract to sell and
received a part payment thereon, has no implied power to return the
money because he is erroneously led to believe that the principal's title
was imperfect**
Such an agent will, moreover, have ordinarily no power to change
or alter the completed contract or to substitute another in its place,"
though his authority over the subject-matter may be sufficiently com-
prehensive to justify it**
§ 828. Or discharge of mortgage.— An agent authorized
merely to sell land has therefrom no implied power to release or dis-
charge mortgages belonging to his principal ; " but an agent having
general authority to deal in land, may bind his principal by the as-
sumption of a mortgage as part of the purchase price.^^
§ 829. Or investment of proceeds of sale.— A power of
attorney authorizing the agent to take possession of and sell all the
property of his principal, and collect his debts, does not authorize the
agent to re-invest the funds of his principal or to engage therewith in
any schemes of speculation, however tempting.**
x^Lnke v. Grlgg, 4 Dak. 287, 30 N.
W. 170; West End Hotel & Land Co.
V. Crawford. 120 N. C. 347.
"Montgomery v. Pacific Coast
Land Bureau, 94 Cal. 284, 28 Am.
St R. 122.
"In HIU V. Bess (Tex. Civ. App.).
40 S. W. 202, it was held that author-
ity to sell land and accept and col-
lect notes In payment therefor does
not authorize an agent, after the deed
had been delivered and the original
purchase money notes forwarded to
the principal, to secure and collect
duplicate notes In substitution for the
originals upon the erroneous but hon-
est supposition that the originals had
been lost In the mail.
i» Thus In Francis v. Litchfield, 82
Iowa, 726, It was held that where
a general agent In the state had au-
thority to sell the lands of a non-
resident principal, collect the pay-
ments, and transact business gen-
erally in connection therewith, he
had implied authority to make a
contract with a purchaser whereby
the principal was to take a second
mortgage on the land Instead of a
first mortgage. In consideration that
the purchaser would make a part
payment to the principal out of the
proceeds of the first mortgage, and
give some additional security.
There was also evidence of ratlfloa-
tlon.
So In Neppach v. Oregon A Cal. R.
R. Co., 46 Or. 374, it was held that
a general agent. Intrusted with the
entire management and control of
the land business of a corporation,
might bind his principal by extend-
ing the time for deferred payments
and waiving a forfeiture for the de-
lay.
i*Barger v. MlUer, Fed. Cas, No.
979. 4 Wash. (U. 8. C. C.) 280.
15 Schley v. Fryer. 100 N. Y. 71.
i«Stoddart v. United States, 4 Ct.
CI. 611. See Forges v. U. S. Mort*
gage ft Trust Co.. 203 N. Y. 181, re-
591
§ 830]
THE LAW OF AGENCY
[book II
II.
OF AGENT AUTHORIZED TO LEASE LAND.
§ 836. In general. — It has been seen in an earlier section how
authority to lease land may be conferred.^^ If the lease is required to
be under seal, authority under seal would at common law be requisite.^^
Authority to make leases for certain periods is, by statute, often re-
quired to be in writing.^* In other cases, oral authority will suffice.'*
Whatever the method employed, the authority must contemplate a
leasing.^^ Authority to sell, therefore, would not suffice; authority
to care for property, or to collect rents, or exhibit the property to
prospective tenants, would not ordinarily suffice ; ** authority to "man-
age" property would be more comprehensive, and might under many
circumstances justify the making of leases.^*
versing 186 N. Y. App. Div. 484, and
holding that where a power to sell
was accompanied by express power
to use proceeds In effecting a re-
demption of mortgaged land, the
agent may not convert proceeds of
a sale in the form of a check paya-
ble to his principal into cash and de-
posit the same in his individual
banking account
IT See ante, S 229.
18 See ante, S 212.
i^See ante, § 229. Acceptance of
rent does not ratify the making of
a lease for more than the statutory
period where the jprincipal was ig-
norant that it was so made. Larkin
V. Radosta, 119 App. Div. 615. Mere
knowledge that the tenant is mak-
ing improvements Is not enough un-
less they are of the sort which a
tenant for the shorter term would
not be likely to make. Clement v.
Amusement Co., 70 N. J. "ESq. 677, 118
Am. St R. 747. The written author-
ity required may be made up of sev-
eral writings. Paris v. Johnstone,
165 Ala. 403.
so See ante, I 229.
SI See Bonnazza v. Schlltz Brew-
ing Co.. 166 Mich. 36, where the case
failed because there was held to be
no evidence upon this point See
also Howard ▼. Carpenter, 11 Md.
259.
22 In Owens v. Swanton, 25 Wash.
112, a non-resident owner of lands
left them In charge of his brother
who being temporarily absent depu-
tized another person to ^'collect
rents, procure tenants and others
wise look after the property." Held
that this deputy had no power to
bind the owner by a lease for a defi-
nite term, in this case eighteen
months.
The mere power to collect rent
does not confer authority to lease
(Dleckman v. Weirlch, 24 Ky. L.
Rep. 2340, 73 S. W. 1119); or to
make a new lease or change an ex-
isting one (Indianapolis Mfg. Car-
penters' Union V. Cleveland, etc., Ry.
Co., 45 Ind. 281).
Authority to lease premises for a
certain year is not inferable from
facts that the alleged agent had
sometimes collected rent drafts of
the landlord on the lessee or given
his own receipt for other rent due,
or that he had previously leased the
same premises. Well v. Zodiag, 34
La. Ann. 982.
28 In Duncan v. Hartman, 143 Pa.
596, 24 Am. St R. 570 (149 Pa. 114),
an agent was authorized to "act as
.SQ2
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§831
§ 831. What execution authorized. — In order to bind his princi-
pal, the agent to lease must, like other agents, confine his* acts within
the terms and conditions of his authority. Thus an agent authorized
to lease an entire tract of land for a given period for a stated rent
beginning at a certain time, may not bind his principal by a lease of a
part of the land for a different rent and for a term beginning at a
different time,** nor may an agent authorized to lease for a certain
term, bind his principal by a lease for that term but which gives the
lessee the option of a renewal for a longer period.*' Neither does a
power of attorney to a life tenant to make a lease for twenty-one years
or one for one, two or three lives, authorize a lease for ninety-nine
years determinable upon three lives.** But where the authority of a
life tenant was to lease the property for such term or terms of years
as she may deem proper, provided that no such term or terms should
exceed the period of fifteen years, or should contain any clause of re-
newal, and that nothing in the power should be construed to author-
ize a lease for a longer period than fifteen years, it was held that the
power of the tenant was not exhausted by one lease for fifteen years,
but that she might, at the expiration of the first term, make a new
lease for a term not to exceed fifteen years.^^
An agent to take a lease may not bind his principal by covenants to
repair the premises so as to make them suitable for his principal's
purposes, or to rebuild them in case of fire ; ** but where the agent,
who resided in another state, was authorized to take a lease of lands
our agent for our properties * • *
and honestly and diligently manage
said properties" for the term of one
year. The properties embraced
farms, mineral lands and wild lands.
"It is conceded/' said the court,
"that it would not authorize the sale
of the land, while on the other hand
it is equaUy clear that it would au-
thorize leases in the ordinary form
for ordinary terms." It was, how-
ever, held not to authorize an exclu-
sive grant to quarry, take and sell
stone from the lands for a term of
fifteen years.
The general agent of a corpora-
tion in charge of its lands, build-
ings, etc, cannot, in virtue of his
authority to manage the affairs of
the corporation, make a lease for
the purpose of trying the title to
land upon which he has entered for
condition broken, under a vote of
the corporation authorizing him to
so enter but silent as to the lease.
Oims V. Bailey, 17 N. H. 18.
A lease made for three years by
an agent of an owner abroad haying
authority from the owner "to take
charge of the land while he was
gone and make it pay the best way
he could,"^ is terminable by the
owner upon his return. Antoni v.
Belknap, 102 Mass. 193.
t* Borderre ▼. Den, 106 Cal. 594.
so Schumacher v. Pabst Brewing
Co., 78 Minn. 60.
2«Roe d. Brune t. Prideaux, 10
East, 158.
sf Taussig y. Reel, 184 Mo. 580.
ssHalbut ▼. Forrest City, 84 Ark.
246.
38
593
§§ 832, 833] THE LAW OF AGENCY [bOOK II
in that state, it was held that he might, upon the lessor's refusal to
accept the principars credit, give his own note and, after it was paid,
recover the amount from his principal.^*
Acts of the agent, within the apparent scope of his authority, would,
as in other cases, bind the principal, though they were in violation of
his secret instructions.'®
§ 832. Authority to execute a lease, in the usual form, with usual
termSw— Authority to actually lease premises would carry with it,
by implication, the power to execute and deliver the necessary or
usual documents, to make them in the ordinary form, and to insert in
them the usual and ordinary terms, covenants and conditions. Under
a general power of this sort, the agent would be justified in making a
necessary and usual covenant to repair the premises,'^ or to furnish
heat."
§ 833. Authority to make representations as to condition of prem-
ises, ownership, etc. — It has been seen in an earlier section that an
agent authorized to sell land has, under many circumstances, power
to bind his principal by representations concerning the location and
boundaries of the land sold.** Hence, it is said, "if an agent author-
ized to sell has authority to point out the location of land he desires to
sell, it is difficult to see why an agent to lease has not authority to
describe the building and its surroundings which he desires to lease."
It was therefore held that an agent, authorized to lease a building,
who falsely represents that a partition wall in the building was fire
proof makes his principal liable for damages.** It was conceded that
2» Irlons V. Cook, 88 N. C. 203. »i In White v. Clow. 135 IlL App.
Where an agent had authority to 464. the court said: "Authority to
lease upon taking security for the rent the property included authority
payment of the rent, hut there was to make a lease with such condl-
no provision as to what security or tions as are customary in leases and
in what form, and the agent made to bind [the principal] by such a
a lease to begin at a future date contract"
and arranged for security to be But in McMlchen v. Brown, 10 Qa.
given before the term began, and App. 506, it was held that an agent
the tenant offered to give the se- to rent had no implied authority to
curity so agreed upon, it was held agree that the landlord would pay a
that the principal was bound. Paris certain sum for improvements made
v. Johnson, 155 Ala. 403. by the tenant.
so As where an agent, who appar- 32 see National Loan Co. r. Bleas-
ently had general authority, made a dale, 140 Iowa, 695.
lease for a year though he had been sa See antOf § 809.
instructed to rent by the month MMatteaon v. Rice, 116 Wis. 828.
only. Babln v. Ensley, 14 N. Y. App. Agent to lease has apparent author-
Div. 548. See also Johnson v. Ehr- ity to describe the lands to be leased,
man Brewing Co., 66 N. Y. App. Diy. Wilson v. Bale, 41 Pa. Super. 566.
103. In Daley v. Quick. 99 Cal. 179. it
594
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 834
the facts might not justify .an inference of authority to warrant the
fire proof quality of the wall, but it was said that "cases may and fre-
quently do arise where the agent may have no authority to warrant,
and yet, from the character of his agency, his principal may be held
liable in tort for false representations made by him."
An agent to make leases would also undoubtedly have implied au-
thority to make such representations concerning the general owner-
ship of the premises, the right to lease them at that time, the deter-
mination of previous interests,. and the like, as are naturally and usu-
ally involved in such transactions.'* So, also, doubtless, to make rep-
resentations and give information as to the facts concerning those
matters which it is important for a prospective tenant to know, which
are usually inquired about, and which are not open to the tenant's
observation.*'
§ 834. Authority to receive pa3ntient of rent — An agent author-
ized to make a lease, would, like the agent authorized to sell, have im-
plied authority to receive so much of the rent as was to be paid as a
part of that transaction; but he would not thereby necessarily have
authority to receive payment of subsequent installments. That would
depend upon the general and continuing character of his authority.
Where he is authorized to receive payment of rent, he must as in
other cases receive it in money only, and certainly has no authority to
ynaa held that the principal was not
liable for the repr68entati<Hi8 of an
a^ent (not authoriased to lease the
premises, but having merely author-
ity to make repairs when requested
by the tenants), that the premises
did not need repairs, the tenants be-
ing in as good a position to discover
the defects as the agent
But in Martin v. Richards, 155
Mass. 381, it was held that where
the agent who leased the premises
referred to one H as the person au-
thorized to make repairs, the knowl-
edge of H of offensive odors which
made the premises unfit for occu-
pancy, was imputable to the princi-
pal, and the latter w^ liable to the
tenant for Injuries caused thereby.
In Williams v. Goldberg, 58 Misc.
211, the principal was held liable
to tenant for injuries caused by the
falling of plastering, after she had
remained in possession relying upon
the rental agent's false representa-
tions that the plastering had been
examined and found safe.
ssMuHena v. Miller, 22 Ch. Dlv.
194; Finch v. Causey, 107 Va. 124;
Crump V. Mining Co.. 7 Gratt (Va.)
352, 56 Am. Dec. 116.
But not after the transaction is
closed. Finch v. Causey, supra;
Lake v. Tyree, 90 Va. 719.
No general authority to bind by
representations as to the title so as
to give a defence to an action for
rent against a tenant who has not
been disturbed by any outstanding
claims. Tondro v. Cushman, 5 Wis.
279.
••See Matteion v. Rice, 116 Wis.
328; Comfoot v. Fowke, 6 M. lb W.
368.
595
§§ 835-S37] THE LAW OF AGENCV [bOOK II
allow it to be used to pay his own debts.V He must also obtain rent,
and has no authority to permit tenants to remain without paying.**
§ 835. Authority to lease does not authorize lease to begin in
future.— Authority to lease lands must ordinarily, when nothing is
said as to the term, be deemed to contemplate only the making of a
lease which shall begin immediately or substantially so ; and therefore
one made to begin at some future time would ordinarily be beyond the
agent's authority.'** It seems to be immaterial, in this respect, that
the power under which the lease is made is one which is irrevocable
during the life time of the agent.*^
§ 836. Authority to change terms, substitute tenants, accept siu:-
render of lease, or give notice to quit. — ^An agent having authority
merely to make a lease would have, thereby, no implied power to sub-
sequently change the terms of the lease so made ; consent to a substitu-
tion of tenants; or accept a surrender of the.lease.*^ But an agent
having general power to manage premises, lease them when vacant,
and collect accruing rents, would have implied power to consent to the
surrender of a lease ** or to the substitution of tenants,** or to extend
the term of a lease,** or to reduce the rent, if done within reasonable
limits,** or to waive payment entirely during a time when the premises
are untenantable as the result of a fire, if, by so doing, he induces the
tenants to remain after the repairs are made.** Such an agent would
also have implied power to terminate a tenancy and give notice to
quit.*'
§ 837. To renew or extend a lease. — Authority to make a
particular lease, or to lease upon a particular occasion would not jus-
tify a Subsequent renewal of the lease or an extension of the term.
>7 National Loan Co. v. Bleasdale, Berry v. Broadway Co., 148 N. Y.
140 Iowa, 695. App. Div. 159.
B8 Johnson v. Hulett, 66 Tex. Civ. *8Amory v. Kanoffsky, 117 Mass.
App. 11. 351, 19 Am. Rep. 416. Or consent to
89 Taussig y. Reel, 134 Mo. 530. a aub-Ietting. Underwood Type*
40 Roe d. Brune v. Prldeauz, 10 writer Co. v. Century Realty Co.,
East, 158. 165 Mo. App. 131.
41 See Wallace v. Dinniny, 11 N. ** Pittsburg Mfg. Co. v. Fidelity
Y. MiBc. 317 (aff'd 12 Misc. 635); Title & Trust Co., 207 Pa. 223. See
Wilson V. Lester, 64 Barb. 431; Fa- also Noble v. Burney, 124 Ga» 960. '
ville V. Lund vail, 106 Iowa, 135; ^o Goldsmith v. Schroeder, 93 N.
Hamm Brewing Co. v. Wiggam, 27 Y. App. Div. 206.
S. D. 613. *o Ireland v. Hyde, 34 Misc. (N.
42 Lillian Realty Co. v. Erdurm, Y.) 546.
120 N. Y. Supp. 749. But not where 47 Doe v. Mizem, 2 Moo. A Rob. 66;
the lease expressly requires the con- Benton v. Stokes, 109 Md. 117. See
sent of some other specified person, also McClung y. McPherson, 47
Or. 78.
CHAP. IIlJ
CONSTRUCTION OF AUTHORITIES
[§§ 83&-84O
But such an act would fall within the power of an agent having a gen-
eral and continuing authority to let premises or make leases. He
might renew or extend an old lease wherever he could have made a
new lease to the same parties and upon the same terms.*®
§ 838. Authority to bind principal to furnish irrigation, supplies,
stock, etc. — ^An agent authorized to lease lands would thereby have,
ordinarily, no authority to agree to such an unusual stipulation as that
the principal shall, without charge, irrigate the lands,** or to bind his
principal to furnish agricultural supplies to the tenant for putting in
his crop.*** Where the authority was general in its nature and au-
thorized a lease on such terms as the agent should deem best, it was
held that the agent might bind his principal separately to furnish
stock: but he could not, by leasing his own lands with those of his
principal, make her jointly liable with him for such stock." An au-
thority to lease does not include the power to bind the principal on a
partnership agreement in respect to the use of the land;"* nor does
authority to lease land ordinarily justify an agreement to make im-
provements thereon."
§ 839. Authority to waive liens.-— ^An agent authorized merely to
lease lands would clearly have no implied authority, ordinarily, to
waive or release his principal's lien upon the crops or other property,
whether the lien was contractual or statutory : but where the evidence
showed that the agent had authority to lease, collect rents, direct re-
pairs, authorize a tenant to sell crops to pay taxes and purchase fenc-
ing, etc., and otherwise indicated the general scope of his authority,
it was held sufficient to justify the jury in finding a general agency
which would include authority to release the principal's lien on a part
of the crop which he permitted the tenant to sell.**
§ 840. Authority to mortgage, or to impair or defeat the princi-
pal's title.— -An authority to lease lands, even though given in broad
terms and including a power to sell, does not justify the making of a
"Pittsburg Mfg. Co. V. Fidelity
Title St Trust Co., 207 Pa. 223; Steu-
erwald v. Jackson, 123 App. Dlv. 569.
«Durkee v. Carr, 38 Or. 189; An-
derson V. Adams, 43 Or. 621.
•oLoftin V. CroBSland, 94 N. C. 76.
Bi La Point V. Scott, 36 Vt 603.
Kor may an agent to lease con-
struct ditches on the land of his
principal, for the purpose of drain-
ing the agents own land adjoining,
and thus render the principal liable
for injuries caused by the negligent
construction of the ditches. Harvey
y. Mason City R. Co., 129 Iowa, 465,
113 Am. St R. 483, 3 L. R. A. (N.
S.) 973.
B2 Providence Machine Co. v.
Browning, 72 S. C. 424.
5? Peddicord v. Berk, 74 Kan. 236.
' B^Pishbaugh v. Spunaugle, 118
Iowa, 337.
597
§§ 841, 842]
THE LAW OF AGENCY
[book II
mortgage upon the lands.*' Neither does authority to lease lands and
collect the rents justify licensing a telegraph company to erect poles
in the highway in front of the lands.** Nor does authority to lease a
particular piece of property confer authority to recognize an out-
standing title asserted by a third person.*' Nor does a formal power
of attorney to lease lands and to compromise claims (but which ex-
pressly withholds the power to sell the same) authorize a conveyance
of the land in settlement of the claims.**
III.
OF AGENT AUTHORIZED TO PURCHASE LAND.
§ 841. When authority exists. — ^The authority of an agent to
purchase land is subject to many of the considerations applicable to
the authority to purchase personal property, considered in the fol-
lowing subdivision. Like that authority, it may be conferred ex-
pressly or may arise from implication,** Land being much less fre-
quently the subject of commercial transactions, and usually involving
considerable amounts, authority for its purchase is more frequently
specially conferred and less commonly results from implication.** It
is not, however, impossible that the authority should arise by implica-
tion. Thus, the managing officer of a railway in process of construc-
tion would undoubtedly in many cases have implied authority to buy
necessary land for right of way.** The managing agent of a principal
generally engaged in buying and selling real estate, might often be
found to have such authority ; •• and the managing agent of other
enterprises might also have the authority when found to be essential
to the accomplishment of the objects confided to his care.
§ 84a. Authority to make a binding contract. — As in the case of
the agent authorized to sell, it may be found that (he authority to pur-
» First Nat Bank t. Hicks. 24
Tex. Civ. App. 269,
8« American Telegraph A TeL Ck>.
V. Jones, 78 III. App. 372.
BTMacDonald v. O'Neil, 21 Pa. Su-
per. Ct 364; Cameron ft Co. v.
Blackwell, 63 Tex. Civ. App. 414.
«• Wells V. Heddenburg, 11 Tex.
Ciy. App. 3.
59 As has been seen In S 230, ante,
authority to purchase land is not
usually required to be conferred by
writing. But see Davis t. Brigham,
66 Or. 41, Ann. Cas. 1912, B, 1340.
•0 Authority to purchase an exe-
cution which has been levied upon
land does not justify a purchase of
the land itself. Hood v. Hendrick-
son, 122 Oa. 796.
61 See Johnson v. Railway Co.» 116
N. Car. 926.
•2 See Schley t. Fryer^ 100 N. Y.
71.
SP8
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 843, 844
chase is, under the circumstances, • merely a power of negotiation,
authorizing the agent to find the seller but not authorizing him to
make a binding contract. Where, however, it is evident that he was
expected to consummate the negotiations, the agent could bind his
principal by a definite contract of purchase.**
§ 843. Authority t© agree upon termsw — ^Authority to purchase
land will usually be a special one, confined to a particular piece of land
to be purchased on specified terms. Where it is so, the rules gov-
erning special authority will apply to it. Where the agent has not
been limited as to subject-matter or terms, be would have implied
autliority to select the land and agree upon the terms, within the range
of what is usual and reasonable.'* Where he is authorized to agree
upon the terms, his authority will ordinarily be regarded as so far
personal that he could not delegate it, or agree that the price should
be fixed by arbitration.'*
§ 844. Authority to bind principal for ordinary expenses in pur-
chase.— An agent authorized to purchase would have, as incident
to this authority, power to bind the principal for the ordinary and
necessary expenses involved in the purchase, and not expected to be
paid in the first instance by the agent himself; as, for example, for
necessary recording fees, abstract charges, or the charges of an at-
torney reasonably employed to pass upon the title.**
MA mere authority to use one's
name as the holder of the legal ti-
tle, does not Justify pledging his
credit for the purchase price. Cow-
ap V. Curran. 216 111. 598.
«*See Brock v. Pearson, 87 CaL
581; Johnson v. Railway Co., 116 N.
Car. 926.
The mere fact that the principal
thought the agent was buying the
whole of a piece of land, where the
agent had in fact bought but part of
it, will not relieve the principal,
there being no fraud, and the other
party having no notice that the
agent was not following his instruc-
tions. Corbit V. Kimball, 107 CaL
665.
' In Kickland v. Menasha Co., 68
Wis. 34, 60 Am. Rep. 831, the agent
in buying the plaintiff's land prom-
ised as part of the price one-half of
any excess in price at any later sale
over the cash price paid. The deed.
however, mentioned only the cash
price and there was no proof of any
notice to the company of the addi-
tional promise; but upon selling the
land four years later the company
was held bound to divide the profit
with the plaintiff. This case is
quoted and approved in Windsor v.
St Paul, etc., Ry. Co., 37 Wash. 156,
3 Ann. Cas. 62, where the right of
way agent of the railway and an
emissary employed by him agreed
with the plaintiff that if he would
sell his land for a certain price, the
railway would provide fences and
guards, and the company waa held
bound by these oral promises not
mentioned in the deed.
osTalmadge v. Arrowhead Reser-
voir Co., 101 Cal. 367.
««In Egan v. DeJonge, 113 N. Y.
Supp. 737, an agent employed to pur-
chase land was held to have author-
ity to engage attorneys afl an im-
599
§§ 84S-«48]
THE LAW OF AGENCY
[book II
§ 845. Authority to receive the deed-— Where the agent is au-
thorized to close the transaction, and especially where he is author-
ized to pay the purchase price upon the delivery of the deed, he would
be authorized to receive the conveyance and to pay the price. The
deed should, of course, be taken in the principal's name.
§ 846- Authority to assume mortgages.— An agent having gen-
eral authority to purchase, who buys subject to an existing mortgage,
may, it is held, bind his principal by accepting a deed which provides
that the purchaser shall assume and pay the mortgage."^
§ 847. No authority to sell or mortgage land purchased. — Author-
ity to purchase land would ordinarily be exhausted when the purchase
was consummated, and the agent would have no implied authority to
afterwards sell or mortgage the land bought.
IV.
OF AGENT AUTHORIZED TO SELL PERSONAL PROPERTY.
«
§ 848. When authority exists. — Authority to sell personal prop-
erty need not be conferred in any particular manner. It may, of
course, be expressly conferred, but it may also be implied from cir-
cumstances. Where the authority results from construction, or is
deduced from circumstances, the circumstances must be such as fairly
to warrant the inference of an authority to sell.'* Such authority.
piled power Incident to the general
purpose of his employment
•T Schley v. Fryer, 100 N. Y. 71
(but see, Deering v. Starr, 118 N. Y.
6G5).
There Is a dictum to the contrary
in Metzger v. Huntington, 139 Ind.
601, though there was an adverse
interest In that case which was held
of Itself to disqualify the agent.
«8See Limestone Mine Co. v. Leh-
man (Ky.), 76 S. W. 328, 25 Ky. L.
Rep. 703; Chiles v. Southern Ry.
Co., 69 S. Car. 327; Mahrt v. Hyman,
17 Wash. 415; Dowagiac Mfg. Co. v!
Watson, 90 Minn. 100; Rosendorf r.
Poling, 48 W. Va. 621; Antrim Iron
Co. V. Anderson, 140 Mich. 702, 112
Am. St R. 434.
In Blaisdell t. Bohr, 77 Ga. 381, an
agent who had bought and had pos-
session of stock, and who had a
power of attorney, "to attend to any
and all descriptions of business in
which I may be interested or con-
cerned In a real or personal manner
and to receive for me any sum or
sums of money which may be due
to me and to receipt therefore,** was
held authorized to sell it.
But in Camden Fire Ins. Ass'n v.
Jones, 53 N. J. L. 189, an agent who
had acted as general business agent
for his principal and had collected
dividends on the stock In question,
and who had a power of attorney to
collect all debts, compound same,
and do whatever was necessary
about the premises, "as well as to
sign my name In all business trans-
actions," was held not to be author-
ized to sell the principal's stock.
Authority from reUUionahip, — ^As
has already been seen in an earlier
600
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 849
however, cannot ordinarily be inferred from mere possession of the
property •• even though the alleged agent be a dealer in property of
that kind/® but the principal must have done something more ; he must
have so acted as to clothe the agent with apparent authority to sell, or
must have conferred upon him, or permitted him to assume, the ap-
parent indicia of ownership.^^
A distinction must be observed between an apparent ownership, and
an apparent agency to sell.^^ Many things might be done by an ap-
parent owner which would not be justified in an apparent agent — for
example, the use of the property to pay the debts owed or secure the
advances obtained by the apparent agent. It is agency and not appar-
ent ownership which is to be considered here.
§ 849. Limited or qualified authority. — The authority of
the agent may be limited or qualified with respect of subject-matter,
time, terms or other elements to any degree which may serve the prin-
cipal's purposes, and such qualifications or limitations will be opera-
tive not only as between the principal and the agent, but as to third
persons also provided they are not waived or are not secret limitations
within the rules already discussed.''^ Thus where the agent, as in the
familiar case of the traveling salesman, is authorized simply to solicit
chapter, authority to sell does not
arise from mere relationship. The
wife, has no iitherent authority to
sell her husband's chattels, or the
child to sell his parent's chattels,
and the like. So, in the case of
uncle and nephew. Moffet v. Mof-
fett, 90 Iowa, 442.
Suspicious circumstances. — The
circumstances under which the al-
leged agent assumes to act may be
sufficient to charge the buyer with
notice of his lack of authority. See
Clark V. Haupt, 109 Mich. 212.
«» Anderson v. Patten, — Iowa,
, 137 N. W. 1060; Edwards v.
Dooley, 120 N. Y. 540; Peerless Mfg.
Co. V- Gates, 61 Minn. 124; Warder
V. Rublee, 42 Minn. 23; Qreene v.
Dockendorf, 13 Minn. 70; Roberts v.
Francis, 123 Wis. 78; Sloan v.
Brown, 228 Pa. 496» 189 Am. St. R.
1019.
70 Levi V. Booth. 68 Md. 305, 42
Am. Rep. 332; Baehr v. Clark, 83
Iowa, 313, 13 L. R. A. 717; Oilman
LlKseed Oil Co. v. Norton, 89 Iowa,
434, 48 Am. St. R. 400, citing other
cases.
71 Smith V. Clews, 105 N. Y. 283,
69 Am. Rep. 602, distinguished in
Saunders v. Payne, 12 N. Y. Supp.
736; Wilson v. Loeb, 69 111. App.
445; Farquharson v. King, [1901] 2
K. B. 697; Heath v. Stoddard, 91
Me. 499.
See the fuller discussion, post.
Book IV, Chap. VII.
72 See a good discussion of this
distinction in Sloan v. Brown, 228
Pa. 495, 139 Am. St. R. 1019.
73 Where a reorganization com-
mittee is entrusted with bonds with
power of sale "'til Jan. 1, '06" a sale
thereafter does not pass title. Smith
& Co. V. Collins, 91 C. C. A. 182, 1155
Fed. 148.
601
§850]
THE LAW OF AGENCY
[book ir
orders which are to be transmitted to and passed upon by the principal,
he can not usually bind his principal by a present contract J*
So where the authority is to sell "upon terms to be agreed upon,"
or "subject to confirmation," and the like, the agent can not make a
valid contract otherwise,^' unless the qualification has been waived or
concealed.^*
§ 850. What may be sold— All— Part.— Where the authority
specifies what it is that the agent is to sell, he cannot bind his prin-
cipal thereunder by undertaking to sell something else." Where he
is authorized to sell a certain amount, he would have therefrom no
T*See post, { 861; Elf ring v. New
Birdsall Co., 16 S. Dak. 262; Becker
V. Clardy, 96 MIbs. 301.
Where the agent's authority is
limited to Boliclting written propo-
sals, the principal Is not bound by a
contemporaneous verbal agreement
not in the writing and unknown to
him. Inman v. Crawford, 116 Ga.
63.
76 Johnson R. Signal Co. v. Union
Switch ft Signal Co., 61 Fed. 86;
Chauche v. Pare, 75 Fed. 283. 21 C.
C. A. 329; Bronson v. Implement
Co., 136 Mo. App. 483 (representa-
tions by the agent that the printed
terms of the order blank were mere
formality do not alter the case);
Alcorn r. Buschke, 133 Cal. 665.
70 Where the local custom justifies
an agent, empowered as the one in
question, to make a present sale
without confirmation, the principal
will be bound although his instruc-
tions were not to sell until terms
were confirmed. Cawthon v. Lusk,
97 Ala. 674.
77 An agent for the sale of grocer-
ies has no implied authority to bind
his principal by agreeing to sell
nails in which as the buyer knows,
the principal does not deal. Brown
Grocery Co. v. Becket (Ky.), 22 L.
Rep. 393, 57 S. W. 468.
An agent known to be acting for
the packers of Alaska salmon has
no implied authority to bind them
to furnish salmon produced else-
where. Rel4 V. Alaska Packing Co.,
47 Or. 216.
Agent for the sale of beer in kegs,
which kegs, as the buyer knew,
were not ordinarily sold but were
to be returned when empty to the
principal, can not pass title to the
kegs to such a buyer In violation of
his actual authority. Schlltz Brew.
Co. V. Qrimmon, 28 Nev. 235.
A written authority to seU "new
patterns of furniture" gives no au-
tJiority to sell old patterns. Mc-
Cord Furniture Co. v. Wollpert, 89
Cal. 271. An agent acting under a
formal and recorded power of at-
torney which authoriases him to sell
mortgages of which the principal Is
"now possessed" Is limited to the
sale of the mortgages which the
principal had at time of giving the
power. Union Trust Co. v. Means,
201 Pa. 374.
Where the principal by telegram
authorizes his broker to sell goods
of a certain grade and the broker
makes a sale to a bona fide pur-
chaser by exhibiting the telegram,
the principal cannot escape by
showing instructions to the agent to
sell only goods of an inferior grade.
Southern Cotton Oil Co. v. Shreve-
port Cotton Oil Co., Ill La. 387.
Where a seller wrote to a broker In
Memphis, offering to sell "fifteen
cars good mixed corn, ♦ • * weath-
er wet, and will not guaranty
gi-ade," which letter is shown to the
purchaser, a contract to sell corn of
No. 2 grade, as known at Memphis,
was unauthorized. Galbreath v.
Condon, 48 Kan. 748.
602
CHAP, III]
CONSTRUCTION OF AUTHORITIES
[§851
implied authority to sell more.^® Whether he may sell less or may
sell a part only of that which he is authorized to sell will depend upon
a variety of circumstances. The situation may be such as to clearly
indicate that the authority is to be regarded as an entirety. Thus, for
example, if he, the agent, be authorized to sell a team, it would usu-
ally be difficult to see that he was authorized to sell the horses sepa-
rately, and especially to sell one horse without selling the other.'*
In one case it was said, ''An agent authorized to sell a house might not
be justified in selling half of it. But unless special directions to the
contrary were given, an agent who had shares of stock to sell might
sell in parcels, or might sell a part if he could not sell the whole; or
he might sell a part to one person and the rest to another. Each sale
would be valid, and within his autliority." *®
§ 8ji. — — Commingling with other goods for sak. — Similar
questions might arise respecting the commingling of the principal's
goods with the goods of other principals or of the agent in making
78 Authority to sell a yacht does
not justify a sale of a 'launch,
merely hecause it was sometimea
used as a tender for the yacht For-
reet v. Vanderhilt, 46 C. C. A. 611,
107 Fed. 784, 52 L. R. A. 473.
An employment of a person as
sole salesman of a coal mining com-
pany for one year, with power to
sell "all coal mined," and which
provides for fitting up an office for
him at a certain place, contemplates
the sale, on the market, of the coal
as produced from time to time and
does not justify a single sale of the
entire output for ten months. Black-
mer v. Summit Coal & Mining Co.,
187 111. 32.
But where a salesman authorized
to contract for the sale of cement to
be manufactured by his principal
and who had no actual limitation
upon his authority as to the quan-
tity he might sell to one customer,
agreed to sell a large quantity, viz.:
35,000 barrels, but this amount was
not beyond' the limits of the princi-
pal's production, there was held to
be nothing in the quantity so sold
to show that it was beyond his au-
thority, though he had never sold
more than 7,600 barrels at one time
before. Jenkins v. Alpena Cement
Co., 77 C. C. A. 625, 147 Fed. 641.
An agent to sell stock on which
a dividend has been declared but
not paid has no implied authority
to sell or throw in the dividend.
Wheeler v. Northwestern Sleigh Co.,
39 Fed. 347. But see Cronan v. Horn-
blower, 211 Mass. 538.
79 In Henry v. Bhckner, 13 Colo.
18, it was held that a written con-
tract to sell for the owner a team of
horses with a wagon and harness
for a certain sum is an entire con-
tract and does not authorize the
sale of the wagon and harness with-
out the team. The action was be-
tween the principal and agent only
and did not involve the rights of
third persons.
Compare Hatch v. Taylor, 10 N.
H. 688, where various directions
about trading or disposing of a team
of horses, and about parting the
span, were held to be apparently
mere private instructions.
•©Ulster County Sav. Inst. v.
Fourth Nat Bank, 64 Hun, 638, 8 N.
Y. Supp. 162. Here 194 shares of
stock were sent to a correspondent
to be sold "at a price not less than
1 20 a share." The agent made a
603
§§ 852^54]
THE LAW OF AGENCY
[book II
the sale. Ordinarily it would be the duty of the agent not to com-
mingle them, but to keep them separate and to sell them separately
and to give to his principal the benefit of a several rather than a joint
contract and obligation.*^ The general custom of the trade or the
particular customs of a given market might, however, easily be such
as not only to justify but perhaps to require that the goods should be
so united with others as to make salable lots or groups.
§ 852. Authority when to be executed. — An authority to sell the
property upon a particular day specified confers no power to sell it
upon a subsequent or different day ; " neither is there any presump-
tion that an authority to sell goods in a single instance continues for
several years afterward."
§ 853* No authority to sell at auction — ^When. — ^An agent author-
ized to sell property is presumptively empowered to sell it only in the
usual way, and therefore cannot, without special authority, sell it at
auction; and a purchaser at such a sale, can ordinarily acquire no
title." So under a power of attorney authorizing a sale only at auc-
tion, a private sale is void and confers no* title on the purchaser/*
even though the full price fixed for the auction sale is realized.'*
§ 854. Authority to fix price and terms of sale. — An agent clothed
with general power to sell personal property without restrictions. ha«
sale of 144 shares, and the sale was
sustained, one judge dissenting.
The latter said: "I am unable to ac-
cept the theory that in the absence
of an express direction not to sell a
lesser number than 194 shares, the
agent possessed an implied author-
ity to sell as many shares, and in
such parcels, as was deemed expedi-
ent, as the practical effect of such
doctrine would seem to be to allow
an agent to substitute for an ex-
press direction an Implied author-
ity. Suppose an agent should be di-
rected to sell a farm, at not less
than a fixed price per acre, would
the agent be authorized to divide
the farm and sell a portion thereof
without the knowledge or consent of
the owner? I think not."
«i In Coe v. Nash, 28 Mich. 259, it
was held in an action by the agent
against his principal, that a com-
mission merchant to whom hops had
.been consigned for sale had no right
to sell them in a lot with others for
a gross sum.
In Cameron v. Paxton, 15 Can.
Sup. Ct. 622, it was held that an
agent of two independent and un-
connected principals has no author-
ity to bind his principals or either
of them by the sale of the goods in
one lot, when the articles included
in such sale are different in kind
and are sold for a single lump price
not susceptible of a ratable appor-
tionment except by the mere arbi-
trary will of the agent
«« Bliss V. Clark, 16 Gray (Mass.),
60.
88 Reed V. Baggott, 6 111. App. 257.
«4TowIe V. Leavitt, 23 N. H, 360,
65 Am. Dec. 195.
»5The G. H. MonUgue, 4 Blatch.
(U. S. C. C.) 464, Fed. Cas. No. 5,377.
8« Daniel v. Adams, 1 Arabl. 495;
Jaques v. Todd, 3 Wend. 83.
604
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§8S4
implied authority to select the purchaser,*^ to fix the price, and to
agree upon such ordinary incidental matters as the time and place of
delivery, and the other ordinary and usual terms of a sale.** The price
so fixed, however, should not be less than the market price, if there be
a market price, and in any event should not be less than a reasonable
price." And so as to the terms of the sale where the principal has
not prescribed them: they should be the usual terms, if there be any
particular usage, and, if not, they should not exceed the natural and
ordinary terms, reasonably necessary and proper in selling similar
goods under similar circumstances at the time and place in question.'*
The principal may lawfully prescribe the price and terms upon which
the sale is to be made, and these regulations will be binding upon the
agent,®* and, where they are charged with notice of them •* upon third
persons.** Private instructions as to price and terms cannot, how-
«T Where the principal writes to
his agent "Of course, I want a relia-
ble purchaser, one whom you think
would make hi$ payments prompt-
ly" he clearly leaves this matter to
the discretion of the agent. Peay
V. Seigler, 48 S. Car. 496, 59 Am. St
R. 731 (a land case).
MGalbraith v. Weber, 58 Wash.
132, 28 L. R. A. (N. S.) 341; Day-
light Burner Co. v. Odlin, 51 N. H.
56, 12 Am. Rep. 45; Putnam v.
French, 53 Vt. 402, 38 Am. Rep. 682;
Flanders v. Putney, 58 N. H. 358;
French Piano ft Organ Co. v. Card-
well, 114 Ga. 340; Stlrn v. Hoffman
House Co., 8 (N. Y.) Misc. 246;
Smith Table Co. y. Madsen, 30
Utah, 297; Smith r. Droubay, 20
Utah, 443. As incident to the gen-
eral authority to sell, the agent has
"power to fix the terms of sale, in-
cluding the time, place, and mode of
delivery and the price of the goods,
and the time and mode of payment,
and to receive payment of the price,
subject of course, to be controlled
by proof of the mercantile usage in
such trade or business." Daylight
Burner Co. v. Odlln, supra.
In Smith ▼. Droubay, supra, a
traveling salesman was held to
have implied authority to agree that
the goods for which he took the or-
der would be delivered in a certain
number of days, and that the princi-
pal was bound though he knew
nothing about this undertaking, —
certainly a doubtful proposition.
But a mere broker has no implied
authority to fix terms of delivery.
MoUoy V. Cement Co., 116 N. Y. App.
Div. 839.
89Blgelow v. Walker, 24 Vt. 149,
58 Am. Dec. 156.
fio Putnam v. French, supra. Such
an agent, It is there held, has appar-
ent authority "to make terms of pay-
ment as to time and place, to the
extent at least of what was custom-
ary and not extraordinary."
01 See Wolfe v. Luyster, 1 Hall
(N. Y.), 14G; Steele v. EUmaker, H
Serg. A R. (Penn.) 86.
02 As to this, see ante, I 743 et seq,
OS A special agent cannot bind his
principal by terms different from
those prescribed. Sloan v. Brown,
228 Pa. 496, 139 Am. St R. 1019;
McManas v. Fortescue, [1907] 2 K.
B. 1; Hardwlck v. Klrwan. 91 Md.
285; Neater v. Craig, G9 Hun (N.
Y.), 543; Lucas v. Rader, 29 Ind.
App. 287.
Instructions to sell for ''net cash"
are not violated by permitting the
buyer to postpone payment until the
goods are delivered. Bristol v.
Mente, 79 App. Div. 67, aff'd 178 N.
Y. 599.
6o!
§ 854]
THE L.\W OF AGENCY
[book II
ever, affect those who, with no notice of them, have dealt with the
agent in good faith, relying upon an apparent general authority.'*
But such third persons must have exercised reasonable prudence, and
if the price or terms fixed by the agent were so unusual or so unrea-
sonable as to fairly put a prudent man upon his guard, they will not
be protected.**
MTowle V. Leavltt. 23 N. H. 360,
r»5 Am. Dec. 195: Clews v. Rellly, 53
Hun (N. Y.), 636; Hatch v. Taylor,
10 N. H. 638.
Where a letter authorizing the
agent to sell and exhibited to the
buyer, is silent as to the price, the
agent has apparent authority to fix
the price and the buyer is not bound
by oral limitations given to the
agent of which the buyer was ignor-
ant Bass Dry Goods Oo. v. Granite
City Mfg. Co., 119 Ga. 124.
In Ludlow-Saylor Wire Co. v. Fri-
bley Hdw. Co., 67 Kan. 710, a tra-
veling salesman sold wire ties in
February for payment In May. He
reported the price to his principal
as being $1.10 per bale. In an ac-
tion for the price, defendant was
permitted to prove that the agent
on the sale "had guaranteed the
price" as on the date of payment;
and that on that date the price wad
only ninety-five cents per bale. Held,
proper, as the agent had merely vio*
lated secret instructions.
w See ante, § 751. Where the pur-
chaser was informed, by the terms
of the contract which he signed,
that the agreement upon which he
now relies was outside the agent's
authority, he can not base a case
upon any doctrine of "apparent" or
implied authority. Metropolitan,
etc., Co. V. Law, 61 N. Y. Misc. 105.
(Here the buyer relied upon an al-
leged agreement that he might coun-
termand the order; the contract ex-
pressly provided that it should not
be countermanded; and that no
agent had authority to agree to the
contrary unless it was made a part
of the written contract and was ap-
proved by the principal.) To same
effect: Fulton v. Sword Medicine Co.^
145 Ala. 331; Schlitz Brewing Co. v.
Grimmon, 28 Nev. 235. But compare
Author's, etc., Ass'n v. O'Gorman^
147 Fed. 616.
Where the agent ofters to sell a
$300 piano for |120, and to take the
buyer's note running to the agent,
there is enou^ to put the buyer on
his guard. Baldwin v. Tucker, 112
Ky. 282, 2S Ky. L. Rep. 1538, 57 U
R. A. 451. So, where there wa»
known to be a "list-price," an offer
by the agent to allow a rebate which
the agent was to pay in person be-
cause he did not wish it known
that the house was discounting the
list price, the buyer is put upon in
quiry. Taylor Mfg. Co. v. Brown
(Tex. Civ. App.), 14 S. W. 1071.
The same conclusion was reached
where the buyer knew that the sell-
er-principal was under contract tx>
maintain list prices but the agent
offered to sell at a discount to be al-
lowed by the agent when the bill
was collected. Brown v. West, G^
Vt. 440.
But where there was no oollusion
between the buyer and the agent,
and the price was not so low as to
reasonably arouse suspicion, and
the buyer had no notice of limita-
tions except a clause in the contract
requiring the agent to sell at
"proper prices," it was held that the
principal was bound. The court
thought the expression "proper
prices" was "too flexible and indefi-
nite to bind or even put upon in*
quiry." U. S. School Furn. Co. v.
Board of Education (Ky.), 38 S. W*
864, 18 Ky. 1m Rep. 948*
6o6
CHAP. IIlJ CONSTRUCTION OF AUTHORITIES [§ 855
g 855. Further as to price. — ^As is pointed out in an earlier
chapter, the question whether the communications between the prin-
cipal and the agent respecting price are to be regarded as mere private
instructions, or as an effective limitation upon the agent's autliority,
is one not always easy of determination. Neither is it easy to deter-
mine whether fixing the price, — ^as distinguished from stating the
price fixed by some one else, — appears to be within the agent's au-
thority. Neither is it easy to decide what should be the consequences
if the agent does not correctly state the price fixed by his principal.
If I go to a railway ticket office, for example, and ask the price of a
ticket to New York, I cannot, in the first place, reasonably suppose
that the ticket agent is the one who decides that matter. I must as-
sume that the -price has been set for him by a higher authority, and
that he is authorized to sell only at that price. If, now, by mistake,
he names a lower price, which I pay and receive the ticket, but, before
I have changed my position to my detriment, he discovers the mis-
take and demands its correction, have I a legal right to retain the
ticket — ^have I a contract to carry me to New York at the price paid ?
If I go to a great department store and ask the clerk at a particular
counter what is the price of a certain article, and he, by mistake, states
the wrong price, but it is discovered when the sale is checked up and
before I leave the counter, have I a contract for the purchase at that
price? I have clearly no right to think that the clerk fixes the price.
What is he put there for ? What is the offer made to me by the pro-
prietor ? Two answers are possible : One, that the proprietor offers to
sell only at the price which he has fixed, — which I may learn by asking
the clerk, — and that the proprietor will be liable for any loss I have sus-
tained by reason of misinformation given me by the clerk, but that no
contract to sell at the mistaken price results. The other that the pro-
prietor offers to sell the goods at the price which the clerk shall name, —
the proprietor having instructed him what price to name, — and, there-
fore, that I make a contract by accepting the offer as made by the clerk,
even though he violates his instructions, if I am ignorant of that fact,
and am not put upon my guard by any suspicious circumstances. The
logic of the first view seems to the present writer to be unanswerable :
practical convenience may, perhaps, be better subserved by the second.
Certainly, however, from the standpoint of equity or morals, the per-
son who thus seeks to take advantage of a clear mistake, seems to be
entitled to but very little consideration.
If the departure from the price fixed was the result, not of error
607
§855]
THE LAW OF AGENCY
[book II
but of intent, on the part of the agent, .the other party's situation does
not seem to be improved.
It is doubtful whether it could be contended that the clerk or sales-
man in these cases has any authority to give information as to price
except as part of a negotiation for a present sale, — ^he doubtless has
no authority ordinarily to quote future prices, or to agree that prices
for the future shall be what they now are.
Other more or less similar cases will at once present themselves.
The traveling salesman who solicits orders for merchandise or ma-
chinery or implements may furnish an illustration. He is usually
well known to be quoting the prices which have been named to him,
and hence no one would ordinarily suppose that he is authorized to
oflFer the goods for any other prices than those which have actually
been prescribed for him.'*
»«An ordinary "commercial tra-
veller," of the sort who usually sell
at prescribed or list prices, has no
apparent authority to bind his prin-
cipal by agreeing to give rebates or
reductions. Tollerton v. Gllruth, 21
S. D. 820; Taylor Mfg. Co. v. Brown,
8Upr<L
In Scudder-Gale Grocer Co. v.
Russell, 66 111. App. 281, the court
held the principal liable for non-
performance of a contract of sale
made by a salesman who had mis-
takenly quoted the wrong price.
The court said that the circum-
stances as well as former dealings
Justified the buyer In believing that
the salesman had power to fix the
price.
In Ohio, etc., Ry. Co. v. Savage, 38
111. App. 148, It appeared that a local
freight agent had named to the plain-
tiff a rate for transporting grain less
than the usual rate. The agent pur-
ported to do this on the authority of
the division freight agent, one Hodg-
don. Plaintiff loaded his grain In re-
llance upon the rate so named, but
when he came to get his receipt, the
agent Informed him that some ques-
tion had arisen about the rate, and
that he could not allow it to him.
Plaintiff thereupon sent his grain at
the regular rate and brought this ac-
tion to recover the difference. Held,
that he could recover. The court
said: "In the case of a railroad com-
pany the agent who Is put up to rep-
resent the company in a particular
capacity Is, for that purpose, the
company Itself. In this Instance the
station agent held such a position
that the plaintiff was Justified in re-
lying upon his representation in ref-
erence to the shipment of this grain,
while the plaintiff knew that this
agent had, necessarily, limited pow-
ers, yet he knew that he was the
mouth-piece of the company, and
more particularly of Hodgdon, at
that place, in regard to matters of
local business, and the company
should not be permitted to say that
the agent misunderstood or misinter*
preted his iuslnictions." It will be
observed in this case, however, that
the plaintiff had loaded his grain be-
fore he was advised of the mistake.
In Stlrn v. Hoffman House Oo.. S
N. Y. Misc. 246, a "general sales-
man" in a store was held to have
apparent authority to agree to give
a discount of ten per ' cent from
fixed prices upon a large bill of
goods then bought. It does not
clearly appear whether this was ae^
tually beyond the agent's prescribed
authority or not.
In Smith Table Co. v. Madsen, 30
Utah, 297, a general salesman in a
6o8
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
l§ 856
§856.
Where the agent is given possession of the chattel
and authorized to sell it, restrictions as to price may still be eiJective
if the circumstances of the sale are such as, according to ordinary ex-
perience, would naturally suggest the probability of such restrictions.
But where tlie agent is given possession and is sent out to sell to any
buyer he can find, it is doubtless a natural and proper inference that
he is authorized to sell for such price a$ he may be able to obtain,
subject only to the limitation of what is unusual or extraordinary aqd
therefore sufficient to excite suspicion.*^
furniture salesroom was held to
have apparent authority to give a
"trade discount," rather than a
mere "cash discount" There was
evidence here that the agent had
no such prescribed authority. The
cases relied upon are Banks v. ETver-
est, 35 Kan. 687 and Potter v.
Springfield Milling Co., 76 Miss. (82,
both cited in a following section,
I 861. The first case is readily dis-
tinguishable; the second is more in
point
There is also some comment about
price in Authors', etc., Association
V. O'Gorman, 147 Fed. 616.
In Qalbraith t. Weber, 58 Wash.
132, 28 L. R. A. (N. S.) 341 (in aU
respects a most extraordinary case)
it appeared that Galbraith had sent
out one B, as agent to sell an im*
ported horse. Galbraith valued the
horse at $3,000, but there was no
evidence of any instructions to B
not to seU for less. B took the
horse to a town about 100 miles
away, where for six or eight weeks
he tried to sell the horse for. |3,000,
but without success. Defendants
then oftered $1,000 for him. B said
he had no authority to sell for that
sum, but would telegraph to Gal*
bralth to see if he would accept it
B did not in fact send' any telegram,
but next day falsely reported to de-
fendants that he had done so, and
had received authority from Gal-
braith to accept the $1,000, and de«
fondants bought at that price, giv-
ing B two promissory notes for $500
each, in payment B did not send
these notes ^o Galbraith, but dis-
counted them at a bank and kept
the money, at the same time forg-
ing and sending to Galbraith three
notes for $900 each, wjiich he re*
ported that defendants had given in
payment for the horse. Galbraith
accepted these notes and held them
until he learned of the forgery, thus,
as the court held, indicating that he
did not insist rigidly upon $3,000,
but was willing to accept $2,700 in
notes. Qalbraith testified that the
horse was worth $3,000, but there
was also evidence of a leas value.
In view of these facts, the court
said: "We do not think that these
circumstances were so extraordi-
nary as to enable us to say, as a
matter of law, they showed want of
authority on the part of B to agree
upon a sale at $1,000." But if B
truthfully told defendants that he
wsB not authorized to sell for $1,000,
his subsequent untrue statement
that he bad received that authority
was not binding upon his principal.
Clark V. Haupt 109 Mlch« 212.
•7 In McManus v. Fortescue,
[1907] 2 K. B. 1, where an auotion-
eer had been given a reserve price
and the sale was advertised as sub-
ject to a reserve price, the auction-
eer at first struck off an article at
less than the reserved price and
then discovering or recollecting that
the reserve was more then the bid
refused to go on with the sale of
the article, it was said by one of the
Judges (Moulton, L. J.): "The em-
ployment of an auctioneer is as an
39
609
§8s7l
THE LAW OF AGENCY
[book II
§ 857-
On the other hand, the authority of the agent over
the subject-matter may be so general, so long recognized or so cus-
tomary that no one could well say that communications respecting
price were intended to be other than mere advice or directory instruc-
tions.** Would the directions as to prices given by the board of di-
rectors of a great department store to the general manager, for ex-
ample, stand upon the same footing as the general manager's directions
given to the clerks respecting the prices at which they should sell the
goods?
So if the agent is expected to bargain, — ^to use his judgment or
skill in securing the best obtainable price, — ^but not to disclose the
agent for special purposefl, and
falls under the general law of
agency by which the employer may
restrict the authority given to the
agent, subject to certain well-known
exceptions not material to this case.
The limitation of an auctioneer's au-
thority, by his principal fixing a re-
serve price, is a perfectly valid and
effectual limitation. It is in no
wise inconsistent with his employ-
ment as an auctioneer, because an
auctioneer is as frequently em-
ployed to sell subject to a reserve as
without one, and Indeed In certain
markets it may be said to be the
more usual practice. A principal,
therefore, who gives authority to an
auctioneer to sell subject to a re-
serve price gives no power to the
auctioneer, either expressly or im-
pliedly, to accept a less price."
Rainbow v. Howkins. (1904] 2 K. B.
322, was doubted.
In Whitehead ▼. Tuckett, 15 Bast,
400, a manuscript case is referred
decided in 1792 or 1793, to the fol-
lowing effect: "A servant was sent
with a horse to a fair with an ex*
press order from the master not to
sell it under a certain s\im; the
servant, notwithstanding, sold it for
a less sum; upon which the mas-
ter immediately gave notice and
brought trover against the purchas-
er; and it was held that he might
recover, because the servant was not
his general agent.
f»
But, on the other hand, It Is said
by Pollock, C. B., arguendo, in Smith
V. McGuire, 8 H. & N. 554, •'If a
man sends his servant to market
to sell goods, or a horse, for a cer-
tain price, a|id the servant sells
them for less, the master is bound
by it. There, even the violation of
a particular authority does not ren-
der the sale null and void." Same
effect: United States v. Torres, 11
Philipp. 606.
In Galbraith v. Weber, 58 Wash.
132, 28 L. R. A. (N. S.) 341, it is
said: "Where the agent has exclu-
sive possession of the property of
his principal with authority and for
the express purpose of selling it to
any purchaser he may find, we
think a purchaser from such agent
would clearly have the right to rely
upon the agent having power to
agree upon the purchase price; but
in that case the principal had not
fixed the price, though he valued the
article at a certain sum. See alsot
Cooper V. Coad, 91 Neb. 840.
»sSee the leading case of White-
head V. Tuckett, 15 Bast, 400, where
prices named by the principals in a
series of letters written to their
agents to seU (held to be general
agents), were held to be mere sug-
gestions or advices and not limita-
tions upon authority. The court
distinguished the case from a MS.
case referred to in argument and
given in the preceding note.
6to
CHAP. Ill]
CONSTRUCTION OF AUTHORII^ES
[§§ 858, 859
limits prescribed by his principal, the limitations so fixed must usu-
ally be regarded as mere instructions.
With respect of price, therefore, the situation seems to be this: If
the principal has not fixed the price, the agent may do so, within ordi-
nary and reasonable limits, because it must be fixed in order to effect
the sale. If the principal has prescribed the price, his limitations are
binding upon the agent, and upon third persons also, unless the prin-
cipal's provisions as to price are to be regarded as mere private in-
structions to the agent or unless the principal has in some way held
the agent out as one having authority to fix the price. Merely in-
trusting an agent with the possession of the property he is to sell, is
not necessarily such a holding out, though it will be where such am
agent so intrusted has ordinarily the autliority to sell upon such terms
as he can secure.
§ 858. Terms or conditions attached. — ^With respect of
the terms or conditions which may be attached to contracts of sale, it
has been held that it is within the apparent scope of an agency for the
sale of goods, to stipulate that if the property is not satisfactory to the
purchaser, or if the machinery sold does not do good work, and the
like, it xriay be returned.** A stipulation that if it be found not
marketable within a reasonable prescribed time, it may be returned,
has also been upheld ; at least, the principal cannot enforce the residue
of the contract, and repudiate this portion of it.* An agent selling a
furnace to be shipped in detached parts has implied authority to agree
that they shall be put together and placed in the building where they
are to be used.* So a traveling salesman has been held to have im-
plied authority to undertake to transmit instructions to his principal
to cause the goods shipped to be insured, where it is the custom of the
principal to effect such insurance on the request of purchasers.*
§ 859. ■ But, on the other hand, it has been held that a
traveling salesman has no implied authority to make such an unusual
MOster y. Mlckley, 35 Minn. 245
(agricultural implement, see also
post, § 885; Zaleskl v. Clark, 44
Conn. 218, 26 Am. Rep. 446 (a bust
to be made by a sculptor); French
Piano Co. V. Card well, 114 Ga. 840
(a piano); Eastern Mfg. Co. v.
Brenk, 82 Tex. Civ. App. 97 (Jew-
elry).
iBabcock v. Deford, 14 Kan. 408.
But see oases cited in folFowing sec-
tion.
«Boynton Furnace Co. v. Clark,
42 Minn. 335. In Lamon y. Speer
Hardware Co. (C. C. A.), 198 Fed.
453, it is held to be within the im-
plied authority of an agent to sell a
cotton ginning plant to agree to
erect It and put it in running order.
But this, of course, cannot be a uni-
versal rule.
> McDonald v. Pearre, 6 Ga. App.
130. Where an agent was sent out
to sell a horse and was given a writ-
611
§ 86o]
TH£ LAW OP AdENCV
[book II
contract as that all of the goods unsold by the purchaser may, after
the season is ended, be returned by him on or before the day of set-
tlement ; * or that the principal would receive and allow for imperfect
goods previously purchased by the Buyer from dther parties;* or
which he might subsequently purchase from the same principal;* or
that he need pay for the gbods only as he resells thetn; itid that the
agent will find buyers for him,^ or that for every sample article which
the buyer give^ away, he will sell a certaih number of accessories
within a given time,* or that the principal will pay for fitting up a
place iti which to sell the goods.*
Oral Conditions attempted to be attached to written contracts, will
be excluded by the rules relating to that subject.**
§ fe6b. Piiliirt to impose condition* pr^iibisd by princi-
pal.— A sales agent who fails or neglects to impose tbnditions upon
the ^al^ which Have been prescribed to tiitn by hts principal, makes
himself liable to his principal, but whether his failure or neglect will
ten statement bj his .principal tha.t
thQ latter ..would ^, be bound by any
contract the agent madej he was
held hound by aii' agreement that If
the borqe did pot e^^^n his cost the
principal would igf^^ allowance for
the deficiency, worsley v. Ayred,
144 Iowa, 676.
\ Friedmi^h. v. Kfilly. 126 Mo. App.
279, or .t}iat the bu^er may counter-
mand the order at his pleasure.
Metropolitan; etc., Co. v. Lau, 61 N.
Y. Misc. 10&. Compare Baboock ▼.
Deford, , jupra. j . .
In Clayton v. Western Nat Wall
Paper Co., — 'tex. Civ. App. — ,
146 S. W. 695, an agreeihent by a
sales a^e^t that, if l;he buyer would
buy more goods, the seller would
take back certain undesirable and
inferior goods previoiiUy purchased
from hitn, was held to be wlthlu his
implied authority. .
In Kinser v. Calumet Fire Clay
Co., 165 III. 505, a salesman who de-
sired to furnish goods to one bid-
ding for public work, agreed that if
tbo latter would lower his bid and
thus secure the contract, the agent's
principal would guaranty him
against loss on the contract. Held,
unauthorized.
• Phoenix Pottery Co. r. Perkins,
79 N,,J..L. 78..
«rd'e V. brody, 156 111. App. 479.
Same effect, where bargain was to
fillgw .on price of goods now sold,
th^ price of goods previously pur-
chased anJi paid for. Lindow v.
Cohii, 5 Oal. At)p. S^8. The court
treated such an arrani^ement as a
l^arter or, excjhang^ — ii^ any event,
not ^ sale for cash. But see Clay-
ton V. Westerh Nat Wall Paper Co.,
supra,
•Ball V. Freund. 117 N. Y. Supp.
193.
8 Sale of "talking machines," pur-
chased to be given away as adver-
tisements, ^ith guaranty that for
every machine given away the
buyer would sell, on the average,
twenty-five "records," within four
months. Johns v. Jaycox, 67 Wash.
403, 39 L, R. A. (N. S.) 1151.
» Salesman of brewery undertook
to pay for fitting up s^ saloon in
which to sell the beer. Schoenhofen
Brew. Co. v. Wengler, 67 111. App.
184.
10 Written orders secured by
age^t and sent to principal who ac-
cepts them are not attected by parol
agreements with the agent of which
6l2
CHAP
. lii]
CONSTRUCTIOK OF AUTHOklTIES
[§ 86r
affect the title of the purchaser will depend upon a variety of circum-
stances. A purchaser with notice of th^ co'nditioris c6iild acquire no
title in violation of them; but a purchaser \i/h6 buys in ignorance of
the conditions and upon terms which are usually within the power of
such an agent to make, would be protected." Thus one who buys a
book of ^n agent ih tne ordinary way, receives it and pays for it, is
held not charged with conditions restricting its resale which are printed
on the inside of the cover and which he neither saw nor had called to
his attcntidn dntil after the pufthase was completed, even though it
was the duty of the agent to mate the sale only upon that condition.^*
§ 86i. Authority to make binding contract. — ^As in the case of
real estate, k so-called Airthority to sell may confer power to actually
make the sale, or it may be confined to the mere preliminary negotia-
tion— the finding of a purchaser with whom the principal may deal in
person, or the solicitation of orders which the principal may accept
or reject at his pleasure.
Authority merely to solicit orders and transmit them to the princi-
pal, as is usually the cise with the so-ca!led "drummer" of trjlveling
solicitor, clearly confers no power to accept the orders so taken or to
make a binding contract of sale." Stlch a power may, however, be
principal Is ignorant ICcCaskey
Register Co. v. Corfman, 45 Ihd.
App. 297; Holt Mfg. Co. T. OdfeA-
fider, 61 Ws^h. 666; Bybee ▼. Eni-
bree-McLean Carriage Co., Tex.
Civ. App. , 135 S. W. 26s.
Buyer baJB no rlgUt to rely oh cblri-
ditions which, as he s^e^, are r^
pugnant to the contract or order
which he signs. Metropolitan, 6t<S.»
Co. V. Lau, itipra,
"Authors** etc., A^'h v. O'Gbr-
raan, 147 Fed. 616.
"Authors* etc., Ass'n v. O'Gor-
man, supra.
The court also says that a rule
which would require the purchaser
upon learning of it either to oh-
serve the restriction or return the
l)ook is "impractical and unsound."
A principal however who ittsists
upon retaining an article bought
upon unauthorized conditions, or
who seeks to enforce a contract
with unauthorized terms, after he
learns of the facts, Is usually held
to ratify the act He must either
repudiate the transaction or stand
by its terms.
IS Bensberg v. Harris, 46 Ma App.
404; Bauman v. McManus, 75 Kaft.
106. 10 L. R. A. (N. S.) 1138; Math-
ews App^atus Co. V. Reaz (Ky.),
22 Ky. Law Rej). 1528, 61 8. V7. 9;
Brown Oroeery Go. r. Beeket (Ky.),
22 Ky. U Rep. 893, 57 S. W. 458;
Ryan v. American Steel A Wire Oa,
148 Ky. 481, l46 S. W. 1099; Bafrlng
V. New Birdskll Co., 16 S. t>ak. 262;
Becker r. Clardy, 96 Miss. 301, Ann.
CkB. 1^12 B. 865.
dee also Abrahams v. Weiller, 87
111. 179.
Notice of the lack of authority
niay be communicated by the terms
of the order. Deane v. E?verett, 90
Iowa, 242. Salesman may insert
stipulation requiring faccet)tance by
principal, even though he had au-
thority to make a binding contract.
Gilman v. Stock, 95 Me. 359.
A "drummer" or soliciting agent
is not a peddler or merchant. City
V. Collins, 34 Kan. 434; State v.
613
§ 86i]
THE LAW OF AGENCY
[book II
conferred expressly,^* or it may arise by implication from a course of
dealing/* or from the general custom of the trade.^*
An agent having an apparently general power to sell may bind his
principal by accepting the order, and the contract will not be affected
by the principal's reservation of a right to reject all orders taken by
him, where such reservation was not known to tlic other party and
was not suggested by the circumstances."
Miner, 93 N. C. 511, 53 Am. Rep.
469; Com. v. Farnum, 114 MajBS. 267.
i*In Pittsburg Sheet Mfg. Co. v.
West Penn. Sheet Steel Co., 197 Pa.
491, a written contract of employ-
ment between a steel company and
a salesman which had express stipu-
lations respecting performance, com-
missions, prices, and the like, but
contained no provision that orders
should be subject to ratification or
approval of the company, was held
to give the salesman authority to
bind his employer by an absolute
contract of sale. Compare McKeige
V. Carrol, 120 N. Y. App. Div. 621;
Falihee v. Simmons, 121 N. Y. App.
Div. 839.
iBBrennan v. Dansby, 43 Tex. Civ.
App. 7.
See Spooner v. Browning, [1898]
1 Q. B. 528, 67 L. Jour. Q. B. 839,
where it was held that the fact that
a principal allows an agent to obtain
orders for him which the principal
may fill or not as he sees fit — ^this
being well known to the party who
gives the order — and the fact that
he has on two occasions filled such
orders, does not afford any evidence
from wbich the Inference of fftct
can reasonably be drawn that the
principal holds the agent out either
as having authority to bind him by
contracts or as representing that
the principal will fill orders brought
him by the agent so as to make the
principal liable for an order subse-
quently given to the agent but not
submitted to the principal and ap-
parently accepted by documents
forged by the agent
In Hopkins v. Armour, 8 Ga. App.
442, a sale was upheld because it
appeared that in previous dealings
the orders as given by the buyer to
the salesman had been filled, and
because of a custom alleged to pre-
vail among such salesman to make
binding contracts, although there
appeared no facts bringing home to
the principal any knowledge either
of the prior dealings or of the ciis-
tom.
But compare with Gould v. Cates
Chair Co., 147 Ala. 629, where it is
said that a principal In North Caro-
lina Is not bound by customs pre-
vailing In Alabama, especially
where the customs urged prevailed
among salesmen only.
i«Sttch a custom shown. Mabray
T. Kelley-Goodfellow Shoe Co., 73
Mo. App. 1; Friedman ▼. Kelly, 126
Mo. App. 279; Austrian v. Springer,
94 Mich. 843. 34 Am. St. Rep. 350;
Cawthon v. Lusk, 97 Ala. 674.
17 Banks v. ETverest, 35 Kan. 687
(where there was a long course of
dealing with the agent of a law book
publisher thought to justify the con-
clusion that he was authorized to
make binding contracts) ; Potter v.
Springfield Milling Co., 75 Miss.
582 (a case doubtful upon its facts).
See also Nebraska Bridge Supply
Co. V. Conway, 127 Iowa, 237.
A salesman who is supplied by his
principal with blank forms of bills
of sale Including the principal'B
name as seller, may make a binding
contract Watterson v. Beaudry, 35
Que. Super. 450.
In Dreyfus v. Goss, 67 Kan. 57, a
traveling salesman sold goods by
sample, sending the order to his
principal. The goods were shipped
but on arrival were found not to be
like the sample. When the agent
came again, he admitted that the
614
CHAP, III] CONSTRUCTION OF AUTHORITIES [§§ 862, 863
§ 862. To execute and deliver necessary documents or
memoranda. — As incident to the power to make a binding contract
of sale or to sell, the agent would have implied power to make, ex-
ecute and deliver any necessary and usual bill of sale, or any neces-
sary and usual note or memorandum in writing, which may be re-
quired to give his act effect, or to satisfy the statute of frauds, and the
like.** These he may, of course, couch in the usual and appropriate
language.
§ 863. Authority of selling agent to receive pasrment — ^In general.
Whether an agent authorized to sell personal property has implied
authority to receive payment, is a question upon which there has been
much difference of opinion. It will be obvious that its sojution must
depend largely upon the nature of the particular transaction and the
usages if any in relation thereto.
If a merchant places behind his counters a clerk to sell goods, it
could not be doubted that, in the absence of a known custom to pay a
cashier or other person, the clerk would have implied power to receive,
at the time of the sale, payment for the goods sold by him.^' Whether
he would have authority at some subsequent time to receive payment
for the goods sold, after the account had gone upon the books, and the
matter had passed into other hands, is evidently not so clear. If pay-
ment were made to him at his usual place in the store, the case would
present a different aspect than if it had been made to him at his own
home or upon the street. So, too, if he were one of many salesmen in
a large establishment in the metropolis, a different case would be pre-
sented than if he were the only clerk in a country store combining in
himself salesman, bookkeeper and collector."
goods were not equal to the sample, implication from such employment
aod made a new contract that the that he has authority, after the
buyer should keep them at a less goods are delivered and taken from
price and on a longer credit Held, the store, to present bills and col-
that this contract was a present lect money due to his employers, be-
blnding sale, and within the author- cause it is not in the scope of the
ity of the agent. 8ed quaere. usual employment of such clerks."
18 Potter V. Sprlngrfleld MUling 20 See Davis v. Waterman, 10 Vt.
Co., 75 Miss. 532. 526, 33 Am. Dec. 216, where it is
i»See HIrshfleld v. Waldron, 54 held that a clerk In a country store
Mich. 649, where CHiamplin, J., says: with whom are left the goods and
"The usual employment of a clerk demands of his employer, has
ill a retail store is to sell goods to charge of both, and in the absence
customers or purchasers, and it is of his principal, has power to re-
implied from such employment that ceive pay on the demands and to
he has authority to receive nny for Institute suits for their security
them on such sale. But there is no when an emergency arises.
615
§§ 864, 86s]
THE XJiW OF AGENCY
[book II
Again if he were sent about the country with authority to sell goods
entrusted to his possession for that purpose, authority to receive pay-
ment therefor would be implied, as it would not be presume^ that the
' principal intended that they should l?e parted with without payment.**
But if his authority was simply to solicit orders for gpods, a sample of
which he had in his possession, it being left for the principal to de-
liver the goods in pursuance of the orders taken, the question whether
the agent might subsequently collect payment merely as an incident of
the authority to take orders, wouljj present other considfirations."*
§ 864. Authority to receive payxxient not implied frotp. possession
of bilL — ^The mere fact th^t one claims to be authorized to receive
payment is no evidence of his authority, nor c^ suph authority b^ im-
plied from the mere possession by the assumed agent of the bill or
account, though made out upon the principal's bill-head and in his own
handwriting.^'
But where the principal sends to a traveling agent, a bill for goods
sold by him, and also, a bill for goods sold to the same purchaser by
the principal himself, and the put;chaser, in reliance upon these facts,
pays the agent, a jury may properly find that the agen^ had apparent
authority to receive the payment.**
§ 865. Agent autljiorized to deliver possession may receive pay-
ment.— ^Where the principal entrusts the agent \yith the possession
of the goods to be sold and authorizes him to sell and deliver them,
authority to receive payment of so much of th^ purchase price as is to
be paid at the time of such delivery, will be implied, and a payment
made to the agent at the time of the sale and delivery, or as part of
the same transaction, will be binding upon the principal ; " of course.
21 See following section.
22 See post, § 864.
2«Hlrshfleld v. Waldron, 54 Mich.
649; Dutcher v. Beckwith, 45 111.
460, 92 Am. Dec. 232. See also
Kornemann v. Mo^aghaIl» 24 Micli.
36; Grover ft Baker Sew. Machine
Co. V. Polhemus, 34 Mich. 247; Rey-
nolds V. Continental Ins. Co., 36
Mich. 131; McDonough y. Heyman,
38 Mich. 334.
24Luckie y. Johnston, 89 Ga. 321.
25 Bailey v. Pardrldge, 134 111.
188; Adams v, Fraser, 82 Fed. 211.
27 C. C. A. 108; Sumner v. Saun-
ders, 51 Mo. 89; Brooks y. Jameson,
55 Mo. 505; Rice v. Groffman, 56
Mo. 434; Birch Tree Bank y. Brown,
152 Mo. App. 589; Capel v. Thorn-
ton, 3 Car. ft P. 352.
Some of the broader dicta in the
Missouri cases cited aboYe, that the
power to receive payment is an In-
cident to the power to sell in any
case, are properly withdrawn in
Butler Y. Dorman, 68 Mo. 298, 30
Am. Rep. 795.
Receiving payment upon sale on
trial. — ^tJnder a contract, held by the
court to create a general agency. It
was held that the agent of a piano
company, intrusted with posses-
sion, could select the purchaser and
agree upon terms of sale, which
616
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 866
in the absence of any knowledge on the part of the purchaser that the
agent was not authorized to receive payment. It is to be presumed
in such a case that payment and delivery are to be substantially con-
current acts, and the agent who is authorized to deliver must be pre-
sumed to be authorized to complete the sale by receiving payment,
either simultaneously or so soon thereafter as to be really a part of the
same transaction.
Where, howfevef, the price is to be pild In installments, the agent,
though having thus implied authority to receive the installment to be
paid at Wife timie of delivery, would ordinarily thereby exhaust his au-
thority, and would have no implied authority to subsequently receive
the remaining instaflfmeiits.*' Such authority inight, of course, be
inferred from a more general Jnithority over the subject-matter, or
from a course of conduct or a holding 6Ut reasonably indicating Such
a wider power."
§ B66. Fayttieht to g^nitSl rfaes-afefetit^-^arrying t*ie doctrine
of the preceding 'Section k step further, it is clear that where the
principal estab'lishes a jgeneral sates agency, of which he puts the agent
in charge, authorizing him to sell the goods, fix the terms and condi-
tions of safe and to receive the proceeds of ^ales, payments made to
such agent for goods purchased of him are apparently within the scope
of his authority, arid ^ill bind the principal !h tfife absence of any lim-
itation upon his authority known to the person who makes the pay-
might be. eltt^er .for CAPh qt. oq ^^ American l^al$9. Bpok Ca ▼. Cow-
cri^it, and deliver tbe property In drey, lOQ A^lc 325, 38 L. R. A. (N.
completion of the ^le or on trial .?.) 700, 1b qontra. There the ac^nt
looking to a completion in the fu- iold apparatus upon terms of part
tare, and receive money^ in advance cash and balance in six install-
to be applied on the purchase price ments; at the time of the sale he
if the sale wa^ completed. French figreed tp come back at a later date
Piano Co. v^ Cardwell, 114 Ga. 340. and instru^ the buyer in the use of
Receiving payment before deliv- the apparatus. .On that later date,
ery, — In ShuU v. New pirdss^U Co., he collected the balance of the price,
15 S. D. 9, it was held that a special giving a discount for cash. Heldy
agent to sell machinery had no Im- that the payment was good. One
plied authority to receive payment iudge dissented, and the case is cer-
before deUvery. To same effect see, tainly guestionabla There was also
Case Thresh. Mach. Co. ▼. Eichin- a notice on the statement sent by
ger, 15 S. D. 530. the seller "Pay no money to agents."
««See Seiple v. Irwin. 30 Pa. St "See Howe Machine Co. t. Ball-
513; CUrk v. Smith, 88 III. 298; Law weg, 89 111. 318; Brooks v. Jameson,
▼. Stokes, 32 N. J. U 249, 90 Am. 55 Mo. 505; Sumner v. Sannders, 51
Dec 666; Batler r. Dorman, 68 Ma Mo. 89; Lamb r. Hirschberg, 1 N. Y.
298, 30 Am. Rep. 795; Adams T. Misc. 108; Baldwin ▼. Tucker, 26
Fraser, 82 Fed. 211, 27 a C. A. 108; Ky. U Rep. 822. 76 S. W. 196.
and cases cited in I 869, po9t,
617
§867]
THE LAW OF AGENCY
[book II
ment.^* In pursuance of this view, it has been held that where such an
agent has taken a note for the price, as he was authorized to do, and
has sent it to his principal, payments afterwards made to the agent
will be effective against the principal where the buyer was ignorant
of any limitation on the agent's authority.**
Such an agent has, however, as will be seen hereafter,** no author-
ity to take notes payable to himself,*^ or to accept in payment property
transferred to himself or the discharge of debts or notes due from
himself.**
§ 867. Payment to agent as ostensible owner. — And so where an
agent authorized to sell and entrusted with possession of the property
to be delivered upon the sale, is expressly or by implication author-
ized or permitted to sell in his own name as though he were the owner,
and makes a sale in his own name to one who does not know and has
no good reason to believe that he is not the owner, a pa3rment made to
the agent or a set off acquired against him before the principal is dis-
closed will be effective against the principal.** An agent so situated
is ostensibly the owner of the goods and the principal who has per-
28Ka8son v. Noltner, 43 Wis. 646;
Estey V. Snyder, 76 Wis. 624; Sum-
ner y. Saunders, 51 Mo. 89; Broolcs
y. Jameson, 55 Mo. 5(15; Howe Ma-
chine Co. y. Ballweg, 89 111. 318;
Sawin y. Union Bldg. Ass'n, 95 Iowa,
477.
2»KaB8on v. Noltner, aupra; Sum-
ner y. Saunders, supra; Brooks v.
Jameson, supra. So In case of a
chattel mortgage. Estey y. Snyder,
supra.
80 See post, § 949 et seq.
«i Baldwin v. Tucker, 112 Ky. 282,
23 Ky. L. Rep. 1538, 67 L. R A. 461
(same case, afTd 75 8. W. 196, 25
Ky. L. Rep. 222).
«t Walton Guano Co. y. McCall,
111 Ga. 114; Hoffman y. Ins. Co., 92
U. S. 161, 28 Ik Ed. 539; Stewart v.
Woodward, 50 Vt. 78, 28 Am. Rep.
488; Wheeler 6 Wilson Mfg. Co. y.
Giyan, 65 Mo. 89; Bertholf y. Quln-
lan, 68 111. 297; Aultman y. Lee, 48
Iowa, 404.
>s Rabone y. Williams, 7 T. R. 860,
n; George y. Clagett, 7 T. R 359;
Pish y. Kempton, 7 C. B. 687; Cooke
y. Eshelby, 12 App. Cas. 271; Mon-
tagu y. Forwood, [1893] 2 Q. B. 360;
Semenza y. Brlnsley, 18 C. B. (N.
S.) 467; Borries y. Imperial Otto-
man Bank, U R 9 C. P. 38; JSop parte
Dixon, 4 Ch. D. 133; Capel y. Thorn-
ton, 3 Car. & P. 352; Hogan v. Shorb»
24 Wend. (N. Y.) 458; Judson y.
Stilwell, 26 How. Pr. (N. Y.) 518;
Pratt y. Conins, 20 Hun (N. Y.),
126; Maxfield t. Carpenter, 84 Hun,
450; Baxter y. Sherman, 73 Minn.
434, 72 Am. St Rep. 631; Rice y.
Groffman, 56 Mo. 484; Hutchinson
Mfg. Co. y. Henry, 44 Mo. App. 263;
Tripp, etc.. Shoe Co. y. Martin, 45
Kan. 765; Eclipse Wind Mill Co. y.
Thorson, 46 Iowa, 181; Bennett y.
Williamson, 9 Ohio Cir. Ct. Rep. 107,
6 Ohio C. D. 59; DuBois y. Perkins^
21 Or. 189; Peel y. Shepherd, 68 Ga.
865; Lumley y. Corbett, 18 Cal. 494:
Ohio Pottery Co. y. Talbert. 87 S.
Car. 194; Hook y. Crowe, 100 Me.
399.
See also Pickering y. Busk, IS
Bast, 88; Oreely y. Bartlett, 1
Green! (Me.) 172, 10 Am. Dec. 54;
Goodnow y. Tyler, 7 Mass. 86, 5 Am.
Deo. 82.
618
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§867
mitted him to assume that appearance is estopped to assert his owner-
ship as against one who has relied upon the contrary appearance.'*
The case of the factor '• or commission merchant *• who usually sells
in his own name is the typical one, and is sharply in contrast with that
of the broker *^ who usually has not possession and sells m the name
of his principal.
The situation presupposes not only an agent in possclssion authorized
to sell (whose duty it is ordinarily to sell only as agent and in the name
of his principal), but also a real or apparent authority to sell in the
agent's own name.*' The failure to observe this last requirement has
So where the agent Is permitted
to carry on the business as though
It was his own, his acts In taking
and disposing of notes cannot be
disturbed by the unknown principal.
Gardner v. Wiley, 46 Or. 96.
s« In Sanenza y. Brinsley, 18 0. &
(N. S.) 467, 477. it is said by WUles,
J., to be one of the essentials to the
set-otr that the agent "sold them as
his own goods in his own name as
principal toith the authority of the
pJaintifT.** [Italics in these quota-
tions are mine, F. R; M.]
In Montagu v. FVirwood, [1893]
2 Q. B. 350. suprGj it is said by
Bowen, L. J.: "The case is. In my
Jndgmenrt, governed by the principle
of the decision In Qeorge t. Clagett,
by the rules of common sense and
justice, and I think also by the law
of estoppel The principle is not
confined to the sale of goods. If A
employs B as his agent to make any
contract for him, or to receive
money for him. and B makes a con-
tract with C, or employs 0 as his
agent, if B U a person who would
he reaaonably apposed to he acting
a« a prinaipah and is not known or
suspected by C to be acting as an
agent for any one, A cannot make a
demand against O without the latter
being entitled to stand in the same
position as If B had in fact been a
principal. If A has allowed his
agent B to appear in the character
of a in-incipal, he mast take the con-
sequences."
In Cooke v. Eshelby, 12 App. Cas.
271. it is said by Lord Halsbury:
"The ground upon which all these
cases have been decided is that the
agent has heen permitted hy the
principal to hold himself out as the
principal, and that tin person deal-
ing with the agent has believed
that the agent was the principal and
has acted on that belief." By Lord
Watson: "It mttst alsb be shown
that the agent was enabled to ap-
pear as the real contracting party
tnf the conduct or hy the authority
erpren or impHed of the .principal.
The rule thus explained is intelligi-
ble and just; and I agree with
Bowen, L. J., that it rests upon the
doctrine of estoppeL"
In Brown v. Morris, 83 N. Car.
251. it is said: "The proposition
that because the defendant thought,
without heing misled hy any one,
that the goods belonged to the agent,
the principal and owner could not
recover, is without support in rea-
son or authority." See also Baxter
▼. Sherman, 78 lllnn. 434, 72 Am.
St Rep. 631.
wSee Rabonev.Wllliama; Oeorge
V. Clagett
««As in Hogan v. Shorb; Tripp,
etc.. Shoe Co. t. Martin.
87 See Maxfield v. Carpenter, su^
pra; Bassett v. Lederer, 8 Th. ft C.
(N. Y.) 671.
<8See second note to this section
supra.
619
§87o]
THE LAW OF AGENCY
[book II
ment, and payment made to such an agent will not be payment to the
principal, unless the agent be in fact authorized or the principal has
held him out as so authorized.*"^ If however, payment in whole or
in part is to be made at the time the order or subscription is taken,
authority to receive such payment will be implied, as has been already
seen,"*^ and so, of course, if such has been the course of dealing be-
tween the particular parties, or if the principal has held the traveling
Salesman out as authorized to receive it, a payment made to him sub-
sequent to the sale will be payment to the principal,*** Subsequent
'dealings or the terms of the employment may also give the authority.***
*9b Simon v. Johnson, 101 Ala.
368, 105 Ala. 344, 58 Am. St R.
125; Meyer v. Stone, 46 Ark. 210,
55 Am. Rep. 577; Sioux City Nurs-
ery Co. ▼. Magned, 6 Colo. App.
172; Lakeside Press, etc., Co. ▼.
Campbell, 39 Fla. 523; Clark v.
Smith. 88 111. 298; Oreenhood v.
Koator, 9 111. App. 183; Williams v.
Anderson, 107 111. App. 32; Kane ▼.
Barstow, 42 Kan. 465, 16 Am. St R.
490; Dreyfuss v. Goss, 67 Kan. 57;
Clark V. Murphy, 164 Mass. 490;
Kornemann v. Monaghan, 24 Mich.
36; Brown T. Lally, 79 Minn. 38;
Sumrall v. Kltselman, — Miss. — ,
58 So. 594; Butler v. Dorman, 68
Mo. 298, 30 Am. Rep. 795; Cham-
bers v. Short, 79 Mo. 204; Law v.
Stokes, 32 N. J. L. 249, 90 Am. Dec.
666; Hahnenfeld v. Wolff, 15 N. Y.
Misc. 133; Zllberman v. Friedman,
54 Misc. 256; Scarritt Fnrn. Co. v.
Hudspeth, 19 Okl. 429, 14 Ann. Cas.
857; Seiple T. Irwin, 80 Pa, 513;
FSabian Mfg. Co. v. Newman (Tenn.
Ch. App.), 62 S. W. 218; Crawford
T. Whittaker, 42 W. Va. 430; Mo-
Kindley v. Dunham, 55 Wis. 515, 42
Am. Rep. 740. The fact that the
agent falsely represents himself to
be a member of the selling firm Is
immaterial. Crawford v. Whit-
taker, supra.
4QcSee ante, I 864.
4«d See Luckie v. Johnston, 89 Ga.
821 (principal sent the bills for the
goods to the agent, and buyer paid
in reliance thereon) ; Hutchison
Mfg. Co. Y. Henry, 44 Mo. App. 263
(principal clothed agent with ap-
parent authority by entrusting him
with possession of the goods) ; War-
ren V. Halley, 107 Mich. 120 (buyer
asked where he should pay; princi-
pal replied that he preferred to have
payments at the office, but would
send a man; later selling agent
came with a receipt on one of prin-
cipal's printed blanks, though made
out by the agent» and buyer paid to
him).
A general agent for the sale of
property Jield to have implied au-
thority to receive payment either
before or after delivery. Sawln ▼.
Union Bldg. Ass'n, 95 Iowa, 477.
See also Lorton v. Russell, 27 Neb.
872.
4oe Where a salesman who had
taken an order from a purchaser
who did not pay, was offered the ac-
count by his principal at a discount,
and was authorized to sell the ac-
count to any one at a discount, in-
stead of selling it wrote directly to
the debtor that he might have the
same discount if he would pay the
debt to the agent, and the debtor
did so pay it, but the agent did not
pay the principal, it was heXd that
these offers of the principal were
sufficient to authorize the agent to
collect the amount as he did, and
that the principal could not recover
the amount from the debtor. Su-
perior Mfg. Co. V. Russell, 127 Ga.
151.
So where the contract between
the principal and the agent makes
622
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 871, 872
A merely local custom, however, to make such payments can not be
operative in the absence of some evidence that the principal knew of
and assented to it/''
§ 871, When payment to agent part of terms oi sale^ —
But it has been held that an agent authorized to take the order has the*
implied authority to make terms of payment as to time and place, U>
the extent at least of what was customary and not extraordinary ; and
that where it is made one of the terms of sale that payment may be
made to the agent at the purchaser's place of business, to save the
expense and trouble of remittance, payment to the agent was payment
to the principal***^
So where a traveling salesman agreed, though without authority, to
receive certain goods in part payment for those sold by him, the pur-
chaser being ignorant of his want of authority, it was held that the
agreement was binding upon the principal who bad shipped the goods
to the purchaser, and sued for the price.*'**
These cases, however, are to be sustained upon the ground of rati-
fication rather than that of implied authority. The defendant had
agreed to pay the price only upon the understanding that it could be
paid in a certain manner. If the agreement in that respect was tui-
authorized, the principal might refuse to deliver, or might recover his
goods, but he could not sue on the contract and enforce it, so far as
it was favorable to himself, and repudiate it as to the residue.
§ 87a. Notice of want of authority.— But whatever infer-
ence of authority might otherwise be drawn, its effect may be neutra-
lized by an adequate notice to the purchaser that the agent has no
authority to receive payment. Express notice of such a limitation
actually delivered to the purchaser would of coarse be sufficient;***
him liable for the price of the goods son, 78 Me. 160, 57 Am, Rep. 790;
sold by him, it Is said that he has Scott v. Hopkins, 41 Hun, 637.
thereby implied authority to collect 4i>h Billinga v. Mason, 80 Me. 496
the price [sed quaere as a universal (distinguishing Clough v. Whit-
rule] though another term in the comb, 105 Mass. 482, and Finch v.
contract providing that the princl- Mansfield, 97 Mass. 89, and likening
pal should have the right to make the case to Wilson v. Stratton, 47
collections if he desired Was held Me. 120).
conclusive of the agent's power in So also Hook v. Crowe, 100 Me.
the absence of an election by the 399; Shoninger r. Peabody, 67 Conn,
principal to collect Diebold Safe ft 42, 14 Am. St Rep. 88.
Lock Co. T. Dunnegan, 135 Mo. App. 49I See Metz v. Savings Associa^
135. tion, 117 App. Div. 825 (a land case)
49f Simon V. Johnson, 101 Ala. 368. where it was a term in the contract
«g Putnam v. French, 53 Vt. 402, that the agents had not power to re-
3S Am. Rep. 682; Trainor v. Mori- ceive payment
623
§ 872] tHE LAW OP AGENCY [bOOK II
but it need not always be express : it is enough if the facts brought to
the buyer's attention reasonably apprise hint of the Hmitation.**^
It is frequently attempted to give notice to the ptjrchaset that the
agent is not authorized to receive payment, by printing or writing
upon the bill or invoice, a warning to that effect. Whether su6h a
warning can be held to be constructive notice seenis to depend largely
upon the degree of promineince given it. Thus, it is said by a Wis-
consin judge, "On the face of the bill sent to the defendant, ahd di-
rectly under hi6 address, thei*e appears in large, legible print in red
ink, as if st2lm{)ed uf)6n it, the words 'Agents hot authbrfzed to collect/
* * * If these words so legible and prominent on the face of the
bill, would riot be notice, it would seem to bfe irti^^sible to gfive a
purchaser siich a notice. By all autlibVities h^ must be presumed to
have observed thelfe words, and to have had such notice when they
were so prominent oh the face of thie bill of goods iti his possession,
and in which he alone was interest^ a§ purchaser. It might as well
be said that the (idnti^nt^ 6f any writt'efi or priht^d notice of any kind,
or for any purpose, were not presumed to have bei^ri brought home to,
and tb be known by, a party on his receipt 6f the Aoti'ce." '^
In a Vermont cafee above referred to it is said: "It is further in-
sisted by the pIsffnfiflFs' coiinsd that the defendants were charj^fed with
notice that they iMsi pay the plaintiffs and n6t Allen (the ia|g:eAt) by
reason of the words 'payable at office'^ written on their Kll rendered,
when th6 last invoice was sent. Thfe defendants did not see those
*»J WlUlams v. Anderson, 107 III. defj^ndant, who purchased suoh fish:
App. S2. "Shoufd tile schooner, kidnight.
In Lamh v. Hlr^chberg, 1 App. * ♦ ♦ sell fresh fish In Portland,
Div. (N. Y.) B19, n is ,«ald; "If wUl^you please see, that the check Is
there ia notice direct or implied to made payable to my order as the
pa7 to a pri;icipal, ^d, therefor^, captain is a stranger, to me? By so
not to tJhe ag^eiit, payment to the doing you will confer a favor."
latter will not bind the principal." Held, notice was sufficient In
In this case one Beaumont as agent Lakeside Press ft Photo-Engraving
for Bradl^ sold goods to defendant Co. v, Campbell, 39 Fla. 523, after a
At the time of sending the invoice sale and th.e receipt of the goods
Bradley wrote to defendant. "Kind- plaintiff sent the following notice
ly favor me with your remittance on to defendants : "Agents are not au-
receipt of the goods, and oblige," thorlzed to make collections." Held,
and later, "will you kindly send sufficient notice,
check for above amount by return, BoQrton, J., in McKin^ly v. Dun-
or in case you have remitted part, ham, 66 Wis. 515, 42 Am. Rep. 740.
kindly send balance to cover." To same effect is Law v. Stokes, 32
Held, subsequent payment to Beau- N. J. L. 249, 90 Am. Dec. 665, though
mont not binding. In Stanwood v, there was also a letter of warning
Trefethen, 84 Me. 295, plaintiff, the In this case,
owner of a cargo of fish, wrote to
624
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 872
words. Therefore tiiey had no hotFcc !ri fact. ShoCia they be held
chargeable with notice? The plaintiffs sent that tjill without any
letter, when the |joods were sent, wHfch wis three months before the
time of payment agreed upon. The defendants examined it as to
items charged and amount of same, and filed it away, — ^never noticing
those words; and when Allen came around at about the time he was
to come f6r the pay by the terms of the Sale, they paid him the bal-
ance due, — supposing all the while thdt he was, as he claimed to be,
a member of the firm. In view of the obscure manner in which those
words were written on the bill-head ; and of the circumstarices under
which, and the purposes for which in 6th'tr respects that bill was sent,
and of the terms of the contract as to whom and when and whfere pay-
merit Was to bfe mkde, we do riot thitik the defenclsints were guilty of
stich ricig:%ence, fn riot seeing those words, as to be chargeable with
notice whieh they did riot ih fact havfe. It was a matter which the
plaintifffe might easily hive made plain. They saw fit to undertake
to give the notice in an obscure way which was likely to be ineffectual.
It turned out so arid tiiey should bear the cdriseqiierices." '^
50 goods ordered of an igent wete delivered as agreed, accom-
panied by a bill with the Words, "All bills mtlst be paid by check to
our order or in curreht furids it our office," printed in red at the top.
About two weeks afterward, the agent called for arid received pay-
ment, giving to the purchasers a receipted bill bearing the same no-
tice in red letters that appeared upon the bill sent with the goods.
The agent embezzled the money. THe todtt said: "The plaintiff seeks
to charge the defendants with knowledge that payment was required
to be made according to the terms of the notice in red letters upon the
bill sent with the goods. The defendants did not see the notice, nor
taking into consideration the care ordinarily exercised by prudent
men, are they at fault for not observing it. It is not so prominent
upon the bill as to become a distinctive feature of it, one that would
be likely to attract attention in the hurry of business and that ought
to have been seen by the defendants. It would have been an easy
matter for the plaintiff to have inclosed the bill in a letter of advice,
calling the attention of the defendants to the fact that he was un-
willing to intrust collections to his agent." •*
51 Veazey, J., In Putnam v. French, v. Kerah^iw, 119 Mass. 140; Law ▼.
53 yt 402, 38 Am.. Rep. 682. To StoWs, 32 U, J. L. 249, 90 Am. Dec.
same effect: Luckle T. Johnston, 89 655.
Ga. 321. A notice mailed but not received
B2 Tralnor v. Morlson, 78 Me. 160^ would be of no effect Scott v. Hop-
67 Am. Rep. 790; see also Kinsman kins, 41 Hun, 637.
40 625
§§ 873-875]
THE LAW OF AGENCY
[book II
§ 873.
What may be received in payment when receipt ia
authorized. — ^The question of what a selling agent, who is author-
ized to receive payment, may accept as payment, is included within
the discussion in a later subdivision dealing with agents generally who
are authorized to collect or receive payment ; " and it will not be sep-
arately considered here.
§ 874. Purchaser cannot set off debt due trom agent. —
For reasons similar to those preventing payment to an agent author-
ized merely to sell, the purchaser cannot set off against the principal
a debt due him from the agent,*^^ except where the agent is permitted
to appear as ostensible owner as has been seen in a preceding section."^
§ 875. Implied authority of traveling salesmen to hire horses. —
It has been held that an agent authorized to travel from place to place
to sell his principal's goods, has implied authority to hire horses and
carriages, wh^n necessary for use in the course of his employment, to
transport himself and his samples;** and for that purpose may use
his principal's funds in his hands, or pledge his principal's credit And
even though the agent may have been supplied by the principal with
money for that purpose, and forbidden to pledge the credit of the
principal therefor, the principal, it is said, will be liable to one who in
good faith has supplied the agent with horses, without knowledge of
those instructions.*^
M See post, SS 946 et seq.
BiBernfihouse v. Abbott, 16 Vroom
(N. J.), 531, 46 Am. Rep. 789; Tal-
boys V. Boston, 46 Minn. 144; Zelenka
V. Port Huron Mach. Co., 144 Iowa,
692; arubel v. Busche, 76 Kan. 820.
50 See ante, i 867.
MBentley v. Doggett, 61 Wis. 224,
37 Am. Rep. 827.
See also Huntley ▼. Matbias, 90
N. Car. 101, 47 Am. Rep. 616, where
the principal was held liable be-
cause his agent, who had hired a
horse to transport his samples, had
overdriven the same. Same effect:
Rexroth v. HoUoway, 45 Ind. App.
36.
But in Alabama It is held that "au-
thority to sell and canvass for the
sale of sewing-machines, does not,
per «e, confer the power to purchase
or hire a horse or mule to aid the
agent's locomotion and thus fasten a
liability on the principal." Howe Ma-
chine Co. v. Ashley, 60 Ala. 496. See
also Nicholson v. Pease, 61 Vt 634.
w Bentley v. Doggett, 9Upra*
"The defendants not having fur-
nished their agent the necessary
teams and carriages for transporta-
tion, he clearly had the right to hire
the same and pay their hire out of
the funds in his hands belonging to
them. This is admitted by all par-
ties. The real question is, can the
agent, having the money of his
principals in his possession for the
purpose of paying such hire, by ne-
glecting to pay for it, charge them
with the payment to the party fur-
nishing the same, such party being
Ignorant at the time of furnishing
the same that the agent was fur-
nished by his principals with money
and forbidden to pledge their credit
for the same?
"There can be no question that,
from the nature of the business re-
626
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 876
The reasoning of the court, more fully set forth in the margin, was
that the agent had apparent authority to hire the horses, and that he
might hire them upon the basis that payment should be made after the
service had been performed. He thus created a valid debt against
his principal, and, if he then failed to pay it with the money supplied
him for that purpose, the principal must suffer, as he would in any
other case in which an agent commissioned to pay a debt had failed to
do so. Evidence that it was the custom in Chicago, where the prin-
cipal did business, to furnish traveling salesmen with funds for their
expenses was held to be immaterial, unless it was so universal that
the other party in Wisconsin could fairly be charged with notice of it.
§ 876. ' There being no express authority to hire the horses
and carriage in this caie, upon the principal's credit, the conclusion
reached by the court can be sustained only on the ground that the au-
thority to do so was (a) incidental, (b) usual, or (c) warranted by
the principars previous conduct, as, for example, a course of dealing
or a "holding out." The last two may, however, be eliminated from
this case. There was no proof of such conduct, course of dealing or
"holding out :" and there was no proof that it was usual to do so. The
only proof of usage was that it was customary in Chicago to supply
such agents with funds. Was the authority, then, 'incidental," within
the meaning of the rule that every authority carries with it, unless the
contrary be made known, implied authority to do those things which
are reasonably necessary and proper to carry into effect the main au-
thority conferred?" The question may be stated in two ways: (i) Is
quired to be done by their agent, the principal, in his hands cannot de-
defendants held out to those who prlTe the party furnishing the serv-
might have occasion to deal with him ice of the right to eatorte the con-
that he had the right to contract for tract against them, he being ignor-
teams and carriages necessary and ant of the restricted authority of
convenient for doing such business, the agent If the party furnishing
in the name of his principals, if he the service knew that the agent had
saw fit, in the way such service is been furnished by his principal
usually contracted for; and we may, with the money to pay for the serv-
perhaps, take judicial notice that such ice, and had been forbidden to
service is usually contracted for, pay- pledge the credit of his principals
meat to be made after the service is for such service, he would be in a
performed. It would seem to follow different position. Under such cir-
that as the agent had the power to cumstances, if he furnished the
bind his principals by a contract service to the agent, he would be
for such service, to be paid for in held to have furnished it upon the
the usual way, if he neglects or re- sole credit of the agent, and he
fuses to pay for the same after the would be compelled to look to the
service is performed, the principals agent alone for his pay.
must pay. The fault of the agent in ss See ante, f 716.
not paying out the money of his
627
n
§877]
TUB LAW OF AGENCY
[900^ II
authority to pledge the principar$ credit, in hiriii^ horses to traqsiport
the agent and his samples, to points not reapheij by raihroadi r^a^pably
ne^es^ary and proper as an incident to the au^ipri^ty of a^ ^£fn% au-
thorized to go a.bput the country to sell goods ior hi§ prijicipftl ? (2) Is
st^ph an authority an incident if the agent i^ nqt sji^pplied with fuads ?
If the former can b^ said, then it would be injimat^vi^i sp far %s the
third persoxji ignorant of the fact was concerned, that tjte principal
had, in the given case, supplied th^ aj^^ept wijth iffp<i^ a^d iprhiidp^
him to obtain credit. That would be in the ijijafuf^ of a secrot limita-
tion upon apparent ai^thprity. If the latter is to \^ ^id, th^ principal
would 1^0^ b^ boupd^ unless the case wer|^ i^q^g^^ \g |^11 within the
rule^ not recognized by all courts, that the ageijit^ aft was a cepr^i^nta-
tion as to a condi^p^f pjquJiarly wi^in Jiis ow|> }9iQ^}fi4gP upp;q w^li^
the party dealijqg with hifp may rely.*^ Thj? A^i§cpi)^i9 ^jiit took the
first view.
§ 877. But another view is ten?ib)e: It yf^s not co^Jtcip-
plated that the ^ge^t should procure l^or^^ oj; other ^iMPpJies ot^ credit
at all, or, at least, ^ot Qu hi$ principal's 9i:edj^ Th^ 9igpnt was ex-
pected to pay cash (and was supplied yifjtb casl^ fpr ^t p^rpos^) or,
if a brief credit y^?fl ^iyep, a^ (ac^oj-|dipg tp t;)ie «Jtt5g?^ipn of the
court), until the service ^yas performcjd, or un^il 1?^ p^Jlj^ for his bill
at the h9t,el, apd th^ likp, ii; ?^iQV/d b^ 9^1 the ^gfl^t's pw^n ci:edi.t. . His
principal authorize^ \i\xxi to p^y out the principal's rpoiiey for this pur-
pose (and agrees to allow ij on ^p accounting), or agrees to reimburse
or indemnify fhe ^gent for any proper expej^^e for whiph the agent
pledges his own credit, but does not authorize the pl^digipg of the
principal's credit."? Su^h a vi^w accords best with the actual situa-
tion. It seems unnatural to suppose that the principal has authorized
his credit to be pledged at apy one of the (usually remote) hotels and
livery stables which his agent may visit ; or that the local hotel keeper
or livery stable keeper ever, in fact, trusted to the credit of a princi-
pal, of whom he never heard and whom he might have to go into an-
other state to find. It seems much more natural to suppose that the
B» See ante, § 769.
•oA principal who snpplies his
traveling salesman with money for
his expenses while on the road, and
allowed him' to draw for more when-
ever he needed It, is not liable to a
hotel keeper for the agent's board
where he has settled with the agent
and allowed him for* this expense
before he knew that the agent had
not paid it Nicholson v. Pease. 61
Vt 534.
But it is held that he will be lia-
ble if, after being notified that the
agent has not paid, he then pays
or allows it to the agent Grand
Ave. Hotel Co. v. Friedman, 83 Mo.
App. 491.
6^
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
Y
[§878
agent's credit, if any one's, is looked to, and that the agent looks to
his principal for reimbursement.
It vvould scarcely be thought that the agept was authorized to pledge
his principars credit for railrpad tickets, since tliey are practically
never sola except for ca^h; yet it would be just as easy to regard such
a purchase as an incidental act as the hiring of horses. Once adopted,
the rule may easily be pushed to extreme lengths, ^d fee urge4 to
justify pledging the principal's credit for the persona) supplies of the
agjent, ujpon the gi:c|und that, without them^ the ag;ent could not actu-
ally be in condition to execute his authority.
§ 87?* ' Au^ority to procure personal spp^li^. — But, £^s
is pointed out in the preceding ^ectipn, ev^n though it be conceded
that tne agent may exercise incid^ental authority, the authority so in-
cluded must be dire<;tiy incident to the ciain power and not me.rely
collateral to it; and personal sj^pplies for the agent could r^rply be
deemed to be le^itimate/^ As sai<^ in pijie case,'^ "Supplies ^ifforded
for the personal use of |hf agent are ^oj among tfie pbjegts presumed
to be includefi ip the agency, but, if rjelate^ to it at all, jir? rperely col-
lateral to it. It follows that authority tQ propure such s^ufjpli^^, on
the credit of the principal, is not to be presurned, por will th,e law
pre;sume a conti;act in such a case from the i?}er^ fagt of fiirni^hing
such supplies." Hence it was held that from the mere fact t)i^t an
agent employed to sell goods, has intrusted to his possession a hor^e
and wagop of the principal as well as tl^e goods for sale, the law will
not imply a contract on the part of the principal to pay for Jhe board
of the agent or the keeping of the horse.** Nor is the principal re-
sponsible for a hotel bill, covering a period of several mpnth| and con-
tracted by his traveling agent, without notice to or authority from tjie
principal, it being the custom to pay cash.?*
«i Sampson v. Singer Mfg. Co., 5
S. Car, 465; Covington' v. New-
berger, 99 J^. C. 5?3; Niphplson v.
Pease, 61 Vt 534; 6rand Ave Hotel
Co. V. Friedman, 83 Mo. App. 491.
03 Sampson v. Singer Mfg. Co., •«-
pra.
OS Sampson v. Singer Mfg. Co., 6
S. C. 466; Qrover 4 Baker 8. Mach.
Co. ▼. Polhemus, 34 Mich. 247.
Wb^re an agent is fartaisfaed a
hor9e by his princU^al, nrhich thd
agent is to feed and take care of,
tbe fact that the principal derives a
profit from such use of the horse
does not make him liable for the
bppjd atid li^eptng of the^ horse pro-
cured by the agent without author-
ity. Grover ft Baker S. ^ach. Co. v.
Polhemus, 8upra,
«* Covington v. Newberger, 99 N.
C. 623. Ih Gllmour v. SnoW, 27 Rep.
Jnd. Quebec, 39, a commercial tk*av-
eler is held to have no right to
pledge his samples to an innkeeper
as security tdf the expense of medi-
cal attention furnished by the inn-
keeper lind' money supplied by him
629
§§* 879-881] THE LAW OF AGENCY [bOOK II
§ 879. No implied authority to sell his samples. — A
traveling salesman has no implied authority to sell the samples fur-
nished him by his principal for use in soliciting orders. His sale of
them, therefore, and receipt of payment therefor, will be no bar to the
recovery of their value by his principal from the purchaser .•• Neither
may he pledge them to secure payment for personal supplies furnished
to himself.** There may, however, be such proof of custom as to
sustain the sale."
§ 880. Implied authority to warrant quality.^The question of the
implied power of an agent, authorized to sell, to warrant the quality
of the goods sold, is a very important one, and one that has often
arisen, but upon which the authorities are not harmonious. It has
been attempted in many cases to settle the question by reference to the
arbitrary distinction made between general and special agencies ; *•
but while these rules may suffice to determine many of the questions
arising between the principal and his agent, they are not satisfactory
in considering the liability of the principal to third persons. This
question must be determined by the same principles which govern the
liability of the principal for the acts of the agent in other cases.
As has been already seen, the authority of the agent in a given case
may include not only the powers expressly conferred upon him, but
also (a) such powers as are reasonably necessary and proper to carry
into effect the main power conferred; (b) such powers as are usually
exercised in similar cases; and (c) such powers as, on the doctrine of
estoppel, may fairly be deemed to be open in the particular case. An
authority to warrant quality as a part of a power to sell might con-
ceivably arise under any of these rules.
§ 881. — ^— Authority to warrant as a necessary incident —
Many dicta are to be found in the books to the effect that authority
to warrant quality is an incident to authority to sell. Such a proposi-
tion is, of course, unsound. Sales may be, and constantly are, made
in many fields without either an express or an implied warranty, as
the well settled maxim of our law, caveat emptor, sufficiently attests.
to the traveler to continue his jour- See also, Savage y. Pelton, 1 Colo,
ney; and the employer Is, therefore, App. 148.
held to have the right to reclaim o^Gllmonr ▼. Snow, 27 Rap. Jud.
such merchandise from the inn- Que. 39.
keeper. •r Lauchheimer t. Jacobs, 126 Ga.
M Kohn ▼. Washer, 64 Tex. 181» 53 261, example* to sell at the end of
Am. Rep. 745; Hlbbard, Spencer, the season.
Bartlett A Co. v. Stein, 46 Ore. 607. mAb in Oaar ▼. Rose, S Ind. App.
269.
630
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 882
At the same time, it is believed to be true that there may be cases,
though they must be rare, in which the making of a warranty of qual-
ity is so practically essential to the making of the sale as, without proof
of usage, to justify the inference of the power as a necessary incident
of authority to sell. A number of cases have been put upon this
ground.'* Thus, an agent for a distant principal, endeavoring to in-
troduce a new article in a certain community, and who could not sell
it unless it was warranted, has been held to have authority to warrant
as a necessary incident to the authority to sell.''®
§ 882. Authority to warrant because warranty usual. —
Authority to warrant quality may be, and in a constantly increasing
mass of cases is, deduced from the fact that the same or similar arti-
cles are usually sold with such a warranty. In this respect it may be
said to be the rule that authority conferred upon an agent, whether
general or special, to sell personal property carries with it, in the ab?
sence of countervailing circumstances known to the person with whom
he deals, implied authority to make, in the name of the principal, such
a warranty of the quality and condition of the property sold as is usu-
ally and ordinarily made in like sales of similar property at that time
and place.'^^ Stated negatively he will have no such authority if it be
••See Hille v. Adair, 22 Ky. L. Mo App. 676; Morris v. Bowen, 52
Rep. 742, 58 S. W. 697; Woodford v. N. H. 416; Oooley v. Perrlne, 41 N.
McClenahan, 9 111. 85; Ahem y. J. L. 822, 82 Am. Rep. 210 (aiTd. 42
Goodspeed, 72 N. Y. 108; Conkllng N. J. L. 623); Decker v. Fredericks,
V. Standard Oil Co., 138 Iowa. 596. 47 N. J. L. 469; Ahem v. Good-
70 mile V. Adair, 9upra, speed, 72 N. Y. 108; Tice v. Gallup,
71 Gaines v. McKinley, 1 Ala. 446; 2 Hun (N. Y.), 446; Smith v. Tracy,
Skinner v. Gunn, 9 Port. (Ala.) 86 N. Y. 79; Nelson ▼. Cowing, 6 Hill
305; Bradford v. Bush, 10 Ala. 386; (N. Y.), 336; Scott v. MoOrath, 7
Herring v. Skaggs, 62 Ala. 180, 34 Barb. (N. Y.) 53; Mllbura v, Bel-
Am. Rep. 4; Cocke y. Campbell, 13 loni, 34 ZcL 607; Sanford t. Handy,
Ala. 286; Croom v. Shaw, 1 Fla. 23 Wend. (N. Y.) 260; Cafre v.
211; Huguley v. Morris, 65 Ga. 666; Lockwood, 22 App. Dlv. (N. Y.) 11;
Woodford v. McClenahan, 4 Gilm. Reynolds v. Mayor, 39 App. Dlv. (N.
(111.) 85; Eau Claire Canning Co. v. Y.) 218; Bierman v. City Mills Co.,
Western Brokerage Co., 213 111. 501; 10 Misc. Rep. (N. Y.) 140; Ellner
Applegate v. MolBtt, 60 Ind. 104; v. Priestly, 39 Misc. Rep. (N. Y.)
Talmage v. Blerhaiise, 103 Ind. 270; 635; Manley v. Ackler, 76 Hun (N.
Murray v. Brooks, 41 Iowa, 45; Mai- Y.), 546; Hunter v. Jameson, 6 Ired.
lory V. Elwood, 120 Iowa, 632; First (N. C.) L. 252; Davis v. Burnett, 4
N. Bank v. Robinson, 105 Iowa, 463; Jones (N. C). L. 71, 67 Am. Dec.
Bryant v. Moore, 26 Me. 84, 45 Am. 263; Williamson v. Canaday, 3 Ired.
Dec. 96; Randall v. Kehlor, 60 Me. (N. C.) L. 349; Bteell v. Franklin, 2
37, 11 Am. Rep. 169; Upton v. Suf- Sneed (Tenn.), 236; McAlpln v.
folk Mills, 11 Cush. (Mass.) 586. 59 Cassidy, 17 Tex. 449; Demlng v.
Am. Dec. 163; Palmer v. Hatch, 46 Chase. 48 Vt 882; Fay v. Richmond,
Mo. 685; Hayner ▼. Churchill, 29 48 Vt 26; Reese v. Bates, 94 Va.
631
§§ 883, 884J THE LAW OF AGENCY [bOOK II
not usual/* and, of course, as will be seen,^* he will have no authority
to give an unusual warranty.
The question of what is usual in such a case is ordinarily a question
of fact to be determined by the jury,^* but in certain cases the court
will take judicial notice of it.*'' The usage must be so well settled,
notorious and continuous, as to raise the legal presumption that it was
known to buyer and seller, and that the sale was. made in reference to
if* If it is purely local, the principal may rebut the presumption of
knowledge by showing that, in fact, he did not know of it, in which
case he will not be bound.^^ Proof of the usage is admissible in be-
half of either party .''•
§ 883. '• — Authority to give warranties which the law would
imply. — It has, moreover, befen declared in several cases that, if the
sale is one in which, had it tieen made by the principal in person, the
law would imply a warranty, e. g., b. warranty of fitness for the con-
templated use, an express warranty to the same effect, given by the
agent, must be deemed to be within the scope of his implied authority.^*
§ 884. Authority to warraxit in accordiance with descriptions fur-
nished by principal. — ^Where the principal furnishes the agent with
written or printed circulars, or Other descriptive matter relating to the
goods to be sold, for the purpose of having these delivered or ex-
321; Pickert y. Marston, 68 Wis. breed more than sixty per cent of
465, 60 Am. Rep. 876; Boothby v. the mares serve^, ^^I({, beyoud im-
Scales, 27 Wis. 626; Larson v. Ault- t>lied power of agent In absence of
man & Taylor Ck)., 86 Wis. 281, 3d a custom to so warrant).
Am. St. R. 898; Westurn ▼. Page, 94 rs See post, § ^89.
Wis. 251; Waupaca Electric Lfght t* Herring T. Skag^gs, itii)r(^; Pick-
Co, V. Milwaukee Electric Ry. Go., ert v. Marston, supra; Westurn v.
112 Wis. 469; Schuchardt v. Aliens. Page, supra; feeiese v. feates. supra;
1 Wall. (U. S.) 859, 17 L. Ed. 642; Hayner v. Churchill, supra. See
Taggart ▼. Stanbery, 2 McLean (U. also, Reynolds v. Mayor, supra.
a CO, 543; Graves v. Legg, 2 rsAhern ▼. Goodspeed, supra;
HurL A N. 210; Dingle v. Hare, 7 Talmage v. Bierhause. supra. See
C. B. (N. S.) 145; Alexander v. Gib- also Reese v. Bates, supra.
son, 2 Camp. 555. t« Herring v. Skaggs, suprcL
After the sale Is completed, the tt pickert v. Marston. supra; see
agent would have no implied au* ante, $ 281.
thority to add a warranty. Fletch- rspickert v, Marston, supra.
er v. Nelson, 6 N. D. 94. tq in Laumur v. Dolph, 145 Mo.
T«See Plller v. Plser, 67 Misc. 446 App. 78 (sale of an automobile) the
(a salesman in a furniture store, court said: "The defendants im-
selling articles open to view, has no piiedly warranted that the chattel
implied authority to warrant a uni- was fit for the purpose Intended,
formity of color in a bed room and no special authority in the
suite) ; Dunham v. Salmon, 130 agent, who tiaade the sale, to give
Wis. 164 (a warranty that a stallion guch warranty need be shown."
was a good foal getter and would
632
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§885
hibited to prospective buyers, or otherwise used as a means of induc-
ingf sales, the agent would doubtless have implied authority to war-
rant the goods in accordance with any statements of fact contained in
such circulars, provided such statements, if made under the same cir-
cumstances by the principal in person, would constitute warranties.^^
§ 885. Illustrations of rules — Commercial paper — Agricultural
implements — Sainple, etc. — Thus in a New York case, the court said
it was within their judicial observation from many cases before them,
that a warranty of commercial character was the usual accompani-
ment of a sale, upon the New York stock exchange, of promissory
notes having the guise of commercial paper, and it was held that an
agent authorized to sell such paper had implied authority to make such
a warranty.'^
So the court will take judicial notice that it is usual and customary
in ordering goods of a dealer, through his agent, to require a war-
ranty of quality, where the goods are not present and subject to the in-
spection of the purchaser, and authority to make such a warranty will
be implied.**
Again, sales of implements, machinery and similar articles by the
manufacturers are so generally accompanied by a warranty of good
workmanship, sound materials, and general fitness for the purpose for
which they are intended, that an agent commissioned to sell them, will
it is held, be presumed to have authority to make such a warranty.*^
So such an agent has been held to have implied authority to sell
upon trial and to give the purchaser the privilege of returning the ma-
chine if not satisfactory ; ®* and may sell upon condition that the sale
shall not be consummated if the machine does not do good work;*°
and, having sold upon condition that, if the machine does not prove
satisfactory to the purchaser, he shall return it, the agent may waive
such return.**
sosmilie v. Hobbs, 64 N. H. 75;
Levis V. Pope Motor Car Co., 202 N.
y. 402.
81 Ahern y. Goodspeed, 72 N. Y.
108, 114.
s^Talmage v. BierhauBe, 103 Ind.
270.
M (Farm Implements) Murray v.
Brooks, 41 Iowa, 45; McCormIck v.
KeUy, 2« Minn. 135; Flatt v. Oa-
borne ft Co., 33 Minn. 98; Aultman
V. Falkum, 51 Minn- 562; Gaar v.
Patterson, 65 Minn, 449; Case
TXireshlDg Mach. Co. v. McKlnnon,
82 Minn. 75; Parsons Band Cutter,
etc., Co. y. Haub, 83 Minn. 180; Can-
ham v. Piano Mfg. Co., 3 N. D. 229;
Smith V. Williams, 29 Ind. App. 336.
(Furnaces) Boynton Furnace Co. v.
Clark, 42 Minn. 335. (Flour) Loom-
I3 v. Vawter, 8 Kan. App. 437.
84Deerlng v. Thorn, 29 Minn. 120.
See also, Olson v. Aultman Co., 81
Minn. 11; Reeves v. Cress, 80 Minn.
466.
sBOster V. Mickley, 35 Minn. 245.
w Pltslnowsky v. Beardsley, 37
Iowa, 9; Warder v. Robertson, 75
Iowa, 585.
633
§ 886]
THE LAW OF AGENCY
[book II
An agent authorized to sell goods by sample would doubtless have
implied authority to make the warranty usual in such cases, that the
goods sold are equal to the sample.'^
§ 886. Horses. — Whether an agent employed to sell a
horse has implied authority to warrant his soundness, has been much
discussed and the authorities are not harmonious. Thus it has been
held that an agent of a horse dealer has such implied authority, and
that it cannot be affected by private instructions from the principal not
to warrant ; ®* but that the agent of a private individual or a special
agent has no such implied authority, even in the absence of any re-
strictions.^* On the other hand, it has been decided that unless ex-
pressly forbidden, the agent would have such an implied authority ; •^
and in still other cases, the authority has been declared in general
terms.®^
But no satisfactory reason is perceived why the question of the war-
ranty of a horse should stand upon any different basis than the war-
ranty of any other chattel, namely, that an agent authorized to sell may
give a warranty of quality if, and only if, such a warranty is usually
given on similar sales at that time and place.®* It would doubtless be
«T Andrews v. Kneeland, 6 Cow.
(N. T.) 354; Dayton v. Hooglund,
39 * Ohio St 671; Schuchardt v.
Aliens, 1 Wall. (U. S.) 359, 17 L.
Ed 642; Murray y. Smith, 4 Daly
(N. Y.), 277; Dreyfus v. Goss, 67
Kan. 57.
See also Ellinger v. Rawlings, 12
Ind. App. 336.
88 Howard v. Sheward. L. R. 2 C.
P. 148.
8» Brady v. Todd. 9 C. B. (N. S.)
592; Cooley v. Perrlne, 41 N. J. L.
322, 82 Am. Rep. 210, aff'd 42 N. J. L.
623. The decision in this case was
based solely on the distinction be-
tween a general and a special
agency.
See also Court v. Snyder, 2 Ind.
App. 440. 50 Am. St R. 247; Brier
▼. Mankey. 47 Ind. App. 7.
•oDeming v. Chase, 48 Vt 382;
Tice V. Gallup, 2 Hun (N. Y.), 446.
•iSee Nelson v. Cowing, 6 Hill
(N. Y.), 836; Scott v. McGrath, 7
Barb. (N. Y.) 53; Ezell v. Franklin,
2 Sneed (Tenn.), 236; Skinner t.
Gunn, 9 Port (Ala.) 305; Lane y.
Dudley, 2 Murph. (N. C.) 119, 5 Am.
Deo. 523; Gaines ▼. McKinley, 1 Ala.
446; Helyear v. Hawke, 5 Esp. 72;
Alexander v. Gibson, 2 Camp. 555;
Bradford v. Bush, 10 Ala. 386; Sav-
age V. Baklns, 81 IlL App. 267;
Cochran v. Chitwood, 59 111. 53; El-
lison v. Simmons, 6 Pen. (Del.) 200.
Most of these cases rely for au-
thority on § 102 of Story's Agency
which however has been questioned
or qualified by most of the subse-
quent editors. See 7th Ed. by Red-
field & Herrick, and the 9th by Mr.
C. P. Greenough.
In Belmont's ETz'r v. Talbot, 21
Ky. Law Rep. 453, 51 S. W. 538, It
was held that the superintendent of
a stock farm would have authority
to warrant soundness. "It was at
least within the apparent scope of
his authority. He was not a spe-
cial agent, but a general agent hav-
ing charge of his principars busi-
ness in this state."
See also. First Nat. Bank ▼. Rob-
inson, 105 Iowa, 463.
92 See Samuel v. Bartee, 58 Mo.
App. 687; Westbum v. Page, 94 Wis.
251.
634
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 887-«89
much easier to establish a custom to warrant in sales by horse dealers
than in sales by other persons.
g 887. Limitations upon custom.— Where a general cus-
tom to warrant is recognized or proof of such a custom is made, evi-
dence is not admissible to prove that it was not the custom of this
particular principal to warrant, unless it be shown that the purchaser
had notice of that fact,*' or that the agent was expressly forbidden to
warrant, unless notice of such prohibition be brought home to the
purchaser.**
§ 888. Evidence that the authority of the agent to war-
rant was limited to the giving of a particular written or printed war-
ranty only, furnished him by his principal, is not admissible, unless it
be also shown that the purchaser had knowledge of the limitation ; ••
but where the purchaser has knowledge that such a warranty was fur-
nished, he cannot accept an oral warranty frort the agent, different in
its terms, and require the principal to comply with such oral warranty.**
Evidence that it was the seller's custom to give a printed warranty
only would not be admissible to rebut the general inference,*^ nor
would evidence of any local custom not prevailing at the place of
sale ; •* but a local custom there prevailing upon which the parties re-
lied, or a general custom in contemplation of which they presumptively
dealt, would be admissible.
§ 88^. Limits of this rule — ^No extraordinaA-y warranty. — But this
»8 Murray v. Brooks, 41 Iowa, 45.
MBootliby V. Scales, 27 Wis. 626;
Reynolds v. Mayor, 39 N. T. App.
Dlv. 218.
See also Reese v. Bates, 94 Va.
S21; Hayner v. Churchill, 29 Mo.
App. 676.
90 Murray v. Brooks, 41 Iowa, 45;
First Nat. Bank y. Robinson, 105
Iowa, 46S; Parsons, etc., Co. v.
Haub, 83 Minn. 180.
»«Wood Mow. & Reap. Machine
Co. V. Crow, 70 Iowa, 340; limiting
Eadie v. Ashbaugh, 44 Iowa, 519,
and Farrar v. Peterson, 52 Iowa,
420. Where the purchaser is fur-
nished with a printed warranty
which expressly provides that the
agent has no authority to change or
vary Its terms, such provision is a
sufficient notice to the purchaser of
the limitations upon the agent's au-
thority. Furneanz v. Easterly, 36
Ran. 539.
Notice from hlank not used or
from previous order not accepted.-^
But where the purchaser had first
given an order upon a printed form
which contained a statement that
agents were authorized to make con-
tracts only on such a form, and that
order was rejected, whereupon the
purchaser made an oral contract
with the agent, it was held that the
purchaser was not bound, as to this
last contract, by the notice con-
tained In the previous one which
had not been consummated. Olson
V. Aultman, 81 Minn. 11, citing Gaar
V. Patterson, 65 Minn. 449. See also
Challenge Co. v. Kerr, 93 Mich. 328.
But see contra Deane v. ETverett, 90
Iowa, 242.
•TFlatt V. Osborne, 33 Minn. 98.
88 Flatt V. Osborne, supra.
635
§ 890] THE LAW OF AGENCY [bOOK II
rule authorizing the usual warranties is not to be extended beyond the
limits prescribed by it. It cannot, therefore, apply to sales of prop-
erty not usually sold with such a warranty, nor to sales made under
such circumstances that such a warranty is not usually given, nor can
it give countenance to any unusual or extraordinary Warranty.
Thus, though an agent authorized to sell liquors may warrant their
(|uality and condition, he has no implied power to warrant that they
will not be seized for violation of the revenue laws ; ** an agent em-
ployed to sell flour, cannot without express authority, warrant that it
will keep sweet during a sea voyage from Massachusetts to Cali-
fornia ; ^ nor has a traveling salesman authorized to sell fish any im-
plied authority to warrant that it would keep sound for aiiy particular
time.*
And though an agent employed to sell negotiable notes would have
implied authority, when necessary, to indorse them, he would have no
implied authority to make an additional guarantee of payment.'
Nor has an agent authorized to sell safes implied authority to war-
rant that they are burglar proof.*
The implied authority must, moreover, be confined to warranties
given respecting the goods the agent sells, and it will not extend to
goods subsequently sold by the principal in person."
§ 890. Authority to make representations concerning goods. —
Even though not taking the form of an express warranty, authority to
make representations concerning the goods would in many cases be
implied. Thus, if the principal sTiould send an agent out to introduce
and sell a new article, as, for example, a new machine, a new article
of food, a new medicine, and the like, authority to answer questions,
or to make statements, concerning such matters as would naturally
and ordinarily arise under such circumstances, would properly be im-
plied. Questions respecting the purpose of the article, the manner in
•0 Palmer y. Hatch, 46 Mo. 586. the claim., Lipscomb v. KltreU, 11
1 Upton v., Suffolk County Mills, Humph. (Tenn.) 256.
11 Cush. (Mass.) 586, 59 Am. Dec. « Herring T. SkaggB, 62 Ala. 180,
163. 34 Am. Rep. 4, s. 0. 78 Ala. 446.
a Troy Grocery Co. v. Potter, 139 ^Walt v. Borne, 123 N. Y. 592.
Ala. 359. An agent for the sale ot So thougjh an ageAt who sella a
Alaskan salmon haa no implied au* "stacjLer" may warrant the "stack-
thority to warrant that it is aa good er/' he has no implied authority to
as that caujght anywhere. Reid v. warrant that ^ix engine already
Alaska Packing Co,, 47 Oreg. 215. owned by the buyer (though previ-
»Graul V. Strutzel, 53 Iowa, 712, ously bought of the principal) has
36 Am. Rep. 250. Authority to sell power enough to run the "stacker."
a claim in judgment does not Just- Second Nat. Bank y. Adams (Ky.),
ify a warranty of the validity of 93 S. W. 671. See also Caise Mill
Mfg. Co. V. Vickere, 147 Ky. 396.
636
CHAP, in]
CONSTRUCTION OF AUTHORITIES
[§§ 891, 892
which It might be safely handled, the conditions arid circumstances
unJer which it could be properly used, and the like, wbuld fall within
this ftt-fnciple,' arid woiild, if false, afford whatever remedy would or-
dinarily be available for misrepresentations.
Even th'ougli the agent may not be deemed to be authorised to make
representatiohs, but he nevertheless does do so as part of the sale, the
principal may be affected by them, either ih an actidn for da^mages or
for rescission, as will be seen in a later chipter; brit tiiat is not the
question here under cotisideratioh.
§ 891. Authority to warramt title. — An agent authorized to sell
goods, as the gobds of his principal, would doubtless be deemed to
have implied authority to warrant his princijiars title. Warranties of
this sort are usiial, and \Vould be implied if the principal himself were
to offer ior sale goodie in his own p6ssession.^
The same principles would also doubtless apply to warranties against
incumbrances upon the title of the goods sold.*
§ 892. Authority to adv<6rti^« the pro^ierty.— It is clearly not
within the implied authority of the ordiriary agent employed to sell
property to bind the principal to third persons by contracts to pay for
advertising the property tO be sold.* Presurriptively, in the ordinary
«In Haynor Mfg. Go. v.^ Davis, 147
N. C. 267, 17 L. R. A. (N. S.) 193.
a salesman reprefiented, a, qertaia
"tonic" as i>erilg noA-alcohoUc, and
guaranteed tbat a buyer, in a pro-
hibition territory, would be indem-
nified for liquor licenses required.
Held, that the, manufaqturer, know-
ing the character of the toni(^ was
bound by his agent's representation^
although no, express i^utjbiorisatlon
to make such statements ^ was
proven. In Darks v. Scudders-Qale
Grocer Co,, 146 Mo. APP*. ^46, a
salesman sold ginger extract, now
alleged to contain wood alcohol, rep-
resenting it to be a proper medi-
cine and the buyer died of the ef-
fects. Said the court: "The defend-
ant permitted the age^t,to go ipto
the field and solicit orders. In so-
Ilcltlng business for the defendant*
questions would naturally come up
concerning the quality and useful-
ness of the articles the agent was
attempting to sell, and therefore
statements made by the agent con-
cerning the quality of tbe articles
and the purpose for which they
were intended must be within his
apparent authority." See also
DoylQstown Agr, Co. v. Brackett,
Me. , 84 Atl, 146,
T See 2 Mechem on Sales, % 1300 et
aeq,
B See Colvin v. Peck. 62 Conn. 155.
A general agent of defendant au-
thorized a special agent to sell a
cargo of imported coal. Instructing
him to make the best terms he
could, and informing him that the
duty had been paid. The latter
agent sold with an express war-
ranty that the coal was free from
incumbrance, whereas in fact it
was still subject to duty. Heldt
that the circumstances and the fact
that the law would raise an implied
warranty of title Justified this war-
ranty. North American Com'l Co.
V. North American Trans p. Co., 52
Wash. 502.
0 See Tarpy v. Bernheimer, 16 N.
Y. Supp. 870 (beer salesman no im-
637
§§ 893, 894]
THE LAW OF AGENCY
[book n
case, that is a matter which the principal will arrange for himself.
The authority of a general manager might be wider, as will be seea in
a following section ; ^^ and an agent authorized to sell goods of a sort
usually sold only by some form of public advertising, or to sell goods
in a manner usually involving such advertising, and the like, might
well be found to have implied authority to pursue that method." It
would doubtless be easier in many cases to find an implied undertaking
to reimburse the agent for expenses which he might incur in advertis-
ing, than to find implied authority to pledge the principal's credit di-
rectly.
§ 893. No implied authority to give credit—In the absence of
anything to indicate the contrary, it will be presumed that the sale is
to be for cash in hand. An agent authorized merely to. sell a chattel
has, therefore, no implied authority to give credit, unless there is a
valid usage to that effect at that time and place."
A general authority to prescribe terms, or an established course of
dealing, may, of course, justify a different conclusion.
§ 894. No authority to appropriate to his own use. — ^An agent
entrusted with goods to sell for his principal, has no implied authority
to sell or deliver them in payment of his own debt, or to pledge them
as security for his own debt, and persons dealing with such an agent
are bound to take notice of this limitation of his authority .*• Such
plied authority); Brooklyn Dally
Eagle V. Dellman, 30 N. Y. Misc.
747 (soliciting salesman no implied
authority to agree with a buyer
that his principal would advertise
the wares In plaintiff's newspaper) ;
United States Bedding Co. v. Andre,
Ark. , 150 8. W. 413 (travel-
ing salesman no Implied authority
to charge his principal for advertis-
ing goods upon hill hoards for a
period of six months at an expense
of $44). See also National Cash
Reg. Co. ▼. Ison, 94 Ga. 463.
10 See post § 989.
"In Ayer v. Bell Mfg. Co., 147
Mass. 46, defendant was seeking to
introduce a new soap; it was al-
ready advertising it widely; and
gifts were offered to consumers who
used the largest quantity up to a
certain date. Plaintiff, a wholesale
grocer, wrote to defendant, asking
what terms and inducements were
offered to johhers. In response de-
fendant sent an agent who. In or-
der to get plaintiff's order, agreed
that the advertisement should be
continued until a certain date.
Held, that the Jury might properly
find that this was within his author-
ity.
"Payne v. Potter, 9 Iowa, 549;
May V. Mitchell, 5 Humph. (Tenn.)
865; Burks v. Hubbard, 69 Ala. 379;
School District y. Aetna Ins. Co., 62
Me. 830; State v. Delafield, 8 Paige
(N. Y.), 627, ard 26 Wend. 192;
Norton v. Nevllls, 174 Mass. 243;
Kops V. Smith, 137 Mich. 28; State
V. Chilton, 49 W. Va. 453. See also
Tyler v. O'Reilly, 59 Hun, 618;
Bowles V. Rice, 107 Va. 51. That a
factor may sell on credit, see post.
Chapter on Factors.
i» Wheeler & Wilson Mfg. Co. v.
Givan, 65 Mo. 89; Holton v. Smith,
7 N. H. 446; Gould v. Blodgett, 61
638
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§89S
authority may however be expressly conferred, or it may be inferred
from the fact that the agent was, with the principars knowledge and
consent, using the principars property and credit, generally, in the
agent's behalf.'*
In other cases, however, a creditor who receives the goods under
such an arrangement with the agent, though acting in good faith and
in ignorance that the goods do not belong to the agent, acquires no
title as against the principal.^*
§ 895. No implied authority to exchange or barter. — Mere author-
ity to sell gives an agent no authority to exchange the chattels for
other property, or to take anything else than money in payment for
them,^' though such an authority may, of course, be conferred ex-
pressly or be fairly inferred from the language of the power.*^ Such
an agent cannot therefore, take payment in notes, checks or other
paper.** And having received payment in money, he has no author-
N. H, 115; Whitney v. State Bank, 7
WiB. 620; BurkB v. Hubbard, 69 Ala.
379; Stewart v. Woodward, 50 Vt.
78, 28 Am. Rep. 488; Levi v. Booth.
58 Md. 305, 42 Am. Rep. 332; Wil-
liams V. Johnston, 92 N. C. 532, 53
Am. Rep. 428; Parsons v. Webb, 8
Greenl. (Me.) 38, 22 Am. Dec. 220;
Hook v. Crowe, 100 Me. 399; Green-
wood V. Burns, 50 Mo. 52; Butts v,
Newton, 29 Wis. 632; Rodick v. Co-
burn, 68 Me. 170; McCormick v.
Keith, 8 Neb. 143; Hart v. Hudson,
6 Duer (N. Y.), 294; Hurley v. Wat-
son. 68 Mich. 531, s. c. 92 Mich. 121;
Wilson V. Wilson-Rogers. 181 Pa.
80; Hodgson v. Raphael, 105 Ga.
480; Talboys v. Boston, 46 Minn.
144; Low V. Moore, 31 Tex. Civ.
App. 460; Grooms v. Nefl Harness
Co., 79 Ark. 401; Smith v. James, 53
Ark. 135; Miller v. Springfield Wa-
gon Co., 6 Ind. Ter. 115; Sykes v.
Giles, 5 M. A W. 645; Scott v. Irv-
ing, 1 B. & Ad. 605; Catterall v.
Hindle. L. R. 1 C. P. 187.
I* Stewart v. Cowles, 67 Minn.
184.
16 Grooms v. Nefl Harness Co., bu-
pra; Smith v. James, supra; Warner
Y. Martin, 11 How. (U. S.) 209, 13 L.
Ed. 667; Belton Compress Co. v. Bel-
ton Brick Mfg. Co., 64 Tex. 337; De
Bouchout V. Goldsmld, 6 Ves. Jun.
211, and cases above cited. An
agent has no authority to agree to
pay his private debt from the pro-
ceeds of the sale of his principal's
goods. Rice V. Lyndborough Glass
Co., 60 N. H. 195.
i«Trudo V. Anderson, 10 Mich.
357, 81 Am. Dec 795; Wheeler &
Wilson Mfg. Co. V. Givan, 65 Mo. 89;
Taylor v. Starkey, 69 N. H. 142;
Brown v. Smith, 67 N. C. 245; Vic-
tor Sewing Mach. Co. v. Heller, 44
Wis. 265; Kent v. Borstein, 12 Allen
(Mass.). 842; City of Cleveland v.
State Bank, 16 Ohio St 236, 88 Am.
Dec. 445; Block v. Dundon, 83 App.
Dlv. 639; Beck v. Donohue, 27 Misc.
230; Jones v. Richards, 50 Misc.
645; Hayes v. Colby, 65 N. H. 192.
See also Russell v. Cox, 18 Ky. Law
Rep. 1087; Kearns v. Nlckse, 80
Conn. 23, 10 L. R. A. (N. S.) 1118,
10 Ann. Cas. 420; Starr Piano Co. v.
Morrison (Mich.). 124 N. W. 562;
Guerreiro v. Peile, 3 B. A Aid. 616.
IT Gaus V. Hathaway, 66 IlL App.
149.
isBuckwalter v. Craig, 56 Mo. 71.
A direction to sell for cash does not
permit the agent to take a cheek
payable the day after the sale, even
though that be the customary way
639
§§ 896-898]
THE LAW OF AGENCY
[book n
ity to exchange the money with a third person for other money, and
if he does so and receives a counterfeit bill, his principal may recover
the money given for it ; *® or, having authority to receive notes, he has
no authority to accept goods in payment of the notes.*^
§ 896. No authority to buy goods.— An agent authorized to sell
has thereby no implied authority to buy goods;" especially, as has
been seen,^ to buy the goods he is authorized to sell." Authority to
buy, however, may as in other cases arise from the conduct or ac-
quiescence of the principal.^*
§ 897. No authority to pledge goods.— An authority to sell goods
clearly contemplates an actual transfer of the genera} ownership : a^d,
as has been seen," a transfer of such ownership for cash only. * Mere
authority to sell, therefore, does not justify a pledge,^? evep on the
principal's account,^^ and a fortiori not on the agent*s account*® Ex-
cept as modified by the Factors Acts, this riil^ is ppt afffi9ted by the
fact that the other parties did not know that the agent was merely
such, and supposed him to be the owner of the goods.**
§ 8q8. No authority tg mortgage. — For reasons siriiilar to those
that rebut the implication of an authority to pledge, an authority to
at the place of sale of making what
aro there called cash sales. Hall v.
Storrs, 7 Wis. 253. An agent who
takes check payable ten days after
date is liable if bank fafls before
payment. Harlan v. Ely, 68 Gal.
522.
10 Kent V. Boratein, supra.
2t>J. A. Fay, etc., Co. v. Cansey,
131 N. C. 350; Woodruff v. Am.
Road Mach. Co., 23 Ky. Law Rep.
1551. See also Russell v. Cox, su-
pra.
21 Gates Iron Works v. Denver
Engineering Works Company, 17
Colo. App. 15; Keyes v. Union Pac.
Tea Co., 81 Vt 420.
A fortiori, no authority to buy
goods for third persona on his prin-
cipal's credit. Cowan ▼. Sargent
Mfg. Co., 141 Mich. 87.
22 See ante, I 179.
28 See cases cited ante, § 179; Mc-
intosh-Huntington Co. V. Rice, 18
Colo. App. 398.
This questfon is more fully dis-
cussed in Book IV, Chap. II.
2'*Witcher v. Gibson, 15 Colo.
App. 163.
w See ante, 5 898.
««Heilbronn v. McAleenan, 16 N.
Y. St. Rep. 957, 1 N. Y. Supp. 875;
Anderson v. McAleenan, 16 Daly.
4^4. See also, Hawxhurst y. Rath-
geb, 119 Cal. 581, 63 Am. St R. 142.
2r Shaw v. Saranac HorsenaH Co.,
144 N. Y. 220. See also,' Bonita v.
Mosquera, 2 Bosw. (N. Y.) 401.
2«Wycoff V. Davis, 127 Iowa, 899;
Read v. Cumberland Tel. Co.. 93
Tcnn. 482; Wheeler ft Wilson v.
Glvan, 65 Mo. 89; Henry ▼. Marvin,
8 E. D. Smith (N. Y.), 71; Mer-
chants' Bank T. Livingstone, 74 N.
Y. 223; Taliaferro v.' Baltimore
First Nat. Bank, 71 Md. 200; Ull-
man v. Myrick, 93 Ala. 532; Thur-
ber V. Cecil Nat. Bank, 52 Fed. 513;
Hawxhurst v. Rathgeb, supra:
Haynes v. Foster, 2 Cr. & M. 237.
See also, Ryan v. Stowell, 31 Neb.
121; Morsh V. Lessig, 100 Pac. 481.
2»See post. Book IV, Chap. VII;
Bott V. McCoy, 20 Ala. 578, 56 Am.
Dec. 223; Voss ft Co. v. Robertson,
Brown ft Co. 46 Ala. 483; Costlkyan
V. Sloan, 33 App. D. C. 420.
640
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 899, 9OO
sell goods raises no implication of an authority to mortgage them.^*
Clearly is this so where the agent undertakes to mortgage them as
his own, or to secure his own debt.*^
§ 899. No authority to promise conunissions for sub-sales. — An
agent authorized to sell his principal's goods, and not being of the
rank of a manager, general sales agent, and the like, has ordinarily no
implied authority to bind his principal by a promise to pay commis-
sions to third persons for sales made bythfcm for the principal;** nor
having property to be sold for cash, like railroad tickets, has he im-
plied power to deliver it to a third person to sell, to be paid for when
sold, and to bind the principal by promising such third person a com-
mission upon sales made by him.'*
§ 90a Authority to guarantee excltisive markets, particular prices,
etc. — ^An agent authorized to take orders for his principal's goods
of a certain sort, i. e., eye-glasses, may, it has been held, bind his prin-
cipal by an agreement that the latter will give the buyer the exclusive
right to handle his goods in that place, and will not, during that period
sell similar goods to any other dealer in the same town ; '* but it has
also been held that he cannot agree that his principal will not afterward
sell to others similar goods for a less price."
If the first case is sound, its doctrine must certainly be confined to
goods and places as to which a single representative might be deemed
usual and sufficient.
So it has been held that an agent, authorized to sell threshing ma-
chinery, has no implied authority to bind his principal to procure
threshing contracts from other persons ; •• and that an agent author-
ized to sell cigarettes and tobacco has no implied authority to agree,
as an inducement to the purchase, that the buyer will not suffer from
•oEdgerly v. Cover, 106 Iowa, horses, was held to have authority
670; Klefer v. Klinsick, 144 Ind. 46. to make arrangement for the assiS'
siSwitzer V. Wilvers, 24 Kan. tance of a local dealer.
384, 36 Am. Rep. 259; Barry v. •> Frank v. Ingalls, 41 Ohio St
Adams, 3 Allen (Mass.), 493; Ryan 660.
V. Stowell, 81 Neb. 121; Reed v. 84 Keith v. Hlrschberg Optical
KInsey, 98 111. App. 864. Co., 48 Ark. 138. To same effect
•2Atlee v. Fink, 75 Mo. 100, 42 (the goods being crockery, etc.,
Am. Rep. 385; National Cash Regis- manufactured by the seller) Is Wat-
ter Co. V. Ison, 94 Ga. 463; See also, kins v. Morley, 2 Will. (Tex. Civ.
Shonlnger v. Peabody, 59 Conn. 588; App.) 634.
National Cash Register Co. v« ssAndersMi v. Bruner, 112 Mass.
Hagan, 37 Tex. Civ. App. 281. 14.
In Cooper v. Coad, 91 Neb. 840, an ssForbis v. Reeves, 109 111.
agent sent Into a locality, in 'which App. 98.
he was a stranger, to sell valuable
41 641
§§ 9oi> 9^]
THE LAW OF AGENCY
[book II
the loss of rebates which would have been allowed to him by another
dealer for selling the latter's goods.^^
§ 901. No implied authority to compromise, release principal's
rights, or pay his debts. — Neither has such an agent any implied
authority to release a debt due tp his principal ; •• nor has a mere clerk
employed in his principal's store, or a mere traveling salesman au-
thorized to solicit orders, any implied authority to compound or com-
promise debts due to his employer ; •• or to sell goods at wholesale prices
for a debt due from his principal ; *^ or to deliver goods in payment
of, or as security for, a note signed by his employer.*^ So an agent,
authorized to sell machinery — for example, a harvesting machine, has
implied authority to release one of his principal's customers from lia-
bility for the price of goods purchased and to accept in his place the
customer's successor in the business;*^ nor, where goods have been
sold upon conditions retaining title as security, would he have any
implied authority to consent to acts which would waive or defeat that
security.**
§ 902. Authority to rescind the sale. — Authority to make or ne-
gotiate a sale is ordinarily exhausted when the sale contemplated is
made.*** After the contract of sale made or negotiated by the agent
has become complete therefore, the agent has ordinarily no implied
authority to rescind or discharge it, or to receive back the goods, or to
otherwise alter or amend the terms of the sale.*'
•TBrann v. Hess, 187 111. 28S, 79
Am. St Rep. 221.
88 Smith V. Perry, 29 N. J. L. 74.
M Powell's Adm'r ▼. Henry, 27
Ala. 612.
Traveling salesman or "drum-
mer" has no implied authority to
compromise debts due for goods pre-
viously sold by him, or to agree
that later goods may be applied to
satisfy alleged defects existing: in
goods previously sold. Ltndow v.
Cohn, 5 Cal. App. 388; Scaritt ▼.
Hudspeth, 19 Okla. 429, 14 Ann.
Cas. 857.
«»Lee V. Tinges, 7 Md. 216;
Hampton v. Matthews, 14 Pa. 106.
«iNash y. Drew, 6 Oosh. (Mass.)
422.
4sLudwlg T. Qorsuch, 154 Pa. 413.
ttMcEntlre, etc., Co. v. Buggy
Co., 172 Ala. 637.
4«Stilwell v. Mut. L. Ins. Co., 72
N. Y. 886; Luke y. Griggs, 4 Dak.
287; Ahern y. Baker, 84 Minn. 98;
Fuller ton y. McLaughlin, 70 Hun
(N. Y.), 668; Robinson y. Nipp, 20
Ind. App. 156.
46 Adams v. Fraser, 27 C. C. A.
108, 82 Fed. 21; Diyersy v. Kellogg.
44 111. 114, 92 Am. Dec. 154; Brig-
hom y. Hibbard, 28 Or. 886;
Fletcher y. Nelson, 6 N. D. 94; An-
drews y. Himrod, 37 111. App. 124;
Fullerton v. McLaughlin, 70 Hun
(N. Y.), 568; American Sales Book
Co. y. Whitaker, 100 Ark. 860, 37
L. R. A. (N. S.) 91; Mange-Wiener
Co. y. Patton Drug Co., 27 Pa. Su-
per. 815; Sumwalt Ice Co. y. Knick-
erbocker Ice Co., 112 Md. 437.
Where an agent who has taken an
order wrongfully alters it before
transmission to his principal, the
alteration is to be treated as the
act of a stranger and will not in-
642
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 903
As has been seen, however, an agent having general authority to
sell may, in many cases, make the right to return the property if the
buyer is not satisfied, an express condition of the sale ; *• and an agent,
having a general and continuing authority to sell, would also doubtless,
in many cases, be deemed to have implied authority to release a dis-
satisfied purchaser, even though no such condition had been expressly
incorporated in the contract."
§ 903. Authority to waive performance of terms of contract.— As
has been seen in an earlier section,*^ it has been held that an agent
authorized to sell machinery — for example, a harvesting machine, has
implied authority to give a prospective purchaser an opportunit)' to
try the machine, and to agree that if the machine is not satisfactory
it may be returned.*® The printed forms of contract, with which such
agents are supplied by their principals, now quite commonly provide
for return in case the machine shall be found defective, and also usu-
ally provide that, before the machine is returned, a notice of the de-
fect shall be given to the seller or the agent, and an opportunity af-
forded to remedy it. Under such contracts, it has been held that the
agent, having actual notice of the defect, may waive the formal return
of the property to himself ; •* and, where the contract provides for no-
validate the contract. BquUable
Mfg. Co. V. Allen, 76 Vt 22, 104 Am.
St. R. 915.
Obviously a mere agent to deliver
goods sold by the principal has
thereby no authority to alter the
terms of the sale. Schenck v. Grif-
fith, 74 Ark. 567.
40 See ante, f 858. Where the
buyer. In pursuance of the contract,
may return the article, a return or
tender to the agent who made the
sale and who is still acting as such
will ordinarily be held sufBclent
Parsons Band-Cutter ft Self-Feeder
Co. V. Malllnger, 122 Iowa, 703;
Clydesdale Horse Co. v. Bennett, 52
Mo. App. 833; Adrian v. Lane, 18
8. C. 183.
*TSee ante, f§ 715, 858.
See also Palmer v. Roath, 86 Mich.
602; Herpolsheimer v. Acme Harves-
ter Co., 83 Neb. 53.
In Peterson v. Walter A, Wood,
etc., Co., 97 Iowa, 148, 59 Am. St. R.
399, It is said: "Did the agent have
auUiority to agree with plaintitf for
a return of the notes? It appears he
had authority to sell, to set up, and
to see that the machine worked prop-
erly. There is no question as to his
authority to have received the ma-
chine back when he discovered that
It did not work properly, unless he
could remedy the defect, which he
did not do. It seems to us, under
such circumstances, his right to re-
store that which plaintiff had given
for the machine is not to be doubted.
Everything that the agent did»
touching the setting up and operat-
ing the machine, and the promise to
return the notes, was in the line of
an attempt to complete the sale, and
within his authority. Springfield
Engine Co. v. Kennedy, 7 Ind. App.
602/'
4« Ante, I 858.
*»Deering v. Thom, 29 Minn. 120.
See also, Olson v. Aultman, 81 Minn.
11; Marion Mfg. Co. v. Harding, 155
Ind. 648.
»o Pitsinowsky v. Beardsley, 87
Iowa, 9; Warder v. Robertson, 75
643
§ 904]
THE LAW OF AGENCY
[bqok II
tice in writing, the agent who has actual notice may waive the require-
ment of a written notice so far as he is concerned,*^ though he cannqt
necessarily waive notice to his principal where that also is required."^
Having thus the authority to waive, its exercise by the agent may bfc
express, or it may be inferred from the fact that he has proceeded to
do or act without requiring the performance in question.
§ 904. Alteration of contract. — Such a sales-agent, while
he could not of course surrender any of the substantial rights of his
principal, would doubtless in many cases be held to have implied au-
Iowa, 5S6; McCormlck Harvesting
Mach. Co. y. Brower, 88 Iowa, 607;
Osborne ft Co. y. Backer, 81 Iowa,
875; BlaesB v. Nichols 6 Shepard
Co., 115 Iowa, 373; Massilon Engine
Co. y. Shimier, X32 Iowa, 699; Ken-
ney v. Anderson (Ky.), 81 S. W. 663,
26 Ky. L. Rep. 867; McCormlck Har-
vesting Mach. Co. y. Hiatt, 4 Neb.
TJnof. 587; Bannon v. C. Aultmann A
Co., 80 Wis. 307. 26 Am. St. R. 37;
Canham v. Piano Mfg. Co., 8 N. D.
229; 8nody v. Shier, ^8 Mloh. 304.
In all of the cases previously cited
the authority has been spoken of as
a general authority to sell. In
Bragg V. Bamberger, 23 Ind. 198,
upon apparently the same general
facts a contrary conclusion Is
reached; but It is said that the au-
thority Is special and exhausted
when the sale is mad^.
See also Ellinger v. Rawllngs, 12
Ind. App. 836.
»i Peterson v. Reaping Mach. Co.,
97 Iowa, 148, 59 Am. St R. 390;
First Nat. Bank v. Dutcher, 128
Iowa, 413, 1 L. R. A. (N. S.) 142;
Oaar, Scott ft Co. v. Rose, 8 Ind. App.
269; Springfield Engine ft Thresher
Co. v. Kennedy, 7 Ind. App. 502;
Hellman Machine Works v. Dollar-
hide, 32 Mo. App. 178.
MSee Nichols v. Knowles, 31
Minn. 489, where It is held that a
notice of a defect given to the sell-
er's mechanical expert, who^ hap-
pened to be in the neighborhood
and his promise to come and "fix"
the machine (which he never did)
could not be regarded as a waiver of
the requirement of written notice to
the principal. The court said that
there was no evidence whatever of
this man's authority to receive saeh
a notice in behalf of his principal ^
to waive it, and no evidence that the
principal ever knew of or accepted
or acted upon the notice, qr ratified
his promise or fiction In the matter.
Failure to send a registered letter
as required by the contract has been
held not fatal where the letter wpa
actually received, especially where
the proper person responded to it
and came or did what was required*
See First Nat. Bank v. Dutcher, 128
Iowa, 413, 1 L. R. A. (N. S.) 142
[citing Advance Thresher Co. v.
Curd (Ky.), 85 S. W. 690; Kenny v.
Anderson (Ky.), 81 S. W. 663; Frick
V. Morgan (Ky.). 69 S. W. 1073 (Ky.
cases not officially reported); Bad-
gett V. Frlck, 28 S. Car, 176; Ault-
man, etc.. Machine Co. v. Ridenour,
96 Iowa, 638].
The Iowa cases state that "it is ^
well settled rule that an agent hav-
ing power and authority to sell ^
machine under a contract which
contains conditions for the beiiefit of
the seller has authority to bind his
principal by a waiver of such condi-
tions." Reeves v. Younglove, 148
Iowa, 699; First Nat Bank v.
Dutcher, supra [citing Pltslnowsky
v. Beardsley, 37 Iowa, 9; Warder v.
Robertson, 75 Iowa, 585; McCormick
v. Brower, 88 Iowa, 607; Osborne v.
Backer, 81 Iowa, 376; Peterson v.
Machine Co.. 97 Iowa, 148, 59 Am.
Sc. R. 399]. But that la certainly a
most questionable proposition, how-
ever well settled it may be in Iowa.
644
CHAP, in]
CONSTRUCTION OP AUTHORITIES
[§ 905
thority, while the matter was still in his hands, to waive or alter other
terms of the contract than the ones relating to notice, depending upon
their nature and the extent of his authority. Thus, in order to pre-
vent a failure of the sale, or to faiduce further trials, it might be held
that he could extend the time for making tests, or promise further as-
sistance or supplies.^' So a general sales-agent, having authority to
make sales and collections, would doubtless have authority to make
reasonable adjustments and modifications in order to effect a settle-
ment.'^ And a general sales and contracting agent, having charge of
his principars business within a given territory, with no apparent lim-
itations upon his authority in that regard, has been held to have im-
plied authority to consent to a change in a contract negotiated by him,
though such change involved an alteration in the printed form sup-
plied by his principal."'
§ go5. ' Notice of limitations upon the agent's authority to
waive or alter the contract may be given by the terms of the contract
itself and such limitations upon the authority of particular agents at
least will be eifective," though some courts have refused to enforce
>s See Blaess v. Nichols A Shepard
Co.. 115 Iowa, 373; Peter v. Piano
Mfg. Co.. 21 S. D. 198.
Where a harvester is sold on
terms that if the machine upon a
week's trial does not work well, the
bnjer shall give notice and the seller
will send a man to put it In order;
but fixes no time within which this
shall be done, the buyer and the
seller's agent sent to put It in order
may agree upon a time, notwith-
standing a provision in the contract
that "no agent has power to make
any additions, or to vary the terms
and conditions hereof." Holt Mfg.
Co. V. Dunnigan. 22 Wash. 184.
But a mere mechanical expert sent
to repair a machine sold by other
agents has no implied authority to
alter or consent to the alteration of
the terms of the contract. Hough-
ton Implement Co. v. Vavrowski, 19
N D. 6S4.
M Stevenson Co. v. Fox, 10 Misc.
177.
Same of an adjustment made by
a "state agent" (Randall v. Fay Co.,
158 Mich. 630); and of a district
agent to agree that certain goods
sold in excess of buyer's needs
might be returned (Herpolsheimer
V. Acme Harvester Co., S3 Neb. 53).
In Ellinger v. Rawllngs, 12 Ind.
App. 336, an ordinary traveling
salesman who bad taken orders for
goods which were shipped but
proved to be unsatisfactory to the
buyer, was held to have apparent
power on a later visit to the same
customer (at which he took a new
order) to give directions as to the
time and manner of returning the
unsatisfactory goods.
55 Van Santvoord v. Smith, 79
Minn. 316 (citing Tice v. Russell, 43
Minn. 66; Badger Lumber Co. v. Bal-
lentine. 54 Mo. App. 172; Burley v.
Hitt, 64 Mo. App. 272; Palmer v.
Roath, 86 Mich. 602; Indianapolis
Rolling Mill V. R. Co., 120 U. S. 256,
30 L. Ed. 639).
So of statements made by a gen-
eral agent that forfeitures under the
contract would not be insisted upon
and that delayed payments would
be accepted. McDonald v. Kings-
bury, 16 Cal. App. 244.
B« (No agent or expert can change,
etc.) Fahey v. Esterley Mach. Co.,
64s
§ 908J THE LAW OF AGENCY [BOOK II
V.
OF AGENT AUtHORIZED TO PURCHASE PERSONAL PROPERTY.
§ 908. When authority exists.-^As in the case of an agency to
sell, authority to purchase personal property heed not be conferred in
any particular manner. Where it is expressly conferred there is, of
course, ordinarily very little room for doubt. The question here is
rather, first whether any, and if so, what power to buy personal prop-
erty is properly to be deduced from the words and conduct of the par-
ties, or from a conceded power to do some other act ; and, secondly, if it
be found that authority to purchase has been cotiferred, how that au-
thority is to be construed, and what implied or incidental powers are
to be regarded as attaching to it.
Upon the first point, then, an agent may be deemed authorized to
buy not only where he has been expressly authorized to do so, but also
where as a matter of fact authority to buy may be implied, or where,
though no such implication of fact can be made, the principal has so
conducted himself as to reasonably warrant the inference of such an
authority. Stated more specifically, if the principal has authorized an
agent to do an act for the doing of which the purchase of personal
property is practically essential, or has put him in a situation in which
a power to buy it is usually exercised, or has in any manner held him
out as possessing such a power, the principal will be bound by pur-
chases made within the apparent scope of the authority from sellers in
ignorance of any limitations upon it.'* Thus the manager of a store,
the superintendent of a railway or a mine, or the foreman of a farm
«* Hay ward Lumber Co. v. Cox bought by him. The court held that
(Tex. Civ. App.), 104 S. W. 403; HaU there was express auth(»rity.
V. Ayer & Lord Tie Co. (Ky.), 102 B, a salesman and buyer of raw
S. W. 867. furs, oa sereral occasions had
In Furnace Run SawmUl Co. r. bought furs from the plaintiff on
Heller» 81 Ohio St. 201, creditors terms of present delivery; once be-
who, by arrangement with their fore, to the knowledge of the plain*
debtor, had united in appointing a Uff, he had bought furs of another
trustee to manage the debtor's busi- person on a written contract for fu-
ncss with a view to paying the cred- ture delivery; his purchases had
iters, under a contract that the trus- been made subject to confirmation,
tee should "complete all outstanding Held, to justify a finding of the jury
contracts and pay all necessary run- that B had authority to make a bind-
ning expenses of said business," Ing contract for the purchase of
were held to be liable for supplies furs to be delivered in the future.
Abrohams v. Revillon, 129 Wis. 285.
648
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 909» 919
may be found to hav« the power to buy stock or supplies as a usual
or necessary incident of the business' in his charge.**
g gog.. -^ — — ' Authority from conduct. — It is, moreover, not es-
sential that the authority be deducible from an acknowledged power.
It is sufficient that there has beea a course of dealing or a line of con-
duct from which the authority can reasonably be inferred.*^ An open
and notorious exercise of the authority without objection, the receipt
and payment for goods piu-chased by the alleged agent, the turning
over to the alleged agent of a business and permitting him to conduct
it as the business of the principal — these are but a few of the many
illustrations of the cases of conduct from which it has been held that
the authority to purchase may reasonably be inferred.**
8 910. Limitations. — It cannot be too strongly empha-
sized, however, that the conduct or relation from which the inference
is sought to be deduced must be such as fairly amd reasonably to war-
«9 Superintendent of a mdfie may
buy necessary supplies. Stuart v.
Adams, S9 Cal. 8€7; Jonefr v. Clark,
42 Cal. ISO. Or provisions for a
boarding house. Heald v. Hendy, 89
Cal. 682. Manager of waterworks
may bay a pump. Goss v. Helbing,
77 Cal. 190. So, of a quarry. Dor-
sey T. Pike, 57 Hun, 586. Manager
of a farm may buy fertilizers. Jefl«
erds T. AJyard» 161 Masa 94. So an
agent placed- in charge of a lumber
yard, may buy nece88cu*y suppliefl*
Witcher v. Gibson, 15 Colo. App. 163«
See also Columbus Showcase Co. y.
Brinson, 128 Ga. 487. Manager of
large store may buy team. Mont^
gomery Furn. Co. v. Hardaway, 104
Ala. 100.
G and C who lived Ia towa bad an
Interest in a farm in another county.
One H lived upon the farm and had
immediate charge of their affalra
there. C had for a long time had
general personal supervision of the
interests of himself and G. C sold
eut to G, but afterwards appeared to
continue to exercise supervision as
before. In this situation C bought
supplies for the farm while H was
present and they were delivered to
H who used, them in the usual way
upon the farm. Hel^ sufQcient to
Justify a Jury in finding that in the
purchase C waa also acting for G.
Gregg, y. Berkshire (10 Kan. App.
679, no opinion), 62 Pac. 550.
Where the owner of a warehouse
placed an agent in charge of It and
the a^ent, with the prineipars
knowledge held- himself out as hav-
ing general control of the prinei-
pars business at that place, th^
agent was held to have Implied au-
thority to purchase certain grain
placed in the warehouse. Nash v.
Classon, 55 111. App. 856 (aff'd 163
111. 409).
In Conabeer r. Bru^an, 121 N. Y.
Supp. 207, a janitor in charge of an
ordinary "flat" building was held to
havo Implied authority to buy some
necessary coal.
•7 Wilson V. Wyandanee Springs
Imp. Co., 4 N. Y. Misc. 605; Lamb v.
Hlrschberg, 1 N. Y. Misc. 108; Jef-
ferson Hotel Co. V. Brumbaugh, 94
C. C. A. 279, 168 Fed. 867.
w Purchases of supplies made by
the local supervfsing agent of a oon-
tracting company engaged in build"
Ing a railroad, whose acts were
known to the company and appar-
ently acquiesced in by the company,
bind the company even though ac-
tually contrary to his instructions.
Hirschmann v. Iron Range, etc., R.
Co., 97 Mich. 884; Black Lick Lum-
649
§ 9IO]
THE LAW OF AGENCY
[book II
rant the inference of authority to buy ; because it i8 clear that one may
be authorized to sell, but not to feuy; or to care for, manage, or con-
trol, but not to purchase.** And where the authority to purchase is
ber Co. v. Gamp Const. Co., 63 W. Va.
477. So of "extras" ordered under
similar circumstances by a supervis-
ing architect Jefferson Hotel Co. v.
Brumbaugh, 94 C. C. A. 279, 168 Fed.
$67.
The purchaser at a sherift sale who
allows the prior owner to continue
the business under his name as agent
Is liable for goods to replenish the
stock purchased on his credit by such
agent. McKinney v. Stephens, 17 Pa.
Super. Ct 126.
Where an agent had for several
months been representing the de-
fendants in a certain county, buying
cattle to be shipped to the defend-
ants, soliciting conifignments of cat-
tle to be sold by the defendants, and
during this time drafts drawn by the
agent upon defendants had been
honored; and the agent then bought
certain cattle upon which plaintiff
had a lien, agreeing that, If plaintiff
would release his lien and aiccept
certain drafts drawn upon the de-
fendants, defendants would pay the
drafts, it was held that the agent
had apparent authority to make the
agreement in auestion. Greer v.
First Nat Bank (Tex. CiT. App.)»
47 S. W. 1045.
A physician who owned a drug
store, turned it over to an agent to
run it at a definite wage, to be de-
termined by the success or failure
of the enterprise. Held, that the
physician was liable for goods
bought for the store. Bice y. Horer,
% Colo, App. 172. See also, Mahoney
V. Butte Hardware Co., 19 Mont 377;
C. & C. Klectric Motor Co. ▼. Frlsbie,
66 Conn. 67.
69 A mere agency to sell does not
imply authority to buy (Keyes, etc.,
Co. v. Union Pac Tea Co., 81 Vt
420) ; nor an agency to solicit orders
(Klump V. American Hardware Co.,
50 N. Y. Misc. 662). The relation of
master and coachman does not
clothe the latter with ostensible au-
thority to pledge his master's credit
for feed supplied for his horses.
Wright ▼. Glyn. [1902] 1 K. B. 746.
A chauffeur has no implied author-
ity to buy supplies or to order re-
pairs other than such as a Journey
or an emergency requires. Oage v.
Callahan, 67 N. Y. Misc. 479.
A mortgagor left in possession of
goods, with authority to sell them
and apply the proceeds in the pay-
ment of the mortgage, has no im^
plied authority to bind the mort-
gagee by a purchase of new goods.
Kelly ▼- Tracy and Avery Co., 71
Ohio St 220. See also Herd v. Bank
of Buffalo, 66 Mo. App. 643; Bentley
y. Snyder, 101 Iowa, 1. A store clerk
^'employed to sell goods, keep the
store books, and to act generally in
the conduct of the store" has no au-
thority to purchase goods on his prin-
cipal's account. Doan v. Duncan, IS
111. 96. The foreman in general
charge of the construction of a mill,
authorized to employ and pay work-
men, has no authority to contract to
purchase necessary timber for it
Rankin t. New England and Nevada
Sliver Mining Co., 4 Nev. 78. The
general manager of a branch selling
office of a concern engaged in the
business of manufacturing and sell-
ing mining machinery has no au-
thority to purchase mining machin-
ery. Gates Iron Works v. Denver
Bug. Works Co., 17 Colo. App. 16.
An employee upon a ranch has no
implied or apparent authority to buy
personal supplies upon the credit of
the owner. Young v. Chi Psi Cattle
Co., 79 Neb. 268.
See also Wales-Riggs Plantations
V. Dye, — Ark. — , 151 S. W. 998;
Sackville v. Storey, — Tex. Civ.
App. , 149 S. W. 239.
650
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 911
inferred, its operation must be confined to the purchase of goods for
the principal's benefit and on his account, and be limited to those rea-
sonably adapted to or customarily used in a business, or under circum-
stances, of the kind in question.^'*
§ 911. — — Ratification. — ^It is not indispensable that author-
ity for a purchase shall have been given in advance. In this, as in
other cases, tliere may be ratification; and ratification may be found
where, with full knowledge of the facts, the principal has voluntarily
accepted or taken the benefit of a purchase, made on his account, by
one who purported to be his agent.^^
The mere fact, however, that the goods came to the benefit of the
principal is not enough to work a ratification. There must be knowl-
edge and voluntary action or acquiescence, following a purchase made
by one who acted as his agent."
'oWallls Tobacco Co. r.' Jackson,
99 Ala. 460. Manager of a plantation
^'authorized to purchase mules, farm-
ing implements, and supplies for if'
has no authority to buy goods for the
hands employed on it Carter v.
Burnham, 31 Ark. 212.
One authorized to buy cattle,
sheep and hogs has therefrom no
Implied authority to buy hotel prop-
erties. In re Miley, 187 Fed. 177.
The trayellng agent and solicitor of
a commission house, with express
authority to sell the goods in which
his principal dealt, and to buy hides
and wool, may be found by the jury
to have apparent authority to pur-
chase fowls. Brochman Commission
Co. V. Pound, 77 Ark. 364.
General authority to purchase can-
not be inferred from express author-
ity in a single instance. Rice v.
James, 193 Mass. 458. To same ef-
fect: Town V. Hendee, 27 Vt 258;
Heathfleld v. Van Allen, 7 Up. Can.
C- PI. 346. A book-keeper was given
express authority in one instance to
buy a typewriter. Held, to confer no
implied or apparent authority to
later buy another. Smith Premier
Typewriter Co. v. National lAght
Co., 72 Misc. 405. Where principal
gave his son express permission to
make one purchase which was duly
made and paid for, held, that the
son had no authority two months
later to make another purchase on
his father's account. Cohen v. Min-
coff, 96 N. Y. Supp. 411.
TiSee In re Cohen, 163 Fed. 444;
Hay ward Lumber Co. v. Cox (Tex.
Civ. App.). 104 S. W. 403; Keyes v.
Union Pac. Tea Co., 81 Vt. 420; Pat-
ton V. Brittain. 32 N. Car. (10 Ired.
L.) 8; Witcher v. Gibson, 15 Colo.
App. 163; Greenbrier Distillery Co.
v. Van Frank, 147 Mo. App. 204.
72 ''While from the fact that goods
belonging to one party pass into the
possession of another a contract of
purchase may sometimes be implied,
it will not be implied when it ap-
pears that such transfer of posses-
sion was surreptitious, and without
the knowledge of the latter. A party
cannot be compelled to buy property
which he does not wish to buy; and
no trick of the vendor, conspiring
with an agent of such party, by
which possession is placed in him,
creates on his part a contract of pur-
chase. Nor is any contract of pur-
chase created, even if it also appears
that, unknown to such party, his
agent who has entered into this
wrongful combination has sold the
property and put the proceeds into
his principars possession. Whatever
651
§§ 9I2-9M] THE LAW OF AGENCY [bOOK 11
Qwoji-contractual liability for a purchase, if any such liability may
be enforced, is hot within the scope of this discussion.
§ 912. Powers and limitations incident to authority to purchase.^—
Having thus seen something concerning the existence of the main
authority, that is, the authority to purchase, it is next necessary to de-
termine what authority, if any, is incident to it, whether it be expressly
given or arise by implication, and what limitations, if any, attend its
exercise.
§ 9x3. Agent with general authority may boy on credit. — ^A gen-
eral agent having full and discretionary authority to buy goods for his
principal may, it is held, buy either for cash or upon credit, as may in
his discretion, best subserve the interests of his principal at the time.''*
It is clear, however, as will be seen in the following sections, that
authority to buy upon credit is by no means an invariable attribute of
a mere authority to purchase.
Even though such an authority would not ordinarily exist, however,
its existence in a given case may appear from conduct, as where the
principal knows that the agent is regularly making purchases upon the
principal's credit, and does not dissent.''*
§ 9x4. May not buy on credit, when furnished with funds. — ^An
agent authorized to purchase goods, who is supplied with funds for
that purpose, and who has not been held out as having a more general
authority, has no implied authority to bind his principal by a purchase
on the principal's credit ; and in such a case the principal will not be
bound by a purchase on credit, although the goods come in fact to his
use, unless he has knowledge of the fact and does something in rati-
fication of it, or unless there be shown a custom of trade or a course
of dealing justifying a purchase on the principal's credit." Mere
liability might exist In an action Ayer & Lord Tie Co. v. Toung, 90
brought under these circumstances Ark. 104.
for money had and received, no ac- Receipt of proceeds by the princi-
tlon will lie for goods sold and deliv- pal in the belief that they were be-
ered. The party is not responsible Ing paid to him In satisftiction of a
under a contract and as a purchaser, debt owed by the agent, is not a rat-
whatever may be his liability for the ification. Bohart ▼. Oberne, 86 Kan.
money he has received as the pro- 284.
ceeds of the sales." Per Brewer, J., T«Ruffln v. Mebane, 41 N. C. 507;
hi Schutz V. Jordan, 141 tJ. S. 218, Swindell ▼. Latham, 145 N. C. 144,.
86 L. Bd. 705. See also Swindell v. 122 Am. St R. 480.
Latham, 145 N. C. 144, 122 Am. St m Wftcher v. Gibson, 15 Colo. App
R. 430. 168.
Involuntary and unavoidable use n Stubbing v. Heints, 1 Peake's N.
of goods purchased without authoi^- P. Rep. 47; Pearee v. Rogers. 3 Esp.
ity is not of itself a ratification. 214; Rusby y. Scarlett, 5 £sp. 76;
652
CHAP. Ill]
CONSTfeUCTION OF AUTHORITIES
[§ 9H
authority to buy does not imply authority to buy on credit J* A fortiori
Boston Iron Co. v. Hale. 8 N. H. 363;
KomdrowsW v. Kruindlcft, 66 Wis.
23; JacQues r. Todd. 3 Wend. (N.
Y.) 83; Laing v. Butler. 37 Hun (N.
1^.), 144; Saugerties, etc., Co. v.
Miller, 76 App. DIt. 167; Brittaln v.
Westall. 137 N. Car. 30; Wheeler v.
McGuIre, 86 Ala. 398, 2 L. R. A. 808;
Proctor V. Tows, 116 111. 138; Amferl-
cue Oil Co. Y. feorr, 114 Ga. 624;
Chapman v. Americus Oil Co.. 117
Ga. 881; First Nat. Bank v. Penning-
ton. 76 Tex. 272 (in the absence of
ratification); Patton v. Brlttain. Z2
N. C. (10 Ired. L.) 8; Brooks v. Mor-
timer, 10 App. Dlv. 518; Taber v.
Cannon, 8 Mete (Mass.) 466; Fraser
V. McPherson, 3 Desaussure (S. C),
393; Parsons v. Arcaour, 3 Pet (U.
S.) 413, 7 L. Ed. 724. An agent au-
thorized to draw on his principal for
amount of purchases Is governed by
the same rules that govern agents
in whose hands funds are placed.
I^arsoxw v. Armor, 3 Peters (U. S.),
412, 7 Li. Ed. 724. Where an agent in
ciiarge of a livery business bought
goods on his principal's credit, evi-
dence is admissible in an action
against the principal to show that the
agent was at all times in sufficient
funds either from the business, or
furnished by the principal. Taft v.
Baker. 100 Mass. 68.
An agent authorized to buy goods
with funds furnished by the princi-
pal is not authorized to borrow
money with which to bny even
though the principal does not supply
the funds. Swindell v. Latham. 146
N. Car. 144, 122 Am. St. R. 430.
Defendant, having charge of a farm
in this state, eimployed an agent to
manage it, and authorized him to
employ, pay and discharge laborers.
Defendant arranged with certain mer-
chants to supply such gobds as the
agent needed. The agent bought
clothing for the etnployees of other
dealers, and charged it to the defend-
ant. The sellers knew that the agent
bongfat goods at the appoints places,
but did not know and made no in-
quiry as his authority or the terms
on which those purchases were made.
Held, that defendant was not liable,
even, though, without hil^ knowledge,
the agent supplied the clothing to
the employees ifi payment of their
wages. Eckart v. Roehm, 43 Uinn.
271.
Where the course of business be-
tween a merchant In the country
and a merchant in town Is such, that
the country merchant transmits to
his correspondent in town his pro-
duce and such articles as he has to
sell, and the merchant in town, in
return, supplied him with such mer-
chandise as be deals in, charges it
to the merchant in the country, the
latter is not liable to the seller for
any articles thus procured, although
h(^ directs the purchase of an article
which he knows the merchant in
town does not deal In, and the seller
is informed for whom the purchase
is made, if the merchant in the
country has funds in the hands of
tlie merchant in the city, and has
never authorized him to pledge his
credit on the purchase of any arti-
cles thus ordered, or recognized such
att. Jacques v. Todd, 3 Wend. (N.
Y.) 83.
Where a wife furnished her hus-
band with money to buy lumber for
her house, but the money, instead of
being applied on the purchase of the
lumber, was applied without her
knowledge, on a debt owed by the
husband, the wife is not liable for
the lumber furnished. The fact that
she knew the lumber was being used
was not a ratification, where she sup-
posed it had been paid for. Young
V. Swan, 100 Iowa, 323.
Where an agent who is furnished
with funds to buy goods for his prin-
cipal buys them with his own funds
for the principal, having used the
principal's funds for other purposes,
the title vests in the principal. Ed-
wards V. Dooley. 120 N. Y. 540.
76 Berry v. Barnes. 23 Ark. 411.
653
§ 915]
THE LAW OF AGENCY
[book II
is this true where the seller is expressly notified that the agent has na
authority to buy on credit^^
§ 9i5« But where the principal, either expressly or by
implication, authorizes a purchase upon his credit, the fact that the
agent then had, or was afterwards supplied with funds with which to
pay for the goods so purchased, will not relieve the principal from lia-
bility if the agent fails to pay.'' The fact, moreover, that an agent
authorized to make purchases, is then, or soon after, supplied with
funds with which to pay for them, does not necessarily lead to the con-
clusion that he was forbidden to purchase upon credit; the inference
^T American Lead Pencil Co. v.
Wolfe, 30 Fla. 360.
T«Thus In Stapp v. Spurlin, 82
Ind. 442, where an agent for the pur-
chase of wheat upon commission
bought a quantity of wheat to be
paid for on delivery, but the agent
on delivery paid only a portion of
the price, and sent the wheat to his
principal who later settled with the
agent in Ignorance of the fact that
the wheat was not fully paid for; It
was held that the principal was lia-
ble for the balance of the price to
the seller even though he had
waited several months without pre-
senting his claim. The court said:
"If they [the principals] furnished
the agent with money to pay for the
wheat it was his duty to make the
payment, but if he failed to do so,
and converted the money to his own
use, it was simply a violation of the
trust and confidence reposed in him
by his principals; and as they
trusted him to act for them, as be-
tween them and one who has dealt
with him as their agent. In good
faith, they must suffer the conse-
quences of his bad faith with them-
selves."
In the same effect is Cruzan v.
Smith, 41 Ind. 288, where a general
agent to purchase wheat and in-
structed to buy for cash only had
actually bought wheat on credit and
shipped It to his principal, who set-
tled with him before learning of the
purchase upon credit.
A general agent of trustees having
full authority to pnrohase the par-
ticular goods, and to do so upon the
principal's credit, obtained from the
seller a receipt for the purchase price
in full upon his representation that
such receipt was necessary in order
to secure payment from his princi-
pals. The agent then presented the
receipt to his principals, who paid
the money In ignorance of the cir-
cumstances under which the receipt
was obtained. The agent failed to
turn over the money to the seller and
it was held that the latter could
maintain an action against the prin-
cipals for the purchase price. Wil-
lard T. Buckingham, 86 Conn. 39S.
Plaintiff, upon the request of' de-
fendant's architect, supplied lumber
which was used in the construction
of defendant's house. The contract
between defendant and the archi-
tect gave the latter authority to
make contracts for the construction
of the building, and It also provided
that defendant should on each Sat-
urday forenoon furnish money to
pay the expenses of the preceding
week as shown by the architect's es-
timates. Held, that the contract
clearly showed that the money was
not to be supplied till after bills
were contracted and that it was the
intention that the architect should
have power to pledge the defend-
ant's credit Larlvee v. A'Heam,
207 Mass. 288.
Authority to an agent to build a
house held to justify procuring ma-
6S4
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 915
to be drawn is one of fact.'" And where an agent, w'ho has general
authority to buy, is instructed not to buy more goods than the funds
at his command will enable him to pay for, the principal will, never-
theless, be bound to one who relies upon his apparent authority in
ignorance of such instructions.*® And so where the usual course of
business is to buy upon credit, private directions to the agent not to
terlals upon the principal's credit
Spry Lumber Co. v. McMillan, 77
111. App. 280.
A long continued course of deal-
ing. In which the agent bought upon
the principal's credit, with this
knowledge and without his dissent,
will Justify an inference of consent
Witcher v. Gibson, 15 Colo. App. 163.
In the old nisi prius case of Haz-
ard T. Tread well, (1768) 1 Strange,
506, it appeared that "the defendant
who was a considerable dealer in
iron and known to the plaintiff as
such, though they had never dealt
together before, sent a waterman to
the plaintiff for iron on trust and
paid for it afterwards. He sent the
same waterman a second time with
ready money, who received the
goods, but did not pay for- them;
and the chief justice [Pratt] ruled
the sending him upon trust the first
time and paying for the goods, was
giving him credit, so as to charge
the defendant upon the second con-
tract." This case has been often
cited, e. 0. Keyes v. Union Pac. Tea
Co., 81 Vt 420, but it is, of course,
questionable whether It is sound.
It is at most an inference of fact
and, as has been seen in several
places, the inference of authority
upon one occasion is not usually to
be safely drawn from the existence
of a special authority upon another
occasion. See ante, § 910, note.
T»An agent who had entire charge
of property,— procuring tenants, col-
lecting rents, paying taxes, Insurance,
etc., was expressly authorized by the
owner to make certain quite exten-
sive repairs, being given full author-
ity to -act according to his own
judgment, but being directed not to
spend more than $500 upon them,
which sum was given him in cash.
The agent procured from the plaint-
iff lumber and other material, which
were charged to the agent, and other
supplies elsewhere for cash, in a
gross amount in excess of |500.
Upon discovery of the agency, the
plaintiff filed a bill for mechanic's .
lien. Held, that the |500 limit did
not qualify the power as far as third
persons were concerned and that
since the agent was not expressly
prohibited from purchasing on credit^
such prohibition, if it existed at all,
must be inferred from the fact that
money was placed in his hands and
that such Inference was a question
of fact Palne v. Tillinghast, 52
Conn. 532. Compare Proctor v. Tows,
115 111. 188.
«oLlddell V. Sahllne, 55 Ark. 627;
Napa Valley Wine Co. v. Casanova.
140 Wis. 289; Wheeler v. McGulre,
86 Ala. 398, 2 L. R. A. 808; Pacific
Biscuit Co. V. Dugger, 40 Or. 302.
The fact that the principal was
undisclosed does not it is held, al-
ter the rule. Hubbard v. Tenbrook,
124 Pa. St. 291, 10 Am. St Rep. 585,
2 L. R. A. 823; Watteau v. Penwick,
[1893] 1 Q. B. 346; Steel-Smith
Grocery Co. v. Potthast, 109 Iowa,
413. See also Fees v. Shadel, 20 Pa.
Super. 193; Sartwell v. Frost, 122
Mass. 184; Brooks v. Shaw. 197
Mass. 376; Mississippi Valley Const.
Co. V. Abeles, 87 Ark. 374.
But see the discussion of the lia-
bility of the Undisclosed Principal.
The ordinary rules governing the
liability of an. undisclosed principal
when discovered, of course apply to
purchases. See Lamb v. Thompson,
31 Neb. 448; Patrick v. Grand Forks
Merc. Co., 13 N. D. 12.
6S5
§§ 9i6, 917]
THE LAW OF AGENCY
[book II
buy in that way will not save the principal from liability to. those who,
in good faith, sell in ignorance of the limitation.'^
§ 916. And even where the agent is supplied with funds
and is forbidden to purchase upon the principal's credit, it does not
necessarily follow that he is expected to pay at the very instant he re-
ceives the property. It may well be that it was fairly within the con-
templation of the parties, that he was to pay at the termination of the
transaction, or at the end of the day, or when the seller presented him-
self for payment, and the like ; and if the agent should not pay when
so expected, the principal might still be liable."
§ 917. Moreover, the seller upon a cash sale, who has de-
livered the goods upon condition of immediate payment and without
. waiving his right thereto, may, if payment be not made, recover the
goods from the agent or from the principal himself, if they have come
into his possession, the principal in such a case not being a bona Ude
purchaser.®* And so, where the agent, supplied with cash wrongfully
purchases upon the principars credit, the principal may make himself
81 Watts V. Devor, 1 Grant (Pa.),
267.
82 Where an agent is furnished,
with money to pay for property
which he Is authorized to purchase,
there is no such limitation on his
authority to buy on credit, as to re-
quire him to pay the instant, or on
the same day, for property which he
purchases without any understand-
ing or agreement that credit is to
be given therefor. Adams v. Boies,
24 Iowa, 96. The facts alleged were
that W. (a resident of Muscatine)
acted in that place and throughout
the adjacent country as the agent of
defendants (grain and cattle deal-
ers, residing in Washington, Iowa),
in making purchases and shipments
of stock for them. Defendants fur-
nished W. with money to pay for
his purchases, and particularly
made arrangements with a bank in
Muscatine to cash checks dfawn
upon it by W. W. had acted as the
agent of the defendants some eight
or ten months, making purchases of
stock for them. During that period
he had bought hogs of the plaintiff
at six different times. When he
wished to buy in order to fill up a
car he would come in penaion or
send a wagon to plaintiff, get hoga,
and then, or very soon afterwards*
settle for them. He acted as agent
for no other person, and there was
no testimony in the case, showing
that he bought stock on his own ac-
count. The two lots for which this
action was brought were sold in the
same way that the others had been.
On the first of these two lots W.
paid $125. In three or four days
after the delivery of the second lot
the plaintiff went to Muscatine a,nd
asked W. for his pay, but did not
get it. Shortly after that W. ran
away. Reldt that defendants were
liable.
In Spry Lumber Co. v. McMillan,
77 111. App. 280, the court points out
that a purchase of goods which are
delivered In installments and are to
be paid for when all are delivered
''can hardly be said to be a pur-
chase on credit;" it is not the giv-
ing of credit "in the sense in which
the word credit is used among mer-
chants."
88 See Mechem on Sales, iS 554,
555.
656
CHAP. IIlJ
CONSTRUCTION OF AUTHORITIES
[§ 917
liable for the purchase by ratific«ttion, or though he may not be liable
upon the contract, he must usually, if he repudiates it, return the goods ;
and if he does not, or cannot do so, he may be liable in quasi contract
for their value."
"See Patton v. Bfittain, 32 N.
Car. (10 Ired. L.) 8, in which a prin-
cipal g^ye authority to an a^ent to
purchase hides but only bo far as he
had cash of the principal to pay for
them. The a^ent bought on the
crcdU of hia principal, and ik»
£^ods were delivered to and r«-
oeived by the principai witJi knowl-
edge that they had not besn paid
for. Hel4f that the sellev oouKi re-
cover from the principal the i^'ice
•of the goods. In SartweU t. 7fost»
122 Mass. 184, the defendant pur*
•chased the stock in trade of a bank-
rupt, left him in charge of tha bust-
nessy with the understanding that
lie should not buy on credit Plain-
tiff sold goods to this agent on
credit, without knowledge oX any
principal. The defendant discov-
ered by investigation of his agents
business that purchases had been
made on credit* and he thereupon
compelled the agent to settle such
debts. Afterwards the agent again
bought on oredit, as the defendant
by reasonably diligent inquiry
might have discovered. The de-
fendant took possession of the busi-
ness, and was held liable for the
purchases on the theory of a ratifl-
eation by an acceptance of benefits.
In Mofflt-West Drug Co. v. Lyneman,
10 Colo. App. 249, the defendant's
husband acted as her agent in con-
ducting a drug business. Defend-
ant had notified plaintifC not to sell
goods to her husband. The hus-
band, however, bought goods on
credit from plaintiff, on various oc-
casions covering a period of five
months. On his death, the defend-
ant took charge of the store, and
found in stock one barrel of whisky
which she apparently knew had
been purchased contrary to her or-
ders. The other goods of the ac-
count sued on were not brought to
her notice, but did in fact go to in-
crease the stock of her business.
Defendant was held liable for the
ptlce of all the goods on the ground
that she had ratified the unauthor-
ised purchase by an acceptance of
the subject matter.
In dWinOeU v. Latham, 145 N. C.
144> 122 Am. St R. 430, an agent, au-
thorized to conduct a business and
purchase goods, borrowed money
from the plaintifC with which to
buy. Lower court gave this iastruo-
tion: "If the agent had no author-
ity to borrow money to pay for
goods, but was directed to buy for
oasli with money advanced by the
principal, and the latter fails to fur-
nlah the cash, and the agent for the
purpose of promoting the business
borrows money and uses it to pay
for goods for his principal, and the
goods are used in said business for
the benefit of 'the principal then the
principal is liable for the money so
borrowed." This charge was held
to be too broad, and the court ex-
plains it's deoisioa in Brittaln v.
WesthaU, 136 N. C. 492, upon which
decision the trial court had founded
its instruction in this case. To hold
a principal liable In contract for
goods bought on credit where the
agent wa^ authorized to buy only
for cash acceptance of benefits by
the principal is not alone sufficient,
but it must appear that the princi-
pal had notice of his agents default
In McDowell v. McKenzie, 65 Ga.
630, there was an action on account
for gooda purchased and the whole
opinion of the court* is in this lan-
guage: "This case turns on a single
qiiestion: Can a merchant in Georgia
whose agent buys goods In New
York, though on credit and the
credit unauthorized by the Georgia
42
657
§9i8]
THE LAW OF AGENCY
[book II
§ 918. May buy on credit when not supplied with funds. — An
agent, however, who is directed to purchase goods, but is not supplied
with the necessary funds, and who is not expected to buy upon his
own credit,®^ has ordinarily implied authority to purchase such goods
on the credit of his principal, for otherwise, he cannot execute his
authority.'* And it has been held that an agent who has general au-
thority to buy and sell goods for his principal, may buy on credit or
for cash at his discretion.*^
merchantp legaHy refuse to pay for
the goods when they have gone into
his possessionp been sold for him,
and he has pocketed the proceeds,
especially when he had paid other
bills bought on credit by the same
agent? To propound the question
plainly is to answer it in law, as
well as in good sense and common
honesty." If this decision rests on
a ratification, it must be noted that
there is no mention in the case of
knowledge on the principal's part
•» In Bank of Indiana v. Bugfoee,
3 Keyes (N. Y.). 461. it was said
that authority to a broker to buy
goods but not supplied with funds,
contemplated that he should buy
them on his own credit or with his
own funds. The broker settles later
with his principal.
This is apparently the common
understanding in many markets
with reference to brokers.
SQSprague v. Gillett, 9 Mete.
(Mass.) 91; Wltcher v. Gibson, 16
Colo. App. 163.
Where the owner of a boat sent a
member of the crew to buy supplies
for it, which were sold upon the
owner's credit, it was held that if
the agent was furnished with the
money to pay for the goods the prin-
cipal was not liable for goods fur-
nished on credit since the mere au-
thority to purchase would not Justify
the agent in buying on credit, but
that since he did not always furnish
the agent with funds and the agent
rendered him an account and received
the money in settlement, the agent
was authorized to purchase on credit
and the principal was liable for the
goods. Spear A Tietjen Supply Go. ▼.
Van Riper. 104 Fed. 6g9.
The defendants, being two of sev-
eral joint owners of a whaling yesseU
authorised a third Joint owner to
parchase their share of the neces-
sary supplies of the yessel for a
coming voyage but advanced him no
money. Such third owner, as their
agent, bought the supplies on a six
months' credit and gave a note pay-
able in six months. The defend-
ants. In ignorance of the credit and
the note, paid the third owner their
share with a commission, but the
note not being paid at maturity, the
vendor brought suit against them for
the supplies.
Held, that he was entitled to re-
cover. Wilde, J., said: "The de-
fence is. that the agent was not au-
thorised to make the purchase on a
ci-edit. That he was not in terms
expressly so authorized is admitted;
but he was authorized to make the
purchase, and no funds were ad-
vanced to him, to enable him to pur-
chase for cash. This, by implica-
tion, unquestionably authorized him
to make the purchase on the defend-
ant's credit. When an agent is au-
thorized to do an act for his em-
ployer, all the means necessary for
the accomplishment of the act are
impliedly Included in the authority,
unless the agent be in some partic-
ular expressly restricted." Sprague
V. GUlett, 9 Mete. (Mass.) 91.
BTRnfftn V. Mebane, 41 N. Car. ($
Ired. Bq.) 507.
658
CHAP, III]
CONSTRUCTION OF AUTHORITIES
[§ 919
§ 9x9.. Agent with general authority to purchase has authority to
agree upon price and terms.— -An agent invested with general au-
thority to purchase goods for his principal has, in the absence of con-
trary limitations upon his authority, implied power to settle upon the
usual incidents of the purchase.^* Thus, in general, he may select the
seller; he may determine upon the particular goods to be supplied;
he may, within ordinary and reasonable limits, agree upon the price
and terms of payment ; ®® he may determine upon the time and method
of delivery ; '^ he may as part of the act acknowledge the receipt of the
goods and the amount of indebtedness therefor ; ^* and may in general
ssThe manager of a coal company
put in charge of its business and au-
thorized to purchase a track scale,
to whom the principal refers the
seller to make the contract, and
with whom the contract is in fact
made is impliedly authorized to ar-
range the details of the contract
and may agree to dig the pit aiMl
stipulate that title shall not pass
until the scale is paid for. Wishard
V. McNeill, 85 Iowa, 474. Compare
Elder v. Stuart, S5 Iowa, 690. An
agent authorized to purchase win-
dow screens Jield to have Implied
power to agree that the window
sash should be so arranged that
the screens could be properly put in
place. Hogg v. Jackson A Sharp
Co. (Md.), 26 Atl. 869. An agent
with authority to buy logs has au-
thority to buy in the usual manner
and therefore may agree that the
logs shall be scaled in the usual way
and paid for according to that scale.
Watts v. Howard, 70 Minn. 122. The
court took judicial notice of the
usual manner.
Where the principals wrote to the
seller: "R. comes to see you to pur-
chase your cattle in M. County, ad-
Joining our pasture, or any purchase
he may make of you on this trip
for joint account for us and himself,
wo have authorized him to do so,
and have agreed to make any rea-
sonable advance on delivery of con-
tract at any bank in this city, as
an advance on contract, and as to
fulfilment of the same," held, that
this authorized R., in buying a herd
of 3,000 cattle, to stipulate for
15,000 liquidated damages, In case of
breach by the purchasers. HaUf v.
O'Connor, 14 Tex. Civ. App. 191. That
agent "was placed at the elevator to
buy and receive grain; that he con-
tracted for future delivery and at-
tended generally to the corporation's
business" showed authority to rescind
contract. Middle Elevator Co. v. Van-
deventer, 80 111. App. 669.
But an agent authorized to pur-
chase has no authority to make un-
usual and extravagant terms, as in
Salmon v. Austro- American Stave
Co., 109 C. C. A. 254. 187 Ffed. 664,
where an agent agreed as part of
a contract of purchase that money
would be advanced to cover the ex-
pense of manufacturing other goods
than those included in the purchase.
80 Boulder Invest. Co. v. Fries, 2
Colo. App. 373. As between princi-
pal and agent, the principal is not
bound, where the agent has de-
parted materially from his author-
ity. Ross v. Clark, 18 Colo. 90.
And a buying agent has no au-
thority to agree secretly with the
seller upon an excessive price in or-
der that the excess may be applied
to discharge a debt due from the
predecessor in business of the prin-
cipal. Pacific Lumber Co. v. MofCat,
67 C. C. A. 442, 134 Fed. 836.
doQwen v. Brockschmidt, 54 Mo.
285.
9iStothard v. Aull, 7 Mo. 318.
The agent In this case executed a
659
§ 920]
THE LAW OF AGENCY
[book II
do those thmgs, not inconsistent with his authority, which are proper
and usual to do in such cases." When employed in a capacity, or to
deal in a market, affected by a particular custom, he is presumptively
authorized to comply with such custom in making the purchase."
In this case, however, as in others, limitations may lawfully be im-
posed upon the agent's authority, which will be binding upon the agent,
and upon third persons having knowledge or charged with notice of
them.**
§ 920. May not exceed KmitB as to quantity. — ^It is the duty of an
agent, commissioned to buy goods up to a certain quantity, to confine
his purchase within the limits given.** And he has no more implied
authority to purchase a smaller than a greater quantity.** If no lim-
its are fixed, a reasonable discretion may be exercised. An agent,
prbmisBOry note for the price,— ^an
act which the agent ordinarily
Would have no authority to do (eee
post, I 926) — even though he might
agree upon the amount. But in thld
case there waft other evidence from
which the court held that a power
to make such a note might be Infer-
red. The agent was also a general
managing agent and carried on the
business, with the principal's con-
sent, in his own name.
But a mere agent to purchase
goods, who has done so, has no im-
plied authority at a later time to
agree to an account stated. Moore
v. Maxwell. 165 Ala. 299.
MAn agent authorized to pur-
chase property Is authorized to re-
ceive it. Callahan v. Crow, 91 Hun,
ZW, affirmed 157 N. Y. 695.
An agent authorized to purchase
and receive property has implied
power to pass upon the quality and
to bind his principal by acknowl-
edging that it conforms to the con<
tract. Schroeder Lumber Co. v.
Steams, 122 Wis. 503; Nunnely v.
Goodwin (Tenn. Ch. App.), 39 S. W.
S55. In Blrge-Forberi Co. v. St.
Louis, etc., Ry., 53 Tex. Civ. App. 55,
an agent authorized to buy and ship
cotton was held to have implied au-
thority to agree that cotton stored
on a railroad's platform should be
at the risk of the owner.
66o
In St' Louis, etc., Ry. v. Blocker,
— Tex. Civ. App. — , 138 S. W.
166, two agents were purchasing
and irtilpptng poleii' for plaintiff, and
were working contiguous territor-
ies along line of defendant railroad.
Oiie agent signed an agreement re-
leasing the railroad from liability
on poles stored on its right of way.
This agreement held to be binding
only as to poles which the agent
making it had stored.
wVaa Dusen-Harrington Co. v.
Jungeblut, 75 Minn. 298, 74 Am. St
R. 463.
This is more fully exemplified In
the case of brokers. See Brokers.
M Bryant v. Moore, 26 M6. 84, 45
Am. Dec. 96.
»n01yphant v. McNalr, 41 Barb.
(N. Y.) 446, ard 41 N. Y. 619; White
V. Cooper, 3 Pa. St. 130.
Where an agent is known by the
seller to be authorized to buy goods
on credit only to a certain amount,
the seller Is bound to observe the
limitation at his peril. Mussey v.
Beecher, 3 Cush. (Mass.) 511.
As to this, see aiite. $ 761.
»<»Oiyphant v. McNalr, 41 Barb.
(N. Y.) 446, aff'd 41 N. Y. 619. An
agent authorized to purchase one-
sixteenth of a ship at $40 per ton
does not bind his principal by pur-
chasing two-sixteenths at 1^44 per
ton, one-sixteenth being on his own
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 9JI, 922
however, having general authority to buy would, in many cases, bind
his principal, in accordance with rules already discussed, even al-
though he exceeded the instructions given him, or bought more than
his actual authority would justify, if his purchases were within the
limits of his apparent powers.*^
§ 921. Must observe limits as to quality or species. — ^An agent au-
thorized generally to buy chattels, without limitation as to kind or
quality, may undoubtedly exercise a fair and reasonable discretion.
But where he is expressly limited to the purchase of a specific thing,
he cannot purchase another. And where he is instructed to buy goods
only of a given quality or of a certain kind, he must observe the limits
fixed.**
These rules, however, must be limited as in the preceding section ;
for it is clear that an agent, having general authority to buy, would, in
many cases, bind his principal, though he departed from instructions
as to quality or species; and an agent, having apparent authority to
buy according to his own discretion, might often bind his principal,
though his actual authority were otherwise."
§ 922. Mudt observe limits as to price. — As stated in the preced-
ing section^ an agent autliorized to buy without restrictions has im-
account Starbird r. Curtis, 43 Me.
352.
But the circumstances may easily
be such as to show tliat it was not
essential that the agent should buy
the entire quantity In one transaction
or of one person. Thus a direction
to buy one hundred horses might
fairly be found to mean that the
agent should buy of various persons
until he had secured one hundred. A
purchase of five horses, toward the
hundred, might then be authorized,
and, if the agent never succeeded in
securing one hundred, the purchase
of those he did buy would not neces-
sarily be defeasible, nor would the
agent necessarily be liable because
he never completed the number if
that was found to be Impossible, ua*
di^ the circumstances. See Johnston
V. Kershaw, L. R. 2 Ex. 82; LAthrop
▼. Harlow, 28 Mo. 209; Qordon v.
Buchanan, 13 Tenn. (5 Yerg.) 71.
•T Herrmann Saw Mill Co. ▼.
Bailey, 22 Ky. Law Rep. 552, 68 S.
W. 449. Where, however, the sellers
know of the limitation they deal at
their peril. Thrall v. Wilson, 17 Pa.
Super. Ct. 376.
osDavies V. Lyon, 86 Minn. 427;
White V. Cooper, 8 Pa. St. 130; Hop-
kins V. Blane, 1 Call (Va.), 361;
KiUough V. Cleveland (Tex. Civ.
App.), 33 S. W. 1040; Thelle v. Chi-
cago Brick Co., 60 111. App. 559;
Gregg V. Wooliscroft, 62 111. App.
214; Hackett v. Van Frank, 105 Mo.
App. 384; Day v. Snyder Brokerage
Co. (Tex. Civ. App.), 130 S. W. 716;
Dick V. Gk)rdon, 6 Grant's Ch.
(Can.) 394.
»9 South. Ry. Co. v. Raney, 117
Ala. 270. An agent authorized to
purchase peanuts, but only witli the
approval of his principal, made a
purchase of a specific stock, described
as ''recleaned peanuts" in the writ-
ten contract, and the principal ap-
proved the contract. Later the prin-
cipal contended that his approval
was not binding upon him because
the peanuts were Inferior to the
standard commercially described as
661
§ 921]
THE LAW OF AGENCY
[book II
plied authority to agree upon the price which shall be paid. This
discretion, however, even in such a case, is not an unlimited one, and
should be regulated by the customary or market price, where there is
one, and, at all events, by a fair and reasonable price. The principal
may, however, limit the price which the agent is to pay, and while
private instructions cannot prevail against apparent authority, the
seller who has actual knowledge or is charged with notice of the re-
strictions cannot bind the principal by a contract in violation of them.^
The statement is not infrequently found that an agent to buy, though
limited as to price, may bind his principal to pay more if the seller be
ignorant of the limitations. A so-called general agent, having an ap-
parently unqualified or discretionary power to buy, may doubtless bind
his principal, though he exceeds his instructions. An agent, though
a special one, may be so held out by his principal as to have an appar-
ently unlimited authority. What was said by the principal concerning
price may be found to have been intended as mere instructions for the
private ear of the agent, rather than as a real limitation upon his au-
"recleaned." The seller had no with the horsea" Heldy that the
knowledge of the restriction, and
there was nothing to put him upon
notice. Held, that the principal was
hound. Nunnely y. Goodwin (Tenn.
Ch. App.)» 39 S. W. 855. Compare
Shroeder L. Co. v. Stearns, 122 Wis.
503. But in Day v. Snyder B. Co.,
supra, the defendant in Texas wrote
a broker in New York instructing the
broker to buy "new soft shell wal-
nuts," leaving the matter of varie-
ties to the broker's discretion. The
broker inspected the walnuts of-
fered, and made a contract for the
purchase of a quantity of old wal-
nuts. Heldt that the defendant
could repudiate on discovering that
its agent had not purchased the kind
ordered.
1 Burks V. Stam, 65 Mo. App. 455.
Here an agent bought a pair of race
horses for his principal, taking a
written bill of sale In which the
price was set at $3,600. Though the
agent was authorized to buy at that
figure, he nevertheless orally agreed
at the sale that the seller should re-
ceive a certain amount more If the
buyer "did well and had no bad luck
agent was "under all the evidence,
limited to the price stated In the
written contract; hence the defend-
ant was not bound by another or
different agreement if any such was
made." In Atlas Mining Co. v.
Johnston, 23 Mich. 36, the plaintiff
in a sale under order of court had
land bid off to S at 1 20,500. P, an
agent of the defendant, desired to
buy the property, but had been told
by his principal to pay no more than
$20,100. This fact was known to
the plaintiff. P, hoping his princi-
pal would see the advisability of the
purchase, agreed to pay $20,500,
and be substituted as purchaser In
place of S. Held, that the principal
was not bound by the agreement to
buy for $20,500.
Authority given to an agent to
purchase a certain horse for his
principal at a limited price, does not
justify the agent in sending a third
person to buy the horse at a less
price and then turn the horse over
to the principal at the price limited.
Armstrong v. Elliott, 29 Mich. 485.
662
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 923, 924
thority.* But it certainly can not be true that a principal may not,
in any case, put limitations upon the price which his agent may pay,
which will be effective, even though the seller was in fact ignorant of
them.* A seller is under the same obligation as any one else to as-
certain the authority of the agent with whom he deals.
The place at which, or the circumstances under which, the agent
buys may be sufficient to indicate limitations as to price; and limita-
tions suggested by the ordinary experience and couduct of men may not
be overlooked. An agent sent out, however, with apparent authority
to negotiate and conclude a binding purchase from any one having
such goods for sale, would doubtless be deemed to have authority to
agree upon the price within the limits of what was usual or reasonable.
Much that was said in the preceding subdivision respecting the author-
ity of a selling agent to fix the price, is applicable here.
§ 923. May be restricted as to persona with whom to deal. — As
has been seen above, an agent authorized to buy without restrictions,
may buy from any one who has such goods for sale. The principal,
however, may lawfully restrict the agent as to the persons with whom
he shall deal in the execution of his authority, and where such restric-
tions are actually or constructively known, the principal cannot be
bound by a purchase from other persons than those designated.*
§ 924. May make representations as to principal's credit — An
agent expressly authorized to purchase goods upon his principal's
credit, has implied authority to make the natural and ordinary repre-
sentations as to the solvency and credit of his principal, without which
the seller would not sell the goods.' This rule is based upon the
principle that the agent has implied power to do those things which are
^See as to this distinction, { 730, Robinson v. Thompson, 74 Miss. 847.
ante. Hatch v* Taylor, 10 N. H. 638; An agent apparently put in gen-
Towle V. Leavitt, 23 N. H. 860, 56 oral charge of the construction of a
Am. Dec. 195. building may, it is held, bind his
8 It is true that Jones Cotton Co. principal for materials purchased
V. Snead, 169 Ala. 566, seenus to hold for and used in the construction of
the contrary, upon the authority of the building, though he bought them
S 365 of the first edition of this of plaintiff, contrary to instructions
work; but the court gives to that to buy all materials of another per-
section an effect which the writer sou specified. Mississippi Valley
did not intend it to have. Const. Co. v. Abeles, 87 Ark. 374.
Comer v. Granniss, 75 6a. 277, is « Hunter v. Hudson River Co., 20
also apparently contra, though there . Barb. (N. Y.) 493; Morris v. Poss-
is no discussion at all of this pai^ ner. 111 Iowa, 335. See also Meyer-
ticular Question. hoff v. Daniels, 173 Pa. 555, 51 Am.
^Peckhsun v. Lyon, 4 McLean, 45; St. R. 782.
Thrall v. Wilson, 17 Pa. Super. 376;
663
§§ 9^5* 9^6]
THE LAW OF ACENXY
[book II
necessary and usual to accomplish the object sought to be attained,
and must, in reason, be limited by that necessity. Thus, if the prin-
cipal's credit is already established, or if the seller does not require a
representation, the principal ought not to be bound by the mere vol-
untary and gratuitous representations of his agent, nor in any event,
for excessive or unusual pledges of responsibility.
§ 925. May not bcMTOvr money to pay for goods. — Even though it
should be conceded that the agent, not supplied with funds, may buy
upon the principal's credit, no authority will be implied to borrow
money on the principal's credit with which to pay for the goods, unless
such borrowing was authorized by the course of dealing, or was prac-
tically indispensable to the execution of the ^authority.*
§ 9a6. May not execute negotiable paper. — So authority to bind
his principal by a note or bill for the price of the goods bought is not
< See post, of Agent Authorized to
Borrow Money; Blckford v. Menier,
107 N. Y. 490. Authority to buy
stock does not justify an inference
that the agent may borrow money
on the principaFfl credit to pay for
it Martin v. Peters, 27 N. Y. Su-
erior (4 Eobt), 434. In Bank of
Indiana v. Bugbee, 3 Keyes (N. Y.),
461, It was held that an authority
to a broker to buy and load upon a
yessel a cargo of produce, does aot,
by implication, and in the absence
of any sufficient custom, give to the
agent the power to borrow, upon
the credit of the principal, the
money with which to make the pur-
chase. In Bryant v. Ia Banque Du
Peuple, [1893] App. Cas. 170, it was
held that the Quebec agent of a Lon-
don Company, the Canadian business
of which was loaning money on the
Monrity of timber, whose power of
attorney authorized him to make con*
tracts for the purchase or sale of
goods, the chartering of vessels, the
employment of agents and servants,
and a great number of other specified
acts necessarily incidental thereto,
has no authority to borrow money on
behalf of the company or bind it by
a contract of loan.
Authority to buy cotton, though
general, does not authorisse the
agent to open a bank account, bor-
row money, and pledge his princi-
pal's securities as collateral there-
for. Chicago, etc., Ry. Co. v. Ctaick-
asha Nat Bank, 98 C. a A« 53S, 174
Fed. 923.
A power of attorney, authorizing
an agent in England to purchase
goods in connection with the busi-
ness carried on by his principal in
tho colonies, and either for cash or
on credit, and "where necessary in
connection with my business or in
connection with any purchases
made on my behalf as aforesaid," to
make, draw and accept bUls of ex-
change, and to sign the name of the
principal to any checks on the Lon-
don banking account of the princi-
pal, does not confer on the agent a
general borrowing power. Jacobs v.
Morrris, [1901] 1 Ch. Div. 281. See
also Weekes v. Hardware Co., 28
Tex. Civ. App. 677.
Authority to buy horses held to in-
clude authority to borrow money for
feed for and care of them after pur-
chase and before shipment to the
principal. Rider v. Kirk, 82 Mo. App.
120.
An agent put in charge of a busi-
ness, with large discretionary au-
thority, may bind his principal by
borrowing necessary money. Mc-
Dermott r. Jackson, 97 Wis. 64.
664
CHAP, m]
CONSTRUCTION OF AUTHORITIES
[§§ 927. 9^
to be implied from mere authority to purchase. Such an agent, there-
fore, has no authority to bind his principal by a promissory note or
bill of exchange, unless that authority be expressly given, or unless
the giving of such note or bill is indispensable to the discharge of the
duties to be performed.''
Authority to buy on credit when not supplied with funds does not,
as seen in the preceding section, justify the borrowing of money to
pay for them, and it does not justify either giving a note for the price,
or giving a note to obtain money with which to pay the price."
§ 9^7. May not guarantee payment by his vendor.-^An agent au-
thorized to buy goods and to make cash advances upon goods to be
delivered, has thereby no implied authority to bind his principal by a
guaranty that the person from whom the ag^t bought will pay what
he already owes to his own vendor for the goods.*
§ $2B. May not sell goods. — ^An agent authorized to buy goods
has therefrom no implied authority to sell them."* And this result is.
TWkere an agent In charge of a
butchering business signed his prin-
cipal's name to a promissory note It
was held that the jury should have
been instructed that "though an agent
employed to make purchases for his
principal may undoubtedly bind him
by a contract of sale, he cannot ordi-
narily, without express authority,
bind him by a negotiable promissory
note; and that the single exception to
this positire rule is in relation to
agencies^ the objects and purposes of
which cannot be accomplished with-
out the exercise of such a power."
Temple v. Pomroy, 4 Gray (Mass.),
128.
Accordingly where the owners of a
whaling vessel appointed an agent to
fit her out and furnish the proper
supplies for a whaling voyage, it was
held that such agent had no authority
to bind the owners by accepting a
draft in their names as agent for the
purchases made by him for the ves-
sel. Taber v. Cannon, 8 Met. (Mass.)
456. An agent placed In general
charge of a mercantile business who
is given a definite amount of money
and directed to conduct the business
"upon the cash systme" has no au-
thority to execute a note In the de-
fendant's name as agent for goods
purchased for the business. Stoddard
V. Men wain, 7 ttlch. (S. Oar. L.)
526; Perrotin v. Ouciillu, 6 Iia. 667,
is contra.
An agent to purchase wool; sug-
gested a cek*tain purcbase to his
principal, but the latter declined It
Agent nevertheless purchased and
induced plaintiff bank to discount a
draft fbr the price. Plsiintiff had
no knowledge of the instructions
not to buy, but made no effort to as-
certain his powers and relied on the
fact that once before the agent had
caused a similar draft to be dis-
counted at the bank which the prin-
cipal paid. Held, that bank could
not recover on the draft. First
Nat'l Bank v. Hall, 8 Mont. 341.
8 Swindell v. Latham, 145 N. C.
144, 122 Am. St R. 430.
Manager of store no implied au-
thority to give note for goods pre-
viously bought Wits T. Gray, 116
N. O. 48.
• Oberne v. Burke, 80 Neb. 581.
loHogue V. Slmonson, 94 N. Y.
App. Dlv. 139; Mclntosh-Huntlrig-
ton Co. V. Rice, 18 Colo. App. 893.
665
§§ 92^-931]
THE LAW OF AGENCY
[book II
of course, not changed by the fact that the buyer relied on the agent's
false assertion that the principal had permitted him to sell them.^*.
§ 929. Authority to alter or cancel contract — ^An agent author-
ized to make a contract of purchase would ordinarily have no implied
authority to afterwards consent that the contract should be cancelled
or altered ; but where the agent has been given general authority over
the matter of purchase, with discretion in selecting the purchasers,
agreeing upon the amounts, and fixing upon the terms of the sale, a
modification or cancellation of a particular contract, done with a view
to promote the principal's interests, wotdd ordinarily be within his
authority."
§ 930. Authority to make admissions after the purchase. — ^As has
been seen in an earlier section, an agent at the time of the purchase
may be deemed to have authority to make the acknowledgments or
admissions which are properly a part of the purchase ; ^* but there his
authority would usually end; and, unless he were an agent with gen-
eral authority over the whole subject-matter, he could have no im-
plied authority, after the transaction was ended, to affect his princi-
pal .by admissions or acknowledgments respecting the past transaction.**
§ 931, Agent can buy only for principaL — The authority of the
agent to buy, like that of other agents, is to be exercised only for the
principal's benefit; and the agent therefore cannot bind his principal
by purchases openly made on his own account or that of some third
person." If an agent, not known to be such, buys for himself, when
he should have purchased for his principal, the latter may charge him
as a trustee ; but a person who, in good faith, sells to the agent is not
affected by a secret intention of the agent to use the goods for him-
self.*«
11 Sage V. Shepard A Morse Lum-
ber Co., 4 N. Y. App. Dlv. 290 (aff'd
158 N. Y. 672).
IS Anderson v. Coonley, 21 Wend.
(N. Y.) 279; Spauldlng Lumber CJo.
V. Stout, 86 Wis. 89; Middle Dlvl-
fllon Elevator Co. v. Vandeventer, 80
111. App. 669.
18 See ante^ i 919.
14 Agent who has made a pur-
chase has no implied authority at
a later period to bind his principal
by an account stated as to the price.
Moore v. Maxwell, 155 Ala. 299.
iftSee Saul v. Lepldus, 46 Colo.
538, where the manager of defend-
ant's store at P, undertook to buy
in defendant's name goods to be
supplied to the agent to establish a
store of his own at F.
19 Loeb y. Selig, 120 La. 192.
666
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 932, 933
VI.
OP AGENT AUTHORIZED TO COLLECT OR RECEIVE PAYMENT.
§ 93a. What here involved. — The question of authority to collect
or receive payment has, as its statement suggests, two aspects: One,
that of the person who insists that he is authorized to demand and re-
ceive of another that which the latter owes to a third person. Who-
ever makes such a claim, has ordinarily the burden of proving his
authority. The other, that of the person who contends that he has dis-
charged a debt, which he owes to another, by paying it to a third per-
son as one authorized to receive it for the creditor. Whoever insists
that he has discharged an admitted debt, by paying it to some one other
than the creditor himself, has ordinarily the burden of proving that
the person to whom he paid it was authorized by the creditor to re-
ceive such payment"
§ 933. What constitutes such authority. — Authority to collect or
receive payment of a demand may, of course, be conferred in express
terms and with more or less of discretionary and incidental power.^*
When such is the case, the rules heretofore laid down are sufficient to
determine its construction.
Such an authority however, as in the other cases already consid-
ered may also arise by implication. Nevertheless it is not lightly to
be inferred. . An authority to an agent to receive goods, for example,
would be much less likely to be subject to abuse, and much less likely
to furnish temptation to the agent, than an authority to receive money.
IT See, for example. Koen v. Mill- In Lyth«oe v. Smith, 140 N. Y.
«*• Ark. — , 160 S. W. 411; Ho£f- 442, money waa to be dirtribttted In
master v. Black, 78 Ohio St. 1, 125 pursuance of a decree of court An
Am. St. R. 679, 21 L. R. A. (N. S.) agent clothed with a power of attor-
52, 14 Ann. Cas. 877; Smith v. First ney executed by his principal who
Nat Bank, 23 Okl. 411, 29 L. R. A. lived in a foreign country demanded
(N. a) 576; Marling v. Nommen- his principal's shara There was no
sen, 127 Wis. 363, 15 Am. St R. question raised respecting the gen-
1017, 5 L. R. A (N. S.) 412, 7 Ann. ulneness of the power and nothing
Cas. 864. See also McNabb v. Hunt, to suggest that the principal had
28 Okl. 43, died or revoked it Held, that the
18 See, for example, Schroeder v. agent waa entitled to receive the
Waters, 173 Pa. 422, where the prin- money.
cipal not only in terms authorized Authority given to two persons
an agent to receive the money, but to receive payment does not Justify
also gave him a receipt already pre- payment to one of them only. Rob-
pared to be delivered to the debtor bins v. Horgan, 192 Mass. 443.
upon payment
667
§ 933]
THE LAW OF AGENCY
[book II
But where from the relation of the parties, a previous course of deal-
ing, an established custom, or conduct working an estoppel it can
fairly and reasonably be inferred that one person is authorized to re-
ceive payment for another, payment to the former will bind the lat-
ter,*' irrespective, ordinarily, of what may become of the money.** At-
i*See Grant v. Humerlck, 123
Iowa, 571; WilBon v. Pones, 99
Iowa, 132; Sax y. Drake, 69 Iowa,
760; Quinn y. Dresbach, 75 Cal. 159,
7 Am. St. R, 138; Simon v. Brown,
38 Mich. 552; Gross y. Owen, 86 N.
Y. Supp. 266; DeWltt y. DeWltt, 202
Pa. 255; McConaeU y. Mackin. 22
App. Diy. 537; McCarty y. Stanflll,
19 Ky. L. Rep. 612. 41 S. W. 278;
McLelsh y. Ball, 58 Wash. 690, 187
Am. St. R. 1087; Bennett Piano Co.
V. Scace, 130 App. Diy. 281.
One who buys a note and mort-
gage, knowing that his transferrM*
is authorized to collect interest and
principal thereon, and who permits
him to make such collections for a
considerable period* la bound by
payments subsequently made and
can not recoyer again upon the the-
ory that he was a purchaser for
yalue of negotiable paper. Pockin
y. Knoebel, 63 Neb. 768.
The transferee of a note who al-
lows the transferror to continue to
receiye payments thereon as before
the transfer, is bound by payments
afterwards made to such transfer-
ror. Enright Y. Beaumond, 68 Vt.
240. To same effect: Morgan y.
Neal, 7 Idaho, 629, 97 Am. St. R.
264.
But In Winer y. Bank, 89 Ark.
435, 131 Am. St 102, the mere fact
that the holder of a series of notes
allowed the payee to collect one of
them, was held not sufficient to con-
fer authority In the payee to collect
any others.
Loan agents residing in a city
made loans through a local agent
in another place and divided com-
missions with him. The local agent
took an application for a loan. In
which it was stipulated that the
commission should be paid to the
general or the local agent. When
the loan was ooosummated, a sepa-
rate note was taken for the com-
missions in the name of the general
agents and sent to them, and they
paid the local agent his abare in
cash. Later the borrower paid the
amount of this note to the local
agent who did not haye the note in
his possession. There was proof of
some correspondence between the
general and the local agent which
Indicated that the local 'agent was
to urge pajrment of this note, at
least. If not to receive it Held,
that on all the facts, the payment
was good. May v. Trust Co., 138
Mo. 275.
A wholeaale hovme established a
local agency through which sales
were made and accounts collected.
The directions to the manager were
to deposit all receipts in a certain
bank, and they were to be checked
out only on checks In the prind-
pal's name. This the bank knew.
A former manager had often cached
checks received at the agency with-
out depositing them. This practice
was continued by the manager in
question, with the knowledge of the
principal and without objection.
Later the principal sued the bank to
recover the amount of certain
checks so paid to the manager and
not deposited. Held, that the course
of dealing Justified the bank in so
paying. Heinz v. American Nat
Bank, 9 Colo. App. 31.
Payment to a salesman who
would not ordinarily be authorized
to receive It may be good where
there has been a recognized course
of dealing in which payments have
been made to him. Murphy v. St.
Louis Coffin Co., 150 Ala. 143.
The agent's previous authority be-
668
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
{§ 934
tention mv^ therefore be given to some of the circumstaiices under
which an authority to receive payment may be implied.
§ 934. When implied from making the loan or negotiating the
contract — ^And in the first place it may be noticed that the mere
fact that the agent was employed to make the loan or negotiate the
contract or draft the securities, upon which the money is payable will
not, as of course, confer upon him the incidental authority to receive
a payment which may become due upon such contract.*^ If the au-
thority goes no further, the agent's power will be exhausted when the
loan is made or the contract is negotiated.
The fact that tlie money is made payable at the agent's oKce does
not alter this rule, and the rule itself applies alike to principal and in-
terest."
comes practically immaterial where
the principal with knowledge ac-
cepts the payment without objec-
tion. Spencer y. AfeCament, 7 CaL
App. 84.
Authority to an agent to re-loan
money, given before the maturity
of the prior loan, implies authority
to receive the money upon the
prior loan. Wales v. Mower, 44
Colo. 146.
Payment to husband or wife act-
ing as agent of the other is good.
Long T. Martin, 71 Mo. App. 569;
Stanton v. French, 83 Cal. 194.
A mere payment to ''the roan in
the office" of the principal is not
good in the absence of evidence
showing his actual or apparent au-
thority. Schneider v. Hill, 19 N. Y.
Misc. 56.
Payment in face of notice that
agent is not authorized to receive
it is not good. Metz v. Harbor Bldg.
4b Loan Ass'n, 117 App. Div. 825.
so It seems scarcely necessary to
mention in this connection the ef-
fect of payment; but it is well set-
tled, of course, that in general one
who pays money in good faith to
one authorized to receive it, is not
bound to follow the money into the
hands of the principal, and is not
affected by the fact that the agent
may misappropriate the money.
Schroeder v. Waters, 173 Pa. 422;
National Mtg. Co. v. Lash, 6 Kan.
App. 633; Indiana Trust Co. v.
Building A Loan Ass'n, 86 Ind. App.
685, afTd 165 Ind. 597; Fayetteville
Wagon Co. V. Kenefick Co., 76 Ark.
615; James v. Lewis, 189 Mass.
134; Land Mtg. Co. v. Preston, 119
Ala. 290; Hamil v. Amer. Mtg. Co.,
127 Ala. 90; Rogerson v. tiSggett,
145 N. C. 7; South Melbourne Bldg.
Society V. Field, 19 Vict. L. R- 213.
21 Thompson v. Blllott, 73 III
221; Smith v. Hall, 19 111. App. 17;
Cooley V. Winard,.34 111. 68, 85 Am.
Dec. 296; Fortune v. Stockton, 188
111. 454; Ortmeier ▼. Ivory, 208 111.
577; Hefferman v. Boteler, 87 Ma
App. 316; Western Security Co. v.
DoufflaSi 14 Wash. 215; Rhodes v.
Belchee, 86 Or. 141.
Attorney or conveyancer employed
merely as a scrivener to draw the
papers is not thereby made agent
to subsequently receive payments.
Mynlck v. Bickings, 30 Pa. Super.
401.
Mere authority to find a pur-
chaser for real estate (but not
to make a contract or deed), con-
fers no implied power to receive the
purchase price. See ante, $ 814;
Halsell V. Renfrew, 14 Okl. 674, aff'd
202 U. S. 287, 50 L. Ed. 1032.
2« Trowbridge v. Ross, 105 Mich.
698; Wood v. Trust Co., 41 111. 267;
Cadwell v. Evans, 5 Bush (Ky.),
669
§§ 935, 936]
THE LAW OF AGENCY
[book 11
§ 935. When implied from possession of the securities. — Author-
ity to receive payment on securities is not necessarily to be impKed
merely from their possession by the assumed agent.
Thus, authority to receive payment of a bill or note payable to the
order of the principal and not indorsed by him, cannot be presumed
from the mere possession by the assumed agent.^* But where the bill
or note is made payable to bearer, or is indorsed in blank, its appar-
ently lawful possession by one whose real relation is not known, may
be sufficient evidence of title if not of agency to sustain a payment to
him."
Possession, however, when coupled with other facts or acts indicat-
ing agency to manage, control or deal with the securities, may be very^
potent evidence of authority to receive payment.**
§ 936. Possession by agent who negotiated loan evidence
of authority. — ^While the mere fact that the agent negotiated the
loan, or has possession of the securities, may not alone be enough to-
create at least an apparent authority to receive payment upon them,,
the union of both circumstances seems to suffice.**
880, 96 Am. Dec. 358; St Paul Nat.
Bank v. Cannon, 46 Minn. 95, 24
Am. St. R. 189; Dwlght v. Lenz, 75
Minn. 78; Gas Co. v. Plnkerton, 95
Penn. St 62; Ward v. Smith, 7
Wan. 447, 19 L. Ed. 207; Cheney v.
Llbby, 134 U. S. 68, 33 L. Ed. 818;
Corey v. Hunter, 10 N. D. 5; Hollins-
head v. Stuart 8 N. D. 35, 42 L. R.
A, 659; Stolzman v. Wyman, 8 N. D.
108; Cummlngs v. Hurd, 49 Mo. App.
139.
In Shaw v. WlUiams, 100 N. C.
272, It appeared that plaintiff and
her brother and a sister owned land.
An oral sale to defendant was ar-
ranged by the brother. All joined
in the execution of a deed which,
in the usual form, recited the re-
ceipt of the consideration. This
deed was delivered to defendant by
the sister's husband who recelvod
his share of the price. Instructions
were given by the plalntifP not to
collect her share of the price but to
leave It with defendant until she
called for It Nevertheless the
brother collected the residue of the
price from defendant who was not
Informed of this direction, but the
brother failed to pay plaintiff her*
share. Held, that plaintiff could re-
cover her share from the defendant.
The brother was merely a special
agent The mere fact that he ne-
gotiated the sale gave him no Im-
plied authority to collect Defend-
ant made no inquiries, and was not
misled by any holding out on the
part of plaintiff of her brother as-
her agent to receive the money.
2s Doubleday v. Kress, 50 N. Y.
410, 10 Am. Rep. 502; Wardrop r.
Dunlop, 1 Hun, 326. affirmed 59 N.
Y. 634; Hair v. Edwards, 104 Mo.
App. 213; Lawson v. Nicholson, 52'
N. J. Eq. 821.
24 See Woodbury v. Larned, 5-
Minn. 339; Cone v. Brown, 15 Rich.
(S. Car.) L. 262; Owen v. Barrow, 1
Bob. & Pul. N. R. 101; Whelan v.
Reilly, 61 Mo. 565; Drinkall v. Mov-
ius State Bank, 11 N. D. 10, 95 Am.
St R. 693, 57 L. R, A. 341.
25 Dawson v. Wombles, 111 Mo.
App. 532.
26 In Central Trust Co. v. Folsom,
167 N. Y. 285, it is Said: "The rea-
son why a payment to an agent who*
has made the loan and who contiu-
670
CHAP, hi]
CONSTRUCTION OF AUTHORITIES
[§ 936
Thus it is held that where a loan upon a note, or bond and mort-
gage has been negotiated, or such a security has been purchased, for
the principal through an agent, and the security is left in the agent's
possession and control, his authority to receive payments of principal
■or interest thereon as they accrue may, in the absence of directions to
pay it elsewhere, be implied." The reason for this rule, it has been
said, "is founded upon human experience, that the payer knows that
the agent has been trusted by the payee about the same business, and
he is thus given a credit with the payer." " This reason is certainly
not a very cogent one.
ves to hold the security is good pay-
ment to the principal, and why, un-
der such circumstancee, the agent
has apparent authority to collect
the deht is not very clearly stated
in either the text books or the
earlier decided cases. It was first
-established in England, and doubt-
less there grew out of the general
•course of business as to loans made
through attorneys or scriveners.
The fact that the attorney or agent
has made the loan does not give
"him authority to collect the debt,
nor, it seems, does the mere posses-
sion of the security by the attorney
give such authority (Doubleday v.
Kress, 50 N. Y. 410, 10 Am. Rep.
:602). Both conditions must concur,
that the agent acted for the prin-
<:ipal at the inception of the busi-
ness and that he holds the securi-
ties."
27 Central Trust Co. v. Folsom,
167 N. Y. 285; Crane v. Gruenewald,
120 N. Y. 274, 17 Am. St. R. 643;
Smith V. Kldd, 68 N. Y. 130, 23 Am.
Rep. 157; O'Loughlln v. Billy, 95
App. Div. 99; Williams v. Walker,
2 Sandf. (N. Y.) Ch. 325; Hatfield
V. Reynolds, 34 Barb. (N. Y.) 612;
Van Keuren v. Corkins, 4 Hun (N.
Y.), 129, afl'd 66 N. Y. 77; Union
Trust Co. V. McKeon, 76 Conn. 50S;
Haines v. Pohlmann, 25 N. J. Eq.
179; Smith v. Landecki, 101 111.
App. 248; Stiger v. Bent, 111 111.
:828; Rranz v. TJedelhofen, 193 111.
477; Jolly v. Huebler, 132 Mo. App.
«76.
See also, Sessions y. Kent, 75
Iowa, 601.
"Both conditions must concur,
that the agent acted for the princi-
pal at the inception of the business,
and that he holds the securities."
Central Trust Co. v. Foleom, supra.
The rule applies to an agent who
buys an existing security as well as
to one who makes an original loaiL
Central Trust Co. v. Folsom, supra;
Williams V. Walker, supra.
Limitations, — But this rule can-
not apply in a case in which,
though the alleged agent negotiated
the transaction and retains posses-
sion of the securities, the securities
belong to persons who can not be
bound by ostensible authority-like
minors, insane persons, etc., and his
only authority to receive therefore
depends upon some actual fact, such
as the possession of an ofilcial au-
thority which does not really ex-
ist. Thus, where an agent was in-
trusted with money to be deposited
for . the benefit of minors, and he
took certificates payable to their or-
der or to himself as guardian,—
which position he did not occupy, —
and he finally drew the money, pre-
tending to act as guardian, and the
bank requiring no proof of his au-
thority,— it was held that the pay-
ment did not release the bank. Mc-
Mahon V. German American Bank,
111 Minn. 313, 29 L. R. A. (N. S.) 67.
2&In Doubleday v. Kress, 50 N.
Y. 410, 10 Am. R. 502. See, also,
Central Trust Co. v. Folsom, 167 N.
Y. 285.
671
§ 937]
THE LAW OF AGENCY
[book II
§ 937-
Posseseion indispensable. — ^The presumption in these
cases is founded upon the negotiating agent's possession of the securi-
ties ; it does not arise if the securities are not left in the agent's pos*
session, and, if once created, it ceases when the securities are with-
drawn by the principal.** It is incumbent, therefore, upon the debtor
to assure himself on each occasion when a payment is made that they
still continue in the agent's possession, for if they have been withdrawn
the. payment will not bind the principal, unless actual authority can be
shown or his conduct has been such as to estop him to deny the agency ."•'
It is not, it is held, essential that he shall actually see and examine
the securities on each occasion; "if he have trustworthy infomiatioo
of the fact which he believes and relies upon and it shall prove to be
true, there seems to be no reason why it should not avail him as well
as a personal examination of the securities." "
tt Guilford T. Stacer, 63 Ga. 618;
Megary v. Puntls, 5 Sandf. Sup. Ct.
(N. Y.) 376; Brown v. Blydenburgh,
7 N. T. 141; Cooley v. Willard, 34
ni. 68, 85 Am. Dec. 296; Strachau
V. Muxlow, 24 Wis. 21; Garrels v.
Morton, 26 111. App. 433.
Notice of the withdrawal is not
necessary.
80 Smith V. Kldd, 68 N. Y. 130. 23
Am. Rep. 157; Brown v. Blyden-
burgh, 7 N. Y. 141, 67 Am. Dec. 506;
Kellogg V. Smith, 26 N. Y. 18;
Purdy V. Huntington, 42 N. Y. 334,
1 Am. Rep. 532; Williams v. Walker,
supra; Hatfield v. Reynolds, supra;
Van Keuren v. Corkins, supra; Meg-
ary V. Puntls, supra; Haines v.
Pohlmann, su^pra: Cooley v. Wil-
lard, supra: Brewster v. Carnes, 103
N. Y. 656; Security Co. v. Graybeal,
85 Iowa, 543, 39 Am. St. R. 311;
Pofrtune y. Stockton, 182 111. 454;
Stiger V. Bent, 111 111. 328; West-
ern Security Co. v. Douglass, 14
Wash. 216; Bloomer v. Dau, 122
Mich. 522; Eaton v. Knowles, 61
Mich. 625; Lane v. Duhac, 73 Wis.
646; Prank v. Tuozzo, 26 N. Y. App.
Dlv. 447; Corbet v. Waller, 27 Wash.
242; Bartel v. Brown, 104 Wis. 493;
Walton Guano Co. v. McCall, 111 6a.
114; Evans Co. v. Holder, 16 Tex.
Civ. App. 300.
In Crane v. Gruenewald, supra, it
was said by Parker, J.: "This rule
comprises two elements: First, pos-
session of the securities by the at-
torney with the consent of the mort-
gagee; and second knowledge of
such possession on the part of the
mortgagor. The mere possession of
the securities by the attorney is
not sufficient. The mortgagor must
have knowledge of the fact It
would not avail him to prove that
subsequent to a payment he dis-
covered that the securities were in
the actual custody of the attorney
when it was made. For he could
not have been misled or deceived by
a fact the existence of which waa
unknown to him. It is the infor-
mation which he acquires of the
possession which apprises him that
the attorney has apparent authority
to act for the principal. It is the
appearance of authority to collect,
furnished by the custody of the se-
curities which Justifies him In mak-
ing payment, and It is because the
mortgagor acts In reliance upon
such appearance, an appearance
made possible only by the act of
the mortgagee in leaving the secur-
ities In the hands of an attorney
that estops the owner from denying
the existence of authority in the at-
torney which such possession indi-
cates."
SI Crane ▼. Gruenewald, supra.
672
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 938
It is not, of course, essential in tliese casies that the securities shall
lunre been left with the agent for the express purpose of receiving pay-r
ment, — ^that would create an actual authority; — ^their possession by the
agent by the principal's act may create an appearance of authority to
receive payment upon which the innocent payer may rely, even though
they were in the agent's possession for some other purpose.'*
A payer who was not aware that the agent originally negotiated the
transaction is held not to be within the protection of the rule.^^
§ 938. Authority by conduct independent of pOMessibn.— But "kl-
though the authority to receive payment in these . cases depends upon
the subsequent possession of the securities, the principal may, by the
course of dealing or other conduct, justify an inference of authority
which will be independent of possession. Thus, where the principal
has confided to a loan agent money to be invested and has relied upon
the agent to select the security and determine upon the loan, has per-
mitted him to receive payment of principal and interest when due, has
allowed him to reinvest the proceeds from time to time, and has treated
him as having general authority in the premises, payments of princi-
pal or interest to such agent have been held to justify a finding of au-
thority in fact to bind the principal, even although the agent may not
at the time have had possession of the securities."
**Se6 Lawson v. Carson, 60 N. J. ground than a i>aynient to one in
Bq. S70. Here the conveyancer who poflsesBion who had not negotiated
negotiated the loan, but who did not the aecnrities, and that, even upon
keep poMiegsion of the securitiee, this ground, it could not be said
had been authorized to receive the that the principal had put the agent
Interest and had done so freanently. into possession.
Later the principal handed him a '^ In Lawson v. Nicholson, 62 N*.
covered and sealed package contain- J. BQ. 821, ttipra, where payment
Ing papers for safe keeping merely, was made by a vendee of the orig.
and without informing him of the inal morl^agor-Hiuch vendee not
contents. This bundle contained knowing or relying upon the fact
the securities in question. The that he was dealing with the agent
bandio was opened by the attorney employed in the first instance — ^the
without authority. Later a snbse- rule did not apply,
quent purchaser from the mortga- s4Thns in General Convention v.
gor came in and paid the principal Torkelson, 78 Minn. 401, it appeared
sum to the attorney who surren* that a firm of loan agents, of the
dered up the securities so obtained, name of Kolley, residing in Mlnne-
The Vice Chancellor held that the apolls, and having various local
principal was bound. But this was agents throughout the state, had in
reversed by the Court of Krron in sixteen years made abont eighteen
{nuh. nom. Lawson v. Nicholson, loans for one Fairbanks, who re-
52 N. J. Eq. 821). The latter court sided in Vermont. The Kelleys re-
held that, as to the present payer, oelved the applications and passed
the case oonld stand upon no higher upon them, determined upon the
43 673
§ 9391
THE LAW OF AGENCY
[book II
§ 939-
Estoppel to deny authority.— So, even though the
facts may not be sufficient to justify an inference of actual authority,
as in the cases considered in the preceding section, there may never-
theless be such a course of conduct as to reasonably lead the debtor
sufflciency of the security, and the
QueBtiou of InBurance, and in gen-
eral decided upon all the questions
connected with the loan. The se-
curities when completed were sent
to Fairbanks, and the money was
payable in Vermont but all princi-
pal and interest was in fact col-
lected in Minneapolis, through the
Kelleys. In nearly every instance,
except the one in question, when
principal was paid, the papers were
sent on from Vermont, but, as the
court found, rather to be delivered
upon payment than as evidence of
authority to receive payment. Tor-
kelson had borrowed money of Fair-
banks through the Kelleys, but
there was nothing to indicate that
be knew of or relied upon the fore-
going facts. When the loan became
due, he obtained a new loan,
through the Kelleys, from another
one of their clients, and out of the
proceeds paid the Kelleys the
amount due on the Fairbanks mort>
gage, but without receiving a sur-
render of the note and mortgage.
KeUeys did not send the money to
B^iirbanka, but themselves paid the
interest to Fairbanks for several
years giving him various invented
ezcuaes for not obtaining the prin-
cipal from Torkelson. Later the
Kelleys failed and the facts came
to light. This was an action to
foreclose the mortgage given to
Fairbanks, and assigned to plain-
tiff. Defense was payment The
court held that the payment was
good, on the ground that the evi-
dence tended to show actual author-
ity on the part of Kelleys, partly
express and partly implied, to re-
ceive the money.
At the same term, was decided
Hare t. Bailey, 78 Minn* 409, where-
in the same Kelleys had acted for
defendant who also resided in Ver-
mont The f^cts were much the
same as in the preceding case, and
the court held that the facts here
also Justified an inference of actual
authority to receive payment, with-
out the possession of the securities.
See also, involving the same
agents and reaching the same con-
clusion. Springfield Savings Bank
V. KJaer, 82 Minn. 180; Randall v.
Bichhom, 80 Minn. 344; Dexter t.
Berge, 76 Minn. 218.
The court takes pains in the
case in 82 Minn. 180, suprOf to point
out that in none of these cases has
the court held that the evidence was
in law or in fact sufficient to es-
tablish the agency, but only that
from the facts stated a trier of the
facts might properly find that the
authority in fact existed.
Substantially similar are Quinn
V. Dresbach, 76 Cal. 169, 7 Am. St
Rep. 188; Frost v. Fisher, 18 Colo.
App. 822; Morgan v. Neal, 7 Idaho,
629, 97 Am. St R. 264; Townsend v.
Studer, 109 Iowa, 103; Harrison v.
Legore, 109 Iowa, 618; Shane v. Pal-
mer, 48 Kan. 481; Meserve v. Hans-
ford, 59 Kan. 777; Fowle v. Out-
calt, 64 Kan. 352; Doyle v. Corey,
170 Mass. 837; Wilson v. La Tour,
108 Mich. 547; Zlegan v. Strieker,
110 Mich. 882; Bissell ▼. Dowllng,
117 Mich. 646; Johnston v. Invest-
ment Co., 46 Neb. 480; Thomson v.
Shelton, 49 Neb. 644; Phoenix Ins.
Co. v. Walter, 51 Neb. 182; Pine v.
Mangus, 76 Neb. 88; Harrison Nat
Bank v. Williams, 2 Neb. UnofC. 400,
89 N. W. 245; Reid v. Kellog. 8 S.
D. 596; Bdinburgh-American Mtg.
Co. ▼. Noonan, 11 8. D. 141; Camp-
bell T. Oowans, 86 Utah, 268, 28 L.
R. A. (N. S.) 414, 9 Ann. Cas. 660;
Bants V. Adams, 181 Wis. 152, 120
Am. St R. 1030; Security Co. v.
674
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 940
to rely upon the agent's authority and which will protect him if he
acts upon it'* In this case, however, unlike the preceding* one, knowl-
edge by the payer of the circumstances, and reasonable reliance upon
them to his prejudice, are essential parts of his case.**
§ 940. Lrimitations* — ^The inference of an actual or appar-
ent authority in these cases is quite easy to over draw, and the very
hardship of many of the cases seems to furnish a strong temptation to
do so. Nevertheless, it is an inference which should be drawn with
caution. It is not ordinarily to be presumed, for example, that, where
negotiable sectu*ities for the debt are outstanding, the creditor expects
to demand, or the debtor to make, payments without the surrender or
indorsement of the securities. So where the payment is secured by
mortgage, it is not to be presumed that the debt is to be paid without
a surrender and discharge of the mortgage.
The fact that the principal, though in a number of instances, may
have expressly confided the securities to the agent for the purpose of
receiving a payment upon them ought not to be construed as evidence
of a general authority to receive payment at a time when they have
not been so confided to him,'^ A fortiori would this be true where it
Richardson (U. S. O. C), 8S Fed.
16.
All the more so is this true
-where, in addition to the facts in-
dicated, the principal is not dis-
closed and the securities are taken
in the name of the agent. Cheshire
Provld. Inst v. Fuesner, 6S Neh. 682.
••See the question discussed in
Harrison v. Legore, 109 loVa, 61S,
in which case it was held that
where the principal, as the payer
knew, had allowed the agent to deal
in a very general way with refer-
ence to his loans; had permitted
him to make collections when notes
and coupons were sent to him for
that purpose, but more frequently
had permitted him to collect drat
and had sent him the papers after-
wards; a payment of principal was
binding although the agent did not
have the papers in his possession
for that purpose.
See also, Phillips v. McQrath, 62
Wis. 124; Midland Sav. ft L. Co. v.
SnttoB, 30 Okl. 448.
MSee Cannon t« Qibson, 162 Mo.
App. 386; Thomas v. Swanke, 76
Minn. 326.
«»Budd V. Broen, 76 Minn. 316,
distingniBhing Hare v. Bailey and
General Convention v. Torkelson,
suipra. To the same eftect: Thomas
V. Swanke, 76 Minn. 326; Schenk
V. Dexter, 77 Minn. 15; Trull v.
Hammond, 71 Minn. 172.
In Budd V. Broen, supra, the
court said: "The fact that she [the
principal] did not leave the securi-
ties with her loan agents, but re-
tained them In her exclusive posses-
sion, is very potent evidence that
she did not Intend to confer upon
tliem such general authority. By
so retaining her securities, and
sending them for collection only as
they became due, she could keep a
wholesome check upon her agents,
and avoid the possibility of loss
through them, except as to the par-
ticular securities sent for collection.
If, In such cases, the money was not
remitted or the papers returned
within a reasonable time, she could
investigate, and at once learn
675
§ 94o]
THE LAW OF AGENCY
[book II
appeared that, in nearly all cases, the principal refused to send the se-
curities to the agent until the money had first been paid to him." So,
though one, who has purchased mortgages from a loan company, at
whose office they are made payable, may know "that the loan company
was systematically trying to get the borrowers to discharge their duty
to pay taxes and insurance and get the payments to the Boston office,"
he does not thereby make the loan company his agent to receive pay-
ment upon the securities which he retains in his own possession or
sends to another agent for collection.*" And so where a person, who
has bought mortgages in this way, afterwards employs the loan com-
pany to collect the interest, in each case sending him the security due
with specific instruction, he does not thereby make the loan company
his agent for the collection of subsequent installments of interest and
principal where the papers have not been sent and no authority for
collection has been given.*®
whether her agents were in default
But If she conferred general author-
ity upon them to collect the princi-
pal of any or all of her loans with-
out first receiving the securities,
she would hazard the whole of
them, for she would then have no
check upon her agents, or means of
knowing when or what payments
were made.
"The defendant, having paid his
note and mortgage to the Kelleys
without requiring a surrender of
the securities, assumed the risk of
establishing the authority, express
or Implied, of the agents to receive
such payment for the plaintiff. We
are unable to find in the record any
evidence that Justifies the finding
that the agents were so authorized.
Their authority was to receive pay-
ment for the plaintiff whenever she
forwarded her securities for collec-
tion, and there is no evidence war^
ranting the conclusion that she ever
knew that the Kelleys ever assumed
to collect the principal of her mort-
gcige without having first actually
received them from her; hence
there is no evidence of ratification
of their acts, or of actual implied
authority to receive payment of the
note and mortgage in question."
M Security Co. v. Oraybeal, 86
Iowa, 643, 39 Am. St R. 311; West-
ern Security Ck). v. Douglass, 14
Wash. 216.
30 Bradbury v. Kinney, 63 Neb.
764,
*ojoy V. Vance, 104 Mich. 97. To
same effect: Trowbridge v. Ross, 105
Mich. 698; Bromley v. Lathrop, 105
Mich. 492; Church Assoc, v. Walton,
114 Mich. 677; Bacon v. Pomeroy,
118 Mich. 146; Terry v. Durand Land
Co., 112 Mich. 666; Bartel v. Brown,
104 Wis. 493; Kohl v. Beach, 107 Wis.
409, 50 U R. A. 600; Murphy v. Barn-
ard, 162 Mass. 72, 44 Am. St. R. 340;
Dexter v. Morrow, 76 Minn. 413; Hoi-
Unshed v. Stuart, 8 N. D. 36. 42 U R
A. 669; Ugenfrits v. Mutual B. L.
Ins. Co., 81 Fed. 27; Mutual B. L.
Ins. Co. V. Miles, 81 Fed. 32; United
States Bank v. Burson, 90 Iowa. 191;
Ortmeier v. Ivory, 208 IlL 677.
See also Evans Co. v. Holder, 16
Tex. Oiv. App. 890.
In Joy V. Vance, aupra, the court
said: "Vance [the debtor] admits he
paid the interest to the company
without taking the trouble to ascer-
tain whether it had the mortgage or
who owned it When he paid the
mortgage he was satisfied with the
statement that the mortgage was
676
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 941-^3
§ 941. Payment to agent o£ the owner of record. — Payment fo one
who had been the agent to receive payment upon a recorded "note and
mortgage but made after the record owner has transferred the note
and mortgage to another by an unrecorded instrument, — the agent
not being in fact the agent of the present holder, and neither he nor
the former owner having possession of the securities, is not such a
payment as will bind the present holder.*^
§ 942. Payment to agent as ostensible principal. — Wh^ere the
agent, with the principal's knowle<^e and consent, is permitted to ap-
pear as the ostensible owner of the securities, as where a loan agent
is permitted to take all securities in his own name and generally to
deal with them as though he were the owner, though he afterwards
transfer them to his principal without notice to the debtor, the prin-
cipal who subsequently intervenes must be held bound by all payments
made to the agent while the principal was still undisclosed.**
§ 943. Authority to receive proceeds of securities entrusted to
agent for delivery.— Where the principal confides to an agent for
delivery securities upon whose delivery money is to be loaned or paid
to or for the principal, the agents, in the absence of anything to indi-
cate a contrary intention, would have implied power to receive the
money and payment to him would be effective even though through his
subsequent default the money never came to the hands of the princi-
pal.'^ The case of an agent authorized to negotiate a loan to his
principal and entrusted by the latter with the possession of the bond
and mortgage which were to secure it, would be a typical illustration.**
mlBlaid, although he received a re- the records); Wilson ▼. Campbell,
celpt which indicated that it did not 110 Mich. 680, 36 L. R. A. 644.
belong to the company to which he *« Cheshire Prov. Institution v.
was paying it It was perhaps the Feusner, 63 Neb. 682. See also Mc-
natural thing fbr him to pay it, in re- Leod v. Despain, 49 Or. 636, 124 Am.
liance upon the statement of these St. R. 1066, 19 Xu It A. (N« 8.) 276.
men with whom he was acquainted 48 National Mortgage Co. y. Lash, 6
and in whom he had confidence; but T'an. App. 633; Gosch v. Fire Ins.
his rights must depend upon their Ass'n, 44 111. App. 26S.
authority to receive the money, not But the delivery by a wife to her
upon his confidence in them." husband of a check payable to the
41 Bantz V. Adams, 131 Wis. 162, order of a third person does not
120 Am. St. Rep. 1030 (distinguish- necessarily constitute the husband
ing Marling y. Nommensen, 127 Wis. the agent of the wife to receive the
363, 116 Am. St. R. 1017, 6 L. R. A« amount of the check. Hunt v. Poole,
(N. S.) 412, 7 Ann. Cas. 364, on the 139 Mass. 224.
ground that in the latter case the «« National Mortgage Co. v. Lash,
question arose in dealing with the svpra,
land with reference to the state of See Land, etc., Co. v. Preston, 119
Ala. 290.
677
§§' 944. 94S] THE LAW OF AGENCY [bOOK II
So where an insurance company confides to an agent a policy for de-
livery, the agent has apparently implied authority to receive the pre-
mitmi/"
§ 944. When authority implied from having sold the goods or
land.— The presumption as to the authority to receive payment aris-
ing from the fact that the agent sold the goods for which the demand
is due, has been considered in treating of the implied powers of an
agent authorized to sell goods.^
The same thing is true of agents for the sale of land.^^ It is not
necessary to repeat these discussions here.
§ 945* Authority to receive interest does not authorize receipt of
principal.—- The mere fact that an agent is, either expressly or by
implication, authorized to receive the interest upon a principal sum,
wiU not justify the inference that the agent is authorized to receive
the principal sum itself.** Thus where the payee of a prwnissory
note, payable to her order, delivered it, unindorsed, to an agent with
authority to receive the interest thereon, and to take a new note in
renewal with an indorser, and the maker paid the principal and inter-
est to the agent who embezzled the principal, it was held that the pay-
ment of the principal was unauthorized and did not discharge the lia-
bility of the maker to the payee.**
And so, in many cases, it has been held that one to whom interest
coupons have been sent for collection, or who has been authorized to
receive, or who has been in the habit of receiving the periodical pay-
ments of interest, has therefrom no implied authority to receive the
principal.** And even though the agent negotiated the loan, author-
MGosch V. Fire Ins. Ass'iii supra. bo The f&ct that the holder of a
M See ante, S 866, et seq. mortgage from time to time permit-
*T See ante, f 814. ted a mortgage company to collect
« Doubleday v. Kress, BO N. Y. 410, the Interest coupons, on the same be-
10 Am. Rep. 602; Smith v. Kidd, 68 ing forwarded to it for collection, is
N. Y. 180, 23 Am. Rep. 167; Brew- not sufficient to authorize the com-
Bter V. Garnee, 103 N. Y. 666; HolT- pany to collect the principal upon
master v. Black, 78 Ohio St 1, 126 the mortgages which had not been
Am. St H. 679, 21 I* R. A. (N. S.) sent for collection. Wilson v. Camp-
52, 14 Ann. Cas. 877; Bumham T. bell, 110 Mich. 680, 36 L. R. A. 644.
Vinson, 207 Mass. 878; Higley v. See also, Terry v. Durand Land
Dennis, 40 Tex. Civ. App. 133; Cun- CJo., 112 Mich. 666; Porter v. Ourada,
ningham v. McDonald, 98 Tex. 316; 61 Neb. 610; Trull v. Hammond, 71
Lester v. Snyder, 12 Colo. App. 351; Minn. 172.
Hefferman v. Boteler, 87 Mo. App. Where there was evidence that the
316; Barstow v. Stone, 10 Colo. App. agents sometimes collected interest
396; Koen v. Miller, — Ark. — , on loans before receiving the ecu-
150 6. W. 411. pons, and frequently collected the
4» Doubleday v. Kress, 9upra, principal before receiving the satis-
678
CHAP; Ul]
CONSTRUCTION OF AUTHORITIES
[§ 946
ity to receive payments of interest upon it will not justify the receipt
of the principal where the agent is not entrusted with the possession
of the securities." If he has possession also, a different rule, as has
been seen, applies."
§ 946. Can receive nothing but money.— Where an agent is au-
thorized merely to collect a demand or to receive payment of a debt,
the law, in the absence of anything to indicate a wider authority, in-
terprets this to mean a collection or payment in fact, and the agent
cannot bind his principal by any arrangement short of an actual col-
lection and receipt of the money." He cannot, therefore, take in pay-
faetion of the mortgage, and that
they occasionally seat Interest he-
fore they had coUeoted it or reeelved
the coupons for It, bat there iras no
evidence that the prtncipal knew
that they had ever assumed to col-
lect the priadiial hetore reoelviag
the mortgage or a satisfaction of it,
it ivas held that there was not
enough to show actual authority to
receive principal without having the
securities; and since there was also
no evidence that the debtor knew or
relied upon the facts above set forth
at the time he paid the principal,
there was no ground upon which
the principal could be estopped to
deny the agents' authority to receive
the principal on securities not in
possession of the agents. Thomas v.
Swanke, 76 KInn. 326.
«i Keen v. MiUer, < — Ark. — , 1£0
S. W. 411; Richai^ v. Waller, 49
Neb. 6a9; OUbert v. Qarber» %i Neb.
464; City Missionary v. ReamSt 51
Neb. 226; CampbeU v. O'Connor, 66
Neb. 638; Dewey v. Bradford, 2 Neb.
Unot. 888^ 89 N. W. 249; Ortmeier v.
Ivory» 208 lU. 677; Oarrels v. Mor-
ton, 26 m. App. 483.
A loan was negotiated by an agent
and was made payable at his oAee.
Interest thereon was paid at that of-
fice and was never again demanded.
Plaintiff called there to get the in-
terest and, while she intended that
he should reloan the money when it
was ooUeoted, she never d^nanded
the principal of him. He collected
both iHrinclpal and interest without
production of the note and converted
the principal. Held, no discharge.
Klindt v. Higgins, 95 Iowa, 529, fol-
lowing Bnglert v. White, 92 Iowa, 97
[another case involving the same
agent], and distinguishing Sax v.
Drake, 69 Iowa, 760.
Bs See ante, §S 935-937.
Bs Bridges v. Qarrett, L. R. 5 C. P.
454; Ward v. Evans, 2 Ld. Kaym.
928; Hine v. Steamship Ins. Syndi-
cate, 72 L. T. 79; Pearson v. Scott, 9
Ch. Div. 198; Pape v. Westacott,
[1894] 1 Q. B. 272; Sweeting v.
Pearce, 7 C. B. N. S. 449; Ward v.
Smith, 7 Wall. (U. S.) 447, 19 U Ed.
207; Frets v. Stover. 22 WalL (U.
a) 198, 22 L. Ed. 769; Powell's
Adm'r v. Henry, 27 Ala. 612; Taylor
V. Robinson, 14 CaL 396; Rodgers v.
Peckham, 120 CaL 238; Hendry v.
Benliast 37 Fla. 609, 34 L. R. A. 283;
Holmes v. iAOgston, 110 Oa. 861:
Padfield v. Green, 85 111. 629; Math
ewB V. Hamilton, 23 111. 470; Everts
V. Lawther, 165 111. 487; Cooney v. U.
S. Wringer Ce., 101 IlL App. 468;
MeCormick Harvesting Co. v. Breen,
61 111. App. 628; Coming v. Strong,
1 Ind. 329; Kirk v. Hlatt, 2 Ind. 322;
MoCormick v. Wood» etc, Co., 72 Ind.
518; Robinson v. Anderson, 106 Ind.
152; CConner v. Arnold, 68 Ind. 203;
Aultman v. Lee, 43 Iowa, 404; Gray-
don V. Patterson, 13 Iowa, 256^ 81
Am. Dec. 432; McCarver v. Nealey, 1
G. Greene (Iowa), 360; British 4b
Amer. Mtg. Co. v. Tibbals, 68 Iowa,
468; Ruthven v. Clark, 109 Iowa. 26;
Martin v. United States, 2 T. B. Mon-
679
§ 946]
THE LAW OF AGENCY
[book U
ment the note of the debtor payable either to himself •* or to his prin-
roe (Ky.)* 89, 15 Am. Dec. 129;
Farmers* ft Drovers* Bank v. Ben-
nett, 20 Ky. L. Rep. 852, 47 S. W.
623; Baldwin v. Tucker, 112 Ky. 282,
57 L. R. A. 451; Woodruff v. Amer.
Road Mach. Co., 23 Ky. L. Rep. 1551,
65 S. W. 600; Waterhouse v. oitlzena'
Bank, 25 La. Ann. 77; Rodick v. CO'
burn, 68 Me. 170; Kent v. Ricards, 8
Md. Ch. 392; Langdon v. Potter, 13
Mass. 319; Pitkin v. Harris, 69 Mich.
133; Woodbury v. Larned, 5 Minn.
339; Nichols ft Shepard Co. Y. Hack-
ney, 78 Minn. 461; Greenwood v.
Burns, 50 Mo. 52; Western White
Bronze Co. v. Portrey, 50 Neb. 801;
Moore v. Pollock, 50 Neb. 900; Holt
V. Schneider, 57 Neb. 523; Gilbert y.
Garber, 62 Neb. 464; Dixon v. Guay,
70 N. H. 161; Black v. Dundon, 83
App. DlY. (N.Y.) 539; Slerv. Bache,
7 N. Y. Misc. 165; Williams v. John-
ston, 92 N. C. 532, 53 Am. Rep. 428;
First Nat Bank v. Prior, 10 N. D.
146; Oliver v. Sterling, 20 Ohio St
391; McCuUoch v. McKee, 16 Pa.
289; Paul v. Grimm, 183 Pa. 830;
Googe Y. Gaskill, 18 Pa. Sup. Ct. 39;
Columbia Phosphate Co. v. Farm-
ers' Alliance Store, 47 S. C. 358;
Robson v. Watts, 11 Tex. 764; Rodg-
ers Y. Bass, 46 Tex. 505; Chattanooga
Pipe Works v. Gorman, 12 Tex. Civ.
App. 75; Schleicher v. Armstrong
(Tex. Civ. App.), 32 8. W. 827; West-
em Mfg. Co. V. Maverick, 4 Tex. Civ.
App. 635; Willis v. Gorrell, 102 Va.
746; Corbet v. Waller, 27 Wash. 242;
Wiley Y. Mahood, 10 W. Va. 206; Har-
per Y. Harvey, 4 W. Va. 539; Whit-
ney v. State Bank, 7 Wis. 620.
Becoming V. Strong, 1 Ind. 329;
McCulloch v. McKee, 16 Pa. 289 ; Rob-
inson Y. Anderson, 106 Ind. 152;
Baldwin v. Tucker, 112 Ky. 282, 23
Ky. L. Rep. 1688, 67 L. R. A. 451;
Hoffman v. Ins. Co., 92 U. 8. 161, 28
L. Bd. 539; Holt v. Schneider, 67
Neb. 623; Cram v. Sickel, 61 Neb.
828, 66 Am. St R. 478; Willis v. Gor-
rell, 102 Va. 746; Bverts v. Lawther,
166 IlL 487; Scott v. Gllkey, 168 111.
168; Davis v. Severance, 49 Minn.
528; McGrath v. Vanaman, 53 N. J.
Eq. 459.
BspeclaUy, where the note is for
more than the amount and the prin-
cipal is expected to pay the differ-
ence. Moore v. Pollock, 50 Neb. 900.
The fact that the note is secured
by a mortgage is immaterial. Moore
V. Pollock, gupra.
There are. Indeed, some cases to
the contrary; the most Important
one is Oalbralth y. Weber, 68 Wash.
182, 28 L. R. A. (N. &) 34L There
the owner of a horse, which the
owner valued at $3,000, pat the horse
Into the hands of an agent for sale,
with no specific Instmctions as to
the amount of the price, although he
evidently expected to receive there-
for approximately $3,000; and he au-
thorized the agent to sell the horse
upon time and to take good notes.
The agent, not being able to sell for
$8,000, Anally sold to the defendants
for $1,000, and received In payment
two time notes for $600 each, paya-
ble to himself. The agent Immedi-
ately dteeounted these notes at a
bank and absconded with the
money; before doing so, however, he
forged three notes for $900 each. In
the names of the defendants, payable
to the principal, and sent them to
the principal who retained them un-
til the forgery was discovered. In
an aetlon by the principal to recover
the horse, it was held that the buy-
ers had obtained a good title. After
disposing of the question of the
amount of the price, the court h^d
that an agent, authorised to sell for
cash or for notes, might bind his
principal by taking notes payable to
the agents own order. The argu-
ment waSk not that the notes were a
means of obtaining the cash like a
check, but that there was no more
danger to the principal In permitting
the agent to take notes to his own
order than there would be In allow-
ing him to receive money; It would
68o
CHAP. Ill]
CONSTRUCTION OP AUTHORITIES
[§ 946
cipal ; ■* or the note or bond of himself,*^® or of a third person ; •'' or
a draft or order on a stranger,** or horses, wheat, merchandise,
services or other property of any kind;'* nor can be set oflp a
be no more easy to mleappropriate
tlie notes than the money. The
court relied upon the dissenting
opinion of three justices against
four in Baldwin v. Tucker, 112 Ky.
282, 57 L. It A. 451, wherein the ar-
gument of the dissenting justices
was that, in many cases, agents for
the sale of goods were required by
their principals to take notes in the
agents own names, and to indorse
them to the principals, and that, in
Tiew of this practice, a person buy-
ing of the agent and required by the
agent to give a note, in the agents
name, might well suppose that this
was in accordance with the prlnci-
pal's instructions.
The Washington court also relied
upon a very briefly reported case,
Schleicher v. Armstrong (Tex. Civ.
App.), 82 S. W. 827, a case not ofll-
cially reported. There, in upholding
a sale in which notes had been taken
in the agent's name, the court simply
said that the agents, '^ing In law-
ful possession of and having author-
ity to sell the engine, the fact that
they may have violated their instruc-
tions and taken the purchase money
notes payable to themselves" did not
invalidate the sale.
w Miller V. Edmonston, 8 Blackf.
(Ind.) 291; Smith v. Powell, 98 Va.
431; Nickelson v. Dial, 77 Kan. 8;
West Pub. Co. V. Corbett, 165 Mo.
App. 7.
He may not receive a time bill
drawn by the agent upon the debtor
and accepted by the latter. Hine v.
Steamship Ins. Syndicate, 72 L. T. 79.
«eMcCarver v. Nealey, 1 0. Greene
(Iowa), 360; Farmers' Bank v. Ben-
nett (Ky.), 47 S. W. 623, 20 Ky. L.
Rep. 852; Wilcox, etc.. Organ Oo. v.
Lasley, 40 Kan. 521.
But in the last case it was held
that the principal could not complain
if the agent himself supplied the
money which was received by the
principal.
^f Langdon v. Potter, 13 Mass. 319 ;
Paul V. Qrimm, 183 Pa. 330; Scully
V. Dodge, 40 Kan. 395; Wilkinson v.
Hollo way, 7 Leigh (Va.), 277; Smock
V. Dade, 5 Rand. (Va.) 639; Smith v.
Lamberts, 7 Gratt. (Va.) 138; Wiley
V. Mahood, 10 W. Va. 206.
Nor can he take an assignment of
a mortgage in payment. Columbia
Phosphate Co. v. Farmers* Store, 47
S. Car. 358.
«»McCarver v. Nealey, 1 G. Greene
(Iowa), 360; Drain v. Doggett, 41
Iowa, 682; Groldsborough v. Turner,
67 N. C. 403; Hine v. Steamship Ins.
Syndicate, 72 L. T. 79; Rogers v.
Tiedeman, 9 Ga. App. 811.
Unless the agent actually receives
the money upon the draft in due
course. See later section on checks.
Gibson v. Ward, 9 (Ja. App. 363.
»» Rhine v. Blake, 59 Tex, 240;
Wright V. Dally, 26 Tex. 730; Kent v.
Rlcards, 3 Md. Ch. 392; Harper v.
Harvey, 4 W. Va. 539; Kirk v. Hiatt,
2 Ind. 322; Aultman v. Lee, 43 Ibwa,
404; Martin v. United States, 2 T. B.
Monr. (Ky.) 89, 15 Am. Dec. 129;
Reynolds v. Ferree, 86 111. 570; Wil-
liams V. Johnston, 92 N. C. 532, 53
Am. Rep. 428; Pitkin v. Harris, 69
Mich. 188; Cram v. Sickel, 51 Neb.
628, 66 Am. St. R. 478; Hayes v.
Colby, 65 N. H. 192; Block v. Dun-
don, 83 App. Dlv. (N. Y.) 639; Mc-
Cormick Harvest Co. v. Breen, 61 III.
App. 628; Wees v. Page, 47 Wash.
213.
Obviously, he may not take pay-
ment in goods delivered to the agent
for his own use. Woodruff v. Ameri-
can Road Mach. Oo. (Ky.), 23 Ky.
L. Rep. 1551, 65 S. W. 600.
Or take payment in cancellation of
a debt owing by himself. Grooms v.
NefC Harness Co., 79 Ark. 401 ; Miller
V. Springfield Wagon Co., 6 Ind. Ter.
115; Hook V. Crowe, 100 Me. 899;
and other cases cited in fi 354.
The fact that the agent is to sell
the property so received and apply
681
§ 946]
THE LAW OF AGENCY
[book II
claim dae from himself;*® or take property for his own use in pay-
ment.*^
The money which he is authorized to receive in payment is limited
to that which the law declares to be a legal tender, or which by com-
mon consent is considered and treated as money and which passes as
such at par.®*
the proceeds upon the claim Is Im- App. 75; Union, etc., Co. v. Mason*
material. Woodrujff v. Amer. Road
Mach. Go. (Ky.), 65 S. W. 600, 28 Ky.
h. Rep. 1551.
An agent authorzed to collect
money due upon a mortgage is not
authorised to receive the mortgaged
property In payment Rodgers t.
Peckham, 120 Cal. 238.
Can not take pay in services, es-
pecially for some other person of
whom also he may chance to be
agent. Gunter y. Robinson (Tez.
Civ. App.), 112 S. W. 134.
But his authority may be broad
enough to Justify his taking lands in
payment Ren wick v. Wheeler, 48
Fed. 431.
In Moore ▼. Murrel, 56 Ark. 875, an
attorney was authorized to collect
notes, with directions "to do with
them the best that he can." Held,
that such directions as matter of law
did not authorize him to receive
goods in payment, but that the ques-
tion was for the jury.
«o Whitney v. State Bank, 7 Wis.
620; Butts v. Newton, 29 Wis. 682;
Stewart v. Woodward, 50 Vt 78, 28
Am. Rep. 488; Rodick v. Coburn, 68
Me. 170; Greenwood v. Burns, 50 Ma
52; McCormick v. Keith, 8 Neb. 143;
Western Bronze Co. v. Portrey,
50 Neb. 801; Irwin v. Workman, 8
Watts (Penn.), 357; CofEman y.
Hampton, 2 Watts & Serg. (Penn.)
377, 37 Am. Dec. 511; Bridges v. Gar-
rett, L. R., 5 C. P. 454; Sykes v.
Giles, 5 M. & W. 645; Scott v. Irving,
1 B. ft Ad. 605; Catterall v. Hindle,
U R. 1 C. P. 187; Hurley v. Watson,
68 Mich. 531; Maloney Mercantile Co.
v. Dublin Quarry Co. (Tex. Civ.
App.), 107 S. W. 904; Parker v.
Leech, 76 Neb. 135; Chattanooga
Foundry v. Gorman, 12 Tex. Civ.
8 S. D. 147; Smith v. James, 58 Ark.
185; St John v. Corn well, 52 Kan.
712; Deatherage v. Henderson, 48
Kan. 684; Hodgson v. Raphael, 105
Ga. 480; Stetson v. Briggs, 144 CaL
511; Martin v. Mathews, 62 Hun, 620;
Zang V. Hubbard Bldg. Co. (Tex.
Civ. App.), 125 S. W. 85; Piano Mfg.
Ca V. Doyle, 17 N. D. 386, 17 li. R.
A. (N. S.) 606.
ei Williams v. Johnston, 92 N. C.
532, 53 Am. Rep. 428. In National
Loan CJo. v. Bleasdale, 140 Iowa, 696,
an agent to rent premises was held
to have no implied authority to set
off board to himself against rent
due.
wWard v. Smith, 7 Wall. (U. S.)
447, 19 L. Ed. 207; Fretz v. Stover,
22 Wall (U. S.) 198, 22 L. Sd. 769.
Oonfederate money, -^ Where an
agent was authorized to receive pay-
ment of a note, payable in one of the
confederate states during the civil
war although given to him for col-
lection before the outbreak of the
war and by one not a resident of any
of the confederate states, he has au-
thority to receive payment in con-
federate money, that being the cur>
rency of that section of the country
at that time. Rodgers v. Bass, 46
Tex. 505; Burford v. Memphis Bulle-
tin Co., 9 Heisk. (Tenn.) 691; Pid-
geon V. William's Adm'rs, 21 Gratt
(Va.) 251; Hale v. Wall 22 Gratt
(Va.) 424; Hendry v. Benlisa, 37 Fla.
609, 34 L. R. A. 283. But see. Alley v.
Rodgers, 19 Gratt (Va.) 366; Fretz
V. Stover, 22 WalL (U. S.) 198, 22 L.
Ed. 769, where, under similar facts,
it was held that payment in confed-
erate money did not discharge the
debt as the agent was authorised to
receive in payment only what was
682
CHAP. IIlJ
CONSTRUCTION OF AUTHORITIES
[§§ 947. 948
He would, ordinarily, have no authority to receive more than was
due and to bind bis principal by independent contracts as to the ex-
cess,**
§ 947, ■ Debt payable in goods^-^onversely, where a debt
is expressly payable in goods, an agent authorized merely to receive
the goods, would have no implied authority to accept other goods, or
different qualities or quantities, or to accept a money payment in lieu
of the goods.** Where, however, the agent has been given general
authority in the matter, or has been hdd out as having authority to
accept money his taking of cash instead of the goods niay be deemed
authorized/*
§ 948. .......... Enlarged authori^-- Authority by conduct or rati-
fication*— But while the general rule is as has been stated, the
agent's authority over the subject-matter may be greater than that of
a mere collecting or receiving agent, and he may be found to be vested
with a discretion which will authorize him to receive payment other*
wise than in cash. Thus, the general state agent of an implement
company, having full authority to make settlements with the com-
pany's debtors, has been held to have implied authority to receive the
note of a third person in payment •• So the conduct of the principal,
his directions to the agent, or the exigency of the case, may justify the
accepted as currency at the time the
agent was given the notes to collect;
that war having cut off all communi-
cation between principal and agent»
the fact that the notes were left in
the hands of the agent after confed-
erate money had become the money
of the place of payment, did not
give the agent implied authority to
collect in that currency. In Harper
Y. Harvey, 4 W. Va. 539; and Water-
house V. Citizens' Bank, 25 La. Ann.
77, where the facts were similar. It
was held that payment to an agent
in Confederate money was not a
good payment, on the ground that
the money was illegal.
See also Anderson v. Bank, Chase
535, Fed Cas. No. 864; Bank of Ken-
tacky v. Bxpress Co., 1 Flip. 242, Fed.
Cas. No. 889; Webster v. Whitworth,
49 Ala. 201; Mangum v. Ball, 43 Miss«
288, 5 Am. Rep. 488; Shuford v. Ram-
sour, 63 N. C. 622; Pilson v. Bushoag,
29 Qratt (Va.) 229.
May not accept Mexican money.
Edwards v. Davidson (Tex. Civ.
App.), 79 S. W. 48.
0* While the agent is undoubtedly
usually authorized to make change
at the time in the ordinary way, It
has been held that he may not bind
his principal by agreeing at some
future time to bring back the
change. Pearks Stores v. Watt,
[1907] Transvaal Sup. Ct 755.
•«Cushman v. Somers, 62 Vt 132,
22 Am. St Rep. 92.
«sCushman v. Somers, 62 Vt 132,
22 Am. tit Rep. 92.
•« Nichols ft Shepart Co. y. Hack-
ney, 78 Minn. 461. See also, Holmes
V. Langston, 110 Ga. 861.
In Dusenberry v. McDole, 42
Wash. 470, a person, really a|;ent
for a non-resident principal, but not
known to be such by the defendant
here, loaned money of his principal
to defendant agreeing to accept
grain in payment from time to time.
683
§ 949]
THE LAW OF AGENCY
[book II
exercise of a wider authority. Thus, an agent sent by a foreign cred-
itor to endeavor to get pay from a debtor on the eve of bankruptcy,
and given "full authority to act for us in the matter," was held to have
implied authority to take property in payment.*' So an agent sent
"to receive such amount" as the debtor was able to pay upon the debt,
was held to have implied authority to receive from the debtor an or-
der for money about to become due to him.®*
And in any case, moreover, the principal, who with knowledge re-
ceives without objection the proceeds of the unauthorized method of
collection, may be found to have ratified the same.*^
§ 949. No authority to take checks, certificates of deposit, etc. —
Being authorized to receive nothing but money, the agent has ordinarily
no implied power to accept checks as payment, that is, as satisfaction
of the demand.'* The check is not money ; it is at most but the means
of getting the money. If there are no funds, it is, of course, worth-
less for any purpose. If the check be drawn upon funds to the agent's
order and he obtains the money upon it, it is a good payment '* even
Defendant signed notes payable to
the principal without observing that
they were not payable to the agent.
For a period of ten years he made
payments in grain without objec-
tion. Principal claimed that if
agent took grain he had sold it and
reported to principal in cash, and
that principal had no knowledge of
the agreement to accept grain.
More payments in grain were
claimed than the agent had re-
ported. If the payments in grain
were not counted, action on the
notes was barred by the statute of
limitations. HeZd, in an action on
notes that principal was bound by
payments In grain.
See also Eggleston v. Advance
Thresher Co., 96 Minn. 241, where
a sales agent had been allowed to
act with large discretion. He ac-
cepted certain property in payment.
Later the whole contract was re-
scinded by mutual consent The
agent did not return the property
so received, and the company was
held liable for its value.
•7 Oliver V. Sterling, 20 Ohio SL
391.
MRuthven v. Clark, 109 Iowa, 25.
An agent directed by his principal
to take anything he can Z'^t in settle-
ment has authortly to accept a prom-
issory, note. Mitchell y. Finnell, 101
Cal. 614.
o»BiUing8ley v. Benefleld, 87 Ark.
128; Sawyer v. Vermont Loan Co.,
41 Wash. 524.
ToBroughton y. Silloway, 111
Mass. 71, 19 Am. Rep. 312; Cooney
V. U. S. Wringer Co., 101 111. App.
468; Bernheimer v. Herrman, 44
Hun (N. Y.), 110; Roberts, etc..
Shoe Co. V. McKIm (Nov.), 117 Pac.
13.
Where the agent is authorized to
receive checks, but only those of a
certain kind, {. e., "crossed cheques,"
the principal may lose his right to
insist upon this requirement by per-
mitting the agent to accept ordinary
checks. International Sponge Co.
V. Watt, [1911] App. Cas. 279.
TiHarbach v. Colvin, 78 Iowa,
G38; Griffin v. Ersklne, 131 Iowa,
444, 9 Ann. C&s. 1193; Bridges v.
Garrett, L. R. 6 C. P. 451; Stevenson
Co. V. Pox, 19 N. Y. Misc. 177; Cohen
v. O'Connor, 6 Daly (N. Y.), 28, af-
firmed, 56 N. Y. 613; Prochownlck
V. Boyd, 48 Hun, 618, aff'd 119 N.
684
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 9SO, 95?
though the ag^it afterwards converts the money to his own useJ^
In many cases it would make no practical difference to the principal if
the check were not paid; because he would still have the liability of
the debtor upon the check if not upon the original claim. But where
goods were delivered, securities surrendered, liens discharged and the
like, upon the receipt of the worthless check, the principal might sus-
tain an immediate loss* In such a case, not only would the debtor
remain liable to the principal, but as between the principal and the
agent, the agent is liable to the principal for any loss resulting from
receiving the check."
§ 950* — ^— A deposit of money in a bank to the order of the
principal^ the deposit book of which was delivered to the agent, has
also been held not to be the equivalent of money and therefore the re-
ceipt of the book by the agent did not constitute payment, it not ap-
pearing that either the agent or the principal ever received the money .^*
Where, however, the agent was a bank of deposit, it was held, while
recognizing the general rule, that it might receive in payment one of
its own certificates of deposit.'*
And so, it has been held, that an agent authorized to negotiate a
note might accept in place of money a certificate of deposit payable
on demand, issued by a solvent bank.'*
The principal, moreover, may in any of these cases be found to have
ratified the unauthorized act, where, with knowledge, he has retained
the proceeds without objection.
§ 951. ' But while the agent may have no authority to re-
ceive a check or draft as payment, — ^that is in satisfaction of the debt, —
he may, it is held, unless forbidden, receive it as conditional payment
where he has good reason to believe that it will be paid upon presenta-
tion, and he takes it in the ordinary way as a convenient and usual
method of getting the money.'' If it be paid, the payment is effect-
Y. 641; Sage y. Burton, 84 Hun, 267.
Or though drawn to the principal's or-
der and endorsed without authority
by the agent, if the agent actually
receive the money upon it and waa
authorized to receire money, it is
held a good payment to the principal.
Case V. Kramer, 84 Mont. 142.
See also, Gibson v. Ward, 9 Ga.
App. 868, where it was held that
payment by draft on a third person
waa good, where the draft was paid
and the proceeds came Into the col-
lecting agent's hands.
72 Cohen v. O'Connor, supra; Grif-
fin V. Brskine, supra.
7» Hall V. Storrs, 7 Wis. 253; Har-
lan V. Ely, 68 Cal. 622; Pape v. West-
acott, [1894] 1 Q. B. 272.
T« Dixon V. Guay, 70 N. H. 161.
70 British, etc. Mortgage Co. v.
Tibbalfi, 63 Iowa, 468.
Tepoorman v. Woodward, 21 How.
(U. S.) 266, 16 L. Ed. 151.
77 Griffin v. Ersklne, 181 Iowa,
444, 9 Ann. Cas-. 1198; Cunningham
▼. Wabaih R. Co., — ^ Mo. App. -— ,
149 S. W. 1161.
685
§ 952]
THE LAW OF AGENCY
[book II
ual ; if it be not paid, the principal will ordinarily sustain no loss as he
still retains his original demand,
§ 952. If authorized to take check or note, has no autbority to
indorse and collect it. — But even if the agent be authorized to ac-
cept check or note in payment of the demand, and has taken one to the
order of his principal the agent has no implied authority to indorse it
and collect the money thereon, and the bank paying the check so in-
dorsed is still liable to the principal for the amount thereof.^* The
principal, moreover, is not liable upon the indorsement.^*
In like manner, an agent authorized to take a bill or note in the
name of his principal, h^s no implied authority to indorse and transfer
It so as to deprive the principal of his property,** or make him liable
upon the indorsement.**
So an agent authorized to accept a note in settlement of a debt has
no implied authority, after delivering it to his principal, to receive
payment of the note.**
T8 Jackson v. Nat Bank, 92 Tenn.
154, 36 Am. St Rep. 81, 18 L. R. A.
663; Robinson v. Bank of Wlnalow,
42 Ind. App. 350; Brown v. Peoples*
Nat Bank, Mich. — , 136 N. W.
506; Dispatch Printing Ck). v. Nar
tlonal Bank, 109 Minn. 440; McFdd-
den V. FoIIrath, 114 Minn. 85, 37 L.
R. A. (N. S.) 201; Deering v. Kelso,
74 Minn. 41, 78 Am. St R. 324; Gra-
ham y. United States Saving Inst,
46 Mo. 186; Thomson v. Bank of
British, etc, 82 N. T. 1; Robinson
V. Chemical Bank, 86 N. Y. 404;
Schmidt v. Garfield Nat Bank, 64
Hun, 298, aff'd 138 N. Y. 631; Mil-
lard V. Republic Bank, 3 McArthur
(D. 0.), 54; Jackson Paper Mfg. Oo.
V. Com. Nat Bank, 199 lU. 151, 93
Am. St R. 113, 59 L. R. A. 657; Sin-
clair V. Goodell, 93 IlL App. 592;
Ck>odell V. Sinclair, 112 IlL App. 594.
Bven if he takes the note without
authority, he has no implied power
to indorse and discount it Lonier
V. Ann Arbor Savings Bank, 162
Mich. 541, 127 N. W. 685.
TftJacoby v. Payson, 85 Hun, 367,
91 Hun, 480.
80 Hogg V. Snalth, 1 Taunt 847;
McClure V. Bvartaen* 14 Iiea
(Tenn.), 496; Holtslnger v. Nat
Bank, 6 Abb. (N. Y.) Pr. (N. S.)
292, 37 How. 203, affirmed by the
Court of Appeals, 3 Alb. L. J. 305,
40 How. Pr. 720.
81 National Fence Mach. Co. v.
Highleyman. 71 Kan. 347; Hamil-
ton Bank v. Nye, 37 Ind. App. 464,
117 Am. St R. 333; Essick v. Buck-
waiter, 1 Monag. 209 (Pa.). Dis-
tinguish from National Fire Ins. Co.
V. Eastern Bldg. Loan, 63 Neb. 69S,
aff'd 65 Neb. 488, where an agent
authorized to adjust and collect in-
surance due, was held to have au-
thority to indorse an order given
him by the insuraxice company's ad-
juster on the company, and ques-
tion wafl not liability on the en-
dorsement but payment of the claim.
8t Draper v. Rice, 56 Iowa, 114, 41
Am. Rep. 88; Rhodes v. Belchee, 36
Or. 141.
An agent who has sold goods for
the prioe of which a negotiable
promissory note payable to his prin-
cipal or order was given, ha« no
implied authority, before the ma-
turity of the note and without hav-
ing the same in hla possession, to
allow a discount upon the amount
686
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
l§§ 9S3> 954
§ 953-
Any of these results, however, may be altered by
the circumstances. Thus there may be express authority, or it may
be an incident of the agent's position,®* or the course of dealing may
be such as to give the agent apparent authority to indorse and collect
checks, and in such events the bank will not be liable to pay again.*^
And where there is such an apparent authority, the bank will not be af-
fected by secret instructions which would limit the apparent power,**
nor will the title of a third person who has relied thereon be affected.**
Of course, where the agent is authorized to receive the check, the
fact that he afterwards wrongfully indorses it and obtains the money
upon it, does not destroy the effect of the check as payment by the
drawer.*'
And though he was neither authorized to receive the check nor to
indorse it, and does both, but turns the money over to the principal, it
is held a good payment to the latter.**
§ 954. No authority to release or compromise the debt. — It fol-
lows, as a corollary of the rules already stated, that an agent author-
ized merely to collect or receive payment, has no implied power to
release the debt, in whole or in part, or to compromise the claim, with-
of the note and receive payment of
the balance. Holland v. Van Beil,
8.9 Ga. 223.
ssAb in the case of a general
manager, and the like. Burstein v.
Sullivan, 134 App. Div. 623; Morris
V. Hofferberth, 81 App. Div. 612,
alPd 180 N. Y. 545.
s^Lorton v. Ruasell, 27 Neb. 372;
Levy V. First Nat Bank, 27 Neb.
657.
An agent authorized to indorse
and procure the discount of notes
taken for goods sold, held to have
authority to discount rene-wal notes.
Marine Bank v. Butler Colliery Co.,
52 Hun, 612, 126 N. Y. 696.
SB Kansas City, etc., R. Co. v. Ivy
Leaf Coal Co., 97 Ala. 705.
80 Where an agent is put in gen-
ei'al charge of the business of a prin-
cipal, with power to sell its goods,
collect for the same^ make pur-
chases, etc., it Is a question for the
Jury to determine, whether the
agent had apparent authority to pay
for the goods so purchased, by in-
dorsing checks payable to his prin-
cipal. Graton & Knight Mfg. Co.
v. Redelsheimer, 28 Wash. 370.
An agent was employed to sell
goods and collect accounts. FYom
the very first day he frequently in-
dorsed checks received In payment
and obtained the money, which was
used in the principal's business
Later he endorsed such a check to
the defendant and appropriated the
money to his own usa In an ac-
tion by the principal, held, that
evidence of such a course of dealing
was sufficient to Justify a finding
that the agent was authorized to 'in-
dorse the check sued on. Best v.
Krey, 83 Minn. 32. See also, Witch-
er V. McPhee, 16 Colo. App. 298.
87 Burstein v. Sullivan, 134 App.
Div. 623; Allen v. Tarrant, 7 App.
Div. 172; Sage v. Burton, 84 Hun
(N. Y.), 267; Mofris v. Hofferberth,
81 App. Div. 512, aft'd 180 N. Y. 545.
88CajBe V. Kramer, 34 Mont. 142;
Ct: Dowdall v. Borgfeldt. 113 N. Y.
Supp. 1069.
687
.§ 955]
THB LAW OF AGENCY
[boqk U
out payment in full ; ^* neither has he any implied authority to dis-
charge part of the debtors,*® release liens,®^ discbarge sureties, or
surrender securities ®' except on full payment of the debt. He has no
implied authority to allow for deficiencies, admit counterclaims or set-
offs or recognize any other adverse claims.®* An agent authorized
merely to collect rents has no implied authority to accept a surrender
of the lease, or to consent to the discharge of the tenant and the sub-
stitution of a stranger.** An agent to collect a bill is not authorized
to receive conditionally less than the entire amount and to surrender
the bill before learning whether the condition will be accepted.*'
§ 955- Authority to receive part payment.* — ^Authority to collect
or receive payment of a demand must ordinarily be construed as au-
thorizing the receipt of the whole of the demand only, and not mwely
of a part of it, at least where receipt of a part only would be preju-
dicial to the principal's rights. Cases wherein there would be a reduc-
tion in interest, or the loss of a remedy^ or the right to sue in a partic-
ular court, or where the right to costs would be affected would furnish
8» Herring v. Hottendorf, 74 N. C.
5S8; McHany v. Schenk, 88 IlL 357;
Melvln v. Lamar Ins. Co.; 80 IlL 446,
22 Am. Rep. 19d; Eaton v. Knowles,
61 Mich. 625; Baird v. Randall, 68
Mich. 175; Nolan v. Jackson, 16 111.
272; Whittington ▼. Ross, 8 111. App.
234; Danziger v. Plttsfield Shoe Co.,
204 111. 145; First Nat Bank v.
Prior, 10 N. D. 146; Corbet v. Wal-
ler, 27 Wash. 242; Tompkins Mach.
Co. V. Peter, 84 Tex. 627; Scales v.
Mount, 93 Ala. 82; Craig Silver Co.
V. Smith, 163 Mass. 262; Murphy v.
Kastner, 50 N. J. Bq. 214; Ogilvie
V. Lee, 158 Mo. App. 493; Hoster v.
Lange, 80 Mo. App. 234.
MTorbit V. Heath, 11 Colo. App.
492. In Cram y. Sickel, 51 Neb. 828,
66 Am. St. R. 478, an attorney with
authority to collect a claim against
a partnership was held to have no
authority to release the retired
partner on consideration of security
given by the continuing partner.
»i Couch V. Davidson, 109 Ala. 313.
But the power of the collecting
agent over means and methods may
be BO great as to authorize him to
permit a sale of mortgaged property
in expectation of payment out of the
proceeds; and if he does so, the fact
that he dc^s not receive payment as
expected will not defeat the title of
the purchaser. Winter v. ESlevator
Co., 88 Minn. 196; Partridge v. Ele-
vator Co., 76 Minn. 496.
osKnoche v. Whiteman, 86 Mo.
App. 568; Robinson v. Nlpp, 20 Ind.
App. 156; Harrison v. Burlingame,
48 Hun, 212; Dugan v. Lyman (N.
J. Eq.), 23 Atl. 657; Hutchings v.
Clark, 64 Cal. 228.
»8 Johnson v. Wilson, 137 Ala. 468,
97 Am. St R. 62; Bynum v. Pump
Co., 63 Ala. 462; Railroad Co. v.
Cogsblll, 85 Ala. 436; Gund Brewing
Co. ▼. Peterson, 130 Iowa, 301.
A general agent may make an al-
lowance on a bill, because of delays
In performance. Stevenson Co. v.
Fox, 19 N. Y. Misc. 177.
•«See ante, $ 836; Blake v. Dick,
16 Mont 236, 48 Am. St R 671;
Scanlan v. Hoerth, 151 111. App. 682;
Wallace v. Dinniny, 11 N. Y. Misc.
317, aff'd 12 Misc. 635; Barkley v.
Holt, 84 N. Y. Supp. 967. See also.
Goldsmith V. Schroeder, 08 N. Y.
App. Dlv. 206.
•9 Bank of Scotland v. Dominion
Bank, [1891] App. Oas. 598*
688
CHAP, ni]
CONSTRUCTIOK OP AUTHORITIES
t§956
illustrations.*^ But, on the other hand, there are many cases wherein
the receipt of a part might fairly be deemed not only within the au*-
thority but also within the duty of the agf^t. Thus, claims are con-
stantly put into the hands of agents for collection, under circumstances
which clearly indicate that the principal desires and expects that, if
the agent cannot collect the whole, he will collect as much as pos-
sible.*^
g 956. May not extend time.--^But although the agent may be
authorized to receive payment in part, he has usually no implied au-
thority, upon such payment, or in consideration of it, to extend the
time of payment of the balance;**
Express authority would ordinarily be requisite to extend the time
in any case,** though it is cleat that there may be such general au-
thority, such a course of dealing between the parties, or such other
Min Lowensteln v. Bresler, 10^
Ala. 326, is said that an agent to col-
lect a check cannot receive a part
payment upon It Probably he
could not if he would have to sur-
render the check or permit It to be
stamped as paid, but otherwise it is
not BO clear.
or An attorney at law Is author-
ized to receive partial payments on
account of any claim put In his
hands for collection. Pickett v.
Bates, 8 La. Ann. 627. To same ef-
fect: Whelan t. Reilly. 61 Mo. 665.
In Williams v. Walker, 2 Sandt
(N. Y.) Ch. 825, where an agent
who had made a loan upon bond and
mortgage and was left In possessioa
of the bond was held authorized to
receive the principal as well as the
interest, it was said by Sanford, V.
C: "I do not think that the author-
ity thus Implied is to be limited to
a receipt of the whole principal in
one sum. The implication la that
the bond was left with him on the
same footing as if it were left with
an attorney for collection. In such
a case If any discretion is to be ex-
ercised as to the receipt of a part
only of the debt, it is a diacretion
with which the agent is clothed by
the possession of the security."
So in Peck v. Harriott 6 S. ft R.
(Pa.) 146, 9 Am. Dec. 415, It was
said of an agent authorised to re-
ceive payment for land sold, '*if he
had power to receive the whole, he
had power to receive any part"
That an agent authorized to col-
lect a note may receive part pay-
ment of it, see also. Frost v. Fisher,
18 Colo. App. 322.
•sHutchings v. Munger, 41 N. Y.
165; Ritch v. Smith, 82 N. Y. 627;
Gerrish v. Maher, 70 111. 470; Chap-
pel V. Raymond, 20 La. Ann. 277;
Karcher v. Gans, 13 S. D. 383, 79
Am. St. R. 893. Agent authorized
simply to collect a note, has no im-
plied authority to extend the time
of payment, and thus discharge the
sureties on the note. Lawrence v.
Johnson, 64 IlL 351.
To same effect: Behrns y. Rogers
(Tex. CJlv. App.), 40 S. W. 419.
The mere relation of attorney and
client is not sufficient to empower
the attorney to extend the time of
payment of a mortgage debt. Hazel-
ton V. Florentine Marble Co., 94 Fed.
701. In Mason v. Thompson Co., 94
Minn. 472, it was held that an at-
torney at law, with notes to collect,
could not extend the time of pay-
ment thereon.
•oSee Behrns y. Rogers; Karcher
y. Gans; and other cases cited in
the preceding note; Powell y.
Henry, 96 Ala. 412.
44
689
§§• 95^ 9S8]
THE LAW OF AGENCY
[book II
conduct, as to justify the inference that the ag^nt is authorized to re-
new or extend.^
§ 957- Or otherwise chai&ge the terms of the contract— Neither
has an agent authorized to receive payment any implied authority to
change or alter any other of the terms and conditions of the contract
His attthority is to receive payment on the contract as the parties made
it, not to make a new contract for them or to change or alter the old
one.^ He may not therefore, for example^ surrender the contract or
consent to the substitution of debtors.*
§ 958. Not authorized to receive befcMre due. — ^And even though
an agent have authority to receive payment of an obligation, this
would not ordinarily authorize him to receive it before it is due, and
thus, for example, cut off future interest, or surrender a valuable se*-
curity ; or even expose the principal to the risk of a payment at a time
when he had not bargained for it A power to receive payment must,
therefore, usually be construed as authority to receive payment at ma-
turity and not before.* A known usage of trade or course of business
in a particular employment, or a habit of dealing between the parties.
^Aa where agent for the collec>
tion of notice has to the knowledge
of the principal, been accustomed to
take new notes and new securities.
First Nat Bank v. Ridpath, 47 Neb.
96.
See also McDonald v. Kingsbury,
16 Cal. App. 244, where a general
agent's assurance that then would
be no forfeiture because of delay in
payment, was held binding.
sHalladay v. Underwood, 90 IlL
App. 130; Burgess v. Willis, 43 N.
Y. Misc. 672; Ridgeley National
Bank v. Barse Commission Co., 118
Mo. App. 696 (where the agent was
held to have no authority to give
the security he was authorized and
directed to enforce and take an-
other in its stead).
s Blake ▼. Dick, 16 Mont. 236, 48
Am. St R. 671; Wallace y. Dlnniny,
11 N. Y. Misc. 317. In Board of
Education t. Kelly, 126 Oa. 479, it
was held that the clerk of a court
authorized to collect costs and Bher>
ifC's fees had no authority to re-
lease a party owing such fees and
charge the same against the party's
attorney.
4 Smith y. Kidd, 68 N. Y. 130, 28
Am. Rep. 167; Doubleday y. Kress,
50 N. Y. 410, 10 Am. Rep. 502; Fel-
lows V. Northrup, 39 N. Y. 117:
Walsh y. Peterson, 59 Neb. 645;
Bronson y. Ashlock, 2 Kan. App.
255; Madison y. Cabalek, 86 IH. App.
450; Williams y. Pelley, 96 III. App.
846; Schenk y. Dexter, 77 Minn. 15;
Security Co. y. Graybeal, 85 Iowa,
643, 39 Am. St H. 311; U. S. Bank
y. Burson, 90 Iowa, 191; Park y.
Cross, 76 Minn. 187, 77 Am. St Rep.
630; City Nat Bank y. Qoodloe^Mc^
Clelland Com. Co., 98 Mo. App. 123;
Lester y. Snyder, 12 Colo. App. 351;
Little Rock ft Ft. S. Ry. Co. y.
Wiggins, 65 Ark. 886; Cunningham
y. McDonald, 98 Tex. 316; Campbell
y. Hassel, 1 Stark, 283; Parnther v.
Galtskell, 18 East, 487.
In Realty Transpr. Co. y. Kimball,
66 Misc. 186, payment to an agent
authorized to collect rents 6f rent
upon April 28 which was not due
until May 1, was held not good.
690
CHAP, hi]
CONSTRUCTION OF AUTHORITIES
[§ 959
may, however, extend the ordinary reach of the authority.^ Thus an
agent to loan money may be given such general authority over the
subject as to authorize him to re-invest, change the form or amount of
securities, and receive payment upon securities before they are due.*
And many cases may be imagined, as, for example, the case of com-
mercial claims bearing no interest, wherein an early payment would
be to the principars advantage, and in which the agent might fairly
be deemed to be authorized to receive pa3mient whenever he could
obtain it«^
§ 959. Not auHhoriztd to accelerate maturity.-— An agent author-
ized to collect and remit interest upon a note and mortgage which
provides that, if default be made in the payment of any interest, the
entire principal sum shall, at the option of the mortgagee, become at
once due and payable, is held to have no implied authority in case of
such default to exercise the option.* The effect of this option, when
exercised, being to entirely change and supersede the contract exist-
ing between the parties, it must be shown that the agent was authorized
to exercise it.
• Thompson ▼. Bailott, 78 111. 221;
Noble y. Nugeat, 89 111. 522; Thorn-
ton V. Lawther, 169 111. 228; Mcin-
tosh Y. Ransom, 106 III App. 172.
"The fact that the plaintifl for-
warded coupons, and Insisted on
prompt payment of the principal,
through the agent, weeks before the
maturity, indicates that he intended
the agent to receive the money
when offered." Dilenbeck v. Rehse,
105 Iowa» 749. So where, though
only upon one occasion a payment
not due had been made to the agent
and accepted by the principal with-
out objection. Harrison v. Legore,
109 Iowa, 618.
So where a note is due after five
years but the maker has the privi-
lege of paying it after three years,
au agent to receive payment is pre-
sumptively authorized to receive
payment whenever the maker has
the right to pay it Frost v. Flsher«
13 Colo. App. 322.
A contract may often show by its
terms that stipulations as to time of
payment were intended merely for
the convenience of the debtor, and
in that evest be may pay before.
See per Brett» U J., in Lancashire
Waggon Co. v. Nuttall, 42 L. T. Rep.
466.
ein Bleser v. Stedl, 135 Wis. 124,
while the authority of a loan agent
to mature the paper by taking pay-
ments before due was denied, the
court held that he would have au-
thority to receive payments a few
days earlier or later to be counted
as of the day of maturity. Here the
money was due December 12. Pay-
ments made on December 7 and De-
cember 17 were held to be good.
An agent to manage his principal's
money who "made loans and accepted
re-payment, changed loans, collected
interest, received money on loans be-
fore due and placed it again and gen-
erally transacted the business as he
saw fit" may receive payment of a
note before maturity and release a
mortgage securing it Peterson v.
Fullerton, 106 IlL App. 287.
T See Bliss ▼. Cutter, 19 Barb. (N.
Y.) 9.
• WUoox T. BadiQ, 66 Kan. 469.
e9x
§§ 960-962] THE LAW OF AGENCY [BOOK II
§ 960. Authority to collect does not authorise sale of debt.— Au-
thority to an agent to collect or receive payment of a note or other
demand, does not imply authority to sell, transfer, or otherwise dis-
pose of it.' Nor will authority to an agent to accept a note in settle-
ment of a demand, imply authority in the agent to afterward sell the
note so taken.*^
§ 961. No authority to deal with funds coUected.— An agent au-
thorized to collect and transmit funds to his principal, has no implied
authority to enter into any contract concerning the money in his hands,
or to exchange it for other money with third persoos.^^
A third person dealing with the agent with knowledge of the cir-
cumstances, could acquire no rights against the principal ; and if die
agent lost the money or took a counterfeit he would be liable to the
principal.^' An agent so possessed of funds, having no authority to
borrow money, even for his principal's benefit, would have no implied
authority to open a bank account in the name of his principal and
make the principal liable for an overdraft.^* Neither would such
an agent have implied authority to apply, or agree to apply, the money
received, upon or in payment of a debt due by the principal.^*
§ 962. May give receipt or cBscharge. — An agent authorized tc
collect has implied authority to give to the debtor upon payment such
0 Smith v. Johnson, 71 Mo. 382; to reloan the money after It has
Texada v. Beaman, 6 La. 84, 25 Am. been collected. Haynes v. Carpen-
Dec. 204; Hardesty ▼. Newby. 28 ter, 86 Mo. App. 30.
Mo. 567, 75 Am. Dec. 137; Qulgley v. "Darling v. Younker, 87 Ohio St.
Mexico Southern Bank, 80 Mo. 289, 487, 41 Am. Rep. 532; Kent v. Born-
50 Am. Rep. 503; Moore v. Skyles, stein, 12 Allen (Mass.), 342; Oreen-
38 Mont. 135, 114 Am. St. R. 801, 3 wald v. Metcalf, 28 Iowa, 863.
L. R. A. (N S.) 136; Goodfellow v. "Case v. Hammond Pack. Co.,
Landis, 36 Mo. 168; Dingley v. Me- 106 Mo. App. 168. In Dixon v. Jack-
Donald, 124 Cal. 682; Rigby v. son Exch. Bank, 149 Mo. App. 585,
Lowe, 125 Cal. 613; Lederer v. an agent to collect notes, deposit
Union Say. Bank, 52 Neb. 133. the proceeds and check out for one
A fortiori he may not sell to him- specific purpose, was held to have
self. Appeal of Yard (Pa.), 12 Atl. no authority to draw out the funds
359. In Feiner Y. Puetz, 77 Mo. for any other purposes.
App. 405, it was said that an attor- 14 Hill v. Van Duzer, 111 Oa. 867.
ney authorized to collect a note had in Dowlen v. Georgs Mfg. Co. (Tex.
prima fade no authority to sell it, civ. App.), 125 S. W. 931, a lessor
but that in the case at bar this pre- assigned rents to defendant to col-
sumption was rebutted by evidence lect and pay over to the plaintifC, a
that the agent had authority to sell creditor of the lessor. Held, that
or do with it as he pleased, provided the effect of the assignment was to
he did subject his principal to lia- make the defendant an agent to col-
bJlity as an indorser. lect. and that in such capacity he
10 Ames T. Drew, 31 N. H. i76. had no authority to use money col-
li Such an agent has no authority lected in making repairs.
692
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§963
a receipt or discharge as the payment entitles him to receive. Thus
if the debt be evidenced by a note or other security the agent, upon
payment, may deliver the security to the debtor.^*
And where the transaction involves the adjustment of accounts or
the settlement of disputes, the agent authorized to make it, has implied
authority not only to agree upon the terms of the settlement, if. fair
and reasonable, but to bind the principal by inserting in the receipt
the terms and conditions upon which the settlement was made.^* And
while an agent, authorized to discharge a mortgage upon receiving
payment, may, of course, do so, he can not bind his principal by giving
a discharge when no payment had in fact been made."
§ 963. Authority to sue. — ^While mere authority to demand or
receive pajrment of a debt would not irtiply authority to sue for it, yet
as every endowment of power carries with it implied authority to do
those things which are usual and necessary to accomplish the object
sought to be attained, an agent having general instructions to collect
may, if it becomes necessary, sue upon the claim, cause execution to
issue and direct the seizure of property.** He has, however, no im-
plied authority to instruct the sheriff to levy upon any particular prop-
erty."
Where the principal is a non-resident, an attorney instructed to sue
upon a claim, has been held to have implied power, when necessary,
IS Fadfleld v. Green, 85 111. 529.
See also, Lindley v. Lupton, 118
Mich. 466; Scammon v. Wells, Far-
go, ft Co., 84 Oal. 311.
May give discharge of mortgage
or release of trust deed. Dawson v.
Wombles, 111 Mo. App. 532.
le Vogel V. Weissmann. 23 N. Y.
Misc. 256.
iTHntchlngs v. Clark, 64 Cal. 228.
i» Joyce V. Duplessls, 15 La. Ann.
242, 77 Am. Dec. 185; McMinn v.
Rlchtmyer. 3 Hill (N. Y.), 236; Bush
V. Miller, IS Barb. (N. Y.) 481;
Scott V. "Elmendorf, 12 Johns. (N.
Y.) 317; Hlrshfleld v. Landman, 3
E. D. Smith (N. Y.), 208.
Such an agent may properly se-
cure a confession of judgment for
his principaL Brlggs v. Yetzer, 103
Iowa, 342.
But where a note is already in
Judgment, and is put Into the hands
of a collecting agency with express
instructions not to sue, the princi-
pal is not bound by the bringing of
a suit thereon by the agency. Sat-
tcrlee v. First Nat. Bank, 78 Neb.
691.
i»Averlll V. Williams, 4 Den. (N.
Y.) 295, 47 Am. Dec: 252; Welsh v.
Cochran, 63 N. Y. 181, 20 Am. Rep.
519; Oestrlch v. Gilbert, 9 Hun (N.
Y.). 242.
But see the chapter on Attorneys
at Law.
Authority "to receive tenants for,
receive rents, make contracts for
. . . repairs to and Insurance upon"
a building does not authorize agent in
having distress warrant levied on
tenant's property. Fishburne T. Bn-
gledove, 91 Va. 548.
693
§? 964, 96sl
THE LAW OF AGENCY
[book II
to indemnify the sheriff against the results of the seizure ^ as other*
wise the attorney would not be able to accomplish his undertaking.
For the same reason, if the exigencies of the case demand imme-
diate action, he may make the necessary affidavit, cause the issue of a
writ of attachment, and execute in his principal's name the statutory
bond therefor.'^ But an attorney has not necessarily the authority to
indemnify the surety upon an injunction bond,** nor, it has been held,
to execute a replevin bond in the name of his principal.**
His authority to sue, however, must be confined to the institution of
the ordinary and appropriate actions for the collection of the debt,
and can not be deemed to justify unusual and inappropriate actions,
such, as for example, a criminal proceeding.**
§ 964. Authority to sue in his own name.— An agent authorized
to collect a negotiable note or bill payable to bearer,** or indorsed in
blank** for the purpose of collection, may sue thereon in his own
name. Not so, however, if the note be payable to order and is not
indorsed.*'
Such an indorsement and delivery for the purpose of collection
passes the legal title in trust; and the trust is not terminated by the
principal's death.**
§ 965. Authority to foreckxie mortgages. — ^Authority to foreclose
mortgages is not one lightly to be inferred. The mere fact that a single
interest coupon is sent to the agent for collection certainly does not
justify it. And even the fact that one has acted as agent in nego-
tiating the mortgage, or the fact that he has, from time to time, been
so Clark v. Randall. 9 Wis. 136, 76
Am. Dec. 252; Schoregge v. Gordon*
29 Minn. 367; (see also, Swartz v.
Morgan, 163 Pa. 195, 43 Am. St R.
786) but he has no authority to in-
demnify after the levy and sale
have been mada Snow v. Hiz« 64
Vt 478.
See also American Bonding Co. v.
Ensey, 105 Md. 211, 11 Ann. Cas.
883, where a letter written to the at-
torney was held to authorize him
to procure a bond from plaintiff.
SI DePoret v. Gusman, 80 La. Ann.
Part II, 930; Pulton v. Brown, 10 La.
Ann. 350; Trowbridge v. Weir, 6 Id.
706; Alexander v. Bums, Id. 704.
tsVHiite V. Davidson, 8 Md. 169,
63 Am. Dec. 699. But see post,
chapter on Attorneys at Law.
2s Narraguagus Land Proprietors
V. Wentworth, 36 Me. 339. But see
contra, Merrick v. Vi^agner, 44 111.
266, under a very general power of
attorney. See generally the chap-
ter on Attorneys at Law.
34 Equitable L. Asa'n Society v.
Lester (Te3L Civ. App.), 110 8. W.
499; Thompson v. Beacon Valley
Rubber Co., 56 Conn. 493.
2B Hotchkiss V. Thompson, 1 Mor-
ris (Iowa), 156.
MOrr V. Lacy, 4 McLean (U. Si.
C. C), 243, Fed. Cas. No. 10,589;
Brigham v. Gurney, 1 Mich. 348;
Boyd V. Corbitt, 37 Mich. 52; Hase-
well V. Coureen, 45 N. Y. Super. Ct
22; Moore v. Hall, 48 Mich. 143.
tT Padfleld v. Green, 85 111. 529.
18 Moore v. Hall, supra.
694
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 966-968
authorized to receive interest upon it, or the fact that interest coupons
have been sent to him for collection as they matured, — ^the principal
retaining all of the time the possession of the note and mortgage, —
does not authorize the agent to foreclose. If, therefore, in such a
case, without the principal's knowledge or consent, a foreclosure sale
is had, the principal's title is not affected by it.** Where, however,
in a long series of transactions, extending over a period of about fif-
teen years and involving about $135,000, the agent had been permitted
to assume complete control over the investments, receiving and ac-
cepting applications, accepting payments before they became due,
making changes in the mortgages, and reloaning, at his discretion, it
was held that the agent, although not having possession of the securi-
ties, was so far authorized to foreclose that a foreclosure, at which the
agent became the purchaser, and a redemption made to the agent, con-
stituted payment, and destroyed the principal's lien, although the agent
failed before accounting for the proceeds.**
§ 966. May not submit claim to arbitration. — An agent author-
ized merely to collect or receive payment of a claim, has therefrom
in case of dispute no implied authority to submit the claim to arbitra-
tion."
§ 967. May employ counsel. — ^Where the agent is in fact author-
ized to collect, and by legal process if necessary, the agent may not
only bring suit, but may employ appropriate counsel to conduct it."
§ 968. Authority to employ subagents. — ^The implied authority of
an agent, authorized to collect, to employ a subagent, and his liability
for the acts of such subagent, is a question which has been considered
in other sections and need not be repeated here."'
2« Burchard v. Hull, 71 Minn. 430. tia v. Cutler, 22 C. 0. A. 16, 76 Fed.
To same effect: Dexter v. Morrow, 76 16, 37 L. R. A. 737.
Minn. 413; White v. Meeker County »iSee Manufacturers, etc., Ins.
Bank, 78 Minn. 286 (does not confer Co. y. Mullen, 48 Neb. 620; Micb.
"ostensible authority", under the C. R. Co. v. Gougar, 66 111. 503; Al^
Code); Corey v. Hunter, 10 N. D. len t. Confederate Pub. Co., 121 Ga.
5; Plummer y. Knight, 156 Mo. App. 773.
321 (but an unauthorized foreclosure saRyan v. Tudor, 31 Kan. 366;
in such case may be ratified). Davis v. Waterman, 10 Vt 626, 33
Plummer v. Knight, supra. Am. Dec. 216; Swartz v. Morgan,
<o Springfield Sav. Bank v. KJaer, 163 Pa. 195, 43 Am. St R. 786;
82 Minn. 180. See also, Alexander Strong y. West, 110 Ga. 382.
Y. Alexander, 8 Kan. App. 671; Cur- >8 See ante, Delegatloii of Author-
ity.
69s
§969]
THE LAW OF AGENCY
. [book II
VII.
OF AGENT AUTHORIZED TO MAKE OR INDORSE NEGOTIABLE PAPER.
§ 569. An important power, not lightly inferred. — ^The power to
bind the principal by the making, accepting or indorsing of negotiable
paper is an important one, not lightly to be inferred. The negotiable
instrtiment, in our law, is a contract which stands upon an independent
footing. It is designed by its nature to circulate freely in the business
world, and may come to persons and to places far remote from those
of its creation. It may confer upon a subsequent holder rights which
the original holder did not possess, and its transfer may impose upon
the maker obligations, against which his defenses are unavailing.
The authority to create such obligations is obviously a delicate one,
easily susceptible of abuse, and, if abused, bringing disaster and finan-
cial ruin to the principal. Our law therefore properly regards such
an authority as extraordinary, and not ordinarily to be included within
the terms of general grants; and the rule is abundantly established
that it can exist only when it has been directly conferred or is war-
ranted by necessary implication.'* To use the language of a learned
judge: "The power of binding by promissory negotiable notes, can be
conferred only by the direct authority of the party to be bound, with
the single exception where, by necessary implication, the duties to be
performed cannot be discharged without the exercise of such a power.
To facilitate the business of note making and thus affect the interest
and estates of third persons to an indefinite amount, is not within the
object and intent of the law regulating the common duties of principal
and agent ; neither is the power to be implied because occasionally an
instance occurs in which a note so made shotdd in equity be paid." ••
»4 Paige V. Stone, 10 Met. (Mass.)
160, 43 Am. Dec. 420; Stock Bxch.
Bank v. Williamson, 6 Okl. 348; La-
fourche Transp. Co. v. Pagh, 62 La.
Ann. 1517; Connell v. McLoughlin,
23 Or. 230; Bank of Morganton v.
Hay, 143 N. C. 326; Seattle Shoe
Co. V. Packard, 43 Wash. 527, 117
Am. St. R. 1064.
In MorrlB v. Hofferberth, 81 N. Y.
App. Div. 512, 620 (alTd 180 N. Y.
545) it is said by Hiscock, J.: "It Is
perfectly understood as a matter of
ordinary bufliness observation and
experience, that almost the last au-
thority which a man confers' upon
his agent Is the right to bind him by
signing or indorsing his name upon
negotiable paper. Very naturally
men are reluctant to confer uj>ott
others an authority which, if mis-
used, may be so injurious as this. I
think tiie courts have respected and
followed the general course and
conduct of business men in dealing
with this subject, for they have al-
ways been slow to infer a power to
perform such acts unless it was
clearly given or fairly to be implied.
SB Hubbard, J., in Paige v. Stone,
Bupra.
696
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 970. 971
§ 970. How authority confcrreA— Authority to execute nego-
tiable instruments need not be conferred in any particular manner.
Unless required by some statute it is not essential that authority to
execute it be in writii:!^.^® It need not; always be express:'^ as has
been seen^ it may arise from necessary implication.*^ The principal
may also by his conduct either show that the act was really authorized,
or he may estop himself from denying it,'* and an tmauthorized ex-
ecution may be rendered valid by a subsequent ratification.
§ 97i» When authority implied. — ^As has been seen, general words
made use of in conferring authority must be limited to the legitimate
scope of the business in the transaction of which it is to be exercised,
and authority to bind the principal by negotiable paper will only be
implied where it is practically indispensable to accomplish the object.**
«fl People's Bank v. Scalzo, 127 Mo.
164; Fountain v. Bookstaver, 141
111. 461.
8T Under the code In Louisiana,
It Ib required to be express. La-
fourche Transp. Co. v. Pugh, 52 La.
Ann. 1517. See also, People's Bank
V. Scalzo, supra.
«• Gambrill v. Brown Hotel Co., 11
Colo. App. 529; Whltten v. Bank of
Fincastle, 100 Va. 546.
«*Thus where the principal in
numerous instances or for considera-
ble periods, has permitted the alleged
agent to execute negotiate instni-
ments, he will be liable to one who
has dealt with the agent In reliance
thereon. See Eoff v. Citizens Bank
(Ark.), 112 S. W. 213; Bank of
TJkiah y. Mohr, 430 Cal. 268; Greer
V. First Nat Bank (Tex. Civ. App.),
47 S. W. 1045; Wltcher r. McPhee,
16 (}olo. App. 298. See alio, Taylor
Y. Angel, 162 Ind. 670; Appeal of
Nat Shoe and Leather Bank, 56
Conn. 469. Notes being among the
UBual In0trum«ntalitle8 to evidence
a loan, if the principal requests a
third person to loan the agent
money to carry on the principals
business, the lender may properly
assume that the agent is authorized
to execute notes therefor. Lytle ▼.
Bank of Dothan, 121 Ala. 215^
Principal honoring agenVs drafU*
—But the mere fact that the prlncl?
pal has honored drafts drawn upon
him by his agent does not. It is held,
show thi£t the agent is authorized
to draw drafts upon the principal.
It may Just as well be the fact that
tbe agent had a deposit, or credit
or commissions. In the principal's
hands, and that he had drawn the
drafts as owner and not as agent
and that the principal had paid
them .for that reason only. Seattle
Shoe Co. V. Packard, 43 Wash. 527.
See also Bank of Morganton v.
Hay, 143 N. C. 326; Cook v. Bald-
win, 120 Mass. 317, 21 Am. Rep. 517;
Bank of Deer Lodge v. Hope Min-
ing Co.> a Mont 146, 35 Am. Rep.
458.
But in Valiquette v. Clark Co., S3
Vt. 538, 138 Am. St R. 1104, 34 L.
R, A. (N. S.) 440, where the princlr
pal, though protesting to the agent,
had paid within four weeks three
drafts drawn by the agent In favor
of the plaintiff without protesting to
the latter, the court held him estop-
ped to deny liability upon a fourth
drawn within three weeks there-
after.
See also Greer v. First Nat Bank
(Tex. Civ. App.), 47 S. W. 1045.
40Bickford v. Menier, 107 N. Y.
490.
See Gardner v. Baillie, 6 T. R.
591; Howard v. Baillie, 2 H. Bl. 618.
697
S 971]
THE LAW OF AGENCY
[book II
Thus an authority to an agent "to accomplish a complete adjust-
ment" of all the principal's concerns in a certain state does not au-
thorize him to bind the principal by a promissory note/* nor will au-
thority given by a farmer to his agent to sign his name in the general
transaction of his business, confer power upon the agent to sign the
^Rossiter v. Rosslter, 8 Wend.
(N. T.) 494, 24 Am. Dec. 62. A
power of attorney "to transact all
such business as I may not be able
to attend to In person, to take
charge of and attend to the collec-
tion of all my outstanding debts,
* * * to look after the collection of
rentSy make division of crops with
tenants, make such compromises
and settlements as in their judg-
ment, is for my Interest, make sale
of such property as I may. desire to
dispose of from time to time, and
generally to do and perform all acts
that I might do were I In good
health; and, for this purpose • ♦ •
to sign my name to bonds, receipts,
and such other papers as may be
necessary in the transaction of the
business heretofore set forth," does
not give authority to purchase
mules and wagons and give promis-
sory notes therefor. Born v. Sim-
mons, 111 Ga. 869.
An agent placed In charge of a
stock of goods which had been
bought in by the principal to secure
his debt against such agent, "with
authority to transact any business
in reference thereto that may be
necessary and in accordance with
the desire of or by agreement with
said first party," has no authority,
except in . reference to that very
stock, and hence may not buy goods
on credit to replenish the stock and
give a note therefor. Weekes v.
Sbapleigh Hdwe. Co., 23 Tex. Civ.
App. 677.
Authority "to superintend . . .
the Snyder mine and all other mines
acquired by us by purchase or other-
wise . . . and to preserve, manage,
sell and dispose of any and all of
the said mines, mills or other prop-
erty in such manner as he shall deem
meet and proper and for our best in-
terest", does not authorize agent to
give a promissory note for money
paid to workmen in the mines and
merchandise purchased for the mines,
prior to its execution. Golinsky v.
Allison, 114 Gal. 458.
A power of attorney "to ask, de-
mand, reeelTe, and recover all and
every sum of sums of money whatso-
ever that are or is now due and ow-
ing ... to investigate, adjust, set-
tle and to compromise all accounts,
debts, claims, disputes, and matters
... to conunence and prosecute and
defend all actions, suits, claims, de-
mands and proceedings ... to give
effectual receipts in full discharge of
all claims; and generally to do, per-
form and execute all and every such
act and acts, duty and duties, in and
about the premises as he . . . shall
think proper, as fully and as eftectu-
ally to all intents and purposes what-
soever, as the said (principals) might
or could do if personally present"
does not empower the agent to in-
dorse and negotiate a check which
he has received in settlement of a
claim belonging to his principal
Jacoby v. Payson, 71 Hun, 480. The
court relied upon the case next stated
as conclusive.
A power of attorney gave an at-
torney "full power to execute and
deliver all needful instruments and
papers, and to perform all and every
act and thing whatsoever reqaisite
and necessary to be done in and
about the premises, as fully and
completely, to all intents and pur-
poses, as I might and could do if
personally present" Held^ that this
did not authorize the attorney to
indorse a draft in the name of his
principal. Holtsinger v. Bank, 1
698
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 972
principars name to a note ; ** nor will authority to settle a controversy
of itself imply power to bind the principal by a note given in settle-
ment.**
§ 972. So an agent authorized to attend to and manage a
grocery and provision store ; ^ an agent employed in the manufacture
of carriages;** a mere clerk employed in a merchant's store ;*• an
agent authorized to manage his principal's farm ; *^ an agent author-
ized to superintend his principal's mine;** and an agent employed
generally to manage his principal's business ; ** has no implied power
to bind his principal by the execution of negotiable paper.
An agent authorized to buy goods and pay for them, is not thereby
authorized to give his principal's note, or to accept a bill of exchange
drawa for the amount.*'^
An insurance agent authorized merely to solicit risks and write pol-
icies, has no implied authority to borrow money upon promissory notes
in the company's name.*^ An agent authorized merely to deposit his
principal's money in a bank, has therefrom no implied authority to
Sweeny (N. Y. Super.), 64, 6 Abb.
Pr. (N. S.) 292, 37 How. Pr. 208,
and affirmed by court of appeals In
3 Abb. L. J. 305, 40 How. Pr. 720.
In McClure's Ex*r v. Corydon
Bank (Ky.), 106 S. W, 1177, a power
of attorney authorized an agent "to
take charge ot manage, and con-
^ol all of my business relating to
my personal estate," Justiflee the
agent In making a renewal of a note
on which hia principal was bound.
Such renewal was only a continu-
ance of a present obligation, and
'Elated to her personal business."
See also American Savings Bank
T. Helgesen, 64 Wash. 54.
«s Brantley y. Southern Ins. Co.,
58 Ala. 554.
48 Hills y. Upton, 24 La. Ann. 427.
44 Smith y. Gibson, 6 Blackf.
(Ind.) 869; Terry v. Fargo, 10
Johns. (N. Y.) 114; Perkins y.
Boothby, 71 Me. 91.
4i Paige y. Stone, 10 Mete (Mass.)
160, 43 Am. Dec. 420.
4« Kerns y. Piper, 4 Watts (Penn.)
222; Terry y. Fargo, suprcL
4TDayid8on y. Stanley, 2 M. ft O.
731.
48 New York Iron Mine y. Negau-
nee Bank, 89 Mich. 644; McCullough
V. Moss, 5 Den. (N. Y.) 667; Sewa-
nee Mining Co. ▼. McCall, S Head
(Tenn.), 619.
«>See postt § 926; Perkins y.
Boothby, supra; New York Iron
Mine y. Negaunee Bank, supra; Con-
nell y. McLoughlin, 28 Or. 230; Jack-
son Paper Mfg. Co. v. Commercial
Nat. Bank, 199 111. 151, 98 Am. Sti
R. 113, 59 L.. R. A. 657; Fairly y.
Nash, 70 Miss. 198.
But see Glidden Varnish Co. v.
Interstate Bank, 69 Fed; 912, 16 C.
C. A. 584; Lerch y. Bard, 168 Pa.
573; Whitten v. Bank of Finoastle,
100 Ya. 546; Wimberly y. Windham,
104 Ala. 409, 58 Am. St R. 70.
50 Brown y. Parker, 7 Allen
(Mass.), 837; Taber v. Cannon, 8
Mete (MasA) 456; Webber v. Wil-
liams CoUege, 28 3Pick. (Mass.) 802;
Qonld y. Norfolk Lead Co., 9 Cush.
(Mass.) 838» 57 Am. Dec: 50; Bmer-
son y. Proyidenoe Mfg. Co., 12 Mass.
287, 7 Am. Dee. 66.
BiBurlingame y. Aetna Ins. Co.,
36 N. Y. App. Diy. 858. Here it was
done to pay what the agent owed
the company.
699
§§ 973> 974]
THE LAW OF AGENCY
[book n
draw checks upon the deposit."* An agent authorized upon one oc-
casion to get certain sum at a bank for a stated period, has thereby no
implied authority to bind the principal by making promissory notes
generally."
§ 973- Authority strictly construed. — ^Authority to execute nego-
tiable instruments will be strictly construed, and the power will be
held to extend only to those cases in which it is clearly given, or in
which it is a manifestly necessary and customary incident to the act
which the agent is called upon to perform.**
§ 974* Illustrations of acts not authorized. — Authority to
sign the principal's name to promissory notes will be limited to notes
drawn in the usual form, and will not authorize the execution of a
note containing a provision that if not paid at maturity, an additional
sum of ten per cent, would be paid.*^' Authority to an agent to draw
a bill in the principal's name will not authorize a bill drawn in the
joint names of the principal and the agent ; nor will authority to draw
a bill, authorize an agent to contract to indemnify the acceptor against
the consequences of his acceptance ; *• nor will joint authority from
several persons to indorse a bill in their names jointly, authorize sev-
eral and successive indorsements.*^^ Nor will authority to sign as
surety authorize the signing as principal.** Authority to draw checks
upon a certain bank will not justify the agent in overdrawing his prin-
cipal's account**
Authority to indorse checks of the donor of the power for deposit
in a certain bank, authorizes the indorsement of such checks as are
the property of such donor but not those which are acquired by the
donee of the power in an unauthorized manner.** Authority to draw
B2 Heath ▼. New Bedford Safe De-
poBit Co., 184 Mass. 481. See also.
Schmidt v. Cko^fleld Nat. Bank, 64
Hun, 298 (alTd 188 N. Y. 631);
Exch. Bank v. Thrower, 118 Ga. 433.
OS Stock E^xch. Bank v. William-
son, 6 Okl. 348.
8* Turner v. Keller, 66 N. Y. 66;
Craighead v. Peterson, 72 N. Y. 279,
28 Am. Rep. 160; Brantley v. South-
em Life Ins. Co., 63 Ala. 654; Hills
V. Upton, 24 La. Ann. 427; Webber
V. Williams College, 28 Pick.
(Mass.) 302; Stainback v. Read, 11
Gratt. (Va.) 281, 62 Am. Dec. 648;
Rossi ter v. Rossiter, 8 Wend. (N.
y.) 494, 24 Am. Dec. 62; Avery v.
Lauve, 1 La. 'Ann. 467; Nugent v.
Hlckey, 2 Id. 358; Duconge v. For*
gay, 16 Id. 87.
»• First National Bank y. Gay, 63
Mo. 33, 21 Am. Rep. 480.
B« Stainback v. Read, 11 Gratt.
(Va.) 281, 62 Aol Dec. 648.
OT Bank of United States ▼. Beime,
] Gratt. (Va.) 284, 42 Am. Dec. 561.
See also Union Bank ▼. Beirne, 1
Gratt (Va.) 226; Bank of United
States ▼. Beirne, 1 Gratt. (Va.) 639.
BsFarmington Savings Bank v.
Buzzell, 61 N. H. 612; Bryan v.
Berry, 6 Cal. 394.
69 Union Bank v. Mott, 39 Barb.
(N. Y.) 180.
«oFay V. Slaughter, 194 III. 157,
8S Am St. R. 148, 56 L. R. A. 664.
700
CHAP, in]
CONSTRUCTION OF AUTHORITIES
t§ 975
drafts upon die principal for goods purchased and received by the
agent, involves no authority to draw drafts for goods not received.**
Authority to make a promissory note implies no authority, twelve
years later, to make a small payment upon it in order to prevent the
bar of the statute of limitations.*'. Authority to make a prescribed
and restrictive indorsement for the deposit of checks on the principal's ^
account, involves no authority to indorse or discount them generally
so as to permit the agent to collect the proceeds on his own account.*'
A special authority to negotiate a certain draft for cash at a reason-
able discount, does not authorize the agent to negotiate it for cash and
merchandise.** Authority to collect and remit the amount of a cer-
tain check confers no implied authority to transfer the check and bind
his principal by a general indorsement.** Authority to insert a guar-
anty over an indorsement does not justify inserting an unqualified
promise to pay.**
§ 97 S- — — • Ittustrations of acts authorised. — But authority to
discount bills confers authority to indorse the same when necessary to
accomplish the purpose.*^
Authority to manage and act generally for another in the conduct-
ing of his saloon business, including the depositing of money, and the
drawing of checks, will justify the making of a note to secure a li-
•1 Gray Tie ft Lumber Co. v. Farm-
erg' Bank (Ky.). 78 S. W. 207, 25
Ky. Law R«p. 1596.
M Miller V. Magee, 49 Hun. 610.
«• An agent authorized to inaorse
checkB for deposit with a rubber
stamp has no authority to Indorse
checks In blank, and collect the
money thereon. Exchange Bank v.
Tbrower, 118 Ga. 433. To same ef-
fect: Schmidt V. Garneld Nat. Bank,
64 Hun, 298 (ard 138 N". Y. 631).
But when a bank upon which a
check has been drawn by a customer
pays it to an agent of the customer's
creditor, which agent had authority
to Indorse the check for deposit and
collection but whose limited author-
ity to indorse for collection only, Is
unknown to the bank, and checks
with similar indorsements had been
previously paid through the clear-
ing house without objection on the
part of the agent's principal, this
operates as a payment of the debt
fbr the settlement of which the
check was drawn, even though the
agent absconds with the money so
drawn. Kansas City, etc., R. R. v.
Ivy Leaf Coal Co., 97 Ala. 705.
And where the bookkeeper of a
corporation is authorized to endorse
checks 'In blank, such endorsement to
be used only for the purpose of de-
positing the check in the defendant
bank to the account of the corpora-
tion, the bank is not liable If it pays
a check so endorsed but negotiated by
the bookkeeper for his own purposes,
the limitation on the power to en-
dorse being a secret limitation not
known to the bank. Wedge Mines Co.
V. Denver Nat. Bank, 19 Colo. App.
182.
««Dowden v. Cryder, 55 N. J. Law,
329.
«Nat. City Bank v. Westcott, 118
N. Y. 468, 16 Am. St. R. 771.
MClymer v. Terry, 50 Tex. Civ.
App. 300.
«T Merchants* Bank v. Central
Bunk, 1 Ga. 418, 44 Am. Dec. 665.
701
§ 976]
THE LAW OF AGBNCY
[book II
cense for the saloon.** Authority from a wife to her hud>and "to
transact all business of every nature, and to execute and deliver any
and all papers, documents, deeds, or other instruments," justifies him
in transferring a note belonging to her.** Power of attorney "to sell
. and to convey • • • to change any of the mortgages
upon any of said lands ... or upon the payment of a part of
any one of said mortgages to execute a new note and mortgage for the
residue upon the same ... or to renew any of said mortgages;
but in no event to increase the incumbrances ... or pay a
greater interest" justifies the agent in executing a new note and mort*
gage to a person who, as surety on a prior note, was compelled to pay
off the balance of the mortgage which had been given to secure it.'*
Authority by telegram "to indorse" a note, given in renewal of a note
which had been indorsed with a guaranty and waiver of notice, justifies
the indorsement of the note in question in the same manner."
§ 976. Must be confined to principal's business. — ^Authority to
make or indorse negotiable paper will be confined to the making or
indorsing of such paper in the legitimate business of the principal or
for his benefit Such an agent cannot, therefore, bind his principal
by making or indorsing notes for his own benefit or the benefit of
third persons,'* subject, of course, to the rules governing the rights of
bona fide purchasers for value.'*
wFlewellen v. Mittenthal (Tex.
Civ. App.), 38 S. W. 234.
<»Presnall v. McLeary (Tex, Civ.
App.), 50 S. W. 1066.
TO Barbour v. Sykes (Ky.), 1 S.
W. 600.
71 State Bank v. Evans, 198 Mass.
U.
Ts North River Bank v. Aymer, 3
HiU (N. y.), 262; Stainer v. Tysen,
Id. 279; Stainback v. Read, 11 Gratt
(Va.) 281, 62 Am. Dec. 648; Camden
Safe Dep. Co. v. Abbott 44 N. J. L.
267; Duncan v. Gilbert, 29 Id. 621;
Hamilton v. Vought, 34 Id. 187; Gu-
lick V. Grover, 33 Id. 463, 97 Am.
Dec. 728; Bird v. Daggett, 97 Mass.
494; Wallace v. Branch Bank, 1 Ala.
565; Brantley v. Southern Life Ins.
Co., 63 Ala. 554; Citizens' Savings
Bank v. Hart, 32 La. Ann. 22;
Odiome v. Maxcy, 13 Mass. 178;
Boord V. Strauss, 39 Fla. 381; Park
Hotel Co. V. Fourth Nat Bank. 86
Fed. 742; Merchant's Nat Bank ▼.
Detroit 68 Mich. 620; Myers v.
Walker, 104 Ga. 316.
Even if authorized to indorse, he
cannot indorse to himself. Engle-
hart V. Peoria Plow Ca, 21 Neh. 41.
Authority to borrow money, draw
and endorse notes and execute deeds
does not authorize drawing notes,
making loans and executing deeds of
trust to secure them, for the benefit
and use of the agent individually.
Mechanics' Bank v. Shaumburg, 38
Ma 228. An agent authorized to sign
his principars name to "any paper"
is not justified in signing paper out-
side of the principal's business.
Camden Safe Deposit Co. v. Abbott
supra.
In First National Bank v. Bean,.
141 Wis. 476, an agent was given a
power of attorney to take general
control of principal's affairs^ make
notes, and do every act which the
702
CHAP, n;]
CONSTRUCTION OF AUTHORITIES
L§ 977
In accordance witii the rule prevailing in New York» it is held that>
if the question whether the paper is executed within the scope of the
principal's business depends on extrinsic facts peculiarly within the
knowledge of the agent, a third person, dealing with the agent in good
faith, may rely upon the agent^s representation as to the existence of
those facts.^*
So where an agent is authorized to draw checks "'for the use of"
the principal and draws a check which appears to be, and which he
declares is, for the use of the principal the bank is justified in paying
even though the agent subsequently embezzles the funds. "The au-
thority to sign checks for the use of the principal,'' said the court,
''imposed no affirmative duty upon the bank to inquire into the pur-
poses of the check or the use to which the money was to be put." ^^
§ 977« Execution nmst be confined to limits specified. — Parties
dealing with an agent assuming to be authorized to draw, accq)t, or
mdorse negotiable paper, must see to it that his authority is adequate,
and both they and the agent must keep strictly within the limits fixed
to the agent's authority or the principal will not be bound. Thus au-
thority to draw and discount a note for a given purpose, implies no
authority to draw and discount one for another and different pur-
pose ; ^* authority to bind the principal for a given sum will not au*-
buslnesB would require; the agent
made a note in name of a Fruit
Growers Association, indorsed the
name of bis principal thereon, dis-
counted it,, and kept the proceeds as
a settlement of a claim for services
against tiie association. Later the
ai^ent signed the prinolpal's name
to a guaranty of the same debt, and
later made a mortgage to secure it
Held, that the authority conferred
was restrioted to management of
the principal's afTalrs and that the-
note and mortgage were not author-
ised. In Mathls v. Bank (Ky.). lOS
S. W. 157. a father about to leave on
a short visit, gave his son a power
of atUMrney to sign checks and notes.
The son used the power for about
three years, signing small checks
and using proceeds for personal pur-
poses. The son opened an account
in his own name» over-drew to a
considerable extent, and, to cover
the deficit, checked on his father's
account There was evidence that
the father may have known of the
smaller checks from observation
from time to time of his bank book.
Held, that for the latter he was lia-
ble, but for others the father was
not liable.
^ut in Moore v. Gould, 151 Cal. 723,
where the payee of a note [now an
agent] executed a renewal in the
name of the maker as his agent, it
was held that this rule did not apply,
because the note had been negotiated
away and the agent was not now
dealing with himself but with third
parties.
78 Bryant v. La Banque du Peuple,
[1893] App. Cas. 170.
T4 Marine Bank v. Butler Colliery
Co., 62 Hun, 612, afl'd 12S N. T. 695;
Huie V. Allen, 87 Hun, 516, aff'd 156
N. Y. 668.
rs Warren-Scharf Co. v. Com'l
Nat. Bank, 38 C. C. A, 108, 97 Fed.
181.
TeCallender v. Golsan, 27 La. Ann.
311; Nixon v. Palmer, 8 N. Y. 398;
703
§ 977]
THE LAW OF AGENCY
[aooK II
thorize the binding for a greater sum ; ^^ power of attorney ''to make
deposits, draw, sign and indorse notes, checks, or bills of exchange" in
the course of the principal's business and with one particular bank does
not authorize the agent to execute notes to totally different baiik for
money which he has borrowed from it to use in his own iisdividual
business ;^^ authority to do all things at a particular bank, which
the principal could do if present, will not authorize the agent to draw
money of his principal from another bank where the principal has an
account ; ^' authority to draw checks and notes payable at any bank
where the principal has an account, will not justify making a note pay-
able at a bank where the principal has no account ; ^ authority to draw
on a principal's funds will not empower the agent to draw upon the
principal's credit ; *^ authority to draw checks on a bank for property
purchased by the agent, implies no authority to borrow money ; •* au-
thority to execute notes gives no authority to renew them ; ■• authority
to make a note for a given time will not authorize the making of a note
payable in a different time,®* unless from the circumstances it is evident
that the principal did not intend to fix an exact limit and the variance be
not great ; ^'^ authority to issue bonds does not authorize the issuing of
notes ; *• authority to draw a bill does not of itself imply power to in-
dorse,*^ or to accept one ; •* nor does authority to indorse empower the
agent to accept a bill, or make a joint and several note ; *• authority to
draw bills of exchange payable on time or at sight does not imply au-
Hortons v. Townes, 6 Leigh (Va.),
47.
See also, Great Western Elevator
Co. V. White, 118 Fed. 406, 56 C. C.
A. 3S8.
TTBlackwell v. Ketchain, 53 Ind.
184; King v. Sparks, 77 Oa. 285, 4
Am. St. Rep. 86; Batty v. Carswell,
2 Johns. (N. Y.) 48.
rs Citizens' Savings Bank v. Hart,
32 La. Ann. 22.
79 Sims V. United States Trust Co.,
108 N. Y. 472.
M Craighead v. Peterson, 72 N. Y.
279, 28 Am. Rep. 150.
n Breed v. First Nat. Bank, 4
Colo. 481.
ssMordhurat v. Boies, 24 Iowa, 99.
99 Ward V. Bank of Kentucky, 7 T.
B. Mon. (Ky.) 93.
«* Batty V. Carswell, 2 Johns. (N.
Y.) 48; Tate v. Evans, 7 Mo. 419.
M Adams v. Flanagan, 36 Vt 400{
Bank t. MeWinie, 4 McOord (S. C),
438.
89 School Directors v. Sippy, 64
111. 387; Bank of Deer Lodge ▼.
Hope Mining Co., 3 Montana, 146,
35 Am. Rep. 468.
•Y Robinson V. Yarrow, 7 Taunt.
466: Murray ▼. East India Oo.» 6 B.
* Aid. 204.
But in Marsh v. Fren^. S2 III.
App. 76, it is held that authority to
an agent tx) draw upon the princi*
pal fbr amounts necessary to carry
on the business wUl Justify hts pro*
curing an endorser of drafts so
drawn.
MAttwood y. Munnings, 7 B. & C.
378; Sewanee Mining Co. v. McCall,
3 Head (Tenn.), 619; Bank v. Hope
Min. Co., supra,
MCuyler v. Merrlfleld, 6 Hun (N.
Y.>, 569.
704
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§978
thority to draw post-dated bills ; •* authority to execute a note does not
of itself imply authority to pay it when due, or to receive demand of pay-
ment;*^ or to receive notice of dishonor;" authority to draw on A
at Portland, or B at New York, does not authorize the agent to draw
on A payable at New York ; •■ authority to make a particular draft on
the principal payable "to the order of the court," will not empower
him to make it payable to bearer.**
§ 978. Negotiable paper delivered to agent in blank. — The full
discussion of the effect of the signing and delivering of blank paper
or blank forms to a third person to be filled up or completed as nego-
tiable instruments, belongs more apprc^riately to a treatise dealing
with such instruments.'* In general however it may be said that a
principal who delivers to his agent negotiable paper executed in blank,
to be filled out by the agent according to certain instructions, will be
liable upon the paper as the agent may fill it out, to one who takes it
in good faith, for value and without notice, although the agent may
have violated his instructions.**
But if the third person had n6tice of the instructions or if he does
not take the paper for value, he will not be protected.*^ Whether mere
knowledge that the paper was delivered to the agent in blank is enough
»oNew York Iron Mine v. Citi-
zens' Bank, 44 Mich. 344; Forater v.
Macreth, L. R., 2 Bxch. 163.
»i Lunlng V. Wise, 64 Cal. 410.
»sBank of Mobile v. King, 9 Ala.
279.
»3Lanu8se v. Barker, 3 Wheat (U.
S.) 101, 4 L. £?d. 343.
••^Com'l Assur. Co. v. Rector, 55
Ark. 030.
AftSee Daniel on Neg. Inst § 142,
et seq.
»« Davis ^. Lee, 26 Miss. 505, 59
Am. Dec 267; Johnson v. Blasdale,
1 Smedes & M. (Miss.) 17, 40 Am.
Dec 85; Putnam v. Sullivan, 4 Mass.
45, 3 Am. Dec 206; Roberts v.
Adams, 8 Port. (Ala.) 297, 33 Am.
Dec. 291; Hall v. Bank of Common-
wealth, 5 Dana (Ky.), 258, 30 Am.
Dec 685; Holland v. Hatch, 11 Ind.
497, 71 Am. Dec 363; GlUaspie v.
Kelley, 41 Ind. 158, 13 Am. Rep. 318;
Blackwell y. Ketcham, 53 Ind. 186;
Snyder v. Van Doren, 46 Wis. 602,
32 Am. Rep. 739; Friend v. Yahr,
126 Wis. 291, 110 Am. St R. 924, 1
L. R. A. (N. S.) 891; Bank of Pitts-
burgh V. Neal, 22 How. (U. S.) 96,
16 L. Ed. 323; Frank y. Lillenfeld,
33 Gratt (Va.) 377; Market Nat
Bank y. Sargent, 85 Me. 349, 35 Am.
St R. 376; Weldman v. Symes, 120
Mich. 667. 77 Am. St R. 603; First
Nat Bank y, Mfg. Co., 61 Minn. 274;
Ward V. Hackett, 30 Minn. 150, 44
Am. Rep, 187; De Pauw y. Bank of
Salem, 126 Ind. 553, 10 L. R. A. 46;
Bradford Nat Bank y. Taylor, 75
Hun (N. Y.), 297; Blnney y. Globe
Nat Bank, 150 Mass. 574, 6 L. R. A.
379; Boston Steel Co. y. Steuer, 183
Mass. 140, 97 Am. St Rep. 426.
»7 Davidson v. Lanier, 4 Wall. (TT.
S.) 447, 18 L. Ed. 377; Johnson y.
Blasdale, supra. Where the note
bears evidence on its fdce that it is
being delivered contrary to cTlreo-
tions, it cannot be enforced by per-
son to whom it is so delivered. Mill9
V. WUliams, 16 S. C. 593.
45
705
§ 979]
THE LAW OF AGENCY
[book II
to put third persons upon inquiry as to his instructions, is a question
upon which the authorities differ, but the better opinion seems to be
that it is not.»»
VIII.
OF AGENT AUTHORIZED TO MANAGE BUSINESS.
§ 979. What is meant. — ^The idea of management seems not to be
one of precise legal import.** To manage is to direct, to control, to
conduct, to carry on. The good manager is one who wisely directs
and expedites an enterprise, conserving its resources, making the most
of its opportunities, adding to its influence, increasing its efficiency.
98 See Daniel Neg. Ins. 8 147.
^•Many attempts at definition
have been made, not always with
complete success.
In Hodges v. Banlcerfl' Surety Co.,
162 111. App. 372, a collection of defi-
nitions is given. The court says:
"The powers of a manager are at
least as broad and comprehensiye
as those of a general agent," quot-
ing, "The term, in our judgment,
when used in connection with such
a corporation cannot, In the absence
of any evidence on the subject, be
presumed to mean anything more
than that the person filling the po-
sition has general charge of those
business matters for the carrying
on of which the company was in-
corporated,"— from Washington Gas
Light Co. y. Lansden, 172 U. S. 634,
547, 43 L. Ed. 643; and "Where a
company is located in a state re-
mote from that in which the insur-
ance is effected, one intrusted with
the general management of its busi-
ness in the latter state should be
regarded as a general agent (South-
ern Life Ins. Co. t. Booker, 9 Heisk.
(Tenn.) 606, 24 Am. Rep. 344); and
as possessing all the powers of those
in charge of its business at the head
or home oflice," — from Hartford Life
Ins. Co. V. Hayden, 90 Ky. 39, 47.
In Booker-Jones Oil Co. v. Na-
tional Refining Co., — Tex. Civ.
706
App. ^ 132 S. W. 816, the court
quotes several judicial definitions,
among which are the following:
"The term 'general manager* of a
corporation, according to the ordi-
nary meaning of the term, indicates
one who has general direction and
control of the aflaira of the corpora-
tion." Louisville, etc, Ry. Co. ▼.
McVay, 98 Ind. 391, 49 Am. Rep. 770.
'*A general manager of a corporation
Is the person who has the most gen-
eral control over the aftairs of the
corporation and who has knowledge
of all of its business." Lee Mining
Co. V. Omaha, etc. Smelting Co., 16
Colo. 118; and "The term ^general
manager' is synonymous with gen-
eral agent. A general manager Is
virtually the corporation itself." At-
lantic, etc, R. Co. V. Reisner, 18 Kan.
458. It is said that the general man-
ager of a corporation has "power
P7ima facie to do any act which the
directors of the corporation could au-
thorize or ratify." Jenkins S. S. Co.
V. Preston, 108 C. C. A. 473, 186 Fed.
609, citing other cases. "It will be
presumed that he is authorized by
the corporation to do any act that
the corporation might lawfully do."
Tourtelot v. Whithed, 9 N. D. 467,
474. See also the elaborate discus-
sion in Sencerbox v. First Nat Bank,
14 Idaho, 96.
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§§ 980. 981
and the like, as the nature, scope and purpose of the enterprise may
properly require.
§ 980. Extent of authority depends on nature of business. — ^The
extent of the implied or incidental authority of an agent who has gen-
eral authority to manage his principal's business, must therefore be
dependent largely upon the nature of the business and the degree to
which it is placed under the agent's control. Thus it is obvious that
the implied powers of the general manager of a great continental in-
surance company, while they might be of the same kind, would differ
greatly in degree from those of a clerk in an inland store who is given
general control of the business during his principal's absence.
In general terms, it may be said that the authority of such an agent
will be presumed to be co-extensive with the business to be performed,
and will include the authority to do all of those things which are nec-
essary and proper to be done in carrying out the business in its usual
and accustomed way, and which the principal could and would usually
do in like cases if present.*
His authority, moreover, in this respect must, as in other cases, be
deemed to be what it is held out as being, and is not to be limited by
private instructions of which the persons who deal with him have no
notice.*
§ 981. Execution must be confined to principal's business and for
his benefit. — It would seem to go without saying, however, that the
exercise of such an agent's authority, broad though it may be, must
still be confined to the scope of the business he is thus authorized to
manage, and be availed of only for the principal's benefit. He is not
to exercise his authority for the benefit or acconunodation of third
persons, even though indirectly a benefit may enure to his principal ; •
1 German Fire Ins. Oo. ▼. Gmnert, ivhat is usual and customary to do
112 111. 68; Lowensteln t. Lombard,
164 N. Y. 324; Tennessee R. Transp.
Ck>. T. Kavanaugh, 101 Ala. 1; Ameri-
can Graphic Co. v.- Railway Co., 44
Minn. 93; Havens v. Church, 104
Mich. 136; Byxbee v. Blake, 74 Conn.
607, 57 L. R. A, 222.
In Duncan t. Hartman, 143 Pa.
596. 24 Am. St R, 570 (alTd 149 Pa.
114), it is said that "an agency to
manage implies authority to do with
the property what has previously
been done with it by the owners, or
others with their express or implied
consent; or further, to do with it
with property of the same kind in
the same locality."
■ Montgomery Fum. Co. ▼. Hardar
way, 104 Ala. 100; Tice v. RusseU, 43
Minn. 66; Hartford L. Ins. Co. ▼.
Hayden, 90 Ky. 39; Allis ▼. Voigt, 90
Mich. 125; Levy v. First N. Bank,
27 Neb. 557; Cox ▼. Brewing Co., 66
Hun, 489; Benesch v. Ins. Co., 16
Daly, 394; Georgia MIL Academy v.
Eistill, 77 Ga. 409.
sBullard v. DeGroff. 59 Neb. 783.
An agent of a townsite corporation
has no implied authority to purchase
lumber or other material for private
707
§ 982]
THE LAW OF AGENCY
[book II
and, no more than any other agent, is he to exercise it on his account
or for his own benefit.*
With these general principles in mind, attention will next be given
to some illustrations of the construction of such a power. Thus —
§ 982. Authority to pledge principars credit— Supplies for store
or business. — An agent employed generally to manage his princi-
pal's store or business has usually implied authority, for the keeping
up of tlie stock, to make reasonable and proper purchases of goods
upon his principal's account on such terms as to credit and time of
payment as are customary in the purchase of such goods in like cases,*
but this implied authority would not extend to goods of a kind or
amount not usually kept or bought for such a business or store ; •
and his authority by the terms of the grant, may be limited to the sale
Individuals to build houses upon lots
which they had purchased of the
company. Union Pac Townsite Co.
V. Page, 54 Kan. 863.
«See Clarke v. Kelsey, 41 Neb.
766; McClendon v. Bradford, 42 La.
Ann. 160; Page v. Webb, 9 Ky. L.
Rep. 868, 7 S. W. 308; Stewart v.
Cowles, 67 Minn. 184.
BThe general agent of barge and
tow boat business has Implied power
to agree that a boat which he has
chartered will stand at the risk of
the charterer during the bailment
Dunwoody v. Saunders, 50 Fla. 202.
The manager of a quarry may buy
necessary machinery. Dorsey v.
Pike, 10 N. Y. Supp. 268. The man-
ager of waterworks may purchase
necessary pump. Goss v. Helblng, 77
Cal. 190; Banner Tobacco Co. v. Jen-
ison, 48 Mich. 459; Schmidt v. San-
del, 30 La. Ann. 363; Pacific Biscuit
Co. V. Dugger, 40 Or. 362; Louisville
Coifln Co. V. Stokes* 78 Ala. 372.
The power to buy is coextensive
with the business as actually con-
ducted with the principal's apparent
consent and approval. Witcher v.
Gibson, 15 Colo. App. 163.
See also, Lesher v. Loudon, 85
Mich. 52. In Keyes v. Union Pac.
Tea Co., 81 Vt 420, the power was
sustained on long acquiescence.
One made general manager of a re-
tail drug store has implied authority
to contract for telephone service at
store. New York Telephone Co. v.
Barnes, 86 N. T. Supp. 327.
If the agency be to carry on a mer-
cantile business, and to do this, it is
necessary to rent a house, agent may
do so. Baldwin v. Oarrett, 111 Oa.
876. To same effect, see, Singer Mfg.
Co. V. McLean, 106 Ala. 316.
A "booftJceeper" who Is left in
.charge of an office during the ab-
sence of the regular manager has im-
plied authority to direct a delivery
of goods sold. Fitzgerald Cotton Oil
Co. V. Farmers' Supply Co., 3 Ga.
App. 212.
See also, Kramer v. Compton, 166
Ala. 216. The fact that the manager
wrongfully appropriates the goods to
hia own use is immaterial if his -act
of purchasing them was within hia
authority. Austin v. Elk Merc Co.,
38 Wash. 365.
• An agent, having charge of a
beer business, has no implied power
to buy whisky in quantities, that not
being an authority commonly inci-
dent to the principal business.
Hackett v. Van Frank, 105 Mo. Apii.
384. See also Getty v. Milling Co.,
40 Kan. 281.
District agent of an insurance
company has no implied authority to
buy furniture upon the company's
credit to flit up an office, Beebe v.
Equitable, etc., Ass'n, 76 Iowa, 129.
708
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ 983-985
of goods which the principal may supply.^ One employed merely as
"shop superintendent*' may easily be found to have much less exten-
sive authority, not including the authority to purchase.*
Limitations upon an implied authority to buy upon credit, resulting
from the fact that the agent is supplied with funds and directed to
buy only when he has funds to pay, are discussed in the earlier sec-
tion dealing with agents to purchase.
§ 983. Supplies for hotel — An agent authorized to take
charge of and manage his principal's hotel and to purchase the neces-
sary supplies, may buy suitable and appropriate goods for use in the
hotel upon his principal's credit ; • but he has no implied authority to
bind his principal for the safe keeping and return of carriages fur-
nished by a livery-stable keeper for use by guests of the hotel.**
§ 984. !— Supplies for farm or plantation. — So though an
agent authorized to manage a plantation or farm would have implied
authority to purchase, on his principal's account, the necessafy sup-
plies therefor,^* he would have no such authority to pledge the credit
of his principal for supplies furnished to the "hands" engaged upon
the plantation.**
§ 985. Board and provisions for help. — ^Where it is cus-
tomary in the business for the employer to board the workmen em-
ployed, such an agent may lawfully contract in his principal's name
for the board of the men employed by him.** So it is held that a mine
superintendent, by virtue of his position, has the authority to bind his
principal for the price of provisions furnished to the keeper of a board-
ing house at which the miners board, where it is necessary that the
provisions be furnished in order that the mine may continue in opcra-
The Buperintendent of one papor The general manager of a hotel,
mill among several located at distant may bind his principal by a contract
points, who has authority to buy for ordinary advertising. Mullin y.
pulp for his own plant, has no an- Sire, 34 N. Y. Misc. 540; Calhoon v.
thorlty to buy for the others. Hlnde Buhre, 75 N. J. L. 439; Kastor Adv.
6 Dauch Paper Co. v. Atterbury Co. v. Coleman, 6 Ont. W. R. 791.
Eros., 107 C. C. A. 296. 185 Fed. 76. 10 Brockway v. Mullin, 46 N. J. L.
7 See, aa to the efCect of such a re- 448, 50 Am. Rep. 442.
striction upon persons not advised Nor has such an agent implied au-
of It. Watteau v. Fen wick, [1893] 1 thorlty to make extensive alterations
Q. B. 346. and renewals in the plant Fisk v.
8 Parr y. Northern Blectrical Mfg. Greeley Elec. I0, Co., 3 Colo. At)p. 319.
Co., 117 Wis. 278. " Jefferds v, Alvord, 151 Mass. 94.
• Beecher v. Yenn« 53 Mich. 466; But see Meyer v. Baldwin, 52 Miss.
CummingB ▼. Sargent, 9 Mete 263.
(Mass.) 172; WaUis Tobacco Co. y. 12 Carter y. Burnham, 31 Ark. 212.
Jackson, 99 Ala. 460; Fisk y. Oreeley 13 Burley y. Kitchell, 20 N. J. L.
Elec. L. Co., 3 Colo. App. 319. 305.
709
§§ 986, 987]
THE LAW OF AGENCY
[book II
tion; but the authority is limited to necessary provisions,** But it is
held that it is not incidental to the operation of a railway to board its
employees ; nor is it within the apparent scope of the authority of such
an agent as a roadmaster to bind the company to pay for their board.^*
§ 986. Supplies procured by husband as manager of wife's
business. — So where a husband is given by his wife the general man-
agement of her business, property or estate, or assumes the manage-
ment with her knowledge and acquiescence, contracts which he makes
for labor or supplies needed therefor in the ordinary course of events,
or for improvements, buildings and the like added with her knowledge
and apparent approval, will be binding upon her.^*
But, as has often been pointed out, the husband has no authority
simply because, he is husband ;^^ his authority to bind her as manager
of her affairs will not extend to supplies and labor for his own busi-
ness or estate ; ^* nor can he by such authority charge her for goods
and supplies which it is his duty as head of the family to furnish on
his own account.^*
His authority to bind her by borrowing money and giving nego-
tiable paper would be as limited as that of any other managing agent.*^
§ 987. Supplies procured by wife as domestic manager. —
So it has been seen in a preceding section that, where a husband main-
tains a domestic establishment, and puts his wife in charge, she has
therefrom implied authority to pledge her husband's credit for such
supplies, service and the like, as are ordinarily procured by a wife
placed in charge of a similar establishment.** Many illustrations of
this rule have already given.
••Walking-boss" of railway contrao-
tor whose duties are to superintend
construction and see that sub-con-
tractors complete their contracts and
who has authority to compel the
keeping of sufficient men at work to
fulfill such contract may bind his
principal by a promise to see that la-
borer's board bills are paid. Cannon
V. Henry, 78 Wis. 167, 23 Am. St Rep.
399.
1* Heald y. Hendy, 89 Cal. 632.
15 St. Louis, etc., Ry. Co. v. Ben-
nett, 53 Ark. 208,' 22 Am. St R. 187.
i«Maxcy Mlg. Co. v. Burnham, 89
Me. 538, 56 Am. St Rep. 436; Roberts
V. Hartford, 86 Me. 460; Arnold v.
Spurr, 130 Mass. 347; Wheaton v.
Trimble, 146 Mass. 346, 1 Am. St
Rep. 468; JefFerds ▼. Alvord, 161
Mass. 94.
Compare Parker v. Collins, 127 N.
Y. 186.
fAnte, S 169.
18 Lime, etc.. Clay Co. ▼. Hlleman,
24 Pa. Co. Ct 184; Collins v. Fair-
child, 66 Sup. Ct Rep. 609 (N. T.).
i» Hutchinson v. Brooks, 16 Daly,
486.
20 See ante, % 169; Taylor v. Ang«l,
162 Ind. 670; Witz ▼. Gray, 116 N.
Car. 48; Lane v. Lockridge (Ky.), 17
Ky. L. Rep. 1082, 88 S. W. 780; Mo«
Murray v. Gage, 19 App. Dlv. 606.
»See ante, % 162.
710
CHAP, ni]
CONSTRUCTION OF AUTHORITIES
l§988
§ 9B8.
Hiring help. — ^A general manager, put in complete
charge of a business in which servants, and the like, are ordinarily
employed would have implied authority, within the range of what is
reasonable and proper, to employ the necessary help.*^ In doing so,
he may make contracts of a usual and reasonable sort,** such as for
example, the hiring of an employee for a year ; ** or the assumption of
tt Jenkins S. S. Ck). ▼. Preston, 108
C. C. A. 473, 196 Fed. 609; King v.
Seaboard Air Line R. Co., 140 N. C.
433. In Ralke t. Rubber Mfg. 05.,
127 Mo. App. 480, a territorial man-
ager put in charge of the business in
that territory and told that the prin-
cipal looked to him for results and
left the "ways and means" in his
hands, was held to have implied au-
thority to hire the necessary em-
ployes.
In PhiUips ▼. Gelser Mfg. Ck>., 129
Mo. App. 396, a "secretary," in the
offices of the general manager who
did hare authority, was found to
have by acquiescence the same au-
thority to hire necessary employes.
In Simpson v. Harris, — Ala. — ,
56 So. 968, the general manager of
a lumber firin was held to have at
least apparent authority to contract
for the cutting of timber belonging
to the firm.
But in the late case of Stephens v.
Roper Lumber Co., — N. C. — , 76
S. B. 933, 41 L. R, A. (N. S.) 1141,
it was held that the general superin-
tendent of a lumber company had no
implied authority to make a con-
tract "by the terms of which plain-
tifF was to be dropped from the com-
pany's pay roll for an indefinite
period, and cease all regular work
for the company, and was to belaid
during such time as he was unem-
ployed $100 per month, and mean-
time was not to take other employ-
ment, but hold himself in readiness
to resiune work when notified."
If the principal has given appar-
ent authority to here help, he will
bo bound although the agent violates
his private instructions not to hire
at all, or not to hire upon particular
terms. Benesch v. Ins. Co., 16 Daly
71
(N. Y.), 394; Cox v. Brewing Co., 66
Hun, 489; Rice y. Jackson, 16 Pa.
Clr. Ct R. 15.
A station agent has no implied au-
thority to employ a detective to in-
vestigate the robbery of cars at his
station. Schlapbach v. Richmond R.
R., 85 S. Car. 517; neither has a "su-
perintendent of trucking" such a
power. Rebenstein v. Frost, 116 N.
Y. Supp. 681.
But in Qrand Pacific Hotel v. Pln-
kerton, 217 111. 61, the general man-
ager of a hotel was held to have au-
thority to engage detective service.
A "route agent" of an express com-
pany directed to Investigate a theft
has no implied authority to make a
special contract with a constable to
pay the latter for services tn aiding
to detect the thief. Fee v. Adams
Express Co., 38 Pa. Super. 83.
In Thiol Detective Service Co. v.
McClure, 74 C. C. A. 122, 4 U R. A.
(N. S.) 843, a son acting under a
very broad power of attorney to at-
tend to his mother's affairs, was held
to have no Implied auth'drily to pro-
cure a costly investigation by a de-
tective agency of the affairs of a cor-
poration in which she was a stock-
bolder.
See also, Merritt v. Huber, 137
Iowa, 135; Blowers v. Southern Ry.
Co., 74 S. Car. 221.
2< Garner v. Brewing Co., 6 Utah,
332.
S4 Laming v. Peters Shoe Co., 71
Mo. App. 646; Roche v. Pennington,
90 Wis. 107; Cox v. Brewing Co., 56
Hun, 489; Armstrong v. Tyndall
Quarry Co., 16 West. L. Rep. 111.
Or by the season. Tunison v. Cop-
per Co., 73 Mich. 452, or for the bal-
ance of the season. King v. Sea-
board Air L. R. Co., 8upra, or for
§989]
THE LAW OF AGENCY
[book II
the risk of the eraployee's competency to fill the position.'* He would
not, on the other hand, have any implied authority to contract to give
the employee, as part of his compensation, an interest in the princi-
pal's . business or its profits.**
Tlie questions of an implied authority, if there be any, to hire help
in a sudden emergency ,^^ and the liability of a master for the negli-
gence of a third person assisting his servant," are discussed in other
places.
§ 989. Other incidental contracts* — A general agent charged with
the exclusive management of a real estate loan business, which in-
volved the examination of titles and the foreclosure of mortgages, has
implied authority to direct the employment of a lawyer whenever the
interests of his principal demand such professional assistance.-^ So
iht general manager of a mining company has implied authority to
buy and sell personal property for use about the premises,*® but such
two seasons ; Jenkins SL S. Co. v.
Preston, 108 C. C. A. 473, 186 Fed.
609.
But, of course, not fof a period
which the employee knows Is beyond
the manager's actual authority.
Francis v. Spokane Athletic Club, 54
Wash. 188.
SB Roche V. Pennington, supra.
28 Deffenbaugh v. Jackson Paper
Mfg. Co., 120 Mich. 242.
" See ante, § 339.
«• See postf Book IV, Chap. V.
» Davis y. Matthews, 8 S. D. 300.
In Keenan v. Lauritzen Malt Co., 67
Wash. 367, a general territorial
agent of a company engaged in man-
ufacturing and seiling an alleged
nonintoxlcating liquor was arrested
and prosecuted for selling upon the
ground that the liquor was really in-
toxicating and within a prohibitory
statute: the goods in his possession
were alBo seized. He employed an
attorney to defend him and the
goods on his principal's account, and
advised the principal of what he had
done. The principal made no objec-
tion. Beld that the principal was
liable to the attorney.
Manager of business of advertising
in street cars haa Implied authority
to agree that rival goods shall not be
advertised in the, cars if a particular^
contract for space Is made. Stltt v.
Ward, 142 App. Dlv. 626.
soScudder v. Anderson, 54 Mich.
122.
The general manager of a mining
company may employ necessary la-
bor, purchase necessary tools and
supplies, mine and sell the ore, and
bind the company for bills neces-
sarily contracted In the prosecution
of the work (Lee S. M. Co. v. Smelt-
lug Co., 16 Colo. 118; Oro, etc., Co. v.
Kaiser, 4 Colo. App. 219); but he
may not bind the company by the
purchase ot an expensive mill. Vic-
toria, etc., Co. V. Fraser, 2 Colo. App.
14.
See also. Gates Iron Works Co. v.
Denver Bug. Works Co., 17 tJolo.
App. 15.
In Hodges v. Bankers* Surety Co.,
152 III. App. 372, the defendant
surety company had furnished a
bond for faithful performance by a
construction company of its part of
a building, for which the plalntifF
was general contractor. The con-
struction company abandoned its
agreement, whereupon the plaintiff
and the Chicago agent of the surety
company agreed that the plaintiff
himself should complete the work,
' and be reimbursed for the same by
the surety company. The agent,
12
CHAP. Ill]
CONSTRUCTION OP AUTHORITIES
[§ 990
an agent has no implied authority to bind his principal for debts of a
third person ; •* nor has an agent, authorized to operate a shingle mill,
and to contract for shingle bolts, negotiate for a right of way, and
purchase timber, any implied authority to bind his principal by a con-
tract for the building of a logging road;** nor has an agent author-
ized to carry on his principal's farm any implied authority to permit
a creditor to cut, remove and sell on execution, grass growing on the
farm.*' A conductor of a railroad train, as general manager thereof,
has implied authority to hire a temporary brakeman if necessary in
place of one taken suddenly ill upon the way;** but he would, on the
other hand, have no general authority to hire, or to bind his principal
to hire, laborers for construction work upon a remote part of the
road.**
§ 990. Authority to waive liens, rights, conditions, notices, etc.—
It is not within the ordinary interpretation of authority to manage that
the agent shall have any general authority to waive, surrender or
upon whose directions this was done,
was the general representative of the
def^idant compaoy, an Ohio corpo-
ration; he described himself in busi-
ness as "Manager for Illinois/' and
this was done with the knowle^e of
defendant. HeUf that the agent had
at least apparent authority to au-
thorijEe a completion of the contract,
and to charge his principal with ex*
penditures incurred therein.
In Simpson v. Harris, Ala. — ,
56 So. 968, the manager of a Inmber-
ing firm was held to have authority
to make a contract for the cutting
and sawing of the principals' timber
into lumber. In General Cartage A
Storage Ck). v. Cox, 74 Ohio St 284,
113 Am. St R. 959; the actingT gen-
eral manager of a storage company
was held to have impUed authority
to agree that goods left in storage
would be insured.
A mere "foreman" in charge of a
piece of ordinary manual work has
no implied power to make contracts
for supplies or services respecting
it. Langston v. Postal Tel. Co., 6 Ga.
App. 833.
siRuppe v. Edwards, 52 Mich. 411;
New York Iron Mine v. Negaunee
Bank, 39 Mich. 644; Clayton V. Mar-
tin, 31 Ark. 217; Meyer v. Baldwin,
BUpra,
A mana^ng agent In bayfng goods
has no authority to agree that the
seller shall charge and the manager
allow an excessive price in order
that the excess may be i^^lied upon
a debt owing by the principaVs pre-
decessor in the business. Pacific
Lnmber Co. v. Moffat, 67 C. C. A. 442,
134 Fed. 836.
«» Gregory v. Loose, 19 Wash. 599.
ss Benjamin t. Benjamin, 15 Conn.
847, 39 Am. Dec. 884.
>« Georgia Pac. R. Co. ▼, Probst, 83
Ala. 518, 85 Ala. 203.
See also, Newport News, etc., Ry.
Co. V. Carrol, 17 Ky. Law Rep. 374,
31 S. W. 132.
Bat not when there was no emer-
gency or unusual circumstance. St.
Louis, etc., Ry. Co. v. Jones, 96 Ark.
558, 37 L. R. A. (N. S.) 418.
8» Olson V. Great Northern Ry. Co.,
81 Minn. 402. The action here was
not upon the contract of employ-
ment, but for damages caused by in-
ducing plaintiff to go to the place in
question, and then failing either to
give him work, provide for his ac-
commodation or bring him back.
713
§ 991]
THE LAW OF AGENXY
[book II
qualify his principars rights, privileges, immunities or protective con-
ditions. Management ordinarily involves control, preservation, due
ordering, and not waiver, surrender or destruction. This is particu-
larly true, of course, of rights and privileges which arise outside the
domain of the agent's activities, but it is also ordinarily true of those
which lie within. An agent authorized through management to ac-
quire benefits for his principal, can have thereby no corresponding
authority to give them up when once acquired.
There may, however, be cases in which a general authority of man-
agement may fairly include some power of waiver or surrender, as a
natural incident of the business or affair to be managed — cases in
which adjustment, compromise, or waiver of some things for the pur-
pose of properly accomplishing the main end may easily be justified.
Thus the general manager of a lumber yard, authorized to sell lum-
ber with or without security, for cash or on long or short credit, and
having general management and conduct of the business, has been held
to have implied authority to waive a mechanics lien, provided for by
statute, for lumber sold by him, especially where he did it in order to
secure payment by other means.**
But, on the contrary, where such a Hen has attached it has been said
that "the ordinary duties of even a business manager would not au-
thorize him to execute a release under seal, in the name of his em-
ployer, of a valid lien on real estate,** the debt not having been paid,
and no consideration having been given for the release.®'
§ ggi. There are many cases in which a general manager,
a general superintendent or a general agent may properly make ad-
justments of questions arising in the business, may meet emergencies,
and provide for unexpected exigencies ; and these may involve waivers
of time, or alteration of terms, or waivers of conditions, or surrender
of technical rights, as mere natural and ordinary incidents.** Where
the whole question of determining what contracts shall be made, and
how; and what performance shall be provided or demanded, is con-
86 Badger Lumber Go. v. Ballen- contracts, has implied authority to
tine, 64 Mo. App. 172, citing White
Lake Lumber Co. v. Stone, 19 Neb.
402. To same effect: Hughes v. Lami-
Jng, 34 Or. 118, 75 Am. St. R. 674.
»T Deacon v. GreenjQeld, 141 Pa.
467. See also, Carr v. Greenfield, 134
Pa. 503.
88 Thus, it has been held that the
president of a manufacturing corpo-
ration, who has authority to make
terminate or release contracts made.
Indianapolis Rolli^g Mill v. St.
Louis, etc., Ry., 120 U. S. 256, 30 L.
Ed. 639. In Van Santvoord ▼. Smith,
79 Minn. 316, a "general contracting
and travelling agent" was held to
have Implied authority to change by
parol a term of the company's con-
tract with a sales agent iJthough
the contract itself was In writing.
714
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 992
fided to the agent, the same authority which might have shaped the
transaction differently in the first instance seems ordinarily sufficient
to mould its form accordingly afterwards.
So, in many cases in which notice is required to be given, and it is
provided by the contract that it shall be given in some particular man-
ner, as by writing, by registered mail, and the like, it has been held
that an agent, authorized to receive the notice and actually receiving
it, may waive compliance with the requirement that it shall be given
in that particular manner.**
§ 992. Contracts by architects, superintendents, etc. — An archi-
tect, engineer, or other superintendent employed to supervise the con-
struction of a building, railroad, or other similar structure, is usually
an agent with limited authority. His authority, of course, may be
given a wider range," but, in the absence of such an enlargement, his
authority and duty are confined to seeing that the work is done in
and expressly provided tliat modlfl*
cations be submitted to the company
for acceptance in writing.
In Burley v. Hitt, 64 Mo. App. 27S,
It was held that a geKsral manager
with power to conduct the business,
and make contracts has authority to
release, waive or vary contracts
mada In Tlce v. Russel, 48 Minn.
66, a son In general charge of his
father's lumber business, and in
charge of collections, had authority
to extend the time within which a
mortgagor could redeem after fore-
closure sale.
See also Newberry v. Chicago
Lumbering Co., 164 Mich. 84; Schul-
thels V. Caughey, 146 N. Y. App. DlT.
102; Galveston, etc., Ky. ▼. House, 4
Tex. ClY. App. 263; Randall v. Fay
Co., 168 Mich. 630; Herpolsheimer v.
Harvester Co., 83 Neb. 63.
Many other cases of waiver by
general sales agents will be found in
the sections dealing with the author-
ity of agents to sell personal prop-
erty.
so See Western Union Tel. Co. v.
Prevatt, 149 Ala. 617; Western
Union Tel. Go. v. Cunningham, 99
Ala. 814; Ssmdicate Ins. Co. v. Catch-
ing8» 104 Ala. 176; Western Union
TeL Co. V. Blanchard, 68 Ga. 299, 46
Am. Rep. 480; Hill ▼. Western Union
Tel. Co.» 66 Oa. 486, 21 Am. 8t Rep.
166.
40 See the excellent case of Mich-
aua V. MacOregor, 61 Minn. 198.
Here an agent, acting under a very
general power of attorney in the
construction of a building, was held
to have authority, partly as a matter
o* emergency to make an additional
contract with the contractors for the
removal of rocks which were sunk
below the surface and were un-
known to either party at the time
the original contract was made.
. See also, Henderson Bridge Co. v.
McGrath, 134 U. S. 260, 33 L. Bd. 934.
A superintendent put in charge of
tunnel construction, and having to
arrange for the disposition of the ex-
cavated material, held^ to have im-
plied authority to arrange with a
broker to dispose of the earth and to
give him all over a certain sum for
his services. Thompson v. Mills, 46
Tex. Civ. App. 642.
A mere inspector or overseef em-
ployed by the architect cannot bind
the owner by accepting performance
of the contract. Louisville Foundry
Oo. V. Patterson (Ky.), 93 S. W. 22.
See also, Merrill v. Worthington,
166 Ala. 281, Ct Rumble T. 0am-
mings, 62 Or. 208.
71S
§ 993]
THE LAW OF AGENCY
[book II
accordance with the plans and specifications agreed upon. He has,
therefore, no implied authority to alter the terms of the contract,** or
to waive compliance with its provisions. He has no implied authority
to order extra work or materials,** extend the time of performance,**
make any change in the plans and specifications,** or accept different
or inferior materials and bind his principal to pay for them.** Where
the contract provides that payment shall be made upon his certificate
of compliance, this goes no further than to authorize him to pass upon
the manner of performance ; it gives him no general authority to waive
compliance with any of the substantial conditions of the contract, such,
for example, as that the payments shall not be due imtil the work has
been done to the architect's satisfaction.*'
§ 993- Contracts by station and ticket agents. — A railway station
agent having general charge of the company's business at that station
and authorized to receive and forward freight, has implied authority
to bind the company by stating what is the rate of transportation of
goods ; *^ or to contract to furnish a certain number of cattle cars at
his station on a specified day, the shipper being ignorant of any limita-
tion upon his powers.*^ Such an agent has also been held to have
implied authority, no rule or regulation to the contrary being shown*
41 Sweeney v. Indemnity Co., 84
Wash. 126; Watts v. Metcalf, 23 Ky.
Law Rep. 2189; Forman v. Liddes-
dale, [1900] App. Caa. 190. But in
Driver v. Galland, 59 Wash. 201. aa
agent having general authority to
build a house, was held to have an-
thority» after construction had be-
gun, to alter the contract he had
made, so (ar as the method of pay-
ment was concerned.
42 Starkweather v. Ooodman, 48
Conn. 101, 40 Am. Bep. 162; Wood-
ruff V. Railroad Co., 108 N. T. 39;
Mcintosh V. Hastings, 166 Mass. 844;
Gray v. La Societe Francaise, etc.,
181 Cal. 566; Dodge v. McDonnell, 14
Wis. 553; Day v. Pickens County, 68
8. Car. 46; Carson v. Mitchell, 41 111.
App. 241; Clark y. Bird, 46 111. App.
5S3; Miller v. Sullivan, 14 Tex. Civ.
App. 112.
« Kelly V. Fejervary (Iowa), 78
N. W. 828.
MAdlard v. Muldoon, 46 111. 198;
Mallard T. Moody, 106 Qa. 400.
4oGlaolus V. Black, 60 N. Y. 146,
10 Am. Rep. 449; Fltagerald v.
Moran, 141 N. Y. 419.
^•Leverone v. Arancio, 179 Mass.
489. "An architect la not the gen-
eral agent of the owner," said the
court See also, Lewis v. Slack, 27
Mo. App. 119.
His certUicate, however, within
the terms of the contract, binds the
owner. Young v. Stein, 162 Mich.
810, 126 Am. St R. 412, 17 U R. A.
(N. S.) 23L
«7 Ohio, etc.» Ry. Co. v. Savage, 38
IlL App. 148, so as to permit a re-
covery of excess after goods had
been loaded in reliance upon the
rate named.
4« Harrison v. Missouri Pacific Ry.
Co., 74 Mo. 364, 41 Am. Rep. 318;
Nichols V. Railroad Co., 24 Utah, 83,
81 Am. St R. 778; Wood v. Raiiwa)
Co., 68 Iowa, 491, 66 Am. Rep^ 861;
Pittsburg, eto., R. Co. v. Racer, 10
Ind. A^. 603; Gulf, eta, R. Co. v.
Hume, 87 Tex. 211; Baaton v. Dud-
716
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 994
to bind the company by accepting cattle brought to the station for
shipment (but which can not be shipped until the shipper procures a
license), and undertaking to hold them as a depositary during the
brief time required for obtaining the license.**
So a railway ticket agent, authorized to sell tickets for berths in the
cars of a sleeping car company, has been held to have implied author-
ity to bind the latter company by undertaking, in response to a tele-
gram, to reserve accommodations for a prospective passenger, in the
ordinary way.*®
. But neither the station agent,*^ nor the baggage master,** would
have authority to incur obligations for transportation beyond the com-
pany's own lines, in the absence of some rule or custom so to do.**
Nor has such an agent any authority to suspend the rules or waive the
rights of the company.**
§ 994. Contracts for medical aid or nursing. — ^Although as has
been seen in an earlier chapter,** there is difference of opinion, the
weight of authority concedes to the general manager or general su-
perintendent of a railroad company an implied autliority [difficult to
sustain in legal theory], to secure on account of the company, medical
care and treatment for employees, and perhaps for passengers, in-
jured in the operation of the road.** Similar authority, however, is
generally denied to subordinate employees such as station agents, yard
ley, 78 Tex. 236; Kansas Pac. R7.
Co. v. Bayles, 19 Colo. 348.
But not to furnish cars at some
otber station. Gulf, eic, R. CO. v,
Hodge, 10 Tex. Civ. App. 543.
49 Flint V. Railroad Co., 73 N. H.
141.
He may also bind the company by
agreeing to arrange for a prompt un-
loading of the goods at destination.
Lake Krie, etc., R. Co. v. Rosenberg*
31 111. App. 47.
«o Pullman Co. v. Nelson, 22 Tex.
Civ. App. 223; Pullman Co. v. Willet,
27 Ohio Cir. Ct 649, aff'd 72 Ohio St.
690.
BiMinter v. Railroad Co., 56 Mo.
App. 282.
62 Marmorstein y. Railroad Co., 18
N. T, Misc. 32.
5«Gulf, etc., R. Co. V. Cole, 8 Tex.
Civ. App. 635.
K4 Harris v. Railroad Co., 91 6a.
317.
B5 See ante, S 341.
06 See the exhaustive discussion of
the question by Prof. H. B. Hutch-
ins, 2 Michigan Law Review 1; see
also, Marquette, etc., R. Co. v. Taft»
28 Mich. 289; Southern Ry. Co. v.
Brister, 79 Miss. 761; Cairo, etc., R»
R. Co. V. Mahoney, 82 111. 73, 25 Am.
Rep. 299; Indianapolis, etc, R. Co. v.
Morris, 67 111. 295; Pacific R. Co. v.
Thomas, 19 Kan. '256; Atchison, etc.,
R. Co. V. Reecher, 24 Kan. 228; Union
Pac. R. Co. V. Winterbotham, 52 Kan.
433; Terre Haute R. Co. v. Stockwell,
118 Ind. 98; Cincinnati, etc., R. Co*
V. Davis, 126 Ind. 99, 9 L. R. A. &03.
Cf. Hanscom v. St R. Co., 53 Minn.
119, 20 L. R. A. 695.
As to the authority of the presi-
dent in such cases see, Canney v.
Railroad Co., 63 Cal. 501; Trenor v.
Railroad Co., 50 Cal. 222.
No authority to employ aid for an
injured passenger when the company
was not at fault. U. P. Ry. Co. v.
Beatty, 35 Kan. 265, 67 Am. Rep. 160.
717
§ 994]
THE LAW OF AGENCY
[book II
masters, conductors and locomotive engineers in the absence of evi-
dence of a subsequent ratification of their acts by some competent of-
ficer of the company," unless it be in a case of sudden emergency
when he is the highest representative upon the ground and immediate
action is necessary.'* His authority in these cases, however, is strictly
construed,*^" and ends with the emergency.'*
A surgeon employed by a railroad company to attend upon persons
injured by an accident, has no implied authority to bind the company
by a promise to pay for meals and services furnished to those who
were in attendance upon a party injured.**
In the case of mining, manufacturing and other similar enterprises,
the authority of the general manager has usually been held not to be
per se sufficient to warrant him in binding his principal to pay for
medical services, and the like, furnished to injured employees.** A
•^St LoqIb, etc., R. Co. ▼. Olive,
40 111. App. 82; Peninsnlar R. Co. v.
Gary, 22 Fla. 356, 1 Am. St. Rep 194
(disapproving Terre Haute, etc., R.
Co. V. McMurray, po«f); Atlantic,
etc., R. Co. V. Reisner, 18 Kan. 468;
Tucker v. St L., etc., Ry. Co., 64 Mo.
177; Sevier v. R. Co., 92 Ala. 258;
St Louis, etc., R. Co. v. Hoover, 58
Ark. 377; Louisville, etc., R. Co. v.
HcVay, 98 Ind. 391, 49 Am. Rep.
770; Patterson v. Consol. Trac. Co.,
9 Pa. Dist 362; Adams v. Southern
Ry. Co., 126 N. Car. 565.
B8 In a few states, the authority of
the subordinate employees is recog-
nized in cases of emergency. See
Terre Haute, etc., R. Co. v. McMur-
ray, 98 Ind. 858, 49 Am. Rep. 752;
Louisville, etc., R. Co. v. Smith, 121
Ind. 353, 6 L. R. A. 320; Arkansas,
etc., R Co. V. Loughridge, 65 Ark.
800; Chicago, etc., R. Co. v. Davis,
94 111. App. 54; Toledo, etc., R. Co. v.
Mylott, 6 Ind. App. 438; Evansville,
etc., R. Co. V. Freeland, 4 Ind. App.
207 (an emergency will not justify
employment for any one but a pas-
senger or employee; not as to a tres-
passer) ; Adams v. Southern Ry. Co.,
supra; Wills v. International, etc.,
R. Co., 41 Tex. Civ. App. 68.
MSee Arkansas, etc., R. Co. t.
Loughridge, supra,
«o Bvansville, etc., R. Co. v. Free-
land, 4 Ind. App. 207; Toledo, etc.,
R. Co. V. Mylott, 6 Ind. App. 438;
Bedford Belt R. Co. v. McDonald, 12
Ind. App. 620, s. a 17 Ind. App. 492,
60 Am. St. R. 172.
MBushnell v. Chicago* etc, Ry.
Co., 69 Iowa, 620.
An agent authorized to secure a
doctor cannot authorise the doctor to
employ other physicians. Bond v.
Hurd, 81 Mont 314, 3 Am. Jb E. Ann.
Cas. 666. See also Mohlman v.
American Grocery Co., 68 N. J. Eq.
602. A local doctor employed by a
railroad company in a small town
having in fact no authority to em-
ploy surgical aid did not bind the
company In calling in another doc-
tor when he had said to the other
doctor that he did not have authority
to make a contract but that he be-
lieved the company would pay a rea-
sonable fee. Oalveston, etc., R. R. v.
Allen, 42 Tex. Civ. App. 576.
wHohnes v. McAllister, 128 Mich.
498, 48 L. R. A 396 (laundry) ; (see
also Hodges v. Electric Co., 109 Mich.
647); Melsenback v. Cooperage Co.,
45 Mo. App. 232; Bwazey v. Union
Mfg. Co., 42 Conn. 566; New Pitts-
burg Coal 4b Coke Co. v. Shaley, 26
Ind. App. 282; Chaplin v. Freeland,
7 Ind. App. 676; Spelman v. Mining
Co., 26 Mont 76, 55 L. R. A. 640. 91
Am. St R. 402; Bond y. Hurd, 31
718
CHAP, mj
CONSTRUCnON OF AUTHORITIES
[§§ 995^.996
fortiori would the power of the inferior servant be insufficient even in
emergencies; but a few cases apply the same rule as in the case of
railway companies.*'
§ 995. Implied authority to sell product of business. — ^The gea-
eral manager of a business, whose product is designed or kept for
sale, would ordinarily have implied authority to sell such product, in
the ordinary way,"* and to fix the terms and conditions of the sale
within the limits permitted to any selling agent/* Thus an agent au-
thorized to manage his principal's plantation may sell the product o£
it and collect the money therefor'; •• but he has no implied authority to
agree to exchange such product for that of another plantation."^ An
agent, having general authority to manage the business of a lumber
company, may not only employ tlie necessary workmen, but he may,
if it become necessary, make a sale of lumber to pay them.""
§ 996. Authority to collect or receive payment. — In like manner,
the authority of a managing agent to collect or receive payment must
depend upon the nature of the business. If it be one wherein debts
are regularly being contracted and paid, the authority to receive pay*
ment of such debts would be unquestioned, as a part of the ordinary
and expected course of business."* The collection of payment for
goods sold, the getting in of the outstanding accounts, the looking
Mont. 314, 8 A. ft B« Ann. Cas. 666
and note; Qodsbaw v. Struck, 109
Ky. 285, 51 L. R. A. 668; Malone v.
Robinson (Miss.), 12 80. 709 (plan-
tation). [Contra: Mt Wilson fiUn.
Co. y. Burbrldge, 11 Colo. App. 487.]
A fortiori, where the injuries were
not received while servant was
in line of duty. Chase y. Swift ft
Co., 60 Neb. 696, 83 Am. St. R. 552;
Dale v. Donaldson LiUmber Co., 48
Ark. 188, 3 Am. St R. 224.
As to settlement in consideration
of such payment, see American Quar-
ries Co. V. Lay, 37 Ind. App. 386.
The power of the president would
be greater. Fraser y. San Francisco
Bridge Co., 103 Cal. 79; Welnsberg
y. St. Louis Cordage Co., 135 Mo.
App. 553.
Husband not liable for services of
a physician called by the wife dur-
ing husband's absence to attend a
farm servant shot in a personal al-
tercation by their son. Baker y.
Witten. 1 Okla. 160.
•s See Texas Bldg. Co. v. Albert, 67
Tex. Ciy. App. 638 (physician em-
ployed to attend an injured em-
ployee by the foreman of a "crew" of
men employed by a building and con-
struction company). See also note
to The Kenil worth, 4 L. R. A. (N.
S.) 49, 66.
«« See Silver Biining Ca y. Omaha
Smelting Co., 16 Colo. 118.
Cf. AsheviUe Supply Co. y. Machin,
150 N. Car. 738.
OB See ante, ( 854.
«• Sentell y. Kennedy, 29 La. Ann.
679.
See Michelly. Samford (Mo. App.) ^
130 S. W. 99, where the general man-
ager of a plantation was held to
have Implied authority to arrange
that sub-tenants might purchase sup-
plies to be paid for when the crop>
was sold.
•7 Ball y. Bender, 22 La. Ann. 493.
M Taylor v. Labeaume, 17 Mo. 338.
•9 See Long y. Jennings, 137 Ala.
190.
710
§§ 997, 998]
THE LAW OF AGENCY
[book II
after delinquent debtors, and the like, would often constitute one of
the chief duties of the manager. The reasonable adjustment of dis-
puted claims and counterclaims would fall within the same rules.^^
His authority, of course, would not extend to other kinds of busi-
ness, or to other departments than that entrusted to his care.
§ 997. Authority to revive debt barred by limitation. — The au-
thority of a managing agent to revive debts barred by the statute of
limitations, depends largely upon his authority to adjust and settle
claims against his principal.^* He has, as has been seen, authority in
many cases to pledge the credit of the principal for supplies and serv-
ices furnished to the principal ; but, as is pointed out by the court in
Pennsylvania,^* "When the debt becomes due an entirely different
question is presented ; the renewal of it is not a matter of the operation
of the business committed to the care of the agent, nor is it an exer-
cise of the power of the agent to create new debts ; a new promise to
pay is an extension of the liability of the principal beyond the duration
affixed to it by law. 'A debt may be taken out of the statute by the
act of an agent done in the regular course of his business if he has
specific authority for that purpose, or if such authority be necessarily
implied from the nature of his duties, but this results not from the
power to create new debts but from a distinct and independent power
to settle and adjust old ones. These powers are not in their nature
the same nor very much alike. The one is not a logical or legal con-
sequence of the other.' " ^*
§ 998. Authority to make negotiable instruments. — ^As has been
pointed out in a preceding section/* the authority to bind the principal
as a party to negotiable paper is one which the law does not readily
imply. Such a power may, however, be conferred expressly, it may
TO In Grubbs v. Nixon, 93 Ark. 79,
137 Am. St. R. 78, In an action for
goods Bold, the defendant set up a
settlement made with plaintiff's
agent, by which a larger claim
against tiie plaintiff, previously as-
signed to the defendant, was set off.
The agent was in general charge of
the plaintiff's retail grocery busi-
ness. It was held that a manager
in such a case would have authority
to adjust claims, • even where one
owing was barred by the statute of
limitations.
Ti See Lilley v. Poad, fl899] 2 Ch.
107, where payments made by a man-
aging agent were held to prevent the
operation of the statute.
In Iowa Loan & Trust Co. v. Mc-
Murray, 129 Iowa, 65, an agent hav-
ing general control of a^ borrower's
affairs was held to have Implied au-
thority to agree to extensions of
time which would prevent the bar of
the statute.
72Beal y. Adams Elz. Co., 13 Pa.
Super. Ct 143. But see Orubbs v.
Nixon, cited in the preceding section.
T« Citing, Watts v. Devor» 1 Grant
(Pa.). 267.
T4 See ante, ( 973.
720
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ 998
result from an established course of dealing, or may arise by necessary
implication. As many businesses may be, and constantly are, con*
ducted without the exercise of this extraordinary power, the mere fact
that one is authorized to manage a business does not of itself alone
imply that he may bind his principal by making, accepting, or indors-
ing negotiable paper.^* Where, however, the business is of a soft
ordinarily conducted largely upon credit, and to which the making of
negotiable paper may fairly be regarded as incident, an agent given
a general authority of management may be found to have the author-
ity to execute such paper. Thus, in one case,'* it was said, "a gen-
eral manager having the exclusive management and conduct of a man-
ufacturing and commercial business, and admittedly having the power
to purchase stock, contract debts, discount notes, may, when there is
occasion for so doing, borrow money to pay debts or purchase goods,
and give his principal's negotiable note therefor*" So where the
power under which the managing agent acts, for example, certain
articles of partnership, clearly contemplates and provides that notes
will be executed when necessary, the authority may be found to exist.^^
And so it has been held to be, where the authority was very general
in its terms, authorizing the agent "to do and perform all the neces-
sary acts in the execution and promotion'* of the business "in as full
TsNew York Iron Mine v. Negau* by making promissory notes In its
nee Bank, 89 Mich. 644; Perklna v. name (New York Iron Mine v. Ne-
Boothby, 71 Me. 91; Rossiter v. Ross- gaunee Bank, supra; McCullough v.
Iter, 8 Wend. (N. Y.) 494, 24 Am. Mosa, 5 Denlo (N. Y.). 567); nor
Dec. 62; Connell t. McLaughlin, 28 may he bind it by acceptance of a
Ore. 230; Chicago Elec. Co. y. Hutch- bill of exchange even to aTold the
inson, 25 IlL App. 476; Jackson suspension of work of great Import-
Paper Mfg. Co. T. Commercial Nat. ance. Sewanee Mining Co. r. Mo-
Bank, 199 111. 161, 93 Am. St R. 113, Call, 3 Head (Tenn.), 619.
59 K R. A. 657; Fairly v. Nash, 70 See also. In re Cunningham, 36 Ch.
MlBS. 193; Stock Exch. Eank v. Will- Dlv. 532; Johnston County Sav. Bank
lamson, 6 Okla. 348; Gollnsky v. Al- ▼. Scroggln Drug Co., 162 N. C. 142,
Uson, 114 Cal. 458; Hazeltlne v. Mil- 136 Am. St. R. 821.
ler, 44 Me.^ 177; Dobbins v. Btowah Manager of an Insurance company
Co., 76 Ga, 288; Paige v. Stone, 10 has no Implied authority to "kite"
Met 160, 43 Am. Dec. 420; Whiting checks. Farmers, etc. Bank v. Qer-
V. Stage Co., 20 Iowa, 654; Davidson mania Ins. Co., 150 N. C. 770.
▼. Stanley, 2 M. A G. 721 ; Brown v. re GUdden Varnish Co. v. Interstate
Parker, 7 Allen (Mass.), 337; Weekes Bank, 69 F^d. 912, 16 a C. A. 534
V. Shaplelgh Hdwe. Ca, 23 Tex. Civ. (Sanborn. J., dissenting on this
App. 577; Lafonrche TraiiBp. Co. v. point); Flewellen v. Mittenthal
Pugh, 62 La. Ann. 1517; Helena Nat (Tex. Civ. App.), 38 S. W. 234.
Bank v. Rocky Mt TeL Co,, 20 Mont tt See Lerch v. Bard, 153 Pa. 573.
379, 63 Am. St R. 628. See also, Presnall v. McLeary (Tex,
Thus the general managing agent Civ. App.), 50 S. W. 1066.
of a mining company may not bind It
46 721
§§ 999-IOOI]
THE LAW OF AGENCY
[Boojt n
and ample a manner" as the principal might if he were personally
present.''*
§ 999' •^— The method of conducting the business, with the
principal's knowledge and acquiescence, may also furnish sufficient evi-
dence of the existence of the authority. Thus where the agent was
given absolute control of a lumber business, "bought material, made
all payments and collections, deposited the money received and checked
against it, and used [the principal's] credit in the business as he saw
fit," and had made other notes, of which the principal had knowledge
and some of which he secured, there was held to be sufficient evidence
to warrant the jury in finding that the agent had authority to give
notes for lumber purchased for the business.'^' And even though the
evidence may not be sufficient to show a general authority, the prin-
cipal may be estopped from denying the authority as to a particular
person who, on the faith of an open and long continued exercise of
the authority, has 'dealt with the agent in reliance upon its real exist-
ence.**^
§ looo. — Where the authority in a managing agent to issue
bills or notes is shown, but no specific limitation upon it appears, a
third person dealing with the agent, in good faith, is not bound by
secret limitations, or by local or particular customs, of which he has
no knowledge and of which he is not charged with notice." Where
the authority of the agent is based upon apparent necessity, the fact
that the necessity arose from a misuse by the agent of the principal's
funds, of which fact the other party is ignorant, will be immaterial.**
§ looi. When may borrow money.— The question of the agent's
implied authority to borrow money is closely associated with that of
the execution of negotiable paper, as it is through the execution of
such instruments that the power to borrow is ordinarily exercised.
In this case, as in that, the authority is one reluctantly to be implied.
As has been said in a recent case,** "Authority to borrow money is
TBWlmberly v. Windham, 104 Ala.
409, 63 Am. St. R. 70. See also,
Whltten Y. Bank of Fincastle, 100
Va. 546.
T» Wltcher v. McPhee, 16 Colo. App.
298. See also, Shlpman v. ByleB» 65
Mich. 690; Buhl y. Smith, 69 Mich.
552.
so Collins y. Cooper, 66 Tex. 460;
Friedlander y. Cornell, 45 Tex. 685.
81 Great Western Elevator Co. y.
White, 56 a a A. 388, 118 Fed. 406.
ss Atlantic Mills ▼. Indiaji Orchard
Mills, 147 Mass. 268, 9 Am. St R.
698.
n Exchange Bank y. Thrower, 118
Qa. 433.
In Jacobs y. Morris, [1901] 1 Ch.
261 (aTd. [1902] 1 Ch. 816), It is
said, "there Is a strong Inherent Im-
probability that a principal intends
to giye his attorney power to bor-
row money if he does not expressly
state it" See also Harper y. God-
722
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ lOOI
among the most dangerous powers which a principal can confer upon
an agent. Whoever lends to one, claiming the right to make or indorse
negotiable paper in the name of another, does so in the face of all the
danger signals of business. He need not lend or discount until as-
sured beyond doubt that the principal has, in fact, appointed an agent
who, by the stroke of a pen, may wipe out his present fortune and bind
his future earnings. The very nature of the act is a warning ; and, if
the lender parts with his money, he does so at his own peril. If the
power was not in fact conferred, he must bear the loss occasioned by
his own folly. A power so perilous is not to be implied from acts
which, in other matters less hazardous, might create an agency. It
must be conferred in express terms, or be necessarily and inevitably
inferable from the very nature of the agency actually created. So
strict is the rule that it will not be presumed even from an appoint-
ment of one as general agent, unless the character of the business, or
the duties of the agent, are of such a nature that he was bound to bor-
row in order to carry out his instructions and the duties of the office."
And so in a recent case ** in the court of appeals of New York, it is
said, "If the transaction of business absolutely required the exercise of
the power to borrow money in order to carry it on, then that power
was impliedly conferred as an incident to the employment; but it does
not afford a sufficient ground for the inference of such a power, to
say the act proposed was convenient or advantageous or more effect-
ual in the transaction of the business provided for, but it must be
sen, L. R. 6 Q. B. Gas. 422; Attwood
v. Munnlngs, 7 B. & C. 278; Haw-
tayne v. Bourne, 7 M. A W. 595.
»*Blckford v. Menier, 107 N. Y.
490. Approved In Consolidated Nat
Bank v. Pacific Coast Steamship Co.,
95 CaL 1, 29 Am. St R. 85. Se^ also,
Bryant y. Banque du Peuple, [1898]
App. Cae. 170; Heath v. Paul. 81 V^is.
532; Schramm v. Llebenberg, 42
Colo. 516.
A general authority to buy goods
does not authorize borrowing money
and pledging the principars prop-
erty as collateral. Chicago, etc., Ry.
Co. V. Chlckaaha Nat Banl^ 98 C. C.
A 535, 174 Fed. 923.
Authority to wind up a business
does not authorize the agent to bor-
row money. Smith r. McGregor, 96
N. C. lOL
An agent authorized to buy horses
may borrow money to buy feed for
and take care of them after purchase
and before shipment to his principal
since it is necessary in order to carry
on the business. Rider, v. Kirk, 82
Mo. App. 120.
In Merchants' National Bank v.
Nichols, 228 111. 41. 7 L. R. A. (N. S.)
752, a general sales agent of a Michl^
gan corporation, who had charge of
its business over a considerable por*
tion of Illinois, who maintained a
store room and offlee, a sales force
and who made the collections
for sales, and who was also au-
thorized to open a banking aecount,
overdrew the account. The prind*
pal was held not liable because the
actual authority of its agent included
no implied authority to borrow.
723
§§ I0O2-I0O4] THE LAW OF AGENCY [BOOK II
practically indispensable to the execution of the duties really dele-
gated in order to justify its inference from the original employment."
§ I002, But even though, within these rules, the authority
to borrow is not to be implied from the authority expressly given, it
may yet arise as an actual incident to an established course of dealing ;
and the principal may also by his conduct estop himself from denying
its existence as to persons really relying upon misleading appearances."
Where the authority to borrow is based upon necessity, the fact that
the necessity arose from the wrongful act of the agent himself, would
not necessarily defeat a recovery, where the other party was ignorant
of it.««
And, as will be seen in a later section,®^ even though an agent bor-
rows money without authority, or exceeds the limit of his authority,
while the principal will not be liable on the contract unless he ratifies
it, still if the money be actually applied by the agent for the princi-
pal's benefit, as where he uses it to pay the principal's lawful debts, the
principal may often be charged in equity or quasi contract for the
benefit received.
§ 1003. May not make accommodation paper. — If the authority of
the agent to bind his principal by negotiable instruments, executed in
the principal's business and on his account, is thus so doubtful, a fortiori
has he no authority to bind his principal by making, accepting or in-
dorsing negotiable paper for the benefit of himself or third persons."
Nor can he pledge his principal's credit for the debt of third persons."
§ 1004. May not pledge or mortgage the property of his principal
An agent authorized to manage and carry on his principal's business
has thereby no implied authority to pledge or mortgage the property
in his possession. As is tersely said by a learned judge : "It is not
carrying on the business of the company to pledge or mortgage the
machinery used by the company and thereby suspend its operations;
or place them at the will and pleasure of a mortgagee." •^
SB Montaignac v. Shltta, 15 App. ^7 See post (Ageat authorized to
Cafl. 857; Collins v. Cooper, 65 Tex. borrow money).
460; McDermott ▼. Jackson, 97 Wis. «8 Gullck v. Grover, 83 N. J. L. 463,
64. 97 Am. Dec. 728; Bank v. Johnson,
A wife left at home to manage her 8 Rich. (S. G.) 42; Boord ▼. Strauss,
husband's affairfl and look after his 39 Fla. 381.
family during his absence, may bor- bo Ruppe v. Edwards, 52 Mich. 411 :
row small sums on his credit for im- Bullard y. DeGrotf, 59 Neb. 783;
mediate family needs. Header y. Union Pac. Townsite Co. y. Page, 54
Page. 39 Vt 306. Kan. 363. .
»e Compare Atlantic Mills v. In- »• Despatch Line v. Bellamy Mfg.
dian Orchard Mills, 147 Mass. 268, 9 Co., 12 N. H. 205, 87 Am. Dec. 203;
Am. 8t R. 698. Edgerly y. Cover, 106 Iowa, 670; Go-
724
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ IOOS-IOO8
§ 1005. May not sell or lease principal's land. — Neither has such
an agent implied authority to sell his principal's land,'* even though
it may have been acquired by hira in the execution of the agency.'*
And where he is authorized to manage an affair or conduct a business
which contemplates or requires the continued use or occupancy of
certain land, he will ordinarily have no implied authority to defeat that
purpose by making a general lease of the land.*" It would be other-
wise, of course, with the management of land kept and designed to be
leased. In that case he could make any usual or ordinary lease, but
not an unusual one.**
§ ioo6. May not embark in new and different business. — Author-
ity to carry on the principal's business already established, implies no
authority in the agent to embark in a new and different business, or to
attempt to use his principal's funds or credit in such a business.** His
authority is to manage that business, not to establish another one.
§ 1007. May not sell the business or property. — For similar rea-
sons, a general authority to manage a business or property clearly
contemplates, in the ordinary case, that the business is to be continued
or the property retained, and not disposed of. Such a power, there-
fore, ordinarily implies no authority to sell the business.**
§ 1008. Authority to pay debts. — The authority and duty of a
managing agent to pay the debts of his principal must depend largely
upon the nature of the business confided to his care, and the extent of
his authority over it. He would not ordinarily have implied authority
to pay his principal's debts generally, or to pay debts arising beyond
the scope of the business with which he is entrusted. Where, how-
ever, he is put in charge of a business in which debts are regularly in-
linsky ▼. Allison, 114 C^. 458; First
Nat Bank y. Kirby, 43 Fla. 376;
Henson ▼. Keet Merc. Ca, 48 Mo.
App. 214; First Nat Bank r. Breach
ler, 38 m. App. 4»9; First Nat Bank
V. Hicks, 24 Tex. Civ. App. 269.
tiBUllngs V. Morrow. 7 Cal. 171. 68
Am. Dec. 236; Saunders v. King, 119
Iowa, 291.
»2 Smith y. Stephenson, 45 Jowa,
645 ; Watson v. Hopklaa, 27 Tex. 637.
MWard V. Thnistin, 40 Ohio St
347.
MDnncan t. Hartman, 143 Pa. 595,
24 Am. St R. 570, 149 Pa. 114.
osCampbeU y. Hastings, 29 Ark*
512.
Manhattan Liquor Co. v. Magnus,
43 Tex. Civ. App. 463 (where man-
ager of a saloon business undertook
to buy a rival business and to bind
hia principals to pay the debts ow-
ing by the rival dealer).
••Vesceliuft v. Martin, 11 Colo.
391; Quay v. presidio, etc, R. Co., 82
Cal. 1; Johnson Signal Co. v. Union
Switch Co., 51 Fed. 85,
An agent authorized to manage a
tanning business has no implied au-
thority to sell the hides which have
been purchased for use at the tan-
nery. Holbrook V* Oberue, 56 Iowa,
324.
7^S
§§ IOI2, IOI3]
THE LAW OF AGENCY
[book II
IX.
OF AGENT AUTHORIZED TO SETTLE.
4*
§ 1012. Of the nature of the authority. — ^An authority vested in
an agent to settle claims and demands is an important one, involving
often the exercise of much judgment and discretion. Although this
expression may be used under circumstances showing that the agent
was authorized simply to receive payment of a claim, without reduc-
tion, the authority to settle, as here used, involves more than the mere
receipt of payment of an undisputed claim.^* The very idea of set-
tlement includes the notion of adjustment. It presupposes mutual, if
not disputed and conflicting, claims. It involves often the necessity
of compromise and concession. It may include the receipt in settle-
ment of that which the law would not ordinarily regard as payment.
§ 1013. Burden of proof. — ^A debtor who claims that his debt has
been discharged by settlement or compromise, made with the cred-
itor's agent, has the burden of proving that the agent's authority was
competent for the purpose ; ^' and the principal may, of course, show
that the agent's authority was limited, and did not include the case in
question.** It must also appear, in any case, in order to sustain the
compromise, that there was the same consideration for it which would
have been required if the parties were negotiating in person."
12 In Scales y. Mount, 93 Ala. 82,
It was said, "As a general rule, the
authority of an agent wiU not be ex-
tended beyond that which is given in
terms, or is necessary and proper to
carry the authority given into full
effect. An agent with general au-
thority to collect, is not authorized
to compromise a claim, or release
the debtor, except upon payment of
the full amount Hall Safe and
Lock Co. v. Harwell, 88 Ala. 441.
Such authority will not be implied
from the conjunctive use of the
terms, to settle and collect The lat-
ter word qualifies and limits the
scope and meaning of the former, re-
stricting it to its ordinary significa-
tion to adjust any matter that Is or
may be in dispute — authority to
make a settlement and collect the
amount as settled. Notwithstanding
such is ordinarily the extent of the
authority thus conferred, there may
be circumstances which would en-
large the meaning, and show an in-
tention to confer authority by the
use of the terms, to settle and coh
lect, to take a less amount than the
entire debt in satisfaction, and upon
its payment to discharge the debtor.
There is evidence tending to show
that defendants failing in business,
notified plaintiffs and their other
creditom of their failure, stating
that they thought they could pay all
creditors eighty cents on the dollar.
If this be the fact, and upon receiv-
ing snch notice^ plaintiff sent Tatum
to settle and collect the debt, author-
ity to release defendants upon pay-
ment of eighty per cent, of their
claim may well be inferred."
IS Barker y. Ring, 97 Wis. 63;
Tompkins' Mach, Co. v. Peter, 84
Tex. 627.
i« Qrubbs ▼. Ferguson, 136 N. C. 60.
IB Barker y. Ring, supra.
72S
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ IOI4, IOI5
§ 1014. When authority exists. — By reason of its nature, an au-
thority to settle is one not lightly to be inferred. As has been seen/*
for example, a mere agent to solicit orders for goods has ordinarily
no implied authority even to receive payment, much less to compro-
mise and settle disputed claims as to the price.*^ So an agent author-
ized to receive payment, merely, has, as has been seen,^* ordinarily
no implied authority to do anything but to receive full payment of the
claim in money; he usually may not accept goods or securities, make
concessions, or compromise disputed claims.
Authority to settle may, of course, be expressly conferred ; but it is
not essential that it shall be so. It may arise by implication, but the
facts from which it is inferred must, obviously, be such as reasonably
to warrant the deduction that this important power of adjustment,
compromise, and settlement has been conferred.**
§ 1015. — — Where, after considerable correspondence, the
principal wrote to the other party saying, ''I have asked Mr. S. to talk
over your proposition to me with you. If you trade with him you
can count the matter satisfactorily settled with me. Hoping the mat-
ter will be amicably settled, I am," etc., it was held that S. was au-
thorized to effect a settlement.^'* Equally clear was it, where the
principal wrote, "After consultation by mail with Mr. D. R., we have
concluded to authorize him to adjust with you, and to collect the bal-
» See ante, H 863, 869.
iTLlndow y. Oohn, 5 Calif. App.
388; Scarett-Comstock v. Hudspeth.
19 Okla. 429, 14 A. ft Bl Ann. Oak
867.
IS See ante, $S 946, 954, 956.
i»See Dabney v. MtFarlln (Tex.
Civ. App.), 34 S. W. 142; Oobb v.
Fogs* 166 Maes. 466; Graves v. Mi-
ami S. S. Ck>., 29 N. Y. Misc. 645.
If the authority la to be proven by
clrcumdtanceB, the occurrence of one
act would scarcely be sufficient, but
the proponent may show all the cir-
cumstances and so prove the author-
ity. Sarlol V. McDonald Co., 127
N. Y. App. Dlv. 648.
In Northwest Thresher Co. v.
BahlgTen, 50 Wash. 325, 19 L. R. A.
(N. S.) 324, an aeent from his gen-
eral conduct of the transaction was
held to have authority to settle,
where the agent had sold goods for
which notes In controversy were
given, received the notes and pay-
ments thereon and conducted a fore-
closure.
soiiindley V. Lupton, 118 Mich. 466.
But see^ First Nat. Bank v. Wright,
104 Mo. App. 242.
Where after some correspondence
the agent wrote asking the princi-
pal upon what terms he would set-
tle, and the latter replied that he had
full confidence In the agent and
whatever he did would be all right,
''whether it was one cent or a hun-
dred cents on the dollar," it was
held, in an action by the principal
against the agent, sufficient to au-
thorize the agent to make a settle-
ment Hussey v. Crass (Tenn. Ch.),
53 S. W. 986. Referring one person
to another to settle or determine or
decide a controversy, makes the lat-
ter agent to so act Armstrong v.
Crump, 25 Okla. 452. But see Hunt
v. Johnson & Larimer Dry OoodiS Co.,
7 Ind. Ter. 576.
729
§§ IOl6, IOI7] THE LAW OF AGENCY [bOOK II
ance of our account, or any part of the amount, and to make any change
that you and he may deem necessary in the future advertisement of
your business under our contract. He is on the spot, and will be able
to make satisfactory arrangements with you." *^
So where, on receiving notice of a loss, the secretary of an insurance
company wrote to the insured that he would arrange with the other
companies so that adjusters could meet with him and "close the mat-
ter up as speedily as possible," and later that its adjuster would be
there on a certain day, and the adjuster assumed to have authority to
agree upon a definite sum to be paid in satisfaction of the loss, it was
held that the jury were justified in finding that the agent had the au-
thority he assumed to exercise.*"
§ 1016. ^— — A settlement, though unauthorized, may also be
sustained by a subsequent ratification; and such a ratification may be
effected, as in other cases, where the principal with knowledge accepts
and retains the fruits of the settlement."*
i 1017. What terms of settlement binding. — ^The terms upon
which the settlement shall be made, may of course be expressly pre-
scribed by the principal, and if so, they will, unless amounting merely
to secret instructions, be eflfective limitations upon the agent's author-
ity. Usually, however, the matter is, and from its nature must be,
largely confided to the agent's discretion ; and in such a case, any set-
tlement he makes within the limits of a fair and reasonable discretion,
must be binding upon the principal. Thus, where a creditor wrote
to his debtor, that the letter would be handed him by W. "who will
see you in regard to bill of cofiPee due us, and has full authority to act
for us in the matter," the court said : "Words of authority, by an ab-
sent creditor to a present agent, in regard to any particular matter,
could hardly be made broader. They seem to authorize any and all
bona Me acts of the agent which had relation to the debt, and which
the principal himself could lawfully perform. Had it been the act-
ual intention to include the power to cancel the debt in whole or in
part, by compromise, by payment, or satisfaction otherwise, at the
discretion of the agent, it is difficult to see what other more* appro-
priate general language could have been used. The letter specifies
no particular act or acts which the agent is authorized to do in regard
to the debt. If, for this reason it must be held as giving no authority
siKuhlman v. Hart (Tenn. Ch. »Dowagiac Mfg. Co. v. Hellekson,
App.), 69 S. W. 466. 13 N. D. 267; Zelenka r. Port Huron
2« Miller's Nat. Ins. Co. v. Kin- Mach. Co., 144 Iowa, 692.
neard, 136 111. 199.
730
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ IOl8, IOI9
to take property in payment of the debt, for the same reason it must
be held as giving no authority to accept payment of it in money, to
cause it to be secured, or to do any other specific act in relation to it.
'Fuir authority to act 'in regard* to the debt seems to us to authorize
either, any, and all of these, or the like acts of the agent. The plain
reading of the letter is, that the 'matter' in regard to which the agent
was authorized to act was the debt, the 'bill of coffee/ and not, as
counsel assume, the securing of the debt. The letter equally omits to
give specific authority to secure the debt, as it does to give specific
authority to compromise, compound, or receive satisfaction of it in
property." "
§ 1018. — The terms assented to may, nevertheless, be so
unreasonable and unfair to the principal as to properly arouse the
suspicions of the other party, and put him upon inquiry as to the
agent's authority.^'
§ 10x9. Illustrations. — ^An agent having "full authority to
act for" a creditor in the matter of a debt, has implied authority to
bind the creditor by agreeing to take personal property in payment.^^
A general agent with full authority to make settlements with his prin-
M Oliver ▼. Sterling, 20 Ohio St
891.
Authority to agents to manage and
settle certain contracts for the sale
and delivery of cotton, "as if they
were their own," binds the principal
hy the settlement adopted, in absence
of any evidence of fraud or Injury.
Grnner v. Stnoken, 39 La. Ann. 1076.
In Keenan v. Empire State Surety
Co., 62 Wash. 250, a surety company
was notified by the owner that the
contractors on a building contract
had failed in performance, where-
upon the surety replied that it had
referred the matter to a certain per-
son, without placing any limitations
upon this person's authority. Held,
that this person became an agent
with authority to waive a condition
precedent to Uie surety's liability on
the contractor's bond.
In German American Provision Ck>.
y. Jones, 87 Miss. 277, an agent sent
to settle a controversy with a buyer
who, having purchased a quantity of
lard, contended that it was of an in-
ferior quality, agreed with the buyer
that it was of an inferior grade and
authorized him to sell it as such.
Held, to bind the principal.
In Pollock V. Cohen, 32 Ohio St.
514, an agent authorized to collect a
certain bill, to receive notes there-
for "or any way to settle" it, was
held to have no implied authority to
buy property of the debtor exceed-
ing in value the amount of the bill
and bind his principal to pay the ex-
cess. An agent authorized to settle
doubtful claims may not do so by
agreeing to set oft the same against
his own debt. McCormick v. Keith,
8 Neb. 142.
25 Thus, in Mayor, etc. v. Dubois,
65 C. C. A. 590, 132 Fed. 752, the
court speaks of a compromise made
by the agent, as "a wanton or
reckless sacrifice by him, of the
substantial right" of the principal,
anid of the methods adopted, as "so
unusual, unfair, and remarkable,"
as to impose upon the other party
the necessity of ascertaining his au-
thority to make it See also, Kuhl-
man v. Hart (Tenn. Ch. App.), 59 S.
W. 455.
2« Oliver v. Sterling, 20 Ohio St
731
§ I020]
THE LAW OF AGENCY
I BOOK II
cipal's debtors, may bind his principal by agreeing to accept and re-
ceive the notes of a third person in payment of a debt.*^ An agent
authorized to "adjust" with a debtor and "to collect the balance of our
account or any part of the amount, and to make any change that you
and he may deem necessary in the future advertisement of your busi-
ness under our contract," is justified in making an entirely new con-
tract, even though less advantageous to the principal, if "it does not,
when the nature of the business to which it relates is considered,
* * * carry on its face the evidence or inference that [the agent]
in making it was betraying or selling out the interest of his em-
ployer." *«
An agent sent by the creditors of a debtor in failing circumstances,
at his suggestion, to take a bill of sale of his stock and fixtures as
security, if that was found advisable, may bind his principals by an
understanding that the conveyance and possession which he takes of
the goods shall not be absolute and unconditional, but temporary only,
and that after the agent has sold enough of the goods to satisfy the
claims, the balance shall be restored to the debtor.**
§ 1020. But the ordinary claim agent of a railroad, hav-
ing general authority to settle claims against it, must, it is held, be
391. Or to take a small sum of
money and a conveyance of lands In
settlement. Llndley r. Lupton, 118
Mich. 466.
27 Nichols A Shepard Co. ▼. Hack-
ney, 78 Minn. 461.
An agent directed by his principal
to take anything he can get in settle-
ment has authority to accept a prom-
issory note. Mitchell v. Finnell, 101
Cal. 614.
Under a very wide authority given
to an agent to settle up matters con-
nected with a construction contract,
where It was found that the balance
was against the principal rather
than in his favor, and that he owed
more than was coming to him, the
agents were held authorized to apply
the proceeds upon the debts so far as
they would go, and to give the prin-
cipal's notes for the balance due.
Wapples-Platter Grocer Co. v. Kln-
kaid, 86 Kan. 167.
MKuhlman v. Hart (Tenn. Ch.
App.), 59 a W. 455.
«• Rothschild v. Swope» 116 CaL
670. Where an agent is sent oat by the
seller of fruit trees to deliver trees,
make settlements, and secure notes
therefor, he has implied authority to
do the things necessary to entitle the
principal to receive a note for the
price in accordance with the orig-
inal contract; and he may therefore
renew the obligation of that con-
tract (without which the buyer re-
fused to give his note), that the
seller will plant the trees, prune and
care for them for four years, and re-
place any that fail to grow. Qrif-
flth v« Fields, 106 Iowa, 862.
In Sunset Orchard Land Ca v.
Sherman Nursery Co., — Minn. — ^
140 N. W. 112, where there was a
controversy respecting the seller's
obligation to replace trees which
failed to live, and agent sent to set-
tle it, to **try and get the matter ad-
justed," was held to have authority
to bind the seller to replace a con-
siderable portion of the trees.
732
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ IQ2I
limited to the employment of the usual and ordinary means of ac-
complishing a settlement, and has, therefore, no implied authority to
settle with an injured employee, by agreeing to pay him a sum of
money and to give him steady employment during good behavior,
"There was no evidence," said the court, "that corporations are ac-
customed to give employment for life, or anything except money, for
this purpose." ■* But even a local agent of a railway company, shown
to have been generally entrusted with the settlement of claims of over
chaise arising in his territory, has been held to have apparent author-
ity to waive the provision in a bill of lading that suit for an alleged
over charge shall be brought within a certain number of days.*^ So a
claim agent of a railroad, sent to settle a personal injury case, has been
held to have authority to agree that a claim for medical services ren-
dered to the injured passenger will be paid by the company, even
though the services had already been rendered, and though the agent
had not done the hiring."
§ I02I. A general authority to settle could very rarely
be deemed sufficient to justify the agent in discharging the debtor
without receiving anything." But where an agent had been given
"full powers to close the subscriptions to the permanent fund in such
manner as he deems for the best interest of the college," the court
said, "No language they could use would convey any more power to
discharge without receiving pay than was used. They must have in-
tended that he should learn their circumstances in each particular case,
and act upon those circumstances as prudence should dictate. If he
found the subscriber of doubtful responsibility, or the claim itself
doubtful, he might obtain the best settlement he could and secure what
he could. If he found the claim a nullity, he might discharge with-
out payment." •*
Authority to settle claims against the principal, arising out of a
oontract between him and a third person, however, would not justify
soBohanan v. Boston & M. R. R., 4 Tex. Civ. App. 263, distinguishing
70 N. H. 526. But in Louisville, etc., Gulf, etc., R. Co. v, Trawlck, 80 Tex.
R. Co. v. Cox, 145 Ky. 667, an agent 270.
sent to make a settlement with an 82 Reynolds v. Chicago, etc., R. R.,
injured employe was held to have 114 Mo. App. 670.
apparent authority to do so by agree- '« See Patterson v. Moore, 34 Pa.
ing to give him permanent employ- 69. See also, Hutchlngs v. Clark, 64
raent. Some of the statements in the Cal. 228.
opinion, however, must doubtless be s^Mlddlebury College v. Loomis, 1
regarded as too wide. Vt. 189.
»i Galveston, etc., R. Co. v. House,
733
§§ 1022-1024]
THE LAW OF AGENCY
[book II
the agent in binding his principal to pay that third person's debts to
others."
§ 1022. May receive the proceeds. — An agent, given general au-
thority to settle a demand of his principal, has implied authority, not
only to agree upon and adjust the amount to be paid in settlement, but
also to receive the amount ; and the opposite party who pays it to the
agent will be discharged, although the agent never pays it over to his
principal."
§ 1033. May not submit to arbitration. — Authority conferred upon
an agent to settle a dispute or demand, will be presumed to be so con-
ferred in reliance upon the judgment and discretion of the agent, and
unless there be clear evidence of a contrary intention, the agent will
not be permitted to delegate the trust to another.*^ He cannot there-
fore submit the dispute or demand to the judgment of arbitrators, and,
if he does so, the award will not be binding upon the principal.** Like
other unauthorized acts, the submission may of course be ratified by
the principal, and such a ratification will be presumed where, for ex-
ample, with full knowledge of the facts, the principal accepts the
award.
§ 1024. May not assign the demand. — For the same reasons, an
agent employed to collect and settle his principal's demands has no
implied authority to assign them to another for that purpose;'*
w Cleveland, etc., Ry. Co. v. Shea,
174 Ind. 303.
In Mead y. Owen, 80 Vt 273, 12 L.
R. A. (N. S.) 655, 13 Ann. Cas. 231,
it was lield that authority to arbi-
trate a dispute between a landlord
and tenant did not include the im-
plied authority to extend the time
during which the tenant might hold
over.
But compare Newberry v. Chicago
Lumbering Co., 154 Mich. 84.
8«New York, etc., R. Co. v. Bates,
6S Md. 184.
•7 Thus, where a lumber firm in
Oregon, having a dispute on hand
over the acceptance of a cargo of
lumber sent to Chile, S. A., wrote to
another firm in the same city in Ore-
gon, "We will be satisfied with any
settlement you may make for us in
adjusting the matter at point of des-
tination," knowing that the agent
had an allied house in Chile, it was
held that the agent was authorized
to make the settlement through his
house in Chile. Williamson v. North
Pacific Lumber Co., 38 Or. 560. See
also, cases under Delegation of TLu-
thority.
>« Huber V. Zimmerman, 21 Ala.
488, 56 Am. Dec 255; Scarborough v.
Reynolds, 12 Ala. 252; Michigan
Central R. R. Co. v. Cougar, 65 111.
503; Mayor, etc. v. Dubois, 65 C. C.
A. 590, 132 Fed. 762.
89 Even though it be done merely
for the purpose of enabling the as-
signee to sue upon It. Rigby v.
Lowe, 125 Cal. 613. But where the
agent's authority over a claim for
injuries received in a collision is not
limited merely to a settlement, but
he is given full power concerning the
claim, it is held, that he may, if suit
is necessary, employ an attorney and
make a contract with him which
should include assigning to him a
734
CHAP. Ul]
CONSTRUCTION OF AUTHORITIES [§§ IO25, IO26
nor can he pledge them in order to indemnify a surety for his prin-
cipal.«»
So a power of attorney authorizing certain persons to "bring suit
for, settle up, compromise, release, obtain or recover interest belonging
to and owned" by the principal "in all lands or other property" situ-
ated in certain counties, gives them no implied authority to sell and
convey the lands.**
§ 1025. May not assign or transfer proceeds. — ^When the agent
has made the settlement authorized, and has received the proceeds
thereof, if any, his authority in the matter will, ordinarily, be ex-
hausted, the proceeds will become the property of the principal, and
the agent will usually have no implied authority tp deal further with
them. Thus, if he has received a conveyance of land for his prin-
cipal, he would have no implied authority to sell and convey the land.
If he has received a promissory note or a check payable to the order
of the principal, he will, like the agent to receive payment, already
referred to,** have ordinarily no implied authority to indorse and
transfer the note, or to indorse and collect the check.**
X.
OP AN AGENT AUTHORIZED TO BORROW MONEY.
I 1026. When the authority exists. — As has been pointed out in
a preceding section,^* the power to borrow money on the principal's
account, is everywhere regarded as a dangerous one, not readily to be
implied. As has there been seen, it cannot usually exist unless it has
been expressly given, or is justified by an established course of deal-
ing, or is practically indispensable to the execution of some main au-
thority conferred.*' It is, of course, not impossible that the power to
borrow may be implied, and, stated affirmatively, it may be, where tlie
share In the cause of action to se-
cure his fees. Tabet v. Powell (Tex.
Civ. App.), 78 S. W. 997.
40 Wood V. McCain, 7 Ala. 800, 42
Am. Dec. 612.
41 Connor v. Parsons (Tex. Civ.
App.), 30 S. W. 88.
41 See ante, U 962, 953.
4«Jacoby v. Payson, 91 Hun (N.
Y.), 480.
44 See ante, U lOOl, 1002.
45 See cases cited in i 1002, ante.
See also, Hawtayne ▼. Bourne, 7
Mees. ft Wels. 695; Martin v. Great
Palls Mfg. Co., 9 N. H. 51; Ladd v.
Indemnity Co., 128 Ped. 298, afTd 136
Fed. 636; Chicago, etc., Ry. Co. v.
Chickasha Nat. Bank, 98 C. C. A. 635,
174 FM. 923; Consolidated Nat
Bank v. Pacific Coast 8. S. Co., 95
Cal. 1, 29 Am. St. R. 85; Merchants
Nat. Bank v. Nichols, 223 IH. 41, 7
L. R. A. (N. 8.) 762.
735
§ I026]
THE LAW OF AGENCY
[book II
conduct of the principal or the course of dealing of the parties reason-
ably justifies it,*' or perhaps, where it is practically impossible that the
purpose contemplated should be accomplished without its exercise/'
As in other cases based upon alleged emergency, the possibility of
^•See Howe v. Flnnegan, 61 App.
Div. J610.
Authority to expend money does
not justify borrowing money. Johns
V. CummingB, 11 W. Austr. L. R. 14.
A mere clerk in the office of a man-
ufacturing company has no Implied
authority to borrow money for the
company; and no appearance of au-
thority can arise from the £act that
he had, on a numer of occasions,
borrowed money, under special cir-
cumstances, if the lender did not
know of, or rely upon that fact.
Martin v. Great Falls Mfg. Co., 9 N.
H. 51.
^0 ostensible authority results
from previous borrowing of which
the principal was ignorant. Consol-
idated Nat. Bank v. Pacific Coast S.
S. Co., 95 Cal. 1, 29 Am. St R. 85.
The fact that defendants had hon-
ored several drafts drawn by his
traveling salesman for personal ex-
penses and indorsed at his request
by plaintiffs while he was yet in de-
fendant's employment, did not bind
defendant to pay another draft
drawn and indorsed by the same par-
ties after his discharge even though
plaintiffs had no knowledge of such
discharge. Groneweg v. Kusworm,
75 Iowa, 237, following Baudouine v.
Grimes, 64 Iowa, 370.
Where a principal entrusts an
agent with securities and instructs
him to raise a certain sum upon
them, and the agent borrows a larger
sum upon the securities and fraudu-
lently appropriates the difference
(the lender acting hona /Ide and in
ignorance of the limitation), the
principal cannot redeem the securi-
ties without paying the leader all
he has lent. Brocklesby v. Bldg.
Society, [1895] App. Cas. 173. To
same effect is Robinson v. Brewery
Co., [1896] 2 Ch. 841, where an agent,
authorized to borrow £3000 and en-
trusted with securities worth £8000,
actually borrowed £6000, paid £3000
to his principal and kept the bal-
ance himself.
Authority to purchase for cash or
on credit, and to make or indorse ne-
gotiable paper in connection with a
business, does not imply authority
to borrow generally. The language
of the instrument is construed nar-
rowly, and the power to make notes
is limited to the scope of the busi-
ness. Bryant v. Banque du Peuple,
[1893] App. Cas. 170; Jacobs v. Mor-
ris, [1901] 1 Ch. 261, affirmed in
[1902] 1 Ch. 816.
In Sublette y. Brewington, 139
Mo. App. 410, a principal made a
note payable to the order of his
agent for the purpose of enabling
the agent to procure a loan. The
agent failed to dispose of the note;
and, when the principal asked for it,
said that it had been destroyed.
Thereafter the agent borrowed mon-
ey, and delivered the note without
indorsement as collateral security.
The lender knew nothing, of the
agency or of the circumstances of
the making of the note. Held, that
the principal was liable, on the
ground that he had equipped the
agent with indicia of ownership.
*7 In Hawtayne v. Bourne, 7 M. &
W. 595, Alderson, B., said: "There is
no rule of law that an agent may,
in a case of emergency suddenly aris-
ing raise money and pledge the
credit of his principal for its repay-
ment." Parke, B., to same effect In
this case, the managing agent of a
mine, who, without applying to his
principals, borrowed money in their
name to pay the workmen, so as to
prevent the closing of the mine by
executions obtained by them, was
held not authorized.
But see Bickford y« Menier, 107 N.
Y. 490.
7.^6
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
t§ ro27
communicating with the principal and securing his directions, would
usually have to be excluded before the authority would arise.
Authority to borrow, as an incident to the power to manage, has
been considered in a preceding subdivision.**
§ 1027. What execution authorized.^— An agent authorized to bor-
row may be, and usually is, limited as to the amount, time, security,
rate of interest and the like, and often as to the person with whom he
shall deal. Where he is so limited, and the limitations are not simply
secret instructions, the principal will not be bound where the author-
ity is exceeded.^ If, however, he has a general authority to borrow,
or, though his authority is not general, if he is not limited in these
respects, or, if any actual limitations are not such as the lender is bound
to know, then the agent would apparently be authorized to select the
lender, determine the amount, and agree upon the other terms,'* sub-
ject only to the limitation of what is apparently fair and reasonable."
«• See ante, § 1001.
4« Walsh V. Hunt, 120 Cal. 46, S9
L. R. A. 697 (where agent fraudu-
lently altered the note before deliv-
ery). See also, Bryce v. Massey, 36
S. Car. 127, where there was a tlm-
Ited authority.
Where a person is deceived into
giving to an agent a deed of land
running to a third person, In order
that a loan may be obtained from
him for the owner, and the agent
fraudulently uses It as security for
outstanding debts of his own, the
principal is not bound. McDonald v.
Cool, 134 Cal. 502.
••Where the authority to borrow
Is known to be subject to a fixed pe-
cuniary limit, then, under the doc-
trine of Mussey v. Beecher, 3 Cush.
(Mass.) 511, antey § 761, the prind-
peA would not be bound if that limit
were exceeded. If, however, the au-
thority is limited to be exercised
only upon some condition, the Exis-
tence of which is peculiarly within
the knowledge of the agent, then, un-
der the doctrine of Bank of Batavia
V. New York, etc., R. Co., 106 N. Y.
195, 60 Am. Rep. 440, ante, i% 759,
760, the principal would be bound
though the conditTon did not in fact
exist. The same rule would apply
where the question was whether the
money was being borrowed for the
principal's benefit, or for use in his
business, and the like. North River
Bank v. Aymar, 3 Hill (N. Y.), 262,
ante, §| 75». 760.
And where an agent who was au-
thorized to borrow money to carry
on his principara business, borrowed
money ostensibly for that purpose but
but upon somewhat unusual terms the
House of Lords, in refusing to reverse
the findings of the lower courts, held,
that if, in an emergency, the agent
might properly have made such a
loan and upon such terms, it was not
necessary for the lender to enquire
whether or not the emergency had
arisen in the particular case, and
that if the money was advanced in
good faith without notice that the
agent was exceeding his authority,
the principal would be liable. Mon-
taignac v. Shitta, 15 App. Cas. 357.
61 Agents authorized merely to bor-
row would not be Justified in an or-
dinary case, in paying bonuses or
premiums or high rates of interest
or In adopting any other extraordi-
nary means of raising the money,
without special authority. Shaw v.
Stone, 55 Mass. (1 Cush.) 228. But
47
737
§ 1028]
THE LAW OF AGENCY
[book U
The authority, of course, is presumptively to be exercised only for the
principal's benefit and in his business.
An agent authorized to borrow money and given a very broad au-
thority to execute notes and mortgage as security therefor, may, it is
held, obtain it by procuring accommodation notes from the lender, —
the proceeds of which the principal receives, — and giving to the lender
the principal's notes, secured by mortgage, as security/^
§ 1028. Authority to give necessary securities. — A general au*
thority to borrow would include, by implication^ it is said, authority to
give the lender, in the name of the principal, the appropriate and or-
dinary securities for the sum borrowed;" though it is obvious that
this rule must, in certain cases, be subject to necessary exceptions ; and
that, where pledges, or mortgages of property are involved, it must in
many cases be qualified by such considerations as the necessity of au-
thority under seal or authority in writing.
Powers of attorney to borrow money upon the security of land, usu-
ally include the power to mortgage in express terms; but even if it
were otherwise, the authority to make the necessary instruments would
be implied. Where choice as to the form of the security is open, no
particular form having been specified, the attorney may adopt any
usual and proper form.**
it would be otherwise where the
local conditions Justify It Montaig-
nac v. Shitta, 15 App. Cas. 357.
A bank desiring to obtain a loan or
deposit of state funds offered a bond
with certain sureties; the state treas-
urer objected to this bond, and an-
other was executed with all but one
of the sureties upon the first bond,
and certain others. The treasurer ob-
jected to this one also. To procure
the money, the cashier delivered both
bonds. A surety on both bonds de-
fended on the ground that the au-
thority of the agent to deliver the
first bond terminated with the rejec-
tion of it. Held, that the surety
was liable. The court said that the
refusal to loan upon the first bond
only was not necessarily a rejection
of it; but that, even if it had been,
the whole matter was in the hands
of the agent, and he was authorized
to renew the application with the
added security. Young y. Union Sav.
Bank & Trust Co., 23 Wash. 860. See
Anglo-Callfomlan Bank v. Cerf, 147
Cal. 393.
62 Burnet v. Boyd, 60 Miss. 627.
M Hatch V. Coddington, 95 U. S.
48, 24 L. Ed. 339; Belknap v. Davis,
19 Me. 455.
Authority to borrow money, and
secure its payment by a note and
mortgage Justifies the agent in exe-
cuting a note with such terms as are
usual and proper, and in securing it
by a mortgage with all necessary
and usual covenants. Richmond v.
Voorhees, 10 Wash. 316.
Where an agent is given a deed to
secure a loan from a bank, the agent
may agree that the security shall
cover future advances as well as
past, this being a reasonable agree-
ment under the circumstances^ An-
glo-Californian Bank y. Cerf, 14f Cal.
393.
B4Po6ner v. Bayless, 59 Md. 56.
Held here that an agent who was au-
738
CHAI^. Ill]
CONSTRUCTION OP AUTHORITIES
[§ 1029
§ 1029. Authority to receive the money. — One employed merely
to negotiate a loan to his principal and not entrusted with the securities
to be delivered, would ordinarily have no implied power to receive the
money ; " but such a power could be given him expressly '• and would
ordinarily be implied if he were entrusted to deliver the securities upon
whose delivery the money was to be received.'^
thorized to sell, lease, or mortgage
land, was, in giving security for
money borrowed, not to be confined
to a formal mortgage, but might con-
vey in fee and take back a redeem-
able lease.
AutJwrity to change securities. — ^A
principal, for the purpose of raising
money, placed in the hands of her
agent a note and mortgage made out
to D; the loan, was not effected but
the principal allowed the papers to
remain in the custody of the agent
The principal, in pursuance of a sale,
had placed with the vendor certain
stock to secure the purchase price on
an agreement that the form of secur-
ity could be changed. In this trans-
action the agent had acted. The
agent induced D to assign the note
and mortgage to the vendor, and
with these papers so assigned the
agent effected an exchange of the
mortgage for the stock as permitted
by the contract of sale. The vendor
who accepted this mortgage had no
knowledge of the facts. Held that
the note and mortgage were binding
upon the principal. Brown v.
Brown, 96 Ark. 466.
SB See Henken v. Schwlcker, 174
N. Y. 298; Hlggins v. Moore, 34 N. Y.
417.
B«In Edinburgh American Land
Mortgage Co. v. Peoples, 102 Ala.
241, one P, desirous of obtaining a
loan, applied to M, a local loan
broker, to efFect the loan, and signed
this application: "I agree to pay M
as my attorney a reasonable fee for
taking this application, conducting
correspondence, and making ample
abstract of my land and in securing
and paying over the money,** M
procured a loan, received the money.
and embezzled it Beldy that the
loss should fall upon P who had by
the writing authorised M to receive
the money. A like decision on vir-
tually the same facts is found in
America Mortgage Ga v. King, 106
Ala. 368, and to same eftect, see
Hamil v. American Freehold Co., 127
Ala. 90.
But in Land Mortgage Co. v. Pres-
ton, 119 Ala, 290, where no express
application appeared, the broker was
found on the facts not to be the
agent of the borrower to receive the
money. P applied to M a local
broker to obtain a loan; the broker
made application to the Alabama
Loan Co., which was acting as gen-
eral agent of several foreign invest-
ment companies, one of which was
the lender in controversy. The
notes and mortgage made out to the
lender were forwarded to the Ala-
bama Co., which notified the lending
company of the receipt of the papers
and was thereupon authorized to ap-
propriate some of its funds in Ala-
bama to the execution of the loan.
The Alabama Co. in so doing paid
the money to M who absconded with
it Held, that the Alabama Co., in
paying over the money, was the
agent of the lender, and that the
loss caused by not paying over to the
borrower P, or to an agent of P,
must fall on the lender.
t^T Murphy v. Beeker, 101 Minn.
329; Henken v. Schwicker, 174 N. Y.
29; Pepper v. Cairns, 183 Pa. 114.
In Henken v. Schwicker, supra,
the defendant, whose land was al-
ready mortgaged, applied to a broker
to procure a new mortgage. The
broker induced the plaintiff to ad-
vance the money, provided that a
739
§ 1030]
THE LAW OF AGENCY
[book II
§ 1030. Liability of principal for money borrowed without au-
thority.— Where an agent borrows money having no authority what-
ever to borrow, or where, having some authority, he borrows in excess
or disregard of Hmitations or conditions with knowledge of which the
lender is charged, the principal cannot be held liable upon the con-
tract," unless, with full knowledge of the facts, he ratifies the act.
That there may be such ratification is clear,'^* although, as is pointed
out in an earlier section, the principal does not ratify merely by receiv-
ing a benefit, unless the benefit be received under circumstances indi-
cating a confirmation of the act.'*
first mortgage be given to secure the
loan; the broker promised the plain-
tiff that a first mortgage would be
given, whereupon the plaintiff gave
a check for the amount payable to
the broker. The defendant, when
apprised of the fact that a loan had
been obtained, and that a first mort-
gage must be given, told the broker
to pay off the existing mortgages,
and delivered to the broker at the
same time a new bond and mortgage.
The broker used the funds for his
own purposes without satisfying the
old mortgages, and the question in
suit was upon whom this loss should
fall. Held: (1) that the broker was
the defendant's agent to procure a
loan, i. e.f to produce a person ready
to make a loan; (2) that, in paying
the broker by check, the plaintiff
made the broker his agent to see to
the conveyance of the cash; (3) that
finally when the defendant learned
that the money was In the broker's
possession, the defendant's instruc-
tion to pay off the old mortgages and
to deliver the new bond and mort-
gage constituted the broker the
agent of the defendant, and conse-
quently a defalcation occurring
thereafter and incident to the brok-
er's last employment must be borne
by the defendant.
But In Pigley v. Bradshaw, 85 Neb.
337, the intermediary who effected
the loan was held to be the agent of
the lender at the time the misappro-
priation occurred. Here B applied
to C for a loan, B was to a give a
mortgage on premises which were
already subject to liens. The lender
gave C a draft, made payable to B,
and instructed C to see that the
liens were released. B endorsed the
draft and left it in C's possession
who said that he was to satisfy the
liens out of the same. C cashed the
draft and absconded with the pro-
ceeds. Held, that the loss fell on
the lenders.
s8 See Spooner v. Thompson, 48
Vt 259.
M Kirklln v. Atlas Sav. ft L. Ass'n,
107 Ga. 313; Frye v. Menklns, 15 111.
339; Fitch v. Steam Mill Co., 80 Me.
34; Mohrfeld v. Bldg. Ass'n, 194 Pa.
488.
Where the principal, after receiv-
ing knowledge, voluntarily retains
the money borrowed on his account,
though he may not have had knowl-
edge at the time he received it, this
will ordinarily be evidence of a rati-
fication. See Fitch v. Steam Mill
Co., supra; Bank of Lakln v. Na-
tional Bank of Commerce, 57 Kan.
188 (the general rule formulated by
the court In this case Is too wide);
Willis V. St. Paul Sanitation Co., 58
Minn. 370; Perkins v. Boothby, 71
Me. 91; McDermott v. Jackson, 97
Wis. 64; Collins v. Cooper, 65 Tex.
460. See also, Calnan Constr. Co. v.
Brown, 110 Iowa, 37.
Knowledge is essential. Thomp-
son V. Laboringman's Merc. & Mfg.
Co., 60 W. Va. 42, 6 L. R. A. (N. S.)
311; SwindeU v. Latham, 145 N. C.
144, 122 Am. St R. 430.
«o See ante, | 437.
740
CHAP. Ill]
CONSTRUCTION OP AUTHORITIES [§§ I03I, IO32
Where no authority or ratification can be shown, any recovery which
may be had must be based on ^ttajt-contractual principles, or upon
some theory of equitable subrogation to the rights of those whose valid
claims against the principal have been discharged with the lender's
money,**
XI.
OP AGENT AUTHORIZED TO LEND MONEY.
§ 1031. When authority exists. — ^The authority of an agent to
lend money for his principal may, like many others already considered,
be conferred expressly, or arise by implication from the conduct of
the principal or an established course of dealing. It would also, in
many cases, be an incident to the authority of an agent given general
authority to manage a business in which the loaning of money was a
regular and customary occurrence.
An unauthorized loan may, of course, be subsequently ratified, and
the ratification may be effected in a great variety of ways, as for ex-
ample, by knowingly accepting and retaining the proceeds of a loan.®*
§ 1032. What execution authorized. — Like the agent to borrow,
the agent authorized to lend may be, and often is, limited with respect
of the amount of the loan, the rate of interest, the kind of security, or
the particular person; and limitations of this sort where they are
known, or where the borrower is charged with notice of them, would
be binding upon the borrower, unless the lender should waive them.
But where no such limitations are imposed, or where (what is the
same thing so far as the borrower is concerned), the agent is held out
as having general authority to lend, the principal would be bound by
the acts of the agent in fixing the amount, the time, the rate of inter-
est, and the like, in selecting the borrower and in agreeing upon the
•iThus In Bannatyne v. Maclver,
[1906] 1 K. B. 103. 2 Br. Rul. Oas.
735, it is said by Romer L. J.:
"Where money Is borrowed on behalf
of a principal by an agent, the lender
believing that the agent has author-
ity, though It turns out that his act
has not been authorized or ratified
or adopted by the principal, then, al-
though the principal cannot be sued
at law, yet in equity to the extent to
which the money borrowed has in
fact been applied in paying legal
debts and obligations of the princi-
pal, the lender is entitled to stand
in the same position as if the money
had originally been borrowed by the
principal." Citing In re Wrexham,
etc., Ry. Co., [1899] 1 Ch. 440.
See also, Reversion Fund & Ins.
Co. V. Maison Cosway, [1913] 1 K. B.
364, where Bannatyne v. Maclver, is
explained and applied.
62 See First Nat, Bank v. Oberne,
121 111. 25.
741
§§ i033-i035]
THE LAW OF AGENCY
[book II
form of security, subject, in all of these cases, to the limitation of what
is ordinary and reasonable in such cases.*'
§ i033« Authority to take usurious interest. — ^An agent author-
ized to loan money is presumed to be authorized to loan for lawful in-
terest only, and he can therefore have no implied authority to stipu-
late for usurious interest, or for bonuses or commissions which with
the interest stipulated for will make the interest usurious. If in such
a case the agent does stipulate for usurious interest under the guise
of commissions or otherwise, the principal who has not authorized it,
and who is ignorant of it, and who has not participated in the act or
ratified it, cannot be affected by the unlawful act of his agent.**
. § 1034. Authority to receive payment — As has been seen in an
earlier section,*'* authority to receive payment of either principal or
interest, does not arise from the mere fact that the person who re-
ceived the payment had been agent to negotiate the loan, or from the
fact that the money was payable at his office ; but where in addition to
the fact that he negotiated the loan, it appears that the principal has
also entrusted him with the possession of the securities, an appearance
of authority will arise which will continue as long as such possession
continues. Other situations have also been there considered.**
§ 1035. Authority to extend time or change terms. — An agent
authorized merely to make a loan of money, would ordinarily have no
implied authority to afterwards extend the time,, or otherwise change
the terms or conditions of the loan.*^ It may appear, however, that
«3 Where an agent of a building the land covered by It, the lender Is
and loan association in making a
loan agrees that, if a person who al-
ready has a first mortgage upon the
property, will agree to make his
mortgage second, the company will
see that all the money which It loans
win be used in making improve-
ments upon the land, and he does so,
the company is bound. Wayne
Build. & L. Ass'n v. Moats, 149 Ind.
123.
So where the agent of the lender
agrees that if the borrower, instead
of paying oft an existing mortgage
and giving a new one for the entire
amount borrowed, will consent to the
assignment of the existing mortgage
and the execution of a new one for
the difference only, the lender upon
receiving the assignment of the first
mortgage will release a portion of
bound by the agreement Gross v.
Milligan. 176 Mass. 56G.
«* See Franzen v. Hammond, 136
Wis. 239, 128 Am. St. R. 1079, 19 L.
R. A. (N. S.) 399; and many other
cases cited post^ Book IV, Chapter V,
Liability of Principal for Criminal
and Penal Acts of his Agent
•8 See ante, § 934.
An authority given to reloan mon-
ey already loaned would imply au-
thority to receive payment of the
first loan. Wales v. Mower, 44 Colo.
146, 96 Pac. 971.
<o See ante, § 935.
•TSee Garth v. Runner (Ky.), 121
S. W. 681, where a mere loan agent
was held to have no implied author-
ity to release liens or accept new se-
curities in substitution for those
agreed upon and received.
742
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ IO36-IO38
his authority over the whole subject has been made so general as rea-
sonably to warrant the inference of such an authority •• or he may be
so held out as possessing it as to estop the principal from denying it.
§ 1036. No authority to loan to himself. — Like other agents, the
agent to loan has no implied authority to loan to himself either di-
rectly or indirectly, without the principal's full knowledge and con-
sent/* and if he does so the principal may repudiate the transaction or
affirm at his option.
§ 1037. Authority to purchase securities. — ^It has been held, that
authority to loan his principal's money does not authorize the agent to
purchase a promissory note ; ^® but if the note were one of the kind upon
which the agent would have been justified in loaning the money it is
difficult to see any serious objection to it.
XII.
OF AGENT AUTHORIZED TO BIND PRINCIPAL AS SURETY.
§ 1038. When authority exists. — ^Authority to bind the principal
as surety upon the obligation of a third person is, like certain others
already considered, a dangerous one which ought not lightly to be in-
ferred. The act is usually one done for accommodation merely, out-
side of the scope of the principal's business, for which he receives no
consideration, and which subjects him to risk for the acts and faults
of others over whom he has no control. In a few states, as has been
seen,^* statutes expressly require such an authority to be conferred by
MHurd y. Marple, 2 111. App. 402.
See also, Moore v. Gould, 151 Cal.
728, where authority to renew or ex-
tend was tound to exist under a
broad power of attorney authorizing
the agent to do any kind of buslnefls
for the principal.
«»See Keyser v. Adair, 127 Mo.
App. 62. Here an agent authorized to
loan money desired to borrow it for
himself and his father; he made out
a note leaving the name of the payee
in blank; he and his father signed
it; he then went to defendant and
others and induced him and them to
sign it as sureties upon his represen-
tation that the loan was to be for the
benefit of a certain well known firm
for whom defendant had acted as
surety before; then he filled in the
name of his principal as the payee
and delivered the note to him telling
him that the loan was being made to
the persons who were really the
sureties, and the principal advanced
the money upon this understanding.
The note not being paid, the princi-
pal sued; the defendant, one of the
sureties, defended upon the ground
that the misrepresentations made to
him as to the real borrower were
the misrepresentations of plaintiff's
agent Held, that when the agent
undertook to borrow this money for
himself and his father, his agency
for the plaintifT ceased, and that de-
fendant could not defend upon the
grounds stated.
TO Silvers v. Hess. 47 Mo. App. 507.
71 See antCt I 225.
743
§ I039]
THE LAW OF AGENCY
[book II
writing ; ^^ but, in the absence of such a statute, parol authority is suf-
ficient.^* And even the parol authority need not be express : it may be
conferred by conduct, or be inferred from circumstances,^* though, as
has been suggested, the inference should not be drawn unless the cir-
cumstances clearly and fairly warrant it.
§ 1039. Authority strictly construed. — Powers of attorney to sign
one's name as surety to obligations are properly subjected to a strict
interpretation. As said in one case,^* "the agent can do nothing which
he is not expressly authorized to do by the instrument which is the ex-
clusive source of his authority to act at all." If he is authorized to
sign at a given time, or for one purpose, or for a stated amount, or for
a particular person, he cannot bind his principal by signing at another
time, or for a different purpose, person, or amount.''* If he is author-
ized to sign an obligation with certain conditions, he cannot bind the
principal where the conditions are different. Where he is authorized
to sign upon one occasion, the authority is exhausted with its execu-
tion and cannot be treated as a continuing authority.^^
Where a power of attorney authorized the execution, for an ex-
ecutor, of "the bond required by the court," but the bond as executed
contained also some provisions not required by the law, it was held
72 Ab in Kentucky. See. Ky. Stat.
1899, § 4S2. Simpson v. Common-
wealth, 89 Ky. 412; Dickson v. Lu-
man, 93 Ky. 614; Wilson v. Linville.
96 Ky. 50; Ragan v. Chenault, 78 Ky.
545.
T« Banister v. Wallace, 14 Tex. Civ.
App. 452.
74 See Miller v. Farmers' State
Bank, — Ind. App. — , 100 N. E.
119.
Ts Stuart V. Commonwealth, 91 Va.
152.
T6 Stovall V. Commonwealth, 84 Va.
246 (authority to sign hond for
$25,000, bond for $40,000 not bind-
ing) ; Dugan v. Champion, etc., Co.,
105 Ky. 821 (authority to sign bond
for 16,000, bond for $8,667 not bind-
ing) ; Lovett v. Sullivan, 189 Mass.
535; authority to sign a guaranty of
payment of X's bills during X's mi-
nority will not authorize execution
of a guaranty to continue until can-
celled by the guarantor.
In Redd v. Commonwealth, 85 Va.
648, a man who had been elected
county treasurer was required to
give a bond. A number of persons
gave powers of attorney to sign their
names as his sureties. These powers
were unconditional and unambigu-
ous. He did not qualify under the
election, and a vacancy ensued. He
was apointed to fill this vacancy, and
these powers of attorney were used
in making his bond to fill the va-
cancy. Heldf that the sureties could
not show that they Intended the pow-
ers of attorney to be used only in
making the bond under the election.
A power of attorney executed Sep-
tember 23, 1894, authorizing the ex-
ecution of a bail bond for appearance
at January term, 1894, held to be a
clerical error and to authorize a
bond for the January term, 1895.
Commonwealth v. Perkins, 17 Ky. L.
R. 542, 32 S. W. 134.
TT Stuart V. Commonwealth, supra.
744
CHAP. Ill]
CONSTRUCTION OP AUTHORITIES [§§ IO4O, IO4I
that these extra provisions, which were severable, could be disregarded
and the bond held valid as an execution of the power.^*
XIIL
OP AGENT AUTHORIZED TO EMPLOY.
§ 1040. What here included. — ^The general questions of the dele-
gation of authority by agents and their power to appoint subagents,
have already been considered in another place.''* The general ques-
tion also of the agent's authority, not to delegate his own authority,
but to employ other agents and servants for his principal, which is an
entirely different one, has also been somewhat considered in the same
chapter.*® A few general rules upon the subject seem appropriate in
this place, and will be given.
§ 104Z. When authority exists. — Authority to employ agents and
servants for the principal may, of course, be expressly conferred, or
may arise by implication as a usual or necessary incident of some other
authority conferred.*^ Thus, as has been already seen, an agent to
sell, may often employ a broker ; •' an agent to collect, has often im-
plied authority to employ an attorney;®* the general manager of a
business placed in complete charge thereof would ordinarily have im-
plied authority to employ the necessary help ; " and the foreman of a
shop or farm may have such a general authority over its conduct as to
authorize him to do the same.**^ Even where there was no precedent
T»YoBt T. Ramey, 103 Va. 117.
f See ante, § 304, et seq,
«oSee ante, § 334, et aeq.
But neither evidence of authority
to make a particular contract for the
digging of a well nor evidence of a
general authority as manager to en-
ter into such contracts is sufficient
to prove authority in the agent to
dig the well himself, or to employ
workmen to do it. Mondis v. Emig,
171 Pa. St. 417.
The emplo3mient of a person to
collect the rents of a building does
not give him authority to employ an
engineer to take charge of the en-
gine in such building. Grozier v.
Reins, 4 111. App. 564.
In Nielsen v. Northeastern Co., 40
Wash. 194, an agent authorized to
solicit prospectors to engage in the
service of the principal was held to
have no authority to make binding
contracts of employment.
In Murphy v. Knights of Columbus
Bldg. Co., 155 Mo. App. 649, the de-
fendant company, being desirous of
building, appointed a real estate
committee with R as chairman, and
instructed them "to go out and find
an available site." R employed the
plaintiffs (real estate brokers) who
found for the company a satisfactory
Bite. Held that R had Implied au-
thority to employ the plaintiffs.
82 See ante, $ 316.
88 See ante, { 316.
84 See ante, § 988.
86 The mere fact that one Is "fore-
man" of a gang of men does not es-
tablish his authority to employ such
men. Bonnell v. State, 64 Ind. 498;
I^angston v. Postal Tel. Co., 6 Oa.
App. 833.
745
§ I042]
THE LAW OF AGENCY
[book II
authority, an employment may, of course, be made good by subsequent
ratification,"* or the principal by his conduct may estop himself from
denying its existence.*^
§ 1042. — — As a general rule, however, it is entirely clear that
one agent or servant has, from his mere position a« such, no implied
authority whatever to employ other agents or servants on his princi-
pal's account." What servants or agents the principal shall have (for
and to whom he is to assume responsibility), how and when they shall
be selected, upon what terms and subject to what conditions, limita-
tions or control they shall operate, and the like, are questions of the
greatest importance, which the principal must ordinarily have the
right to determine for himself. Unless it can be shown, therefore,
that the principal has expressly or by proper implication given the
authority to some one else, it must be deemed to reside in him alone.
Neither does the mere fact of some sudden emergency or exigency
ordinarily alter the rule. The principal or master is usually the one
to whom the emergency shall be reported and who shall decide how it
shall be met." If he is where he cannot be communicated with, either
at all or in time to act, a narrow authority, limited by the exigency,
may be recognized.'"
This latter doctrine more readily operates where the agent or serv-
ant who undertakes to employ is one charged with some degree of
86 For eyidence held InBufflclent to
flhow authority or ratification* see
Findlay v. Hildenbrand, 17 Idaho,
408, 29 L. R. A. (N. S.) 400.
>7 See Haluptzok v. Great North-
ern Ry. Co., 66 Minn. 446, 26 L. R.
A. 789; Pardridge v. La Pries, 84
111. 61; Spencer Lumber Co. y.
Marsh, 99 Ark. 368; TroUinger y.
Fleer, 167 N. Car. 81.
M See ante, § 384, et seq. In the
absence of an emergency, at any
rate, the conductor of a freight train
has no implied authority to employ
assistants upon the train. St. Louis,
etc., Ry. Go. y. Jones, 96 Ark. 668,
37 L. R. A. (N. S.) 418.
A railroad station agent has no
implied authority to employ persons
to guard the depot and other prop-
erty there of the company. Lips-
comb y* Houston^ etc., Ry. Co., 96
Tex. 6, 93 Am. St. R. 804, 66 L. R. A.
869.
A physician engaged to attend an
injured employee has no implied au*
thority to employ assistants. Bond
y. Hurd, 31 Mont. 314, 3 Ann. Cas.
66G.
8»Gwllliam y. Twist, [1896] 2 Q.
B. 84.
90 See Aga y. Harbach, 127 Iowa,
144, 109 Am. St R. 877; Marks v.
Rochester R. Co., 146 N. Y. 181; Golf
V. Toledo, etc., R. Co., 28 111. App.
629; East Line, etc., R. Co. y. Scott,
71 Tex. 703, 10 Am. St R. 804; John-
son y. Ashland Water Co., 71 Wis.
553, 6 Am. St. R. 243.
For the liability of the master for
the negligence of a stranger assist-
ing a servant, see pogt. Book IV,
Chap. V.
746
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
I§ 1043
management or control, and to whom some measure of discretion in
dealing with emergencies may fairly be imputed.*^
§ 1043. What employment authorized. — The authority of the
agent to employ, may be either general or special. Where his author-
ity is general, or apparently general, he may bind his principal by con-
tract within the range of what is usual and reasonable in such cases.**
In deciding upon the quality or the quantity of the help to be em-
ployed, his range would be determined by the apparent, t;ather than by
the actual need, where these were different. In fixing the duration of
the employment he may agree for such a length of time as would, "un-
der all the circumstances, be reasonable, considering the nature of the
business, the season of the year in which it is usually prosecuted, and
the length of time it is likely to take to complete the work." •" In fix-
•1 Conductor o2 a train may in an
emergency employ a brakeman, fire-
man and the like. Georgia Pac. Ry.
Co. y. Probst, 85 Ala. 203; Sloan v.
Central Iowa Ry. Co., 62 Iowa, 728;
Fox V. Chicago, etc, Ry. Co., 86
Iowa, 368, 17 L. R. A. 289.
«2in Farrlngton v. Hayes, 65 Vt.
153, defendant telegraphed his
agent, "Employ Farrlngton and Post.
Letter will follow." The agent em-
ployed F and B in accordance with
the telegram, not knowing of any re-
striction in the letter, but showed F
and B the telegram. The letter
when it arrived contained instruc-
tion not to employ F and B unless
they would do the work for $500.
The agent never showed the letter to
F and B, and they did work worth
$1,720. Heldt that the authority con-
ferred by the telegram was absolute;
that F and B were entitled to the
reasonable value of their services;
and that the statement that, "letter
will follow" did not put them upon
inquiry as to the agent's authority.
A special and temporary author-
ity to employ men to work at a par-
ticular place (e. g. in a certain
town) does not Justify the employ-
ment of men to work at a different
place (e. ^., in another town or city).
Williams v. Kerrick, 105 Minn. 254J
In Beaucage v. Mercer, 206 Mass.
492, 138 Am. St B. 401, it is said:
"If, for instance, the authority real
and apparent of Eagen [the agent
who employed] was limited to the se-
lection of only the necessary number
of men, and he selected more, then
the surplus men could not be re-
garded as the servants of the defend-
ant; but if Eagen was empowered to
send as many men as he thought
necessary and acting under such au-
thority he sent such men as he
thought necessary but more than in
fact were necessary, or if he was em-
powered to send as many men as he
pleased and sent more than were
necessary, in either case all the men
so sent would be the servants of the
defendant whether or not they were
in fact needed."
03 Drohan v. Merrill & Ring Lum-
ber Co., 75 Minn. 251, where an em-
ployment for three winter months of
a blacksmith and "handy man" in a
lumber camp was held to be reason-
able.
In World's Columbian Exposition
T. Richards, 67 111. App. 601, an em-
ployment for the six months that
the exposition was to remain open
was held justified.
In Williams v. Getty, 31 Pa. 461,
72 Am. Dec. 757, it is said, "If it
were such a business as It was appar-
ent would last but six months, a
contract for a year doubtless would
not be binding on the principaU be>
747
§ 1044]
THE LAW OF AGENCY
[book II
ing the rate of compensation, where no other terms were prescribed,
he would be governed by the market or customary rate or if none, by
a reasonable rate.**
XIV.
OF AGENT AUTHORIZED TO SHIP GOODS.
§ 1044. How authority arises. — The authority of an agent to ship
goods, like that of other agents already considered, may be conferred
expressly, or it may result from conduct or an established course of
dealing.** An unauthorized shipment may also be rendered valid by
a subsequent ratification.**
cause the party employed would be
acting in bad faith, in undertaking
when it was apparent he would not
be needed; and besides it would be
equally apparent that such a con-
tract was not necessary to the ac-
complishment of the object. So, if
the business were such as would ap-
parently last for months, an employ-
ment for one or more months would
seem to all to be covered by the
agent's implied authority, and would
bind."
In Cohen v. Goldstein, 12S N. T.
Supp. 69 an agent with authority to
hire was held to have power to hire
for one year.
In Laming v. Peters Shoe Co., 71
Mo. App. 646, a hiring for one year
was sustained.
In Roche v. Pennington, 90 Wis.
107, a general agent's undertaking,
upon hiring an employee for a year,
to take the risk of the employe's
competency was sustained.
In DefTenbaugh v. Jackson Paper
Mfg. Co., 120 Mich. 242, an agree-
ment by *the superintendent to give
the employee an interest in the busi-
ness was held not to be within his
power.
»4 Cross V. R. R. Co., 141 Mo. 132.
In the Ala. Great South. R. Co. v.
Hill, 76 Ala. 303. it was said, "Power
tc employ an agent or servant, if
there be no restrictive words. In-
cludes the authority to make a coYn-
plete express contract, definite as to
the amount of wages, as upon all
other terms."
In Opinion of Justices, 72 N. H.
601, it was said, "Authority to em-
ploy agents and other persons neces-
sarily implies power to contract with
them for their compensation accord-
ing to the method usual in matters
of the kind."
Authority to employ would justify
fixing a fair compensation, but not an
agreement that the principal would
also pay what was then owing to the
employee by his former employer.
Rlcker Nat Bank v. Stone, 21 Okla.
S38. See also UoUoway v. Stephens^
1 Hun (N. Y.), 380, 2 Thomp. Jb
Cook (N. Y.), 562; where an extrava-
gant contract was held unauthorized.
BO See Hix V. Eastern S. S. Co., 107
Me. 357. No authority to ship. — ^The
mere employment of a teamster to
haul goods to a warehouse does not
authorize him to ship them and take
a shipping receipt therefor. Zorn v.
Livesley, 44 Or. 501. So where a
teamster was directed to take goods
to a wharf, but not directed to ship
them. Seller v. Steamship Pacific, 1
Or. 409, Fed. Cas. No. 12,644.
Written authority to an agent to
represent his principal "in weighing
my cattle" at a certain place in pur-
suance of a contract of sale, does not
authorize him to ship them to an-
other town to be weighed. Mann v.
Dublin Cotton-Oil Co., 92 Tex. 377.
96 Nelson v. Hndson R. R. Co., 48
748
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ IO45, ^^46
Where the principal directs an agent to ship goods to some particu-
lar place, and no other method of transportation is provided for or con-
templated, and there is a public carrier over whose line such goods
would naturally and reasonably be transported, the direction to ship
them would ordinarily be construed as a direction to ship them by such
carrier.
Where there were several such carriers, the agent would doubtless
bind his principal by a reasonable choice of one.
§ 1045. How authority to be exercised — Agreeing upon terms of
shipment — It would be entirely competent for the principal to di-
rect the agent in the choice of a carrier, and as to the terms and con-
ditions of the contract of carriage. Such directions would of course
be binding on the agent, and upon all third persons charged with notice
of them.®^ An agent, however, authorized to ship, and not known to
be subject to any limitations, would have apparent authority to select
the carrier and agree upon the terms and conditions of carriage, sub-
ject to the limitation of what is usual and reasonable in such cases.
§ 1046. — — Agreements limiting liability of carrier.— Thus,
it has been held in many cases that an agent, entrusted with the pos-
session of goods and authorized to ship them, and being the only per-
son on the ground with whom any contract which it is proper to make
may be made, has apparent authority to do whatever is necessary and
usual in such cases; and he may therefore bind his principal by his
agreements respecting the ordinary terms and conditions of the car-
riage, and by his execution and delivery or acceptance of the cus-
N. Y. 498; Russell v. Brie R. Co., 70
N. J. L. 808, 67 L*. R. A. 438, 1 Am. St
E. Ann. Cas. 672.
•r Where the principal In person
had made an oral contract with the
agent of an express company for the
transportation and delivery of
horses within a certain definite time,
and later sent the horses hy agent
to be delivered to this agent of the
carrier, he is not bound by a shipping
receipt taken by his agent which,
without the knowledge or consent of
the principal, contained a clause ex-
empting the carrier from liability
for loss caused by delay. Waldron
V. Fargo, 170 N. Y. 180. See also,
Atchison, etc., R. Co. v. Watson, 71
Kan. 696.
So an agent merely sent to ship
goods has no apparent authority to
ship upon different terms from those
Indicated by the principal's written
directions which the agent brings
with him. Russell v. Erie R. Co., 70
N. J. L. 808, 1 Am. & E. Ann. Cas.
672, 67 L. R. A 438.
In Willborn v. Southern Ry. Co., 6
Oa. App. 151, an agent, authorized to
carry goods to the railroad and load
tbem, made a contract limiting the
carrier's liability; the agent of the
carrier knew that the person pre-
senting the goods was not the ship-
per, but an agent. Heldj that the
shipper was not bound by the spe-
cial contract.
749
§ 1046]
THE LAW OF AGENCY
[book ir
ternary documents, including such releases of the carrier's liability as
it is lawful and customary for the carrier to give or receive.**
fts California Powder Works v. At^
lantic, etc., R. Co., 113 Cal. 329, 36
L. R. A. 648; Atchison, etc., Ry. Co.
V. Baldwin, — Colo. — , 128 Pac.
U9; 111. Cent. R. Co. y. Jonte, 13 111.
App. 424; Brown v. L. & N. Ry. Co.,
86 111. App. 140; Wabash R. Co. ▼.
Curtis, 134 111. App. 409 (but see Mer-
chants' Desp. Transp. Co. ▼. Joesting,
89 111, 152; Plafl v. Pacific Exp. Co.,
159 111. App. 493, 251 111. 243) ; Adams
Bxpresa Co. v. Byers, — Ind. — , 95
N. E. 518; Adams Exp. Co. v. Carna-
han, 29 Ind. App. 606, 94 Am. St. R.
279; Hill v. Boston, etc., R. R. Co., 144
Mass. 284; Peirce v. American Exp.
Co., 210 Mass. 383; Nelson v. Hudson
River R. R. Co., 48 N. Y. 498; Skelton
V. Transp. Co., 59 N. Y. 258; Jennings
V. Grand Trunk Ry. Co., 127 N. Y.
438; Zimmer v. New York, etc., R.
Co., 137 N. Y. 460; Donovan v. Stan-
dard Oil Co., 155 N. Y. 112; Root v.
New York A N. Bl R. Co., 76 Hun
(N. Y.), 23; Smith v. Robinson Bros.,
88 Hun (N. Y.), 148; Jones v. New
York L. B. & W. R. R, Co., 8 N. Y.
App. Div. 341; Kniapp v. Wells, Fargo
ft Co., 134 N. Y. App. Div. 712; Ad-
doms V. Weir, 56 N. Y. Misc. 487
(and cases cited); Smith Meat Co.
V. Oregon Ry., 59 Ore. 206; Ryan v.
M. K. A T. Ry. Co., 65 Tex. 13, 57 Am.
Rep. 589; Missouri Pac. Ry. Co. v. In-
ternational, etc., Ins. Co., 84 Tex.
149; Head v. Pacific Express Co., —
Tex. Civ. App. — , 126 S. W. 682;
Oregon Short Line Ry. Co. v. Blyth,
19 Wyo. 410; Aldridge v. Gt. Western
Ry. Co., 15 Com. B. (N. S.) 582. [In
the similar case of shipments by the
seller of goods, see McElvain v. St
Louis, etc., Ry. Co., 151 Mo. App. 126;
Lewis V. Imhof, 138 Mo. App. 370.]
In Brunner v. Piatt, 50 N. Y. Misc.
571, plaintill requested an express
company to send to his house and
obtain and transport a suitcase. The
agent called at the house, obtained
the suitcase from the maid, who
paid the charges, and accepted a re-
ceipt containing a clause limiting
liability. Held that the maid was
an agent to ship, within the rule.
On very similar facts, it was held in
Wright V. Fargo, 59 N. Y. Misc. 416,
that although the maid was the
agent, her mere acceptance of the re-
ceipt left with her, in the absence of
any reliance upon the receipt by the
principal, did not make a binding
contract with the principal which
would preclude a right to sue upon
the carrier's common-law liability.
In Belger v. Dlnsmore, 51 N. Y. 166,
10 Am. Rep. 575, the agent who de-
livered the goods and accepted the
receipt was the shipper's wife. In
Missouri, etc., Ry. Co. v. Patrick, 114
Fed. 632, 75 C. C. A. 434, the wife de-
livered the goods, and it was held
that she acted as the agent of her
husband and bound him by the re-
lease, although there was evidence
that she could not read and did not
appreciate the terms included in the
receipt. There was also evidence
here of ratification and acceptance
of a reduced rate given in consider-
ation of the release.
In Oregon, etc., Ry. Cd. v. Blyth,
19 Wyo. 410, where household goods
had been left with a storage com-
pany for shipment, the court said,
"It is not contended . . . that the
storage company was not the agent
of Mr. BlyUi for the shipment of
these goods; and In fact, no such
contention could be sustained under
the evidence. In such case, where
the owner of goods directs his agent
to ship the same without further di-
rections or restrictions, the law im-
plies authority in the agent to make
a reasonable contract with the car-
rier limiting the carrier's liability.**
So in Addoms v. Weir, 66 N. Y.
Misc. 487, where the plaintiff told
the bell-boy at her hotel to take a
package to Adams Express and he
7SO
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 1046
§ 1047. ■ But such an agent would have no implied author-
ity to change contracts of shipment already made by his principal,*®
••Jennings r. Grand Trnnlc Ry.
Co., 127 N. Y. 438; Atchison, etc., Ry.
Co. V. Watson, 71 Kan. 696; North-
west Transp. Co. v. McKenzle, 25 Can.
Sup. Ct. 38; Wilson v. Canadian
Devel. Co., 38 Can. Sup. Ct 432.
took a receipt limiting liability
where no value was declared, it was
held that he had been, by her act,
constituted her agent for all purposes
necessary to the shipment, and that
she could not base an action upon
the receipt for her goods without
being bound by the contract stated
in the receipt.
In Hix V. Eastern Steamship Co.,
107 Me. 357, where the plaintiff had
been a shipper of horses for many
years and had several times accepted
bills of lading signed in his name by
the agent, it was held that he had
held out the agent as having au-
thority to bind him by the special
contract embodied in the bill of lad-
ing and that he knew or ought to
have known the terms of that con-
tract.
An agent of a non-resident firm, in
buying cotton and shipping it to his
principal, may make any lawful and
ordinary contract of shipment, and
hence may agree that the carrier
shall have the benefit of insurance
on the goods. Missouri Pac. Ry.
Co. V. International, etc., Ins. Co.,
84 Tex. 149.
Shipment hy truckman or dray-
man.— Where a drayman, whose reg-
ular duty it was to haul gunpowder
to a depot for shipment, had also au-
thority to ship it for the company
to its destination, he may bind the
principal by signing a shipping order
limiting the liability of the carrier
against loss by fire. California Pow-
der Works V. Atlantic, etc., R. Co.,
113 Cal. 329, 36 L. R. A. 048.
Compare Benson v. Oregon Short
L. R. Co., 35 Utah, 241, 136 Am. St.
R. 1052, 19 Ann. Cas. 803, post.
Plaintiff purchased a mirror, di-
recting the seller to deliver it to de-
fendant for transportation. Seller
sent it by a cartman to defendant's
depot Defendant's agent refused to
receive the mirror unless the cart-
man would sign a contract releasing
liability for breakage. The cartman
signed the contract, but on condition
that defendant would nol ship it
until the next day, and then it
should be returned if seller requested.
The cartman made known the facts
to the seller and delivered to him a
duplicate contract No dissent or re-
quest to return having been made by
the latter, the mirror was shipped
and was broken in transitu. Held,
tliat the seller was authorized to
make the contract on behalf of
plaintiff, that there was a complete
ratification by him of the cartman's
acts, and that the contract made wsjb
valid and binding upon plaintiff.
Nelson v. Hudson River R. Co., 48
N. y. 498.
Part of the apparent conflict in
these cases arises out of the question
whether the mere acceptance of
the receipt or release by ship-
per himself or by such drayman
or truckman with authority to ship
is binding as a special contract, lim-
iting liability in the absence of any
evidence of express assent Such
cases as Cohen v. U. S. Express Co.,
81 N. J. L. 355; Hill v. Adams Ex-
press Co., 80 N. J. L. 604; Lansing v.
N. Y. Central, etc., R. R. Co., 52
Misc. 334; Atlantic C. L. R, R. Co. v.
Dexter, 50 Fla. 180, 111 Am. St R.
11 G; seem to turn upon this question.
In Hill V. Adams Express Co., 77 N.
J. L. 19, the supreme court argued
against the authority of the truck-
man but that case was reversed in
the Court of EIrrors, 78 N. J. L. 333,
though this court declined to pass
751
§ I047]
THE LAW OF AGENCY
[book II
and the carrier could not rely upon the contract where he knew, from
previous dealings with the principal, of limitations upon the agent's
upon tliis particular question since
they found no evidence that the
truckman was authorized to ship.
In the final disposition of the case,
in N. J. U — , 81 Atl. 859, the
case is put upon the question of as-
sent to the terms.
In Hailpam v. Joy Steamship Co.,
60 N. Y. Misc. 566. the plaintiff told
the truckman to deliver the goods to
the defendant for shipment and get
a receipt. for them. The truckman
took a bill of lading, giving his own
name as "owner or shipper," and, at
the request of the carrier's agent
who knew that he was a "mere truck-
man," signed a release. The court
held that there was no authority to
bind the plaintiff by such a release.
In Benson v. Oregon Short Line
R. Co., 36 Utah, 241, 136 Am. St. R.
1052, 19 A. ft S. Ann. Cas. 803,
the owner had employed a dray-
man to pack and ship the goods, and
the drayman had made a contract
limiting liability. Held, that the
owner was not bound. The cases
which it chiefly relies upon, — Nelson
V. Hudson R. R. Co., 48 N. Y. 498.
cited ante; Seller v. Steamship Pa-
cific, 1 Or. 409, Fed. Cas. No. 12,644,
also cited ante; and Russell v. £:rie
R. Co., 70 N. J. L. 808. 67 L. R. A.
483, 1 A. ft B. Ann. Cas. 672, cited
post, seem clearly distinguishable.
Rule in IlUnoi8. — In Illinois, not-
withstanding some conflict in the
cases, it seems to be the rule that
limitations upon the carrier's com-
mon-law liability can only be made
when the shipper clearly assents to
them; and that consequently, if the
goods are shipped by an agent, his
actual authority to assent to the lim-
itations must be shown; it will not
be inferred merely from his au-
thority to ship. In the absence of
any proof to the contrary, the pre-
sumption would be that he is to pre-
serve the common-law liability, and
not to waive it See Merchants De-
spatch Transp. Co. v. Joesting, 89
111. 152; Plaff v. Pacific Bzpress Co.,
159 IlL App. 493, 251 111. 243. Com-
pare Illinois Cent R. Co. v. Jonte, 13
111. App. 424; Brown v. Louisville,
etc., R. Co., 36 111. App. 140; Wabash
R. Co. V. Curtis, 134 111. App. 409.
Contract hy initial carrier with
connecting carrier. — ^Where goods
are delivered to the first of a series
of carriers, without a special con-
tract, the initial carrier has no im-
plied authority to put a limited val-
uation upon the goods when deliver-
ing them to the connecting carrier.
Adams Express Co. v. Byers, 176 Ind.
— , 95 N. B. 513.
Authority of agent sent along tcHth
the goods. — A principal in an in-
terior town in Illinois, who desired
to ship property, including some
horses, to a town in Minnesota, ar-
ranged for a through rate, but took
a shipping receipt only to Chicago,
at which place the property was to
be transferred to another road. He
sent an agent in charge of the prop-
erty, and gave him money to pay
freight from Chicago to destination.
At Chicago, this agent made a con-
tract with the second carrier, which
contained a clause requiring claims
for damages to be presented within
30 days. Held, that this contract
bound the principal. Armstrong v.
Chicago, etc., Ry. Co., 53 Minn. 183.
So, in a similar case, an agent
sent in charge of a carload of hogs
was held to bind his principal by a
contract limiting the carrier's lia-
bility made at a connecting point
upon the way. Squire v. New York,
etc., R. Co., 98 Mass. 239, 93 Am. Dec.
162. But see Gulf, C. ft S. F. Ry. Co.
V. White (Tex. Civ. App.), 32 8. W.
322. But not so, where the person
sent along is evidently a mere at-
tendant, and the principal has al-
ready made on oral contract in the
752
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ IO48
authority ^ or where the contract which the agent makes is obviously
at variance with the instructions which he brings with him or with the
terms of a contract prepared by the principal and sent by him with the
^oods to be executed by the carrier.*
• XV.
OF AGENT AUTHORIZED TO CARE FOR PROPERTY.
§ 1048. Nature and extent of authority. — ^The authority of an
agent authorized to care for property may, according to the circum-
stances, range from that of general manager to that of a mere bailee.
Where the agent is merely a custodian or caretaker his authority to
bind the principal by contract is very limited.* **It is confined, at the
most, to what is immediately and imperatively necessary for the pro-
tection of the premises ;'* and would not justify the making of exten-
sive repairs and a fortiori general alterations and improvements.* So,
authority to an agent "to take good care of the property, and give
[the principal] notice of any lien," does not justify the agent in em-
ploying another person to bid in the property at a sale upon a distress
warrant in such wise as to bind the principal to receive the property
and pay the bid.' Authority to care for property will not justify
selling or otherwise disposing of it • and the like.
matter. Atchison, etc., Ry. Co. v. damage. Hill t. Coates, 34 Misc. (N.
Watson, 71 Kan. 696. Y.) 535.
1 Waldron v. Fargo, 170 N. Y. 130. » Brisbane v. Adams, 3 N. Y. 129.
s! RUBseU v. £rle R. Co., 70 N. J. U « McGraw v. O'Nell, 128 Mo. App.
«08, 67 U R. A. 433, 1 Am. & E. Ann. 691.
Cas. 672, where the agent brought A porter In a garage has no im-
vrlth him a shipping order already plied atthorlty to receive for safe-
made out by his principal for execu- keeping the sample case of a person
tion by the carrier. who stored his car at the garage.
3 An 18 year old daughter of a far- Chesley v. Woods Co., 147 111. App.
mer, left in charge of his farm for a 688.
lew hours, is not thereby authorized A person employed ta care for and
to resist by force an entry upon a drive a race horse has no Implied au-
part of the farm which has been thorlty to receive a purse won by the
legally condemned for public use. horse. Snow v. Wathen, 112 N. Y.
feast Jersey Water Co. t. Slinger- Supp. (App. Div.) 41.
land, 58 N. J. U 411. A person sent to draw from the
4 It seems that a caretaker in barrels and bring to his employer a
-charge of a city house has no Implied few bottles of whiskey; the barrels
authority to order repairs made to it being stored on the employer's prem-
beyond such as are Immediately and laes, has no implied authority to de-
Imperatlvely necessary for its pro- ll^er the barrels of whiskey to a per-
tection; and is not impliedly au- son searching for whiskey unlaw-
thorlzed to order extensive plumbing fully kept. Nash v. Noble, 46 Tex.
repairs, as a consequence of a leak Civ. App. 369.
in the pipes, where turning oft the As to liability of employer tot
water would have prevented any false imprisonment or malicious
48 753
§ 1049] THE LAW OF AGENCY [bOOK II
XVI.
'OF AGENTS AUTHORIZED TO REPRESENT INSURERS.
§ 1049. Purpose of this subdivision. — It is the purpose of this sub-
division to discuss briefly the construction of the authority of the agents
who are appointed to represent those persons or companies who arc
engaged in the business of insuring others against the consequences
of death, fire, accident, and other casualties. These agents are known,
in popular language, as insurance agents. Although persons who de-
sire insurance may appoint agents to represent them in obtaining it,
and although such agents might be called insurance agents, they are
not the ones popularly designated by that term, nor are they the ones
who are here to be considered.
There is also a class of professional agents who make a business of
procuring or furnishing insurance for their clients, as they may hap-
pen to be employed, but who are not the regularly appointed agents of
any particular insurer. They are insurance brokers, and the questions
concerning them will be dealt with in a later chaptisr on Brokers.'' The
discussion here, as has been stated, is confined to the agents who regu-
larly and exclusively act for those who are to furnish the insurance.
In this country, unlike some others, the insurance business is almost,
if not quite wholly in the hands of incorporated companies, organized
under local laws, and extending their business frequently over wide
areas and having their agents in localities far removed from the place
in which the company may be located and have its chief office and
officers.
By reason of the fact that the company is thus often so far away, and
the local agent is the only representative of it which the insured sees
or deals with, the local agent takes on, in the minds of those who deal
with him, a representative character which is not possessed by agents
who operate in many other fields.
The insurance business has also a characteristic not possessed by
any other, in the fact that it is usually not until after a loss has hap-
pened and it is entirely too late to restore the parties to their original
position, that questions arise between the parties. To deny effect at
that time, is, therefore, not only to greatly disappoint expectations, but
to do so only when the opportunity for making new. or more satisfac-
prosecution by caretakers, see Dan- Pacific Ry. Co., 14 Ont. L. K. 55, &
iel.y. Atlantic Coast Line R. Co., Ann. Cas. 324; and cases cited poMt,.
136 N. Car. 517, 67 L. R. A. 455, 1 Book IV, Chapter V.
Ann. Cas. 718; Thomas v. Canadian ^ See post. Book V. Brokebs.
754
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§ IO5O
tory arrangements is forever gone. The possibility of escaping re-
sponsibility for a loss incurred seems naturally to tempt the insurer to
insist upon every teclinicality in its favor^ and to make the most of
•every possible defence; and companies have often filled their policies
with more or less obscure and narrow conditions which only come to
the actual knowledge of the insured when they are urged after loss
^s a ground for escaping responsibility.
The making of contracts of insurance is also peculiar in this, that
the average person acts without competent professional advice. If he
were buying the property, he would have legal assistance, but in in-
juring the same property he trusts to his own judgment and the as-
surances which he receives from the agent of the opposite party.
As the result of these and other reasons which might be mentioned,
there has developed a popular prejudice against defences by insurance
companies, and a tendency on the part of courts to protect the insured
wherever possible, which have tended to make the law respecting in-
surance agents a distinct branch of the law of agency. Doctrines
which usually prevail are here often ignored, and rules of construction
are here often extended, until it sometimes seems to be the fact that
insurance litigation marks the vanishing point of many of the estab-
lished principles of agency.
The whole question is very much in need of a thorough revision, but
the field has now become so gjeat and the number of cases to be dealt
with is so enormous that it can not be undertaken here. All that will
be here attempted is a brief statement of the more important rules
which prevail upon the subject. No attempt to cite all of the cases
will be made.
§ 1050, Classification of agents. — ^There is in the insurance busi-
ness a variety of agents having some particular function to perform
and deriving their special name from that function : — ^thus there is the
appraiser, the adjuster, the medical examiner, etc., but these are not
here to be considered. Apart from these, insurance agents as a whole
may be roughly divided into two classes: I. Issuing agents; 2. Solicit-
ing agents. It is the scope of the authority of these agents that will
be considered here.
I. The issuing agent, usually of a fire or casualty company, is an
agent who is given express authority to accept risks, agree upon the
terms of insurance, and carry them into effect by issuing and renew-
ing policies. They are usually furnished with blank policies by the
insurance company and are authorized to fill them up and deliver them
without further preliminary consent on the part of the company. Of
755
§§ I05I, 1052]
TUE LAW OF AGENCY
[book II
such agents there are two degrees determined by the geographical lim-
its of their authority, — the local agent, representing the company
within a limited territory, and the so-called general, district, or division
agent representing the company over a large territory and often hav-
ing supervisory and appointive powers over the local agents within his
territory.
2. The soliciting agent, often called a special agent, usually of a life
insurance company, is an agent who usually has no authority to make a
binding contract, but who merely solicits applications for insurance
and forwards them to be passed upon at the office of his company.
In addition he often countersigns the policy if issued, delivers it and
collects the premium. Of such agents there are also two kinds — the
general and the local, bearing the same relation to each other as the
corresponding issuing agents.
§ 1051. How relationship is created. — Insurance agetits are usu-
ally appointed by a written commission, but it is not necessary that
they be so appointed, and the relationship of principal and agent in
this case, as in others, may be created in various ways other than by
specific appointrnent. Thus the relationship may be actually created
by the course of dealing between the principal and the alleged agent ; *
it may be made to appear by the agent's being held out to the public
as such ; • or its effect may be obtained by the acceptance and ratifica-
tion of his acts by the principal.^^ The statutory standard form of
policy adopted in many of the states puts some limitations upon this
rule, by provisions, not always uniform, that, for certain purposes at
least, the agent must be authorized by writing.**
§ 1052. Wfiose agent he is. — ^The insurance broker, as is pointed
out elsewhere,*^ is ordinarily the agent of the insured. The discussion
here is confined to the authority of the admitted agent of the company.
8 National Mutual Church Ins. Co.
V. Trustee of M. B. Church, 1(^5 111.
App. 143; Hamilton v. Home Ins.
Co., 94 Mo. 358; Rahr v. Manches-
ter Fire Assur. Co., 93 Wis. 855.
0 Slater v. Capital Ins. Co., 89
Iowa, 628, 23 L. R. A. 181; Mann-
heim Ins. Co. V. Chipman, 124 Fed.
950; Hardin v. Alexandria Ins. Co.,
90 Va. 413. See also, Dickerman v.
Qulncy Mutual Fire Ins. Co., 67 Vt
609.
30 Keith V. Glohe Ins. Co., 52 111.
518. 4 Am. Rep. 624; The Indiana
Ins. Co. v.Hartwell, 123 Ind. 177;
McArthur v. Home Life Ass'n, IS
Iowa, 336, 5 Am, St. Rep. 684; Pack-
ard y. Dorchester Mutual Fire Ins»
Co.. 77 Me. 144.
11 See Qazzam v. German Un. F.
Ins. Co., 155 N. Car. 830, Ann. Cas.
1912 C. 362; Armstrong v. Western
Manufac. Inv. Co., 95 Mich. 139;
Burgeois v. Northwestern Nat. Ins.
Co., 86 Wis. 606; Parker ▼. Rochester
Ins. Co., 162 Mass. 479; Wood v.
American F, Ins. Co., 149 N. Y. 382,
52 Am. St. Rep. 733.
18 See post. Book V, Chap. Ill oa
Brokers.
756
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 1053
As such he cannot, in accordance with the ordinary rules of loyalty,
become the agent of the insured also without the company's consent.
Insurance companies have frequently attempted by provisions in their
applications or policies, to make their soliciting agent the agent of the
insured in all that he does to secure the application, but, by the weight
of authority, as will be seen hereafter, such provisions are usually held
to be ineffective.^*
Statutes in several states expressly declare that one who solicits ap-
plications, makes contracts, collects premiums, etc., for insurance in a
given company shall prima facie be deemed to be the agent of that
company.**
§ 1053. What kind of agent he is. — ^The issuing agent is almost
universally held, so far as the nature and extent of his authority are
concerned, to be a general agent of the company,*' and as such to
have authority to bind it by any act within the usual and ordinary scope
of such an authority, even though the particular act may be in viola-
tion of a limitation upon that authority not brought home to the person
dealing with him.** This is true whether the issuing agent be local or
i« See post, § 1071.
1* See post, S 1071.
16 German American Ins. Ca v.
Hyman, 42 Colo. 156, 16 L. R.'A.
(N. S.) 77; Continental Ins. Co. v,
Ruckman, 127 III. 364, 11 Am. St
Rep. 121; German Fire Ins. Co. v.
Columbia Encaustic Tile Co., 15 Ind.
App. 623; Miller v. Phoenix Ins. Co.,
27 Iowa, 203, 1 Am. Rep. 262; Rich-
ard y. Springfield F. & M. Ins. Co.,
114 La, 794, 108 Am. St. Rep. 359,
69 L. R. A. 278; Hartford Fire Ins.
Co. V. Keating. 86 Md. 130, 63 Am.
St. Rep. 499; Post v. Aetna Ins. Co.,
43 Barb. (N. Y.) 351; Goode v.
Georgia Home Ins. Co., 92 Va. 392,
53 Am. St. Rep. 817, 30 L. R. A. 842.
But see Lohnes v. The Insurance
Company of North America, 121
Mass. 439; Ruthven v. American
Fire Ins. Co., 92 Iowa, 316.
10 "An agent authorized to issue
policies of insurance and consum-
mate the contract, binds his princi-
pal by any act, agreement, represen-
tation or waiver within the ordinary
scope and limit of insurance busi-
ness which is not known by the as-
sured to be beyond the authority
granted to the agent*' American
Central Ins. Co. v. M'Lanathan, 11
Kan. 533; Aetna Life Ins. Co. v.
Fallow, 110 Tenn. 720.
Thus the agent's authority to bind
the company is not restricted by un-
known limitations that the agent is
not to insure beyond a certain
amount. Hartford F. Ins. Co. v.
Farrish, 73 111. 166; unknown limi-
tations or instructions not to insure
the particular property or character
of property, Howard Ins. Co. v.
Owen's Admr'x, 94 Ky. 197; Hicks
V. British Am. Assur. Co., 13 N. Y.
App. Div. 444; unknown instructions
not to insure mortgage Interests,
Woodbury Savings Bank v. Charter
Oak. etc., Ins. Co., 31 Conn. 517; un-
known limitations that the agent is
not to write special risks for the
present, Ruggles v. Am. Cent. Ins.
Co., 114 N. Y. 415, 11 Am. St. Rep.
674; unknown Instructions not to
issue insurance on stocks of mer-
chandise in the hands of married
women, Queen Ins. Co. v. Young, 86
Ala. 424, 11 Am. St. Rep. 51; un-
757
§ I0541
THE LAW OF AGENXY
[book II
general, as those terms are used in insurance, the only difference in
their authority being the territorial limits witliin which they are au-
thorized to act.^^
So, too, the soliciting agent is held to have general powers within
the scope of his somewhat narrow authority.^'
§ 1054. Authority to appoint sub-agents. — Certain agents of in-
surance companies, particularly those having general charge of a large
territory, are usually expressly authorized to appoint sub-agents.**
And where an agent is given authority to represent a company in a
territory so large that he obviously cannot perform his duties in per-
son, it is held that he is impliedly authorized to appoint sub-agents.**
The majority of cases have, however, taken even a broader view,
and the decided weight of authority, following an early New York
case,'* though contrary to what would naturally be expected to be held
in such cases,** seems to be that the business of an insurance agent,
known limitations as to the form of
renewals and renewal receipts, Mc-
CuUousb V. Hartford F. Ins. Co., 2
Pa. Super. 233; secret instructions
not to issue an accident policy un-
til approved by the home ofiBice,
American Employers' Liability Ins.
Co., 68 Fed. 873. See also, Frank-
lin F. Ins. Co. y. Bradford, 201 Pa.
82, 88 Am. St Rep. 770, 55 Li. R. A.
408.
iTFarnum v. Phoenix Ins. Co., 83
Cal. 246, 17 Am. St. Rep. 233; Rich-
ard y. Springfield Fire & Marine
Ins. Co., 114 La. 794, 108 Am. St
Rep. 359, 69 L. R. A. 278.
18 "It is not establishing a harsh
or unreasonable rule in reference to
Insurance companies, to hold that
their agents, authorized 'to take ap-
plications for insurance' are acting
within the scope of their authority
in eyersrthing which they do which
may be necessary to complete such
applications." Rowley v. The Em-
pire Ins. Co., 36 N. y. 650; Coombs
y. Hannibal Sayings and Ins. Co.,
43 Mo. 148.
See also, Wright's Admr. v. North-
western Mutual Life Ins. Co., 91 Ky.
208; Otte y. Hartford Life Ins. Co.,
88 Minn. 428, 97 Am. St Rep. 532.
And in Illinois the soliciting agent
758
has been held to be a general agent
with power to waiye forfeitures and
conditions in the policy. Contin-
ental Casualty Co. y. Johnson, 119
III. App. 93; London Guaranty ft
Accident Co. y. Hartman, 122 111.
App. 315; John Hancock Mutual Life
Ins. Co. y. Schlink, 175 111. 284.
i»Penn. Mutual Life Ins. Co. y.
Ornauer, 39 Colo. 498; Langdon y.
Mutual Life Ins. Co., 14 Fed. 272;
Otte y. Hartford Life Ins. Co., 88
Minn. 423, 97 Am. St Rep. 532;
Hamilton y. Home Insurance Co.,
94 Mo. 353.
20 "The power delegated to the
agent in express terms, being such
as to require the serylces of sub-
agents, carries with it the power to
appoint subagents whateyer the na-
ture of the serylce in respect of be>
Ing in Itself a personal confidence
may be." Insurance Company of
North America y. Thornton, 130 Ala.
222, 89 Am. St Rep. 30, 65 L. R. A«
647; Mutual Life Insurance Com-
pany of New York y. Herron, 79
Miss. 381. See also, Gore y. Canada
Life Assur. Co., 119 Mich. 136.
siBodine y. Exchange Fire Ins.
Co., 51 N. Y. 117. 10 Am. Rep. 566.
" See ante, 307. See also, i 817.
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ IOS5
either issuing or soliciting, is not of such a discretionary or personal
nature that it cannot be delegated.^" It is said to be a matter of com-
mon knowledge, of which the company is, of course, aware, that the
insurance business is carried on by agents largely through subordi-
nates ; that it cannot properly be carried on in any other way, and that
therefore the ordinary local but so-called general agent may, as a mat-
ter of implied consent, appoint sub-agents and subordinates whose
statements," acts,'' knowledge,'* or receipt of notice,'^ within the or-
dinary course of the business and within the scope of the general agent's
authority, will bind the company. And this is true even in the face of
a provision in the policy that only persons appointed in a specified man-
ner shall be deemed to be agents of the company.*'
But a special agent, such as an adjuster, appointed by reason of his
personal skill smd fitness, cannot, it is held, appoint a sub-agent whose
acts will bind the company.**
§ 1055. Authority to make oral contracts.-*-Since, in the absence
of a statute to the contrary, there is no requirement that contracts of
insurance shall be in writing, a general agent, with authority to him-
self issue a policy, may, it 16 held, make either a valid oral contract of
28 London ft Lancashire Fire Ins.
Co. V. Gerteison, 106 Ky. 815;
Phoenix Ins. Co. v. Spiers, 87 Ky.
285; Bodine v. Exchange Fire Ins.
Co., supra; Aetna Life Ins. Co. v.
Fallow, 110 Tenn. 720.
Contra, Waldman v. North British
Mercantile Ins. Co., 91 Ala. 170, 24
Am. St Rep. 883; McClure v. Mis-
sissippi Valley Ins. Co., 4 Mo. App.
148. See also. Home Fire Ins. Co.
V. Garbacz, 48 Neb. 827.
24 Eclectic Life Ins. Co. v. Fahr-
enkrug, 68 111. 463; International
Trust Co. V. Norwich Union Fire
Insurance Society, 71 Fed. 81.
25 Manufacturers' A Merchants' Mu-
tual Ins. Co. V. Armstrong, 45
111. App. 217; German Fire Ins. Co.
y. Columbia Encaustic Tile Co., 15
Ind. App. 623; Pelican Assurance
Company of New York v. Schild-
knecht, 128 Ky. 351; Mutual Life In-
surance Company of New York v.
Herron, 79 Miss. 381; Bodine t. Ex-
change Fire Ins. Co., 9upra; Kuney
y. The Amazon Ins. Co., 86 Hun (N.
Y.), 66; Massachusetts Life Ins. Co.
y. Eshelman, 80 Ohio St 647; Aetna
Life Ins. Co. y. Fallow^ 110 Tenn.
720; Deits y. Providence Washington
Ins. Co., 33 W. Ya. 526, 25 Am. St
Rep. 908.
2« London A Lancashire Fire Ins.
Co. V. Gerteisen, 106 Ky. 815; Steele
V. German Ins. Co., 93 Mich. 81, 18
Jm R. a. 85; Bergeron y. Pamlico
Insurance and Banking Co., Ill N.
Car. 45; McGonigle y. Susquehanna
Fire Ins. Co., 168 Pa. 1; Harding y.
Norwich Union Fire Ins. Co., 10 fi.
D. 64. See also. Prudential Fire Ins.
Co, y. Alley, 104 Va. 356.
27Arff y. Star Fire Ins. Co., 125
N. Y. 57, 21 Am. St Rep. 721, 10
L. R. A. 609.
sa German Fire Ins. Co. y^ Encaus-
tic Tile Co., 15 Ind. App. 623; Arff
y. Star Fire Ins. Co., supra,
»Albers y. Phoenix Ins. Co., 68
Mo. App. 548; Ruthyen y. American
Fire Ins. Co., 92 Iowa» 31«.
759
§ 1056]
THE LAW OF AGENCY
[book II
present insurance,'^ certainly a temporary and provisional one, or an
oral contract to issue a policy.'*
But a mere soliciting agent, not being authorized to make binding
contracts of any kind, has no such authority.'*
§ 1056. Authority to renew. — ^The ordinary issuing or general agent
is usually given express authority to renew insurance, but even with-
out such specific grant, he is held to have authority to renew a policy
already issued,*' and this he may do orally as well as in writing,'* and
coinsurance Company of North
America v. Thornton, 130 Ala. 222,
89 Am. St Rep. 30, 55 L. R. A. 547;
Commercial Union Assur. Co. v.
State. 113 Ind. 331; Baker v. Com-
mercial Union Assur. Co.» 162 Mass.
358; Hicks v. British America As-
sur. Co., 162 N. Y. 284, 48 L. R. A.
424; Newark Machine Co. v. Kenton
Ins. Co., 50 Ohio St. 649, 22 L. R. A.
768; Stickley v. Mobile Ins. Co., 37 &
Car. 56; Relief Fire Ins. Co. v.
Shaw, 94 U. S. 574, 24 L. Ed. 291;
Mathers v. Union Mutual Accident
Ass'n, 78 Wis. 588. 11 L. R. A. 83;
(mutual company) Loom Is y. Jeffer-
son County Patrons Fire Relief
Ass'n, 92 N. Y. App. Dlv. 601; (by
BUh-agent) Pelican Assurance Co.
of N. Y. V. Schlldknecht, 128 Ky. 351;
(of renewal) Bauble v. Aetna Ins.
Co., 2 Dill. 166; Squire ▼. Hanover
Fire Ins. Co., 162 N. Y. 652, 76 Am.
St Rep. 349.
«i Sanborn v. Fireman's Ins. Co.,
16 Gray (Mass.), 448, 77 Am. Dec.
419; Ellis v. Albany City Fire Ins.
Co., 60 N. Y. 402, 10 Am. Rep. 495;
Rhodes v. Railway Passenger. Ins.
(3o., 5 Lans. (N. Y.) 71; (to issue
renewal policy) Brown ▼. Home Ins.
Co., 82 Kan. 442; Post ▼. Aetna Ins.
Co., 43 Barb. (N. Y.) 861; McCabe
V. Aetna Ins. Co., 9 N. D. 19, 47 L.
R. A. 641. Contra. Underwood ^
Pennsylvania Fire Ins. Co., 134 N. Y.
Supp. 105 (not under statutory
standard policy). See Benner v.
Fire Association of Philadelphia,
229 Pa. 75» 140 Am. St Rep. 706;
(where the particular statute under
which the company was incorporated
was held not to permit it) ; Caldwell v.
Virginia Fire ft Marine Ins. Ck>., 124
Tenn. 593 (where the insured was
charged with notice from former
dealings that the agent's authority
was confined to issuing policies upon
the company's printed blanks).
S2 O'Brien v. New Zealand Ins.
Co., 108 CaL 227; Winnesheik Ins.
Co. V. Holzgrafe, 53 111. 516, 5 Am.
Rep. 64; Embree v. German Ins. Co.,
62 Mo. App. 132; Allen v. St Lawrence
County Farmers' Ins. Co., 88 Hun
(N. Y.), 461; Haden v. Farmers* k
Mechanics' Fire Ass'n, 80 Va. 683.
See also. Security Fire Insurance
Company of New York v. Kentucky
Marine ft Fire Insurance Co., 7
Bush (Ky.), 81, 3 Am. Rep. 301;
Starr v. Mutual Life Ins. Co., 41
Wash. 228; Baldwin v. Connecticut
Mut L. Ins. Co., 182 Mass. 389.
And an oral contract between
the insured and the agent to keep
the insurance on the property re-
newed which practically makes the
agent the agent of the insured also,
will not be binding upon the com-
pany. Ramspeck v. PattiUo, 104 Ga.
772, 42 L. R. A. 197; Shank v. Glen
Falls Ins. Co., 4 N. Y. App. Div. 516.
38 Post V. Aetna Ins. Co., 43 Barb.
(N. Y.) 351; Franklin F. Ins. Co.
V. Massey, 38 Pa. 221.
See also, Benner v. Fire Ass'Ut
229 Pa. 75, 140 Am. St Rep. 706;
International Trust Ck>. v. Norwich
Union Fire Insurance Society, 71
Fed. 81; Carroll v. Charter Oak Ins.
Co., 38 Barb. (N. Y.) 402; Mc-
Oillough V. Hartford Ins. Co., 2
Pa. Super. Ct 233.
s^See ante, | 1056.
760
CHAP. Ill] CONSTRUCTION OF AUTHORITIES [§§ IO57, 1058
where he is authorized to renew in a prescribed manner, he will bind
the company by a renewal, though made in a manner not authorized
by the company, if the fact of the variance is not known to the in-
sured." But a mere soliciting agent has no authority to renew.'*
§ 1057. Authority to alter or waive terms — In general. — Two
questions closely related, but in fact distinct, stand out as the most im-
portant in this general topic. The first of these is the extent of the
authority of the agent to alter the printed policy, or waive a condition
or provision of it, either at the time of, or after its issuance. Indis-
solubly bound up with this is the second, namely, the extent to which
the principal will be estopped from enforcing a provision of the policy
or will be held to have waived a forfeiture by reason of the imputation
to it of the knowledge of its agent. Upon these two questions the
cases are so numerous, and the results reached by the courts so ex-
tremely varied, that it is impossible here to attempt a classification
which will include them all, or to state a principle which will explain
their divergent results.*^ In the following sections, therefore, will be
taken up only the larger groups into which they naturally fall.
§ 1058. Authority to alter policy or strike out a provision there-
in— At the time of issuance. — ^A general agent with authority to him-
self issue the policy, may, at the time he issues it, strike out of it or
add to it such provisions and conditions, of the sort ordinarily left open
to negotiation, as he and the assured may agree upon.** This is often
spoken of as a case of waiver, but it would seem incorrectly so, since
waiver presupposes the existence of an obligation which in this case is
yet to be created.** It might more simply and properly be stated that
since he has the authoritv to make the contract of insurance, he has
authority to make it in the ordinary form, and may therefore embody
«5 Western Home Ins. Co. v. wllderment." Brannon, J., in Mau-
Hogiie, 41 Kan. 524. pin v. Scottish Union & National
«e* Pacific Mutual Life Ins. Co. ▼. Ins. Co., 53 W. Va. 557.
Carter, 92 Ark. 378. «8 Gloucester Mfg. Co. v. Howard
8T"Upon this subject of the power F. Ins. Co., 71 Mass. 497, 66 Am.
of agents to waive conditions impos- Dec. 376 (clause added); Dayton
ing on the party insured duties Ins. Co. ▼. Kelly, 24 Ohio St. 345, 15
proper for the protection of the in- Am. Rep. 612 (clause erased),
surlng company, there is a world «» Continental Ins. Co. v. Ruck-
of decisions, and they are a wilder- man, 127 III. 364, 11 Am. St Rep.
ness of conflicting cases, and to at- 121: (United Fireman's Ins. Co.
tempt anything like a review of v. Thomas, 82 Fed. 406, 47 L. R. A.
them in detail would he only to 450: affirmed on rehearing, 92 Fed.
grope and wander in that wil- 127, 47 L. R. A. 455).
derness, and in the end lead to be-
761
§§ I059, io6o]
THE LAW OF AGENCY
[book II
in it or leave out of it such provisions of the sort in question as the
parties may agree upon.*®
But a mere soliciting agent has no such authority, nor can it be said
to be within his apparent authority, since the assured knows that tlie
agent does not himself issue the policy.*^
§ 1059. Parol waivers at time of issuance.-— A far more difficult
question is that of the authority of the agent to make a so-called parol
waiver at the time he issues the policy. The main difficulty, and the
cause of the irreconcilable conflict among the authorities, is, not the
extent of the agent's authority, but the question whether the so-called
Parol Evidence Rule, or some express limitation in the contract itself
prevents the introduction of proof of this contemporaneous oral waiver.
So far as the simple question of the authority of the agent is con-
cerned, it would seem clear that an agent with general authority to
make the contract, and witli ample authority to make it wholly oral if
he sees fit, may make it partly written and partly oral by eliminating
or waiving a condition of the written policy by an oral agreement.**
The general nature and extent of the Parol Evidence Rule will not
be discussed here. It is sufficient to say here that upon one ground or
another most courts, as will be seen, have usually refused to give it
effect."
§ io6o. ' Waiving prepayment of premium. — One of the
cases most frequently arising is that of the authority of the agent to
waive the payment of the premium at the time of the delivery of the
policy. The ordinary fire insurance policy in use in the United States
does not expressly provide that the policy shall not become operative
until the premium is paid in cash,** but life insurance policies and some
others usually do so provide. With reference to the latter, it is fre-
*• In American Cent Ins. Co. v.
McLanathan, 11 Kan. 533, Brewer,
J., lays down the rule, "That an
SLgent authorized to issue policies of
Insurance, and consummate the con-
tract, binds his principal by any act,
agreement, representation or waiver,
within the ordinary scope and limit
of insurance business, which 1b not
known by the assured to be beyond
the authority granted to the agent."
41 London Guaranty ft Accident
Co. V. Missouri ft Illinois Coal Co.,
103 Mo. App. 530.
But see Continental Casualty Co.
▼. Johnson, 119 111. App. 93; London
Guaranty ft Accident Co. v. Hart-
man. 122 III. App. 315.
4s Continental Ins. Co. v. Ruck-
man, 127 111. 364, 11 Am. St Rep.
121; Peoria M. ft F. Ins. Co. v. Hall.
12 Mich. 202; Berry v. American
Central Ins. Co.. 132 N. Y. 49, 28
Am. St. Rep. 548; Murphy v. Royal
Ins. Co.. 52 La. Ann. 775.
But see Gillum v. Fire Ass'n, 106
Mo. App. 673.
«sSee post, SS 1062, 1063.
««See Kollitz v. Equitable Mut. F.
Ins. Co., 92 Minn. 234.
762
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 1060
quently said that an agent having general authority and authorized to
deliver the policy may waive this provision and give at least a short
term of credit.*' In most of the cases, however, w'herein the author-
ity to give credit has been sustained, the money has in fact been ulti-
mately received; or there has been actual authority, or a course of
dealing, or evidence of ratification ; or the arrangement between the com-
pany and the agent has been such that the company charged the pre-
mium to the agent and looked to him for it, giving him at least tacit
permission to trust the insured at his own risk.** In a late case in New
York, it is held that there can be no such valid waiver in the face of
an express provision in the application to the contrary.*^
45 See Boehen v. Williarasburgh
Ins. Co., 36 N, Y. 131, 90 Am. Dec.
787; Church ▼. Lafayette Fire Ins.
Co., 6fi N. Y. 222; Mlsaissippl VaUey
L. Ins. Co. v. Neyland, 72 Ky. 430;
N. Y. Life Ins. Co. v. McGowan, 18
Kan. 800.
In Triple Link, etc., Ass'n v. Wil-
liams, 121 Ala. 138, 77 Am. St. Rep.
34, it was held that the soliciting
agent bound the company by ac-
cepting less than the known amount
of the first payment.
♦« See United States L. Ins. Co. v.
Lesser, 126 Ala. 568; Farnum v.
Phoenix Ins. Co., 83 Cal. 246, 17 Am.
St. Rep. 233; Jurgens v. N. Y. Life
Ins. Co., 114 Cal. 161; Sheldon v.
Connecticut Mut. L. Ins. Co., 26
Conn. 207, 65 Am. Dec. 565; Mechan-
ics, etc., Ins. Co. v. Mutual R. B.
Ass'n, 98 Ga. 262; Young v. Hart-
ford Plre Ins. Co., 45 Iowa, 377, 24
Am. Rep. 784; Bodine v. Exchange
Plre Ins. Co., 51 N. Y. 117, 10 Am.
Rep. 566; Long v. Ins. Co., 137 Pa.
335, 21 Am. St. Rep. 879; Cole v.
Union Central Life Ins. Co., 22 Wash.
26, 47 L. R. A. 201.
47 Russell T. Prudential Ins. Co.,
176 N. Y. 178, 98 Am. St. Rep. 656.
4s See Mississippi Valley L. Ins.
Co. V. Neyland, 72 Ky. 430; New
York L. Ins. Co. v. McQowan, 18
Kan. 800; Mutual L. Ins. Co. v. Lo-
gan, 31 C. C. A. 172. 87 Fed. 637;
Kilborn v. Prudential Ins. Co., 99
Minn. 176, seems to go as far as
any case. There a life insurance
agent took notes payable to his own
order for the amount of the first
premium at the time of receiving
the application. He forwarded the
application but not the notes to the
home oiTlce, where the application
was accepted, and the policy issued,
and sent to the state agents for de-
livery. On the following day and be-
fore the delivery of the policy to the
insured, he was killed. The state
agents thereupon returned the policy
to the home oflice and refused to re-
ceive the notes which the soliciting
agent had taken. These notes were
never collected or paid. Never-
theless, the beneficiary was allowed
to recover upon the policy. The
policy contained no provision that
the first premium should be paid in
cash only. It was held that the
agent had apparent authority to give
a short term of credit and to take a
note for It.
In National Life Ins. Co. v. Twed-
dell, 22 Ky. L. Rep. 881, 68 8. W.
699, the authority to take a note
was upheld, the court saying that
it was not only within the apparent
scope of his authority but the com-
pany had frequently permitted him
to do the same thing.
In Carson v. Jersey City Ins. Co.,
43 N. J. L. 300, 39 Am. Rep. 584,
the agent had taken a note with an
endorser, but had had the note dis-
counted at the bank and actually ob-
tained the money upon it
763
§ io6o]
THE LAW OF AGENCV
[book II
It is frequently said, and sometimes held, that such an agent may
take a note in payment of the premium, though such a holding is con-
trary to the general rules of agency except under the most general au-
thority or some special circumstances of custom, recognition, or the
like, and the better considered cases so limit it.** It has also been
said that the agent may accept the assured as his personal debtor, be-
coming himself liable to the company; but it would seem that this
could not be true unless the company had expressly or impliedly con-
sented to it.** It has also been said that he may accept his own debt
in payment, but this also seems unsound without the consent of the
company,"® except to the extent to which the first premium may, under
his contract with the company actually belong to the agent.*^
In Provident Savings L. Ins. Soc.
V. Oliver, 22 Tex. Civ. App. 8, the
agent had on several occasions
given credit ohr taken notes with
the knowledge and approval of the
general agent of the company.
In Michigan Mut. L. Ins. Co. v.
Hall, 60 111. App. 159, the note had
been taken with the understanding
that, if it was not accepted by the
company, it would be returned. It
was not returned, and the agent dis-
counted it and obtained the money
upon it.
In Pennsylvania Casualty Co. v«
Bacon, 67 C. C. A. 497, 133 Fed. 907,
it was said that, "The cases in the
federal courts sanctioning this rul-
ing were those in which it appeared
that the Instructions of the com-
pany to its general agents were, in
substance, that it would hold them
personally responsible for such pre-
miums (Miller V. Life Ins. Co., 12
Wall. 285, 20 L. Ed. 398; Smith v.
Provident Saving Society, 31 U. S.
App. 163, 65 Fed. 765, 13 C. C. A.
284), or where it appeared that it
was the practice of the company to
charge the premium to the agent at
the time of delivering to him the
premium receipt (Fidelity Co. v.
Getty's Administrators, 39 U. S.
App. 599, 80 Fed. 497, 25 C. C. A.
593".)
In Imbrie v. Manhattan L. Ins. Co.,
178 Pa. 6, where the agent accepted
notes and the company had some
knowledge of the arrangement which
was contrary to rule, it was held
there was evidence of ratification.
In Jurgens v. N. Y. Life Ins. Co.,
114 Cal. 161, where the company's
solicitor took a note and discounted
it and remitted the amount of the
premium, less his commissions in
cash, to the state agent, this was
not in violation of a provision that
no agent shall have authority to
give credit. Similarly in Jacobs v.
Omaha Life Ass'n, 146 Mo. 523,
where a rule required the first
premium to be in cash, and discount-
ing the note and remittance of pro-
ceeds in due course by company's
agent was held compliance with the
rule. To same effect: Krause v.
Equitable L. Assur. Society, 99 Mich.
461.
In Mutual L. Ins. Co. v. Abbey, 76
Ark. 328, it was held that a mere
local solicitor might not accept a
note, but that the state agent might
authorize It to be done. See also,
Dunham v. Morse, 158 Mass. 132, 35
Am. St Rep. 473.
40 See Lebanon Mut Ins. Co. v.
Hoover, 113 Pa. 591, 57 Am. Rep. 511.
50 See Tomsecek v. Travelers* Ins.
Co., 113 Wis. 114, 90 Am. St. Rep.
846, 57 L. R. A. 455; HofTman v. Han-
cock Mut L. Ins. Co., 92 U. S. 161,
23 L. Ed. 539.
51 Home Ins. Co. v. Oilman, 112
Ind. 7 (here the agent actually ac-
counted to the company for the
764
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES [§§ I06t, I062
§ 1061. Implied waiver at time of issuance. — ^Where a general
agent, having full authority to make the contract of insurance, and be-
ing subject to no known restrictions in that regard, issues a policy with
knowledge of an existing breach of one of its conditions, which, if in-
sisted upon, would render it void ab initio, it is held that the agent has
impliedly waived the condition, since he must be conclusively presumed
to have intended to make a valid agreement.^^
§ 1062. Restrictions on authority to waive. — Insurance companies
"have quite generally attempted to avoid the results of waiver by in-
serting either in the application, or the policy, or in both, restrictions
upon the authority of the agent to alter or waive any of the conditions
•or provisions of the policy or a restriction upon the manner of the
alteration. In passing upon the validity and effect of such provisions,
many courts have gone very far in their efforts to protect the assured
and prevent a forfeiture. Where the restriction is contained in the
application, it is held that the assured having notice of this limitation
on the agent's authority is bound by it;" but where the provision is
•contained solely in the policy, many of the state courts have held it in-
effectual on one or more of the following grounds: (i) that by its
terms the restriction applies only to the right of an agent to waive or
alter the terms of a completed contract and does not affect its forma-
tion; ■* (2) that at the time the policy is delivered and becomes a bind-
money); Pythian Life Ass'n v. Prea-
•ton, 47 Neb. 374 (here the agent was
•entitled to the first payment as his
commission).
In Hancock Mut. K Ins. Co. v.
Schlink, 175 111. 284, an agreement
^ith the agent to turn the first pre-
mium upon his own debt to the ex-
tent of his interest in It was im-
plied.
In Wooddy v. Old Dominion Ins.
Co., 31 Grat (Va.) 362, 31 Am. Rep.
732, such an arrangement was up-
held upon the ground that, under the
circumstances, It amounted merely
to paying the money to the agent,
and his Immediately returning it to
the insured.
ss Phoenix Ins. Co. v. Flemming,
^5 Ark. 54, 67 Am. St. Rep. 900, 39
L. R. A. 7S9,' American Central Ins.
<3o. V. M'Lanathan, 11 Kan. 533; Mil-
waukee Mechanics' Ins. Co. v. Brown,
3 Kan. App. 223; Leisen v. St. Paul
Fire & Marine Ins. Co., 20 N. D. 316,
30 L. R. A. (N. S.) 539; Hlbernia Ins.
Co. V. Malevinsky, 6 Tex. Civ. App.
81; Wood V. American Fire Ins. Co.,
149 N. Y. 382, 52 Am. St Rep. 733.
See also, Van Scholck v. Niagara Fire
Ins. Co., 68 N. Y. 434.
68 New York L. Ins. Co. v. Fletcher,
117 U. S. 619, 29 L. Ed. 934; Rus-
sell V. Prudential Ins. Co., 176 N. Y.
178, 98 Am. St. Rep. 656; Weidert v.
State Ins. Co., 19 Greg. 261. 20 Am.
St. Rep. 809; Chase v. Hamilton Ins.
Co., 20 N. Y. 62. See also, Cole v.
Union Cent L. Ins. Co., 22 Wash. 26,
47 L. R. A. 201.
54 "A waiver Is the voluntary
yielding up by a party of some exist-
ing right but until the contract la
consummated, the company has no
rights which are susceptible of waiv-
er, nor can any condition be properly
said to be modified or stricken from
a policy until there is a policy, that
765
§ 1063]
THE LAW OF AGENCY
[book ir
ing contract, the assured has no notice of this limitation and it there-
fore is unavailing in the face of the agent's ostensible authority to^
waive ; '^^ (3) that the agent, having complete authority to waive pro-
visions, may waive the very provision limiting the mode of manner of
waiver ; •• (4) that since a corporation can only act through agents,
and since it has undoubted power to alter its policy, — a provision that
such alteration or waiver cannot be made by any agent is void.*'^ In a.
number of these cases, the principles announced are confessedly pe-
culiar to insurance contracts.*'
§ 1063. On the other hand, courts of the highest authority
have upheld such restrictions,** and the conclusion that a principal may
not, by a restriction brought to the notice of the other party, limit the
Is, until after the terms of the con-
tract have heen agreed upon and the
policy issued. Clearly the claulse in
question was intended as a limitation
upon the powers of agents to waive
or modify the terms of a policy after
it had been issued, and not upon
their power to agree upon and settle
the terms of the policy prior to its
issue." Continental Ins. Co. v. Ruck-
man, 127 lU. 364, 11 Am. St Rep.
121; Farnum v. Phoenix Ins. Co., 83
Cal. 246, 17 Am. St. Rep. 233; Rickey
v. German Guarantee Ins. Co., 79 Mo.
App. 485; Crouse v. Hartford F^re
Ins. Co., 79 Mich. 249; Wood v.
American Fire Ins. Co., 149 N. Y.
382, 52 Am. St. Rep. 733; Hartford
Fire Ins. Co. v. Keating, 86 Md. 130,
63 Am. St. Rep. 499; United Fire-
man's Ins. Co. V. Thomas, 82 Fed. 406,
47 L. R. A. 455; Johnson y. Aetna
Ins. Co., 123 Ga. 404. 107 Am. St.
Rep. 92; Medley v. German Alliance
Ins. Co., 55 W. Va. 342, 2 Ann. Cas.
99.
"Young V. Hartford F. Ins. Co.,
45 Iowa, 377, 24 Am. Rep. 784;
Crouse v. Hartford F. Ins. Co., 79
Mich. 249; Cole v. Union Central L.
Ins. Co., 22 Wash. 26, 47 L. R. A. 201.
fi« United States Life Ins. Co. v.
Lesser, 126 Ala. 568; Young v. Hart-
ford Fire Ins. Co., 45 Iowa, 377, 24
Am, Rep. 784; Orient Ins. Co. v. Mc-
Knight, 197 111. 190; German-Ameri-
can Ins. Co. V. Humphrey, 62 Ark.
348, 54 Am. St. Rep. 297; Western
Assur. Co. T. WiUiams, 94 Ga. 128;
Hartford Fire Ins. Co. v. Landfares,
63 Neb. 559.
ST Farnum v. Phoenix Ins. Co., 83
Cal. 246, 17 Am. St. Rep. 233; Lens
Island Ins. Co. v. Great Western
Manufacturing Co., 2 Kan. App. 377;
Wilkins v. State Ins. Co. 43 Minn.
177; Home Ins. Co. T. Gibson, It:
Miss. 58.
68 See, for example, Chismore ▼»
Anchor Fire Ins. Co., 131 Iowa, 180;
Spalding V. New Hampshire Fire Ins.
Co., 71 N. H. 441; German Ins. Ca
V. Shader, 68 Neb. 1, 60 L. R. A. 918;
Welch V. Fire Association, 120 Wis..
456.
30 Northern Assur. Co. v. Grand
View Bldg. Ass'n, 183 U. S. 308. 48
L. Ed. 213; Liverpool, London ft
Globe Ins. Co. v. Richardson Lumber
Co., 11 Okla. 585; Maupin v. Scottish.
Union & National Ins. Co.. 53 W. Va.
557; Curtin v. Phoenix Ins. Co., 78
Cal. 619; Fidelity, etc., Co. v. Fresno
Flume Co., 161 Cal. 466, 37 L. R. A.
(N. S.) 822; Porter v. United States
Life Ins. Co., 160 Mass. 183; Kyte ▼.
Commercial Union Ins. Co., 144 Mass.
43; Wolf V. Dwelling House Ins. Co.,
75 Mo. App. 337; Reese T. Fidelltjr
Mutual Life Ass'n, 111 Ga. 482.
766
CHAP, nij CONSTKUCTION OF AUTHORITIES [§ IO63
awthority of his agent, or that an agent may waive the limitation known
to rest upon his authority, is contrary to. the fundamental principles of
agency. The supreme court of the United States, particularly, has
taken a very decided position upon the question. In its leading ease,®^
it is said : "That contracts in writing, if in unambiguous terms, must be
permitted to speak for themselves, and cannot by the courts, at the in-
stance of one of the parties, be altered or contradicted by parol evi-
dence, unless in case of fraud or mutual mistake of facts; that this
principle is applicable to cases of insurance contracts as fully as to
contracts on other subjects ; that provisions contained in fire insurance
policies, that such a policy shall be void and of no effect if other insur-
ance is placed on the property in other companies, without the knowl-
edge and consent of the company, are usual and reasonable ; that it is
reasonable and competent for the parties to agree that such knowledge
and consent shall be manifested in writing, either by indorsement upon
the policy or by other writing ; that it is competent and reasonable for
insurance companies to make it matter of condition in their policies
that their agents shall not be deemed to have authority to alter or con-
tradict the express terms of the policies as executed and delivered;
that where fire insurance policies contain provisions whereby agents
may, by writing indorsed upon the policy or by writing attached
thereto, express the company's assent to other insurance, such limited
grant of authority is the measure of the agent's power in the matter,
and where such limitation is expressed in the policy, executed and ac-
cepted, the insured is presumed, as matter of law, to be aware of such
limitation; that insurance companies may waive forfeiture caused by
Tionobservance of such conditions ; that, where waiver is relied on, the
plaintiff must show that the company, with knowledge of the facts
that occasioned the forfeiture, dispensed with the observance of the
condition; that where the waiver relied on is an act of an agent, it
must be shown either that the agent had express authority from the
company to make the waiver, or that the company subsequently, with
tcnowledge of the facts, ratified the action of the agent."
Many of the state courts, however, have expressly refused to adopt
this view or to follow the lead of the United States supreme court.'^
••Northern Assur. Co. ▼. Grand Grand View Bldg. Ass'n v. Northern
View Bldg. Asa'n, supra, Assur. Co., 73 Neb. 149; Orient Ins.
•I See, for example, the elaborate Co. v. McKnlght, 197 111. 190; Chis-
discuBslon In Peoples* F. Ins. Asa'n v. more v. Anchor F, Ina. Co., ISl Iowa.
Goyne, 79 Ark. 315, 9 Ann. Cas. 373, 180.
16 I/. R. A. (N. S.) 1180. Also,
767
§§ io64, 1065J
THE LAW OF AGENCY
[book II
§ 1064. Waivers by agent after issuance — Authority to waive for-
feiture.— It is a well settled principle of agency, that the grant of gen-
eral authority to make a contract does not necessarily include the right
to subsequently alter its terms, and there seems to be no reason for a
different rule in the case of an insurance agent Nevertheless it is or-
dinarily held that a general issuing agent, in the absence of any re-
striction upon his authority brought home to the assured^ may waive
a condition in the policy subsequent to its issuance ; •* or, as is more
commonly the case, may waive the forfeiture resulting from the breach
of a condition, either expressly ®* or by treating the contract as still ia
existence.^* And he may correct the policy,** or, if it is an open policy,
alter its terms.**
But a mere soliciting agent, having no authority to make the con-
tract, would ordinarily have no such authority.*'
§ 1065. Express restrictions on the authority. — ^It would
seem that a provision irt the policy expressly restricting the authority
of the agent to waive a provision should be binding on the assured as
to any condition arising subsequent to its issuance, since after the de-
livery of the policy the assured must be held to have knowledge of its
contents, and such has been the holding of the better considered cases.**
«? Continental P. Ins. Co. v. Brooks,
181 Ala. 614; Carrugl t. The Atlantic
Fire Ins. Co., 40 Ga. 136, 2 Am. Rep.
567; Vlele v. The Germanla Ins. Co.,
26 Iowa, 9, 96 Am. Dec. 83; Manu-
facturers' and Merchants' Mutual
Ins. Co. v. Armstrong, 45 111. App.
217; German Ina. Co. v. Gray, 43
Kan. 497, 19 Am. St. Rep. 150, 8 L.
R. A. 70; Pechner v. Phoenix Ins. Co.,
65 N. Y. 195; Fire Association of
Philadelphia v. Masterson (Tex. Ciy.
App.), 83 S. W. 49. See Phenlx Ins,
Co. V. Hart, 149 IH. 513.
Contra: Kyte v. Commercial Union
AsBur. Co.» 144 Mass. 43.
«3 Richard v. Springfield Fire 6
Marine Ins. Co., 114 La. 794, 108 Am.
St. Rep. 359, 69 L. R. A. 278; Aetna
Life Ins. Co. v. Fallow, 110 Tenn.
720; Miner v. Phoenix Ins. Co., 27
Wis. 698, 9 Am. Rep. 497; Walsh r.
Aetna L. Ins. Co., 30 Iowa, 133, 6
Am. Rep. 664; Geib v. International
Ins. Co., 1 Dil. 448, 10 Fed. Cas. p.
157.
6« German American Ins. Co. v. Hy--
man, 42 Colo^ 106, 16 L. R. A. (N. S.)
77; Viele v. The Germanla Ins. Co.,
26 Iowa, 9, 96 Am. Dec. 83; New Eng-
land Mutual Life Ins. Co. v. Spring*
gate, 129 Ky. 627, 19 L. R. A. (N. S.)
227; Carroll v. Charter Oak Ins. Co.,.
40 Barb. (N, Y.) 292.
«3 Tayler v. State Ins. Co., 98 Iowa,
521, 60 Am. St. Rep. 210.
«0 Kennebec Co. v. Augusta Insur-
ance & Banking Co., 6 Gray, 204;
Day V. The Mechanics' & Traders'
Ins. Co., 88 Mo. 826, 67 Am. Rep. 416.
«T Mutual Life Ins. Co, v. Abbey, 76
Ark. 328; Rockford Ins. Co. v. Boi-
rum, 40 111. App. 129; Heath v.
Springfield Fire Ins. Co., 58 N. H.
414; Duluth National Bank y. Knox-
ville Fire Ins. Co., 85 Tenn. 76,
4 Am. St Rep. 937.
MLippman v. Aetna Ins. Co., 120
Ga. 247; Klrkman v. Farmers' Ins.
Co., 90 Iowa, 457, 48 Am. St. Rep.
454; Burlington Ins. Co. v. Gibbons,
43 Kan. 15, 19 Am. St. Rep. 118; Kyte
768
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ IP66
Many courts have, however, escaped tUs result by holding that the
knowledge of the agent is imputed to the companyi and therefore the
company itself is estopped to assert, or is held to have waived, the for-
feiture.**
§ 1066. Knowledge of agent imputed to principal — ^In general.—
The doctrine of imputed knowledge, more fully considered in a later
chapter,'^ has been carried to its furthest extreme in insurance cases,
and it is llie general rule, applied in a vast number of cases, that knowl-
edge of facts relative to the insurance, acquired by the agent whDe act-
ing within the scope of his authority and during the course of his em-
ployment, will be imputed to the principal, either to form the basis for
a waiver or to support an estoppel, whether such knowledge is acquired
prior to, contemporaneously with, or subsequent to the issuance of the
policy, as the case may happen to beJ*
V. Commercial Union Aasur. Co., 144
MasB. 43; Collins v. Metropolitan
Life Ins. Co., 32 Mont 829, 108 Am.
St. Rep. 578; McBlroy v. Metropoli-
tan Life Ins. Co., 84 Neb. 866, 23 L.
R. A. (N. S.) 968; Merserau v.
Phoenix Life Ins. Co., 66 N. T. 274;
Hankins v. Rockford Iwr. Co., 70 Wis.
1; Carey v. German American Ins.
Co., 84 Wis. 80, 36 Am. St. Rep. 907,
20 L. R. A. 267 (standard policy):
Black y. Atlantic Home Ins. Co., 148
N. Car. 169, 21 L, R. A. (N. S.) 678.
Contra: Carrugi v. Tho Atlantic
Fire Ins. Co., 40 Ga. 135, 2 Am. Rep.
567; Orient Ins. Co. v. McKnlght,
197 111. 190; G€arman Ins. Co. v.
Gray, 43 Kan. 497. 19 Am. St. Rep.
150, 8 L. R. A. 70; ArkeU v. Com-
merce Ins. Co., 7 Hun, 455; Fire As-
sociation of Philadelpliia v. Master*
son (Tex. Civ. App.), 83 S. W. 49;
Aetna Life Ins. Co. v. Fallow, 110
Tenn. 720; American Ins. Co. v. Gal-
latin, 48 Wis. 36; Springfield Steam
Laundry Co. v. Traders* Ins. Co., 151
Mo. 90, 74 Am. St. Rep. 521; Beebe
V, Ohio Farmers* Ins. Co., 93 Mich.
514, 32 Am. St. Rep. 519, 18 L. R. A.
481 (compare Sutherland v. Eureka
F. Ins. Co., 110 Mich. 668); Wilson v.
Commercial Union Assur. Co., 61 S.
Car. 540.
«o See post, § 1070.
49 769
70 See post, fi 1802 et seq.
71 Phoenix Ins. Co. v. Copeland, 90
Ala. 386; Fisbbeck ▼. Phenlx Ins. Co.,
54 Cal. 422; Lumberman's Mutual
Ins. Co. V. Bell, 166 111. 400, 57 Am.
St Rep. 140; Bom v. Home Ins. Cfo.,
120 Iowa, 299; Germania Ins. Co. v.
Ashby, 112 Ky. 803, 91^ Am. St. Rep.
295; Aetna, etc., Ins. Co. v. 01m-
stead. 21 Mich. 246, 4 Am. Rep. 483;
Gristock y. Royal Ins. Co., 84 Mich.
161, 9. c, 87 Mich. 428; Rlvara v.
Queen's Ins. Co., 62 Miss. 720; Pel-
kington ▼. Nat'l Ins. Co., 55 Mo. 172;
Hartford Fire Ins. Co. v. Landfare,
68 Neb. 559; Forward v. Continental
Ins. Co., 142 N. Y. 382, 25 L. R. A.
637; Insurance Co. v. Williams, 39
Ohio St. 584, 48 Am. Rep. 474; Peo-
ple's Ins. Co. V. Spencer, 63 Pa. 353,
91 Am. Dec. 217; American Central
Ins. Co. Y. MoCrea, 8 Lea (Tenn.),
513, 41 Am. Rep. 647; Carrigan v.
Lycoming F. Ins. Co., 63 Vt. 418, 88
Am. Rep. 687; Manhattan F. Ins. Co.
V. Weill, 28 Gratt (Va.) 389, 26 Am.
Rep. 364; Staats ▼. Pioneer Ins.
Ass'n, 55 Wash. 51; May t. Buckeye
Mut. Ins. Co., 25 Wis. 291, 8 Am. Rep.
76; Gans ▼. St. Paul, etc., Ina. Co.,
43 Wis. 108, 28 Am. Rep. 635; Bow-
den Y. London, etc., Assur. Co,. [1892]
2 Q. B. D. 534.
§ 1067]
THE LAW OF AGENCY
[book n
§ 1067.
Existing facts afFecting the risk.>— When the true
state of facts affecting the risk is known to the issuing agent at the
time he issues the policy, it is quite generally held that the assured
will not be precluded from enforcing the policy by reason of such a fact
violating a provision of the policy. The courts have reached this re-
sult on one or both of two totally distinct lines of reasoning, viz.
(i) that already considered, namely, that the agent who issued a policy
with knowledge of the violation of one of its provisions must be held
to have waived such provision;^* or, if that view fails, then (2) the
one now here in question, that the company itself is estopped to insist
upon, or is held to have waived, a right of forfeiture by reason of a
fact of which it is thus deemed to have had full knowledge at the time
it issued the policy.^*
In order to sustain this conclusion, it is held that the provisions in
the policy limiting waivers do not affect the power of the company to
waive, — either upon the ground that the company cannot so limit its
power,^* or that the provision was not intended to apply to the com-
pany itself," or that, being for the benefit of the company, it may
t* See ante, i 1061.
!• Encumbr<xnce9. — Phoenix Ins. Co.
▼. Copeland, 86 Ala. 551, 4 U R. A.
848; German- American Ins. Co. y.
Yeagley, 168 Ind. 651, 2 Ann. Cas,
275; GriBtock v. Royal Ins. Co., 84
Mich. 161; Renier v. Dwelling House
Ins. Co., 74 Wis. 89; West v. Norwich
Union Fire Ins. Society, 10 Utah. 442.
Occuvation by Tenant. — Ohio Farm*
ers' Ins. Co. v. Vogel, 166 Ind. 239,
117 Am. St Rep. 382, 9 Ann. Cas.
91. 3 L. R. A. ON. a) 966; Gandy
r. Orient Ins. Co.. 52 S. Car. 224.
Trior Insurance. — Strauss v. Pho*
nix Ins. Co., 9 Colo. App. 386; McQl-
roy V. British American Assur. Co.,
86 C. C. A. 615. 94 Fed. 990; Bennett
T. Council Bluffs Ins. Co., 70 Iowa,
600; Homthal v. Western Ins. Co.,
88 N. C. 71; Hibemla Ins. Co. v.
Malevinsky, 6 Tex. Civ. App. 81.
Interest of insvkreA. — Hartford Fire
.Ins. Co. V. Keating, 86 Md. 130, 6S
Am. St Rep. 499; Wlsotekey v. N^
agara Fire Ins. Co.. 112 App. Div*
699; aff'd 189 N. T. 532; Pope ▼. Glen
Falls Ins. Co.. 130 Ala. 866; Rhode
Island Underwriters Ass'n y. Mon-
arch. 98 Ky. 305; Crescent Ins. Co.
V. Camp, 71 Tex. '603.
Vacan^iy of premises, — ^Aurora Fire
9t Marine Ins. Co. v, Kranich, 36
Mich. 288; Haight ▼. Continental Ins.
Co., 92 N, y. 51; Wilson v. Commer-
cial Union A^ur. Co., 51 S. Car. 640.
60 Am. St Repi 700.
Leased ground. — Springfield Flr«
ft Marine Ins. Co. v. Price, 132 Ga.
687; Home Ins. Co. v. Stone River
National Bank« 88 Tenn. 369; Welch
y. Fjre Ass'n. 120 Wis. 456.
Dangerous agencies on the prop-
erty.— ^Reaper City Ins. Co, v. Jones.
62 111. 458. See also. Improved
Match Co. y. Michigan Mutual Fire
Ins. Co., 122 Mich. 256; German Ins.
Co. V. ^hader. 68 Neb. 1, 60 L. R. A.
918; Worachek y. New Denmark
Mutual Home Fire Ins. Co.. 102 Wis.
81.
7« Rhode Island Underwriters Ass'n
y. Monarch. 98 Ky. 305.
T& Gandy v. Orient Ins. Co., 52 S.
Car. 224; Hlbernia Ins. Co. v. Male-
vlnsky, 6 Tex. Civ. App. 81.
//'
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
I§.io68
waive it/* or that it would be fraudulent to allow the company to take
advantage of it^^ It is also necessary, to sustain many of the cases,
to hold that there may be an actual waiver by the company based upon
imputed knowledge which never in fact came to any one except the
local agent. It is also necessary to sustain the estoppel spoken of in
many of the cases, to treat, as a representation by the company, the
very act of the ageait which the terms of the policy deny his authority
to perform/*
The same cases, however, which deny the authority of the agent to
make a waiver in the face of an express limitation, would doubtless
also refuse to accomplish the same result by holding the company es-
topped upon the basis of imputed knowledge.^* This, however, is not
a question of agency at all.
§ io68. ■ The same rule which has been thus applied to the
knowledge of the issuing agent has, by the same courts, been applied
to the soliciting agent ; and it is held that the knowledge of a soliciting
agent of a fact regarding the risk solicited by him which violates a
condition of the policy will be imputed to the company, and will raise
an estoppel which will prevent the company from asserting a for-
feiture on the ground of such violation.*®
7« Aetna Life Ins. Co. v. Frlerson,
51 C. C. A. 424, 114 Fed. 56: Barn-
ard V. National Fire Ins. Co., 88 Mo.
App. 106; WilliamB v. Niagara Fire
Ins. Co., 60 Iowa, 561; Carroll v.
Charter Oak Ina. Co., 38 Barb. (N.
Y.) 402; King v. Council BluiEa Ins.
Co., 72 Iowa, 310; American Ins. Co.
y. Yeagley, 163 Ind. 651.
77 Union Mutual Life Ins. Co. ▼•
Wilkinson, 13 Wall. 222, 20 L. Ed.
617 (practically overruled, however.
In Northern Assur. Co. v. Qrand View
Bldg. ABs'n, 188 U. S. 308, 46 U Bd.
218); Wagner v. Westchester Fire
In& Co., 92 Tex. 549; WlsoUkey v.
Niagara Fire Ins. Co., 112 App. DIv.
599; ard 189 N. T. 632; Grabbs v.
Farmers' Mutual Fire Ins. Ass'n, 125
N. C. 389.
78 A striking Illustration may be
seen In Oandy v. Orient Ins. Co., 52
S. Car. 224. In many of the cases,
the alleged estoppel s^ms to be
nothing more than the mere refusal
of the court to enforce what seems to
77
It to be an Inequitable defense; and
they justify the comment of the comt
of appeal of Ontario, in Shannon r.
Gore, etc., Ins. Co., 2 Ont. App. 896.
"It is much easier to say, In the gen-
eral terms nsed In some of the deci-
sions In the United States upon
which the plaintiff relies, that In-
surance companies ought not to be
allowed to set up such a defence,
than to define with precision the
legal principles upon which this kind
of estoppel Is founded."
*• See Northern Assur. Co. v. Grand
View Bldg. Ass'n, 183 U. S. S08, 46 L.
Ed. 213.
•0 London 4b Lancashire Fire Ins.
Co. V. Gerteison, 106 Ky. 816; Berg-
eron V. Pamlico Insurance & Bank-
ing Co., Ill N. Car. 45; McGonigle
V. Susquehanna Fire Ins. Co., 168 Pa.
1; Harding v^ Norwich Union Fire
Ins. Co., 10 S. D. 64; Beebe ▼. Ohio
Farmers* Ina. Co., 93 Mich. 514,
82 Am. St Rep. 519, 18 L. R. A.
481; Lryon v. .Insurance Co., 6 Dak.
§§ 106^1071]
THE LAW OF AGENCY
[book II
And the delivery of a life insurance policy by a soliciting agent,
authorized to solicit applications, collect premiums and deliver pol-
icies, will, it is held, operate to estop the company from enforcing a
forfeiture for the violation of a condition precedent when the agent,
at the time of such delivery, had knowledge of the violation/*
§ 1069. Misstatements in application.^— So it is held that
knowledge by an agent who actually issues the policy that a statement
in the application is false, prevents the company from taking advantage
of a provision that such statements shall be considered warranties, and
that the policy shall be void if any of them are false.**
§ 1070. Subsequent grounds of forfeiture. — And a general agent's
knowledge of a cause of forfeiture, arising subsequent to the issuance
of the policy, and respecting insurance concerning which he is still act-
ing as the company's agent, is usually imputed to the company, so that
if it thereafter treats the policy as in existence, it will be held either to
have waived the forfeiture or to be estopped to enforce it." By the
weight of authority the same rule is applied in the case of a soliciting
agent."
§ 1071. ' Express restriction. — Insurance companies fre-
quently attempt to avoid the results of this rule by inserting provisions
67; Forward v. Continental Ina. Co.,
142 N. Y. 382, 25 L. R. A. 637; St
Clara Female Academy v. Northwest-
em National Ins. Co., 98 Wis. 257,
67 Am. St Rep. 805.
81 McGiirk v. Metropolitan Life Ins.
Co., 56 Conn. 528, 1 L. R. A. 563;
John Hancock Mutual Life Tna. Co.
V. Schlink, 175 lU. 284; Northwest-
em Life Ass'n v. Findley, 29 Tex.
Civ. App. 494.
•tBeebe v. Ohio Farmers' Ins.
Co., 93 Mich. 514, 32 Am. St Rep.
619, 18 L. R. A. 481; Michigan
Shingle Co. v. State Investment Ins.
Co., 94 Mich. 389, 22 L. R. A. 319.
M Arnold V. American Ins. Co., 148
Cal. 660, 25 L. R. A. (N. S.) 6;
Phenix Ins. Co. v. Grove, 215 111.
299, 26 L. R. A. (N. S.) 1; Phoenix
Ins. Co. V. Spiers, 87 Ky. 286; Bige-
low V. Granite State In^. Co., 94 Me.
89; Lamberton v. Connecticut Fire
Ins. Co., 39 Minn. 128, 1 L. R. A. 222;
Hamilton v. Home Ins. Co., 94
Mo. 358. See also, Metropolitan Life
Ins. Oo. v. Sullivan, 112 II L App. 600.
In Bigelow V. Granite State Ins. Co..
9up)a, it is said that the rule is not
affected by the existence of the stat-
utory standard form of policy.
S4 Germanla L. Ins. Co. ▼. Koehler.
168 111. 293, 61 Am« St Rep. 108;
Metropolitan L. Ins. Co. v. Sullivan,
112 111. App. 500; Walsh v. Aetna L.
Ins. Co., 30 Iowa. 133. 6 Am. Rep.
664; Germanla Ins. Co. v. Rudwig. 80
Ky. 223; Schmidt v. Charter Oak L.
Ins. Co., 2 Mo. App. 389. See also,
McGurk V. Metropolitan L. Ins. Co..
56 Conn. 528, 1 L. R. A. 663: North-
western Mut. L. Ins. Co. V. A merman.
119 III. 829, 69 Am. Rep. 799; LoHe
V. Conn. Mut L. Ins. Co.. 15 Fed. Cas.
891.
Contra: Where the agent's entire
authority with reference to that in-
surance ended when the iwliey was
issued. Amerioan InB. Co. v. Wal-
Bton» 111 lU. App. 183; Dickinson
County V. Mississippi Valley Ins. Co.»
41 Iowa, 286.
772
CHAP. Ill]
CONSTRUCTION OF AUTHORITIES
[§ 1072
in their policy or application that the agent 3hall be the agent of the
assured in all that he does in making out the application, or procuring
the insurance. The most common of these is as follows : ''It is a part
of this contract that any person other then the assured who may have
procured this insurance to be taken by the company, shall be deemed to
be the agent of the assured named in this policy and not of this com-
pany imder any circumstances whatever, or in any transactions relat-
ing to this insurance." Such provisions have, however, been quite
generally held ineffective.'^ Statutes in several states expressly de-
clare that a person who solicits applications, makes contracts, collects
premiums, etc., shall prima facie be deemed to be the agent of the com-
pany whatever the policy or the application may say about it/^
§ 1072. ^^—~^- Limitations on rulev*-In accordance with the usual
rule in regard to imputing the knowledge of the agent to his principal '^
the insurance company in any of the before mentioned situations will
M Commercial Ins. Co. v. Ives,
56 in. 402; Rogers v. The
Phenlx Insurance Co. of Brooklyn,
121 Ind. 570; Kausal v. Minnesota
Fanners' Mutual Fire Ins. Ass'n, 91
Minn. 17, 47 Am. Rep. 776; Plant-
ers* Ins. Co. Y. Myers, 55 Miss. 479,
30 Am. Rep. 521; Columbia Ins. Co.
T. Cooper, 50 Pa. 331; Kister t. Leb-
anon Mutual Ins. Co., 128 Pa. 563, 15
Am. St. Rep. 696, 6 L. R. A. 646* See
also, North British ft Mercantile
Ins. Co. v. Crutchfield, 108 Ind. 51S;
Grace ▼. American Central Ins. Co.,
109 U. S. 278, 27 L. Ed. 932.
Contra: Rohrbach T. Qermanla
Fire Ins. Co., 62 N. Y. 47, 20 Am. Rep.
451.
M Such statutes have been passed
in Ala., 6a., Conn., Iowa, Me., Mass.,
Minn., Miss., Mo., Neb., N. H., N. D.,
Ohio, Tex., Vt., Wis.
Thus the Wisconsin statute pro-
Tides that every person "who solicits
Insurance on behalf of any Insurance
corporation or person desiring insur-
ance of any kind, or transmits an
application for a policy of insurance,
other than for himself, to or from
any such corporation, or who makes
any contract for insurance, or col-
lects any premium for insurance, or
in any manner aids or assists in do-
ing either, or in transacting any busi-
ness of like nature for any insur-
ance corporation, or advertises to do
any such thing, shall be held to be
an agent of such corporation to all
Intents and purposes, unless it can
be shown that he receives no com-
pensation for sudi services."
A somewhat different type of stat-
ute, not materially different In effect,
prevails in several states. As to the
construction of such statutes, see Uni-
ted Fireman's Ins. Co. v. Thomas, 34
C. C. A. 240, 92 Fed. 127; Noble v.
Mitchell, 100 Ala. 519, 25 L. R. A.
238; Continental Ins. Co. v. Ruck-
man, 127 111. 364, 11 Am. St. Rep. 121;
Hancock L. Ins. Co. v. Schlink, 175
111. 284; People v. Insurance Ex-
change, 126 111. 466: St. Paul F. A
M. Ins. Co. V. Shaver, 76 Iowa, 282:
Wood V. Fireman's Ins. Co., 126 Mass.
316; Pollock v. Oerman F. Ins. Co.,
127 Mich. 460; Bankers Li. Ins. Co. v.
Robblns, 55 Neb. 117; Schemer v. In-
surance Co., 60 Wis. 575; Hankins
V. Insurance Co., 70 Wis. 1; Davis
Lumber Co. v. Hartford F. Ins. Co..
96 Wis. 226; Costello v. Insurance
Co., 188 Wis. 350; Continenua h.
Ins. Co. V. Chamberlain, 132 U. S.
304.
s7 See post, § 1848 et eeq.
773
§ I073]
THE LAW OF AGENCY
[book II
not be bound by the knowledge of its agent if it is acquired when
transacting other business and not sufficiently close in time to justify
the inference that he had it in mind ; ** or by his false statement if it is
the result of collusion between him and the assured, to defraud the
company.**
§ 1073. Misconduct of agent in taking application.— Qosely af*
filiated and often confused with the question discussed in the preceding
sections is the further question of the effect of tiie misconduct of the
soliciting agent in the taking of the application. Here it is held that
if the agent leads the applicant to make a false statement, or permits
him to set forth in the application statements of fact which the agent
knows to be false, the company is estopped to take advantage of their
falsity ; •• a fortiori, if facts are correctly stated to the agent and they
are by him incorrectly inserted in the application either wilfully or
negligently, the company cannot take advantage of such incorrect-
ness ; •* if the agent fills out the application from his own knowledge
or from knowledge acquired from persons other then the applicant, the
M Stennett v. Pennsylvania F. Ins. 133 Mass. S2; Dimick v. Metropolitan
Go., 68 Iowa, 674; St Paul F. & M.
Ins. Co. T. Parsons, 47 Minn. 352;
Trenton v. Pothen, 46 Minn. 298, 24
Am. St. Rep. 225; Union Bank ▼.
German Ins. Co., 18 C. C. A. 203, 71
Fed. 473. See also, Supreme Coun-
cil y. Green, 71 Md. 263; Sanders ▼.
Cooper, 115 N. T. 279, 12 Am. St. Rep.
801, 6 L. K A. 638.
••Ryan V, World L. Ins. Co., 41
Conn. 168, 19 Am. Rep. 490.
•0 Phoenix Ins. Co. y. Copeland, 86
Ala. 551, 4 L. R. A. 848; Dwelling
House Ins. Co. y. Brodie, 62 Ark. 11,
4 L. R. A. 458; National Fire Ins.
Co. y. Duncan, 44 Colo. 472, 20 L. R.
A. (N. S.) 840; Stone y. Hawkeye
Ins. Co., 68 Iowa. 737, 56 Am. Rep.
870; Mutual Benefit Life Ins. Go.
y. Dayiess, 87 Ky. 641; Follett y.
United States Mutual Accident Ass'n,
110 N. C. 377, 28 Am. St. Rep. 693,
16 li. R. A. 668; Mullln y. Vermont
Mutual Fire Ins. Co., 68 Vt. 113.
Contra: That the knowledge of the
agent will not alter the rule If there
be no actual fraud on the applicant,
lyerson y. Metropolitan Life Ins. Co.,
151 Cal. 746, 13 L. R. A. (N. S.) 866;
McCoy y. Metropolitan L. Ins. Co.,
L. Ins. Co., 69 N. J. L. S84; Clemens
▼. Supreme Council, 131 N. T. 485;
Pottsyllle Mutual Fire Ins. Co. y.
Fromm, 100 Pa. 847.
•1 Creed y. Sun Fire OtBoe of Lon-
don, 101 Ala. 622, 46 Am. St Rep.
134, 23 U R. A. 177; Merchants'
Mutual Fire Ins. Co. y. Harris, 61
Colo. 96; Phoenix Ins. Co. y. Stark,
120 Ind. 444; Taylor y. Anchor
Mutual Fire Ins. Co., 116 Iowa»
626, 93 Am. St Rap. 261, 67 L. R. A.
S28; Continental Ins. Co. y. Pearce,
39 Kan. 396, 7 Am. St. Rep. 667;
Wright y. Northwestern Mutual Life
Ins. Co., 91 Ky. 208; Steele y. Ger-
man Ins. Co., 93 Mich. 91, 18 L. R. A.
85; Chase y. People's Fire Ins. Co.,
14 Hun (N. Y.), 466; Stemaman y.
Metropolitan Life Ins. Co.,. 170 N. T.
13, 88 Am. St Rep. 625, 57 L. R. A.
318; American Life Ins. Co. y. Ma-
hon, 66 Miss. 180; Kister y. Lebanon
Mutual Ins. Co., 128 Pa. 663, 16 Am.
St Rep. 696, 5 L. R. A. 646. See
also. New York Life Ins. Co. y.
Fletcher, 117 U. S. 519, 29 L. BSd. 934;
Farmers' Ins. Co. y. Williams, 39
Ohio St 684, 48 Am. Rep. 474.
774
CHAP, in]
CONSTRUCTION OF AUTHORITIES
[§ 1074
company is bound by his answers ; ^ if the agent draws his own con-
clusions from the information furnished him by the applicant and in-
serts such conclusions in the application the company cannot question
their correctness ; ** if the agent suppresses the application filled out
by the applicant and substitutes an entirely spurious one^ the company
cannot escape liability.*^
Restrictions in the policy of the sort referred to in § 107 1 above have
constantly been appealed to in these cases, but they have generally been
held to be ineffective to change the result
§ 1074* Authority to waive proof or notice of Io3s. — ^While there
is some conflict among the cases, the weight of authority seems to be
that a general insurance agent, with full authority to issue policies,
make contracts and collect premiums may waive proof or notice of loss,
either expressly ,•* or by implication ; •• as may also any agent with
express authority to adjust the loss.*^
"People's Fire Ins. Co. v. Goyne, •« MasBachttsetts Life Ins. Cow v.
79 Ark. 816, 9 Ann. Cas. 878, IS L. R.
A. (N. S.) 1180; Menk v. Home Ins.
Co., 76 Cal. 50; Germania Fire Ins.
Co. V. Hick, 125 111. 361, 8 Am. St
Rep. 384; Roe v. National Life Ins.
ABs'n, 137 Iowa, 696, 17 L. R. A. (N.
S.) 1144; Thomas v. Hartford Fire
Ins. Co., 20 Mo. App. 150; Insurance
Co.T. Wilkinson. 80 U. B. (18 Wall.)
222, 20 L. Ed. 617; Dunbar T. Phenlx
Ins. Co., 72 Wis. 492.
M Hough T. City Fire Ins. Co., 29
Conn. 10, 70 Am. Dec. 681; Miller v.
Phoenix Mutual Life Ins. Co., 107
K T. 292; Langdon y. Union Mutual
Life Ins. Co., 14 Fed. 273; Mutual
Benefit Life Ins. Co. v. Robison, 68
Fed. 723. 22 L. R. A. 325; ContinenUl
Ins. Co. ▼. Chamberlain, 182 XJ, S.
304, 83 L. Kd. 841.
Conclusion as to tiUe» — Duncan ▼.
National Mutual Fire Ins. Co., 44
Colo. 472, 20 L. R. A. (N. S.) 340;
Key V. Des Moines Ins. Co., 77
Towa, 174; Phenlx Ins. Co. v. Stocks,
149 111. 319; Western Assur. Co. v.
Rector, 85 Ky. 294; Combs ▼. Han-
nibal Savings A Ins. Co., 43 Mo.
148, 97 Am. Dec. 883: Burson v.
Philadelphia Fire Ass'n, 136 Pa. 267,
20 Am. St Rep. 919; Home Ins. Co.
V. Hancock, 106 Tenn. 518, 62 L. R.
A. 665.
Bshelman, 80 Ohio St. 647.
M Indian River State Bank v. Hart-
ford Fire Ins. Co., 46 Fla. 283;
Phenlx Ins. Co. t. Munger, 49 Kan.
178, 88 Am. St. Rep. 860; Phenlx
Ins. Co. V. Bowdre, 67 Miss. 620, 19
Am. St. Rep. 326; Nickell v. Phoonlz
Ins. Co., 144 Mo. 420; Perry ▼. Me-
chanics' Mutual Ins. Co., 11 S^a.
478; Snyder v. Dwelling House
Ins. Co., 59 N. J. L. 544, 59 Am. St'
Rep. 626.
Contra: Burlington Ins. Co. r. Ken-
nerly, 60 Ark. 532; Lohnes v. In*
Burance Co. of N. A., 121 Mass. 439;
Knudson v. Hekla Fire Ins. Co., 75
Wis. 198. See also, Smith v. Niagara
Ins. Co., 60 Vt. 682, 6 Am. St. Rep.
144, 1 L. R. A. 216.
»« Indian River State Bank v.
Hartford Fire Ins. Co., 46 Fla. 2S3;
Phenlx Ins. Co. v. Searles, 100 Oa.
97; Citizens' Ins. Co. v. Stoddard* 99
111. App. 469; Commercial Union As-
sur. Oo. V. State, 118 Ind. 881.
Contra: Brmentrout v. GirardFire
ft Marine Ins. Co., 63 Minn. 306, 66
Am. St. Rep. 485, 80 L. R. A. 846;
Hicks V. British Am. Ins. Co., 162
N. T. 284, 48 L. R. A. 424.
•TOhio Farmers* Ins. Co. v. Vogel,
166 Ind. 289, 117 Am. St. Rep.
382. 9 Ann. Cas. 91, 8 L. R« A, (K.
775
§ I078]
THE LAW OF AGENCY
[book II
issue policies upon property which he owns individually,** or which
belongs to a partnership of which he is a member,** or to a corporation
of which he is an oflScer or director/* or in which he is interested as
agent.**
i>Salene t. Queen City Ins. Co«,
59 Greg. 297, 85 L. R. A. (N. 8.) 438;
Zimmerman ▼. Dwelling House Ins.
Co., 110 Mich. 899, S3 L. R. A. 698;
Bentley y. Columbia Ina. Co., 17 N.
Y. 421.
i»Glen Palls Ins. Co. y. Hopkins,
16 111. App. 220; Ritt y. Washington
Marine A Fire Ina. Co., 41 Barb.
(N. T.) 858.
i«Arl8pe Mercantile Co. y. Cajh
ital Ins. Co., 188 Iowa, 272, 12 Ann.
Cas. 98, 9 L. R. A. (N. S.) 1084;
Greenwood Ice ft Coal Co. y. Georgia
Home Ins. Co., 72 Miss. 46. See,
Arispe Mercantile Co. y. Queen Ins.
Co., 141 Iowa, 607, 188 Am. St Rep.
180.
IV British American Assur. Co. y.
Cooper, 6 Colo. App. 25; Utica Ins.
Co. y. Toledo Ins. Ca, 17 Barb. (N.
Y.) 182. See also, Wildberger y.
Hartford Fire Ins. Co., 72 Miss. 888,
48 Am. St. Rep. 558, 28 L. R. A. 220.
778
BOOK ra.
OF THE EXECUTION OF THE AUTHORITY,
CHAPTER I
mOBNBRAL
I 1079. Purpose of Book III. 1086. Slight DeTlatlon does not In^
lOSO. Primary purpose to bind validate.
principal and not agent 1086. When separable, authorized
1081. Must act wiUlin scope of an- part may stand.
thority. 1087. When execution lacks essen-
1082. Necessity of proper Execa« tial elements.
tion. 1088. Summary of the Rules.
1083. How question determined. 1089. Should act in Name of the
1084. Bzecution within» and ez- principal.
ceeding authority.
§ 1079. Purpose of Book III. — In the preceding chapters it has
been seen how authority may be conferred upon an agent, and by what
standards the nature and extent of the authority so conferred are to be
determined.
It is the purpose of Book III to ascertain in what manner the au-
thority so conferred and so construed is to be executed. In what is
said upon this subject, it is to be borne in mind that the authority of
the agent to perform the given act is assumed to be established, and
that the only question is as to the mode and sufficiency of the execution
of it.
§ Z080. Primary purpose to bind principal and not agent — It is
the primary purpose of the creation of an agency to authorize the agent
to act for and in behalf of the principal. It is, therefore, the primary
duty of the agent in executing the authority to so act as to secure to
the principal the benefits to be derived from the performance, and to
impose upon him the responsibilities arising therefrom. In other words,
it is the primary ftmctioii of the agent to bind the principal, and not
himself, to third persons, and likewise to bind such third jpersons to the
principal and not to himself.
779
§§ IO8I-IO84] THE LAW OF AGENCY [bOOK III
§ 108 1. Agent must act within the scope of his authority. — The
act of the agent, whether he be general or special, within the limits of
his authority is binding upon the principal ; his act beyond those lim-
its, binds himself only, or no one. Hence arises the fundamental neces-
sity that not only the extent, but the manner, of the execution be such
as the authority conferred will warrant, and no other. Where precise
and exact limits have been fixed, the performance of the agent should
be kept scrupulously within them. When those limits have not so been
fixed, it is still imperative that the reasonable and usual limits in such
cases be determined, and that the manner and extent of the execution
be made to conform to them.
§ 1082. Necessity of proper execution. — It is obvious, therefore,
that attention to the proper execution of the authority is highly im-
portant, not only as respects the principal himself, but the agent also.
Thus the agent in the attempted execution of the authority, may do»
(a) exactly what he was authorized to do, or (6) more than he was
authorized to do, or (c) less than he was directed to do, and the result
of his performance may be that —
1. He will bind his principal only, or
2. He will bind himself only, or
3. His attempted execution will be wholly void;
whereas the first result was the only one contemplated by the parties
at the time of the creation of the agency.
§ 1083. How question determined. — In determining the results
of an attempted performance, four questions arise:
1. W^hat authority did the agent possess?
2. Is the act assumed to be done by virtue of it, in reality within its
scope?
3. Who was intended to be bound ? and
4. Who as a matter of fact is bound ?
The first two of these questions must be largely determined by the
principles laid down in the preceding chapters. The last two are yet
to be considered.
§ 1084. Execution within, and exceeding authority. — ^Where the
agent keeps strictly within the limits of his authority, the only question
that will arise will be as to the mode of execution, — whether it is such
as to bind the principal, or the agent, or neither.
Where, however, the agent exceeds those limits, the question will
depend somewhat upon the degree of excess. "It is evident," as is
observed by a learned writer, "to anyone who considers the matter,
that the variance between the act done by the agent and the act author-
780
CHAP. l]
EXECUTION OF AUTHORITY IN GENERAL [§§ I085, IO86
ized by the principal, may range through every degree of difference.
The variance may be infinitesimal, or it may be so great as to make an
absolute departure from the authority conferred. To determine the
exact point between those two extremes at which a variance becomes,
substantial and material often gives rise to difficult questions. The
result in each case must depend upon the circumstances of the partic-
ular case." *
§ 1085. Slight deviation does not invalidate.f--No inflexible rule
can be laid down by which to determine when the act as performed
exceeds the limits of the act as authorized. But keeping in mind the
fundamental principle to which reference has so frequently been made,
that the authority conferred includes incidental authority to employ all
the usual modes and means of accomplishing the ends and purposes of
the agency, it may be said that a slight deviation from the course of
his duty will not vitiate his act, if the variation be immaterial and cir-
cumstantial only, and does not in substance exceed the limits fixed.*
§ 1086. -When separable, authorized part may standi — ^Although
the agent may have exceeded his authority, yet if the act be separable,
it may stand so far as it is authorised.' ''When a man," says Lx>rd
1 Evans' Agency, IBS.
« Huntley v. Mathias, 90 N. C. 101.
47 Am. Rep. 516; Parker v. Kett, 1
Salk. 95. "Authorities by letter of
attorney," says Holt, C. J., in this
case, "are either general or special;
thus a letter of attorney may be to
sue in omnibus causis motis et mo-
vcndis, or to defend a particular suit.
Sir Philip Sidney, when he went to
travel, gave a letter of attorney to
Sir Thomas Walsingham to act and
sell all his lands, and all his goods
and chattels; and this was held good.
Where the authority is particular
the party must pursue It; if the act
varies from It, he departs from his
authority, and what he does is void;
but that must be Intended of a vari-
ance not in circumstances, but of a
variance material and substantial, as
where the person, the thing, or the
date is mistaken."
» Drumright v. Phllpot, 16 Ga. 424,
60 Am. Dec. 738; Vanada v. Hopkins,
Minn. 538; Stowell v. EHdred, 39 Wis.
1 J. J. Marsh. (Ky.) 285, 19 Am.
Dec. 92; Dickerman v. Ash ton, 21
614; Bvans v. Wells, 22 Wend. (N^
Y.) 841; Crozler v. Carr, 11 Tex"
576; Moore v. Thompson, 32 Me. 497;
Jesup V. City Bank, 14 Wis. 331.
In Commonwealth v. Hawkins, 83
Ky. 246, in an action on a sherlffB
bond, against the sureties, the bond
included a covenant to indemnify
former sureties on a former bond,
and a covenant to indemnify the
state for the sheriff's collection of
revenue. It was- held that, even
though the agent who executed the
bond had no authority to make the
former covenant, yet, if there was
authority for the latter covenant, it
was separable and valid.
In Guaranty Trust Co. v. Koehler,
195 Fed. 669, the defendants were
sued on a contract of guaranty exe-
cuted by an agent. The authority
of the agent extended to the guaran-
teeing of the repayment of $22,500
and interest, but not to the guaran-
teeing of the payment of interest on
another amount of |40,000. The
agent executed the contract, making
both guarantees. Heldj that the con-
781
§ io87]
THE LAW OF AGENCY
[book III
Coke, "doth that which he is authorized to do and more, there it is
good for that which is warranted, and void for the rest." * So if the
excess be merely superfluous it may be disregarded. Thus if an agent
authorized to enter into a contract not under seal, executes it under
seal, yet if the contract would be good without the seal, the seal may
usually be disregarded and the contract be allowed to staind as written
evidence of a simple contract."
So if an agent in making an authorized sale, adds unauthorized
covenants, the purchaser may enforce so much of the contract as con-
forms to the authority, or, at his option, may refuse to abide by the
contract at all, if the principal repudiates the unauthorized covenants.*
On the otlier hand, where the act done is a single, entire and in-
separable one, it cannot stand unless it can be deemed to be author-
ized as it was done.''
§ 1087. When execution lacks essential elements.— Where, how-
ever, the execution is defective by reason of the absence of some ele-
ment essential to a complete performance, the principal is not bound.
'^Regularly," says Lord Coke, "it is true, that where a man doth less
than the commandment or authority committed unto him, there (the
commandment or authority being not pursued) the act is void." •
tract was valid as to the $22,500
guarantee, though the other guaran-
tee was unauthorized.
4 Coke, Lit 258a.
B Morrow v. Hlggins, 29 Ala. 448;
Baum V. Dubois, 43 Penn. St 260;
Long V. Hartwell, 34 N. J. L. 116;
Dutton v. Warschauer, 21 Cal. 009;
Worrall v. Munn, 6 N. Y. 229, 55 Am.
Dec. 330; Wood ▼. Auburn, etc., R.
R. Co., 8 N. Y. 160; Thomas v. Jos-
lin, 30 Minn. 388. See postt I 1098.
oVanada v. Hopkins, 1 J. J. Marsh.
(Ky.) 285, 19 Am. Dec. 92; Smith v.
Tracy, 36 N. Y. 79.
In Kane v. Sholars, 41 Tex. Civ.
App. 154, where an agent, authorized
by a power of attorney to convey by
a quitclaim deed, gave a deed of
special warranty, the deed was held
valid to the extent of the agent's au-
thority.
In Glllespy v. Hollings worth, —
Ala. — , 53 So. 987, where an agent
to convey signed the deed "S. B.
Jones, Att'y in fact for Jas. Glllespy,"
instead of signing in the name of
Glllespy, the grantor, it was held
that, though the deed was void at
law, it created an eguitable interest
in the grantee.
7 Where an agent was authorized
to sign an obligation of insurance to
the pxtent of £100, and signed for
£150, and it was urged that the ob-
ligation was enforceable to the ex-
tent of the £100, Martin, B., said:
"As to the last point I think it
scarcely arguable. This is an entire
and indivisible contract to pay £ 150,
and It is not valid, because the broker
had authority only to make a con-
tract to the extent of £100." Balnea
V. Ewing, 4 H. ft C. 511, B. c. L. R. 1
Ex. 320. Cases involving the same
point in the case of negotiable in-
struments, are referred to in Chap-
ter III following.
8 Coke, Lit 258a. See also Oly-
phant V. McNair, 41 Barb. (N. Y.)
446; Marland v. Stanwood, 101 Mass.
470.
782
CHAP. l] EXECUTION OF AUTHORITY IN GENERAL [§§ I088, I089
§ 1088. Suxmnary of the rules. — ^Where there is a complete ex-
ecution of the authority and something ex abundanti is added which
was not authorized, there the execution is good and the excess only is
void ; but where there is not a complete execution of the authority, or
where the botmdaries between the execution and the excess are not
distinguishable, the whole must be held bad.^
§ io8g. Agent should act in name of principal — It is also a gen-
eral rule, subject to certain exceptions to be hereafter noticed, that the
act of the agent should purport to be what it is intended to be, — ^the
act of the principal, — and should be performed in his name by the
agent as such.^^ Where the character in which, and the person for
whom, the act is done, are clearly expressed and understood at the
time, many of the difficult questions, hereafter to be noted, which arise
where these matters are left uncertain or ambiguous, will be avoided.
• Alexander v. Alexander, 2 Yes. 10 N. H. 470, 84 Am. Dec. 176; Mer-
Sr. 640; Thomas v. Joslln, 30 Minn, chants* Bank ▼. Central Bank, 1 Ga.
38S. 418, 44 Am. Dec. 665; Clealand v.
10 White T. Cnyler, 6 T. R. 176; Walker, 11 Ala. 1068, 46 Am. Dec
Brlnley t. Mann, 2 Cush. (Mass.) 238; Wood ▼. Goodridge, 6 Gush.
337, 48 Am. Dec. 669; Hale T. Woods, (Mass.) 117, 52 Am. Dec. 771.
783
CHAPTER II
OP THE BXEC?UTION OP SEALED INSTRUMENTS
§ 1090. Purpose of this chapter.
1091. The questions Involved.
1092. Rules may differ with class
of Instrument
1093. Deed by agent must purport
to be made and sealed In
the name of the principal.
1094. Exceptions — Powers ex-
ercisable In name of donee
of power.
1095. — — Rule different In Texas.
1096. Rule changed by statute
In a few states.
1097. Eftect of statutes abol*
ishlng seals or making
them unnecessary.
1098. How where Instrument
valid without a seal.
1099. Instrument may bind neither
principal nor agent
1100. — Or be simply inoper-
ative as conveyance —
Agent's liability on cove-
nants— Estoppel.
1101. Whose deed is a given dded —
How question determined.
1102. Not enough to make deed
the principal's that the
agent is described as such.
1103,1104. Not principal's deed
where agent appears as
grantor and signer.
1105. Agent named as grantor
but deed signed in name
of principal.
1106, 1107. -«*^— Agent purporting
to act "as agent for" or
"in behalf of the prlncl-
paL
1108-1110. Deed naming prin-
cipal as grantor but signed
by agent personally.
1111, 1112. Mere descriptive
words will not change per-
sonal grants or covenants.
1113. Distinction in case of public
agents.
1114. Whether necessary that deed
should purport to be exe-
cuted by an agent
1116-1117. Purther of this
rule.
1118. How in reason.
1119. Parol evidence not admissible
to discharge agent
§ logo. Purpose of this chapter. — ^The manner of the execution
of instruments under seal, such as deeds, bonds and other solemn writ-
ings, is of so much importance and has been so frequently discussed,
as to merit the more extended treatment, which it is the purpose of
this chapter to devote to it. The word "deed" herein is used to de-
scribe all instruments under seal, and not merely conveyances of land.
It is to be observed that the question here is not how authority to
execute sealed instruments is to be conferred, but how such an author-
ity is to be executed. It is assumed that the agent was authorized to
bind his principal, but the question is, has he done so.
784
CHAP, n] EXECUTION OF SEALED IKSTRVMENTS [§§ IO9I-IO93
§ 1091. The questions involved. — ^The purpose which the partiea
have in mind in the execution of any o£ the instrument3 which are here
involved, niust undoubtedly be that the instrument shall have eifect aa
an act in law« In order that it shall have the effect which the parties
desire, it is essential that they shall know how such documents are actu-
ally dealt with in the legal world ; for in no other way can they know
how to frame the one in question in such form that it shall be given
the effect in the le^al world which they so desire. By the legal world,
in this connection, must usually be meant the courts in their efforts to
determine and enforce the rights of parties under instruments of this
sort. It is therefore essential to know how the courts will read, or
construe, or interpret the document, in order that that effect may then
be given to it. In other words, it is essential that the parties shall
know, either actually or constructively, how the courts interpret docu-
ments of this sort, in order that they may so frame the one in question
that it shall be interpreted as they desire. The first question then will
be, how are such instruments as this interpreted by the courts.
A second question will be, is the interpretation to be ascertained
entirely from the document itself, or from the document in the light
of its surrounding facts ; or, if it appears that the rules of interpreta-
tion seem likely to lead to an unsatisfactory result^ may resort be had
to parol evidence to show what in this instance was actually meant.
§ 1092. Rules may differ with class of instrument.— It is entirely
possible, and will in fact be found to be the case, that the rules of law
affecting the questions here suggested will differ with the differing
classes of instruments which the law recognizes ; and^ that a different
history, origin, purpose or theory respecting one class will lead to dis-
tinctions, important in fact, but which might otherwise, perhaps, have
been thought of no real significance. This is strikingly illustrated in
the cases which are here under consideration. Sealed instruments,
negotiable instruments, and ordinary simple contracts in writing have
each their peculiar rules, some of which perhaps make distinctions
without a real and substantial difference, but which must nevertheless
be taken into account. The instrument under seal, which is the sub-
ject of the present chapter, is peculiarly subject to special rules which
must now be considered.
§ 1093. Deed by agent must purport to be made and sealed in the
name of the principal — ^It is a general rule in the law of agency
that in order to bind the principal by a deed executed by an agent, the
deed must upon its face purport to be made,. signed and sealed in the
50 78s
S 1094I
THE LAW OF AGBKCY
[book Ul
name of the principal. If, on the contrary, thotigh the agent describes
himself as "agent," or though he add the word "agent" to his name,
the words of grant, covenant and the like, purport upon the face of
the instrument to be his, and the seal purports to be his seal, the deed
will bind the agent if any one and not the principal.'^
So, in order to enable the principal to enforce the obligation against
the other party, the same rule must be observed For it is well set-
tled by the strict rules of the common law, that no person can sue or
be sued upon an instrument under seal unless he be named therein as a
party to the same, and has also signed and sealed it.^*
The rules, moreover, hereafter to be considered,** which enable an
undisclosed principal to sue or be sued upon a contract made by his
agent, have, as will be seen, no application to instruments under seal.**
The general rule, however, while well settled, is hi^^y technical in
its nature, being founded upon the common-law theories of the effect
of a seal, and like other rules based purely upon these theories, has
encountered a strong tendency in recent cases to make the mere pres-
ence of a seal subordinate to the evident intention of the parties."
§ 1094. — «— Exceptions — ^Powers exercisable in name of donee
of power.— There are, however, several well settled exceptions to
the rule that a power must be exercised in the name of the principal.
iiStinchfield t Little, 1 Gteenl.
(Me.) 231, 10 Am. Dec. 65; Stone v.
Wood, 7 Cow. (N. Y.) 452, 17 Am.
Dec. 529; Lutz ▼. Linthicum, 8 Pet
(U. S.) 165. 8 L. Bd. 904; Fullam T.
West Brookfleld, 9 Allen (Mass.), 1:
Townsend v. Coming, 23 Wend. (N.
Y.) 436, aff'd 4 Hill (N. Y.), 351;
Briggs y. Partridge, 64 N. Y. 357, 21
Am. Rep. 617; Orubbs v. Wiley, 17
Miss. 29; Hopkins v. Mehaffy, 11 S.
ft R. (Penn.) 126; Webster v. Brown,
2 Rich. (S. C.) N. S. 428; Echols v.
Cheney, 28 Cal. 157; Morrison v.
Bowman, 29 Cal. 337; City of Provi-
dence Y. Miller, 11 R. I. 272, 28 Am.
Rep. 458; El well ▼. Shaw, 16 Maas
42, 8 Am. Dec. 126; Brinley T. Mann,
2 Cush. (Mass.) 387, 48 Am. Dec. 669;
Combe's Case, 9 Co. 76; Fowler v.
Shearer, 7 Mass. 14; Carter v. Chaud-
ron, 21 Ala. 72; GiUespy v. Hollings-
worth, 169 Ala. 602; Bogart v. De
Bnssy, 6 Johns (N. Y.) 94; Martin
▼. Flowers, Leigh (Va.), 158; Mer-
chants* Bank r. Central Bank, 1 Ga.
41s, 44 Am. Dec. 665, and see cases
cited in following sections.
13 Buffalo (3atholic Institute ▼. Bit-
ter, 87 N. Y. 250; Klein v. Mechan-
ics' Bank, 146 N. Y. App. Div. 615;
Porter v. Baldwin, 139 N. Y. App.
Div. 278; McColgan v. Kate. 29 N. Y.
Misc. 136; Loeb v. Barris, 50 N. J.
L. 382; Harms v. McCormick, 132 111.
104; Van Dyke ▼. Van Dyke, 123 Ga.
686. See also Potter t. Bassett, 35
Ma App. 417.
xs See post^ Undisclosed Principal
i«Lenney ▼. Finley, 118 (Ja. 718;
Badger Silver Mining Co. v. Drake,
81 C. C. A. 378, 88 Fed. 48; Farrar
▼. Lee, 10 N. Y. App. Div. 130; Ben-
ham V. Emery, 46 Hun (N. Y.), 1S6;
Equitable Life Assur. Soc. t. Smith,
25 III App. 471.
XB See remarks of Henry, J., in Mc-
Clure V. Herring, 70 Mo. 18, 85 Am.
Rep. 404.
786
CHAP. Il]
EXECUTION OF SEALED INSTRUMENTS
I§ 1095
Thus in a leading case ^* in Massachusetts (where the general rule has
been most strictly applied), it is said by Wells, J.: "When the power
merely authorizes the donee to execute a deed in the name of the donor,
or as his attorney, it must be so executed; and the deed oi sale will
then be the deed of the donor of the power and not of the donee. But
a power may be given to be executed by the deed of the donee, as well
as it may by his will. This was formerly the more oommon mode."
When such is the case, the deed of sale not only may, but must, be
executed tfnder the hand and seal of the donee of the power. If the
power be given in the alternative, as is often the case, the deed of sale
may be executed in either form. In the present case [that of the ex*
ecution of a power of sale tmder a mortgage] , the power is 'to make,
execute and deliver to the purchaser or purchasers thereof all neces-
sary conveyances for the purpose of vesting in such purchaser or pur-
chasers the premises so sold in fee simple absolute.' This is not a mere
power of attorney to execute a deed in the name of the mortgagor;
though the deed might not perhaps have been invalid if it had been
executed in that manner; but it is a full power of sale and convey-
ance, which may properly be executed, as it was in this case, by the
deed of the mortgagee, reciting the power, and sigfned and sealed with
her own name and proper seal."
Cases of statutory or official powers may fall within the same rule.
So also, as has been seen, cases of powers "coupled with an interest"
have often been said to be those in which the power is capable of being
exercised in the name of the donee. Cases of powers, properly ex-
ecuted, and expressly authorizing the donee to make the conveyance
in his own name, may be within the same class. A few cases carry the
rule still further, and sustain deeds made by the agent where they
clearly show an intent to convey for the principal, though they are in-
artificial in form.**
g 1095. ■ Rule different in Texas.— A different rule from
that first stated seems to prevail in Texas. There, it is held not to be
KCranstou v. Crane, 97 Mase. 459,
98 Am. Dec. 106.
See "Survival of Powers as Un*
affected by Statutes" by Profefisor
A. M. Kalea^ • IlliDois Law Review,
447.
IT Citing 1 Bugden on Powers (7tli
ed.), 2S6.
"In Hubbard v. Swofford Bros.
Dry Gooda Ca, 209 Mo. 495, 123 Am.
St R. 488, tbere fa a dictum to the
effect that, in case of a power to sell
and convey, a conveyance made by
the donee indicating that he makes
it in execution of the power is a
valid execution of the power though
made in the name of the donee. See
also Donovan y. Welch, 11 K. Dak.
lis.
787
§ 1096]
THE LAW OF AGENCY
[book III
essential that the agent shall refer to his power, and he may make the
deed in his own name.** "If the grantor has no estate in the land
which can pass by the deed, but has a power to convey the title of
another, his act will be referred to his power because the purchaser
will be supposed to have bought in reliance on it/* So it is held, that,
if the attorney refers to one power which is invalid but he has another
valid power not referred to, he will be presumed to have acted under
the latter.*^ Whether, when he acts without reference to his power,
he is to be deemed to be acting in pursuance of it, or independently
of it and on his own account, seems to be a question of fact to be de-
termined in view of all the circumstances of the case.*^
§ 1096. — Rule changed by statute in a few Btates. — In a
few of the states, the general rule has been changed by statutes which
in substance provide that the fact that the attorney is named as the
grantor, or that he signs instead of the principal, shall not prevent the
taking effect of the deed as the deed of the principal, where that ap-
pears to have been the intention of the parties.**
u Thus In Trinity County Lumber
Ca V. Plnckard, 4 Tex. Civ. App. 671,
it is said, "The execution of a power
by the attorney in his own name is
at common law invalid; but that
rule does not now, nor did it obtain
in this state when the act in question
was passed. Under the law of this
state a power may be executed by
the attorney without reference to his
authority. Our law, in this particu-
lar at least, dispenses with the tech-
nical requirements of the common
law, and if the attorney has the
power to convey, the conveyance is
binding upon the principal, and con-
veys his title, though the conveyance
be made without reference to him.
Hough V. Hill, 47 Tex. 148; Rogers
v. Bracken, 16 Tex. 5G4: Link v.
Page, 72 Tex. 592." See also Hill v.
Conrad, 91 Tex. 341; Pool v. Foster
(Tex. Civ. App), 49 S. W. 928; Ryo
V. Petroleum Co., 42 Tex. Civ. App.
186; Neill v. Kleiber. 61 Tex. Civ.
App. 552.
ao Hough V. Hill, supra; Link v.
Page, Bupra.
SI Thus in Hill v. Conrad, supra,
where the agent in making the con-
veyance declared himself to be tlie
owner, and referred to a conveyance
to himself. It was held that his deed
could not be sustained as an execu-
tion of the power.
22 Maine [1883] p. 605, S 15.— Deeds
and contracts, executed by a^, au-
thorized agent of a person or a cor-
poration in the name of his princi-
pal, or in his own name for his
principal are in law the deeds and
contracts of such principal.
Mississippi (Code S 194). — Con-
veyances of land or conti'acts relat-
ing thereto, executed by an attorney
in fact for his principal, and duly
acknowledged or proved, shall have
the same force and effect as if exe-
cuted and acknowledged by the prin-
cipal; and where a conveyance by an
attorney Is in execution of letters of
attorney, it shall pass the interest of
the principal though not formally ex-
ecuted in his name; but In all such
cases the attorney must have been
appointed by some writing duly ex-
ecuted by the principal.
Ohio (R. 8. S 4110).— No deed of
real estate executed by aAy person
acting tof another, under a power of
788
CHAP. II ]
EXECUTION OF SEALED INSTRUMENTS
[§ 1097
§ 1097.
Effect of statutes abolishing seals or making them
unnecessary^— In several of the states, moreover, the rules affecting
sealed instruments generally have been more or less modified by stat-
ute. Thus in Minnesota, where the statute provides that ''the use of
private seals on written contracts is hereby abolished^ and the addition
attorney duly executed, acknowl-
edged and recorded, shall be held to
be Invalid or defective because he
Is named therein, as such attorney,
as the grantor instead of his princi-
pal; nor because his name, as such
attorney, is subscribed thereto, in-
stead of the name of the principal;
nor because the certllicate of ao-
knowledgment. Instead of setting
forth that the deed was acknowledged
by the principal, by his attorney, sets
forth that it was acknowledged by
the person who executed it, as such
attorney; but all such deeds so ex-
ecuted shall be as valid and effectual,
in all respects, within the authority
conferred by such powers of attorney,
as if they had been executed by the
principals of such attorneys, in their
own proper persons.
Pennsylvania (Purdon's Dig. of
Stet. 13th ed. p. 376 § 8).— Whenever
any deed of conveyance or other in-
strument of writing has been here-
tofore executed or acknowledged, or
both under any power sufficiently au-
thorizing the ' same, which power
shall have been recited in said deed
or other instrument, shall have been
informally executed by an attorney,
in his own name, reciting his au-
thority, instead of being executed In
the name of the principal or princi-
pals, such deed or instrument shall
be taken to be of the same validity
and effect as if executed m the name
and behalf of the principal or princi-
pals, as a party or parties thereunto.
Rhode Island (Gen. Laws [1909]
p. 878 § 17). — The donee of a power
of attorney may under and within
the authority of the power if he think
fit, execute or do any assurance, in-
strument, or thing In and with his
own name and signature, and, where
sealing is required, with his own
seal; and every assurance, instru-
ment, and thing so executed and
done, shall be as effectual Ih law, to
all intents, as if it had been executed
or done by the donee of the power,
in the name and with the signature
or signatures and seal of the donor
thereof.
Tennessee (Shan. Code 8 3679). —
Instruments in relation to real or
personal property, executed by an
agent or attorney, may be signed by
such agent or attorney for his prin-
cipal, or by writing the name of the
principal by him as agent or attor-
ney, or by simply writing his own
name or his principal's name. If the
instrument on its face shows the
character in which it is intended to
bo executed. See McCreary v. Mc^
Corkle (Tenn. Ch.), 64 S. W. 53.
Virginia (Code § 2416).— If, in a
deed made by one as attorney in fact
for another, the words of conveyance
or the signature be in the name of
the attorney, it shall be as much the
principal's deed' as if the words of
conveyance or the signature were in
the name of the principal by the at-
torney, if it be manifest on the face
of the deed that it should be con-
strued to be that of the principal to
give effect to Its Intent.
West Virginia (ch. 71 i 3).— If in
a deed made by one as attorney in
fact for another, the words of con-
veyance or the signature be In the
name of the attorney, it shall be as
much the principal's deed as if the
words of conveyance or the signature
were in the name of the principal by
the attorney, if it be manifest on the
face of the deed that it should be con-
strued to be that of the principal to
give effect to its intent
789
§§ 1098, 1099]
THE LAW OF AGENCY
[book in
of a private seal to an instrument in writing shall not affect its char-
acter in any respect," it was held that all the differences theretofore
existing in the law between sealed and unsealed instruments were
abolished, and that, notwithstanding the presence of a seal, an undis-
closed principal could be charged upon parol evidence of his existence.^*
On the other hand, in Texas, where the statute declares that no
private seal shall be necessary to the validity of any contract, bond or
conveyance, "nor shall the addition or omission of a seal or scroll in
any way affect the force and effect of the same," it was held, that
this statute had not changed the rule.**
§ X098. How where instrument valid without a seal. —
Whether the rule excluding parol evidence to charge the real princi-
pal, should apply where the contract, though happening to be under
seal, was not one to whose validity a seal was essential, is a question
upon which the authorities are not entirely uniform. It is held in some
cases that the evidence is as admissible under such circumstances as
though no seal were in fact attached ; ** but in otlier cases it is held
that the rule of exclusion applies, unless the interest of the principal
appears upon the face of the contract, or unless, perhaps, the principal
has ratified it and accepted the benefits of it.**
The question will be more full considered in a later section.*^
§ 1099. Instnunent may bind neither principal nor agent. — ^It
does not necessarily follow, of course, that either the principal or the
The English Conveyancing Act of
1881, S 46, provides that "The donee
of a power of attorney may, if he
thinks fit, execute or do any assur-
ance, instrument, or thing in and
with his own name and signature
and his own seal, where sealing Is
required, hy the authority of the
donor of the power; and every assur-
ance, Instrument and thing so ex-
ecuted and done shall be as effectual
in law, to all Intents, as If it had
been executed or done by the donee
of the power In the name and with
the signature and seal of the donor
thereof."
ssStreeter v. Janu, 90 Minn. 898.
To same effect Is Glbbs ▼. Dickson,
38 Ark. 107.
«* Sanger ▼. Warren, 91 Tex. 472,
66 Am. St R. 913. See also Jones r.
Morris, 61 Ala. 518.
MWoolsey t. Henke, 126 Wis. 184;
StoweU ▼. Bldred, 89 Wis. 614;
Klrschbon r. Bonzel, 67 Wis. 178;
Northern Nat Bank * r. Lewis, 78
Wis. 475; Lancaster ▼. Knicker-
bocker Ice Co., 168 Pa. 427; Wagoner
T. Watts, 44 N. J. U 120, aTd 45 N. J.
L. 184.
so Stanton t. Granger, 125 N. Y.
App. Dlv. 174, affirmed without opin-
ion, 193 N. Y. 656; Smith v. Pierce,
45 N. Y. App. Div. 628; Schaefer T.
Henkel. 75 N. Y. 378; Briggs v. Par-
tridge, 64 N. Y. 867, 21 Am. Rep. 617;
Slmson V. New York, etc., R. Co., 51
N. Y. Super. 419; Lenney ▼. Pinley,
118 Ga. 718; Van Dyke v. Van Dyke,
123 Ga. 686. Compare Rand v. Moul-
ton. 72 N. Y. App. Dlv. 236.
27 See post. Book IV, Chap. V.
790
CHAP. II ]
EXECUTION OF SEALED INSTRUMENTS
[§ HOQ-
agent must always be bound upon the instrument. It may be so ex-
ecuted that neither will be bound. Thus, if the covenants are clearly
the covenants of the principal, but the agent signs in his own name,
and appends his own seal, neither the principal nor the agent will or-
dinarily be liable upon the instrument: the principal, because he has
not signed, and the agent, because he has not covenanted. *• For simi-
lar reasons, the reverse of the situation will be subject to the same
rule, that is, where the grants and covenants are clearly those of the
agent only but the signature and seal are those of the principal.** In
general, as will be seen hereafter,"® the agent cannot be liable upon the
instrument itself unless it contains apt words to bind him personally ;
though in many cases, as will be seen, be will be liable upon an express
or implied warranty of authority.
Courts have, however, in several cases declared that, ut res fnagis
valeat, quam pereat, they would, where the principal could not be held,
lean towards a construction which would make the agent personally
liable.^
§ zioo. <— — «- Or be simply inoperative as ccmveyance — ^Agent's
liability on covenants — Estoppel. — ^The instrument may also in
many cases be simply inoperative, as a conveyance. Thus, where the
agent undertakes in his own name to convey or lease that which clearly
belongs to his principal, the conveyance or lease will be of no effect as
such, and will not support the agreement of the other party to pay the
purchase price or rent therein provided for." Where, however, the
covenant, though made by the agent, is that the principal will convey,
such a covenant is valid and furnishes a good consideration for the
agreement of the opposite party to pay,**
MWIiltford V. Laidler, 94 N. T.
145, 46 Am. Rep. 131; Bellas t. Ra3rB,
5 S. & R. (Pa.) 427, 9 Am. Dec. 885;
Hopkins V. Mehaffy, 11 S. ft R. (Pa.)
126; Neufeld v. Beldler, 37 111. App.
34; Abbey v. Cbase, 6 Cush. (Mass.)
54; Kills V. pQlslfer, 4 Allen (Mass.),
165; Townsend v. Corning, 23 Wend.
(N. Y.) 436, ard 4 Hill, 351; Mor-
rison v. Bowman, 29 Cal. 337.
» Steele y. McElroy, 1 Sneed
(Tenn.), 341.
But compare cases dted In | 1106,
VOBt.
to See post. Book IV, Chapter III.
»i See Hall v. Cockrell, 28 Ala. 507.
«2 First Baptist Church v. Harper,
191 Mass. 196; Murray y. Armstrong,
11 Mo. 209; Potter y. Bassatt, 35 Mo.
App. 417; Bogart y. De Bussy, 6
Johns. (N. Y.) 94; Frontin v. Small,
2 Ld. Ray. 1418; Jones v. Morris, 61
Ala. 518; Fisher y. Salmon, 1 CaL
413, 54 Am. Dec. 297; Echols v.
Cheney, 28 Cal. 157; Casey v. Lucas,
2 Bush (Ky.). 57: Fowler v. Shearer,
7 Mass. 14; Elwell y. Shaw, 16 Mass.
42, 8 Am. Dec. 126; Holmes v. Car-
man, 1 Freem. Ch. (Miss.) 408;
Locke y. Alexander, 2 Hawks (9 N.
C), 155, 11 -Am. Dec. 760.
••Spencer v. Field, 10 Wend. (N.
Y.) 87, distinguishing Bogart y. De
BuBsy, uupra^ and Frontin y. Small,
791
§ IIOl]
THE LAW OF AGENCY
[book Ul
But, though the instrument may be invalid as a coiive3rance, the
agent may be liable upon any of the covenants contained in it, which
may subsist without a transfer of the title.**
The agent's personal covenant in such a case may, it is held, operate
by way of estoppel to prevent the agent's setting up a subsequently
acquired title to the same premises ; *• but he is not estopped by cove-
nants made in the principal's name.**
Returning now to the ordinary case of a deed, bond or other similar
instrument executed by the agent and to the question of whose deed it
is to be deemed to be —
§ zioi. Whose deed is a given deed — How question determined* —
In determining whether a given deed is the deed of Ae principal, re-
gard may be had, First, to the party named as grantor. Is the deed
stated to be made by the principal or by some other person? Sec-
ondly, to the granting clause. Is the principal or the agent the per-
son who purports to make the grant? Thirdly, to the covenants, if
any. Are these the covenants of the principal? Fourthly, to the testi-
monium clause. Who is it who is to set his name and seal in testimony
of the grant? Is it the principal or the agent? And Fifthly, to the
signature and seal. Whose signature and seal are these? Are they
those of the principal or of the agent ? *^
MLutz V. Llnthicum, 38 U. S. (S
Pet.) 165. 8 L. Ed. 904; MitcheU t.
Hazen. 4 Conn. 495, 10 Am. Dec. 169;
Sumner v. WiHlams, 8 Mass. 162, 5
Am. Dec. 803.
But see Locke t. Alexander, 2
Hawks (N. C.), 155, 11 Am. Dec. 750.
36 North ▼. Henneberry, 44 Wis.
806; Heard T. HaU, 16 Pick. (Mass.)
4S7.
»«Kern v. Chalfant, 7 Minn. 487;
Smith V. Penny, 44 CaL 161.
•t Whose seal is it.— Where the
body of a deed appeared to be the
grant of a corporation, and the deed
was signed by the trustees, whose
names were followed by scrolls. It
was held that the scrolls or seals so
used should be deemed to be the seal
of the corporation, inasmuch as they
had not been denominated the seals
of the signees, and since this view
was consonant with the general
tenor of the instrument. Reynolds
Heirs T. Trustees of Glasgow Acad-
emy (1837), 6 Dana (Ky.), 37. And
so in Hopkins y. Mehaffy (1824), 11
S. ft R. (Pa.) 126, it was held that
an agent was not bound where he
had signed and sealed the instru-
ment, since, as the court said, the
sealing was as president and in be-
half of the corporation. And In
Montgomery v. Dorion (1S34), 7 N.
H. 475, an instrument was upheld,
against the principals, to which the
agent had put his hand and seal.
The court said: "This seems tanta-
mount to putting his hand and seal
to the deed for them, which is suffi-
cient"
On the contrary, it was held in
Savings Bank ▼. Davis (1830), 8
Conn. 191, that a deed, executed by
an agent, to be valid must be sealed
with the corporate seal, and none
other would suffice; the court regrets
the inconvenience of such a rule but
yields to unbroken precedents, cit-
ing: King y. (North Duffleld, 3 M. ft
79^
CHAP. II ]
EXECUTION OF SEALED INSTRUMENTS
[§ II02
If upon such an analysis the deed does not upon its face purport to
be the deed of the principal, made, signed, sealed and delivered in his
name and as his deed, it cannot take effect as. such*
§ X 102. Not enough to make deed the principars that the agent is
described as such.— It is not enough merely that the agent was in
fact authorized to make the deed, if he has not acted in the name of
the principal. Nor is it ordinarily sufficient that he describes himself
in the deed as acting by virtue of a power of attorney or otherwise, or
for or in behalf, or as attorney, of the principal, or as a committee, or
as trustee of a corporation, etc.; for these expressions are usually but
dcscriptio pcrsonoe, and if, in fact, he has acted in his own name and
set his own hand and seal, the causes of action thereon accrue to and
against him personally and not to or against the principal, despite these
recitals.**
But at the same time, no set form of words is necessary. The deed
must be in the name, and purport to be the act and deed, of the prin-
cipal ; but whether such is the purport of the instrument, must be de-
S. 247: Randall v. Van Vechten, 19
Johns. (N. Y.) 60» 10 Am. Dec. 193;
Bank ot Columbia r. Patterson's
Adm'rs, 7 Cranch (U. S.), 299, 3 L.
Ed. 351; Damon v. Granby, 2 Pick.
(Mass.) S45; Stinchfleld y. Little, 1
Greenl. (Me.) 231, 10 Am. Dec. 65;
Taft V. Brewster, 9 Johns. (N. Y.)
334, 6 Am. Dec. 280.
M Stinchfleld v. Little, 1 Oreenl.
(Me.) 231, 10 Am. Dec 65; Fowler y.
Shearer, 7 Mass. 14; Tippets v.
Walker, 4 Mass. 595; Tucker v. Bass,
6 Mass. 164; Taft y. Brewster, 9
Johns. (N. Y.) 334, 6 Am. Dec 280;
Lutz V. Linthicum, 8 Pet (U. S.)
166, 8 L. Ed. 904; Fullam v. West
Brookfleld, 9 Allen (Mass.), 1; Duval
y. Oraig. 2 Wheat. (U. S.) 46, 4 L.
Ed. 180; Demlng v. Bullitt, 1 Blackf.
(Ind.) 241; White v. Skinner, 13
Johns. (N. Y.) 307, 7 Am. Dec. 381;
Quigley v. DeHaas, 82 Pa. 267; Brlggs
V. Partridge, 64 N. Y. 367, 21 Am.
Rep. 617; Henrlcus v. Englert, 137
N. Y. 488; Kiersted y. Orange, etc.,
R. R. Co., 69 N. Y. 343, 26 Am. Rep.
199; Sargent y. Webster, 13 Mete.
(Mass.) 497, 46 Am. Dec. 743; First
Church y. Harper, 191 Mass. 196;
Bndsley y. Strock, 60 Mo. 508; Jones
y. Morris, 61 Ala. 518; Banks y.
Sharp, 6 J. J. Marsh. (Ky.) 180;
Locke y. Alexander, 2 Hawk. (N. C.)
155, 11 Am. Dec. 750; Scott v. Mo-
Alpln, 4 N. C. 587, N. C. Term Rep.
166, 7 Am. Dec. 703; Bellas y. Hays,
5 Serg. ft R. (Penn.) 427, 9 Am. Dee.
385; Fisher y. Salmon, 1 Cal. 418, 54
Am. Dec. 297; Welsh y. Usher, 2 Hill
Ch. (8. C.) 167, 29 Am. Dec. 63; Buf-
falo Catholic Institute y. Bitter, 87
N. Y. 250; Willis y. Bellamy, 52 N.
Y. Super. Ct. 373; Sheridan y. Pease,
93 111. App. 219; Home Library Ass'n
y. Wltherow, 50 111. App. 117; Jack-
son y. Roberts, 95 Ky. 410; De Bel-
ran y. Gola, 64 Md. 262.
See also CadeU y. Allen, 99 N. Car.
542. Although the signature in this
case sufficiently purported to be that
of the principal the terms of the
d^ed all read, "C, attorney for L."
The court said: "He — not his princi-
pal— purported to conyey the title,
and, as a consequence, no title
passed, for he had none to conyey.
The deed should, by Its effectiye
terms of conveyance, be and purport
to be that of the principal, executed
by his attorney, and to conyey the
estate of the principal."
793
§ 1103]
THE LAW OF AGENCY
[book III
termined from its general tenor, and not from any particular clause.
Such construction must be given, in this as well as in other questions
arising on conveyances, as shall make every part of the instrument
operative as far as possible ; and when the intention f»f the panics can
be discovered, such intention should be carried into effect, if it can be
done consistently with the rules of law.'*
Thus in a leading English case, it is said by Grose, J. : "There is no
particular form of words required to be used, provided the act be in
the name of the principal, for where is the difference between signing
J B by M W, his attorney, which must be admitted to be good, and
M W for J B? In either case, the act of sealing and delivering is
done in the name of the principal and by his authority. Whether the
attorney put his name first or last cannot affect the validity of the act
done." ** The particular illustration used here, however, is not a very
happy one; because, as will be seen,** the form "M W for J B" is not
always free from difficulty.
§ 1103. Not principars deed where agent appears as grantor and
signer. — Neither can the deed ordinarily be deemed to be the deed
of the principal where the agent is the one who is named as the grantor
or maker, and he is also the one who signs and seals it. Thus where
a deed was executed by an agent in the following form, "Know all men,
etc., that I, Josiah Little, of, etc., by virtue of a vote of the Pejebscot
Proprietors, passed, etc., authorizing and appointing me to give and
execute deeds for and in behalf of said proprietors, for and in consid-
eration of the sum of thirty-seven pounds to me in hand paid by Thomas
Stinchfield, of, etc., the receipt whereof I do hereby acknowledge, have
given, granted, released, conveyed and confirmed unto him, the said
Thomas Stinchfield, his heirs and assigns, two hundred acres, etc. To
have and to hold, etc., hereby covenanting in behalf of said proprietors,
their respective heirs, executors and administrators, to and with the
said T. S., his heirs and assigns, to warrant, confirm and defend him
and them in the possession of the said granted premises, against the
lawful claims of all persons whatsoever. In testimony that this in-
«• Hale T. Woods, 10 N. H. 470, 34
Am- Dec. 176; Jackson v. Blodget,
16 Johns. (N. Y.) 172; Bridge ▼.
Wellington, 1 Mass. 219; Davis v.
Hayden, 9 Mass. 614; Hatch v.
Dwlght, 17 Mass. 289, 9 Am. Dec.
147; Magni ▼. Hinsdale, 6 Conn. 464
a, 16 Am. Dec. 70; Hovey ▼. Magill,
2 Conn. 680.
«o Wilks V. Back, 2 Bast, 142.
See the criticism on this language
of Grose J., by David Hoffman, Bsq.
in 3 American Jurist, at p. 82 et seq.
41 See Dolan v. Alley, 163 Mass.
380; King v. Handy, 2 111. App. 212;
OflPutt v. Ayers, 7 T. B. Mon. (Ky.)
366; Dawson v. Cotton, 26 Ala. 691.
794
CHAP. Il] EXECUTION OF SEALED INSTRUMENTS [§ I IO4
strument shall be forever hereafter acknowledged by the said pro-
prietors as their act and deed and be held good and valid by them, I,
the said Josiah Little, by virtue of the aforesaid vote, do hereby set
my hand and seal this day, etc." Signed "Josiah Little, Seal," it was
held to be the deed of Josiah Little and that he, and not the Pejebscot
Proprietors, was liable upon the covenants.^^
So where Jonathan Elwell executed to Joshua Elwell a power of at-
torney to convey the lands in question, and the latter, purporting to act
in pursuance of it, executed a deed of the land, in which, after reciting
the power, he proceeded: "Now know ye that I, the said Joshua, by
virtue of the power aforesaid, in consideration, etc., do hereby bargain,
grant, sell and convey unto the said (grantees) to have and to hold,
etc., and I do covenant with the said (grantees) that I am duly em-
powered to make the grant and conveyance aforesaid; that the said
Jonathan at the time of executing said power was, and now is, lawfully
seized of the premises, and that he will warrant and defend the same,
etc. In testimony whereof, I have hereunto set the name and seal of
the said Jonathan this day, etc.," and signed "]oshnsL Elwell" and seal,
the deed was held not be the deed of Jonathan/'
I 1 104, — «— The same rules were applied in an early case in
Massachusetts, although the facts were different, and the case might
well have been deemed to fall within a different class later to be con-
sidered. Here one of two deeds which purported to be made by "New
England Silk Cx)mpany, a corporation, by Christopher Colt, Jun., their
treasurer," was attested: "In witness whereof, I, the said Christopher
Colt, Jun., in behalf of said company, and as their treasurer, have here-
unto set my hand and seal," was signed and sealed "Christopher Colt,
Jun., treasurer, New England Silk Company," and the acknowledg-
ment was to the effect that "Christopher Colt, Jun., treasurer, etc.,
acknowledged the above instrument to be his free act and deed," and
the other deed was like the fist except that Colt was therein .described
as "treasurer of New England Silk Cx)mpany, and duly authorized for
that purpose," the court held each of them to be inoperative to convey
the title of the Silk Company. In both of these deeds, as will be no-
ticed, the principal was properly named as grantor but they were signed
and sealed by the agent in his own name. "Both of these deeds," said
Judge Metcalf, "were executed by C. Colt, Jun., in his own name, were
sealed with his seal, and were acknowledged by him as his acts and
tfSUnchfleld ▼. Little (1821), 1 48 Elwell v. Shaw (1819 )« 16 Mass.
Greenl. (Me.) 231* 10 Am. Dec. 65. 42, 8 Am. Dec. 126.
795
§§ H05, II06] THIS, LAW OF AGENCY [bOOK III
deeds. In one of them, it is true, he declared fhat he acted in behalf
of the company, and as their treasurer; and in the other he declared
himself to be their treasurer, and to be duly authorized for the pur-
pose of executing it. But this was not enough. He should have ex-
ecuted the deeds in the name of the company. He should also have
affixed to them the seal of the company, and have acknowledged them
to be the deeds of the company." **
§ 1Z05. Agent named as grantor but deed signed in name
of principal. — Where, however, although the agent was named in
the instrument as the party, the deed was properly signed in the name
of the principal, it has been given effect as the deed of the principal,
and not of the agent.** In this case a lease was made commencing as
follows : "This indenture, made this 17th day of April, A. D. 1869, ^'
tween Daniel R. Brant, of the city of Chicago, party of the first part,
and Edward F. Lawrence, president of the Northwestern Distilling
Company, of the same place, party of the second part." Throughout
the lease the parties were spoken of as persons and the covenants were
p)ersonal covenants, and the instrument concluded as follows : "In testi-
mony whereof, the said parties have hereunto set their hands and seals
the day and year first above written. D. R. Brant. [Seal.] North-
western Distilling Co. [Seal.] By Edward Lawrence, President."
§ 1 106. Agent purporting to act "as" agent **for" or "in
behalf oP the principal — ^Where the agent has expressly declared
that he was acting as such and for or in behalf of a described princi-
**Brlnley v. Mann (1848), 2 Cush. But where an agreement for the
(Mass.) 337, 48 Am. Dec. 669. building of large rooms ran between
Compare Haven v. Adams, 4 Allen "G. M. S. on the one part, and 8. IC
(Mass.), 80. M., D. S. H., A. R. D., committee for
Where a deed was in form the Union Chapter No. 18, and W. S. S.,
deed of Stephen Smith [the princi- S. S. G., N. K., committee for Jackson
pal] from the beginning to the end Lodge No. 68;" and "the before
of the testimonium clause, but was named committee on behalf of said
signed "Stephen Henry Smith, attor- Chapter and Lodge oblTgate them-
ney in fact of Stephen Smith," It was selves to pay" and was signed "G. M.
held not to be the deed of Stephen S.» [L. S.]; Union Chapter No. 18,
Smith. Morrison v. Bowman, 29 Cal. [L. S.] by S. M. M., D. S. H., A. R.
337. D., committee; Jackson Lodg^, No.
« Northwestern DistiUIng Co. v. 68, [L. S.] by W. S. S., L. 8. G.. N.
Brant (1873), 69 111. 668, 18 Am. Rep. K., committee," it was held that the
631. See also to the same effect: agreement was between G. M. 8. and
Shanks v. Lancaster (1848), 5 Gratt. the members of the committees per^
(Va.) 110, 60 Am. Dec. 108; Butter- sonally and that the latter might
field v. Beall (1851)» 8 Ind. 203. therefore sue for its breach. Steele
Compare Hancock v. Tounker, 83 T. McBlroy» 1 Sneed (Tenn.)» 84L
111. 208; Cadell r, Allen, 99 N. Car.
S42.
796
CHAP. Il] EXECUTION OF SEALED INSTRUMENTS [§ IIO7
pal, the deed has m many cases been given effect as such^ Thus where
a nianufacturing company by vote had authorized one Arthur W, Ma-
gill to make a deed o£ the real estate of the company, and he, in pur-
suance of the authority, executed a deed, of which the granting part
was as follows : *' Arthur W. Magill, agent for the Middletown Manu-
facturing Company, being empowered by vote," etc., "for and in behalf
of said company/' etc., "do give, grant," etc., the covenant being: "I
do hereby covenant for and in behalf of the said company," etc., "that
said Middletown Manufacturing Company is well seized," etc., "and I
do also bind the said Middletown Manufacturing Company to warrant
and defend," etc., and the conclusion being as follows: "In witness
whereof, I have hereto, for and in behalf of said Middletown Manu-
facturing Company, set my hand and seal at Middletown, this agth day
of March, A. D. 1817. Arthur W. Magill [l. s.], agent for the Mid-
dletown Manufacturing Company ,'' it was hdd that this was the deed
of the company and not of the agent.**
And again, where the terms of the conveyance were : "I, Daniel King,
as well for myself as attorney for Zachariah King, do for myself and
the said Zachariah, remise, release and forever quit-claim" the premises^
"together with all the estate, right, title, interest, use^ property, claim
and demand whatsoever, of me, the said Daniel, and said Zachariah,
which we now have, or heretofore had at any time, in said premises.
And we, the said Daniel and Zachariah, do hereby, for ourselves, our
heirs and executors, covenant that the premises are free of all in-
cumbrance and that the gjantee may quietly enjoy the same without
any daitn or hindrance from us or any one claiming under us, or either
of us. In witness whereof, we the said Daniel for himself and as at-
torney aforesaid, have hereunto set our hands and seals," etc., and
signed "Daniel King" and "Daniel King, attorney for Zachariah King,
being duly authorized as appears of record," with seals affixed to each
signature, it was held that the grant conveyed the title of both.*^
§ 1107. *■■'*■ So where the deed of the land of T and S, his
wife, was drawn as follows: "I, H, for myself, and as attorney for T
and S, by their letters of attorney under their hands and seals, in con-
sideration, etc., to us paid by L, do sell and convey to L, etc. And we
the said T and S do covenant, etc. In witness whereof, I, H, in my
own right have hereunto set my hand and seal, and as attorney for said
*• Magill v. Hinsdale (1827), 6 v. Back (1802), 2 Bast, 142, and
Conn. 464 a, 16 Am. Dec. 70. Montgomery v. Dorion (1836), 7 N.
4THale V. Woods (1839), 10 N. H. H. 476.
470, 34 Am. Dec. 176; citing Wilks
797
§ II08] THE LAW OF AGENCY [bOOK III
T and S have hereunto set their hands and seals/' and was signed
"H. [l. s.] T. [l. s.] S. [u s.] By H, their attorney in fact," it was
held that the deed was that of T and his wife S, and not of the agent H.**
But where A gave to his wife B a power of attorney to execute a
deed of land and she made the deed in the following form : "Know ye
that I, B, of, etc., as attorney to A, of, etc., in consideration, etc., have
granted, etc. In witness whereof I have hereunto set my hand and
seal. B. [Seal]," the court held that it was not the deed of A.**
§ iio8. — — — Deed naming principal as grantor but signed by
agent personally. — Much clearer than any of the preceding cases
are those in which the principal is named as the grantor or maker,
though the agent then signs as agent. Thus where a lease purporting
to be made by Mussey, was signed "John Hammond for B. B. Mussey,
[Seal]" it was held that it was well executed as the lease of Mussey.
Said the court: "The defendant does not deny Hammond's authority,
but takes the ground that the lease is not the deed of Mussey but of
Hammond. And the common learning is relied on, to wit, that when
a deed is executed by attorney, it must be the act of the principal, done
and executed in the principal's name. The only question is. What is
an execution of a deed, by an attorney, in the name of the principal ?
We understand the execution of a deed to be the signing, sealing and
delivering of it. These must be done in the name of the principal by
die hand of the attorney. When the signing and sealing are in the
name of the principal, the delivery will be presumed to have been so,
"McClure v. Herring (1879), 70 In Hubbard v. Swofford Bros. Dry
Mo. IS, 35 Am. Rep. 404; Hubbard v. Goods Co., supra, tbe deed was made
Swafford Bros. Dry Goods Co.. 209 "between J. W. S. as agent for C, H.,
Mo. 495, 123 Am. 8t R. 488. To like and M. H.," of the first part and the
effect see Donovan y. Welch, 11 Nt grantee. It closed: "In testimony
D. 113 (a fully considered case whereof the said J. W. S. as agent
though seals are abolished In that for C. H. and M. H. ♦ • • has here-
state) ; Mulford v. Rowland, 45 Colo, unto set his hand and seal," and was
172; Shanks v. Lancaster (1848), 6 signed "J. W. 8. AUy. for a H."
Gratt (Va.) 110, 50 Am. Dec. 108. The court said that "one would have
In the last case, the court said: to yield his common sense interpre-
"It is a sufficient execution of a deed tation of this deed to a very narrow
by an attorney in fact for his prln- technical interpretation of it in or-
cipal, if be signs the name of the der to reach the conclusfon that it
principal with a seal annexed, stat- was intended otherwise than as the
ing it to be done by him as attorney deed of H."
for the principal; as if he signs his See also, Collins v. Hammock, 59
own name with a seal annexed, stat- Ala. 448 (a bond),
ing it to be for the principaL" See «» Fowler ▼. Shearer (1810), 7
also, Bryan v. Stump, 8 Gratt 241, 56 Mass. 14.
Am. Dec. 139.
798
CHAP. U]
EXECUTION OF SEALED INSTRUMENTS
l§ IIO9
unless the contrary is proved. But however clearly the body of the
deed may show an intent that it shall be the act of the principal, yet
unless it is executed by his attorney for him, it is not his deed, but the
deed of the attorney or of no one.'* The most usual and approved
form of executing a deed by attorney is by his writing the name of the
principal and adding *by A B his attorney' or 'by his attorney A B.'
But this is not the only form of execution which will make the deed
the act of the principal. In Wilks v. Back,'^ M. Wilks, attorney for
J. Browne, executed a deed for himself and Browne in this form:
'Mathias Wilks' [Seal] ; Tor James Browne, Mathias Wilks* [Seal].
The court of King's bench decided that the deed was well executed in
the name of Browne. This decision has never been overruled, but has
always been regarded as rightly made." "
§ 1109. — — So where the operative clauses of a deed were in
the name of the corporation "by William Wallace, their agent," and
the covenants were in the name of the corporation, but the signature
was "William Wallace, Agent for the Flower Brook Manufacturing
Company," the court held that the deed must be considered the deed of
the corporation.**
And where a contract under seal was made "between the C. I. Co.
party of the first part by J. S. B. agent, and J. K. B. and E. C. B. par-
ties of the second part ; " the stipulations in the contract purporting to
be between "the said party of the first part" and "the said parties of
the second part/' no names being given, and concluded, "In witness
M Lessee of Clarke v. Courtney
(1831). 5 Pet (U. S.) 319, 350, 8 L.
Bd. 140.
(^1 2 East, 142.
62Mussey v. Scott (1851), 7 Cush.
(Mass.) 215, 54 Am. Dec. 719, citing
WUburn v. Larkln (1832), 3 Blackf.
(Ind.) 55; Hunter v. Miller (1846),
6 B. Mon. (Ky.) 612. And to the
same effect are, Shanks v. Lancester
(1848), 5 Gratt (Va.) 110. 50 Am.
Dec. 108; Abbey v. Chase (1850), 6
Cush. (Mass.) 54; Tucker Mfg. Co. v.
Fairbanks (1867), 98 Mass. 101.
Brinley v. Mann (i848), 2 Cush.
(Mass.) 337, 48 Am. Dec. 669 cited
In an earlier section seems opposed,
and Is undoubtedly too extreme.
Compare Haven v. Adams (1862), 4
Allen (Mass.), 80.
M McDanlelB v. Flower Brook Mfg.
Co. (1850), 22 Vt. 274; see also Mar-
tin V. AUnond (1857), 25 Mo. 313,
and Carter v. Chaudron, 21 Ala. 72,
where throughout the body of the
deed It purported to be between the
principal and the third party, but
was signed, "S. H. G. [Seal] Attor-
ney in fact for J. K.," it was held,
that the deed was well executed as
the deed of J. K., the principal.
So In Sapp y. Cllne, 131 Ga. 433, a
deed given by an admlnistratoi
which purported to be made by S.
"administrator," etc., and in the tes-
iimonium clause recited that it was
signed by S. "administrator;" but
was signed by S. merely, was held to
pass the property of the estate there-
in described of which 9. was admin-
istrator. To same effect il Hart v.
Lewis, 130 Ga. 504.
799
§§ mo, II II] THE LAW OF AGENCY [BOOK HI
whereof the parties have hereunto affixed their hands and seals," and
was signed "J. S. B. Agent [l. s.], J. K. B. [l. s.], E. C B. [l. s.]/* it
was held to be the deed of the company.'*
So where a deed reading, "Know all men by these presents that the
West Kansas Land Company, by Solomon Houck, President, and Theo-
dore S. Case, Secretary, * * * has granted," etc., was signed
"Solomon Houck, President [Seal], Theodore S. Case, Sect'y [Seal],
W. K. Land Co. [Seal]," it was held to be the deed of the company,"
§ mo. In the cases cited in the two preceding sections it
will be noticed that the respective instruments purported to be made by
and in the name of the principal. But where a bond beginning ''I
promise to pay," etc., and not mentioning any obligor's name, was
signed, "Witness my hand and seal, H. S. Lucas, [Seal] for Charles
Callender," the supreme court of North Carolina held Lucas personally
responsible.** And so where a bond was signed "Thomas Dix, acting
for James Dix," Chief Justice Ruffin said it was "unquestionably the
bond of Thomas and not of James. The former seals it and he speaks
in it throughout, and the latter not at all." '^ But the same judge in
passing upon the liability of a party to a deed says : "It is not material
in what form the deed be signed, whether A B by C D or C D for A B
provided it appears in the deed, and by the execution that it is the deed
of the principal." **
§ I III. — Mere descriptive words will not change personal
grants or covenants. — ^Where however the grants or covenants are
clearly personal, the mere addition of the word "agent," "trustee," etc.,
will not, as has been stated, change their character.
Thus where a bond was executed by certain persons, who signed and
sealed the same as individuals, but added "Trustees of the Baptist So-
ciety of the Town of Richfield," the court said: "The bond must be
considered as given by the defendants in their individual capacities.
It is not the bond of the Baptist church ; and if the defendants are not
bound the church certainly is not, for the church has not contracted
either in its corporate name or by its seal. The addition of 'Trustees'
»4Bradstreet v. Baker, 14 R. I. 546. soBryson v. Lucas (1881), 84 N. C
To same effect: Hancdck v. Younker, 680, 37 Am. Rep. 634.
83 111. 208; Haven v. Adams, 4 Allen »7 Oliver v. Dix, 1 D. ft B. Eq, (N.
(Mass.), 80. Car.) 158.
BB City of Kansas v. Hannibal, etc., fis Redmond v. Coffin, 2 Dev. Eq.
R. Co. (1882), 77 Mo. 180. (N. Car.) 437. See also, Cadell ▼•
Allen, 99 N. Car. 642.
8oo
CHAP, n]
EXECUTION OP SEALED INSTtUMENTS
[§ IZId
to the names of the defendants is, in tiais case;, a mere descfipHo perso-
And for the same reason, where A, B, C and others, "trustees of the
Methodist Episcopal Church of Jacksonville, their successors and as*
signs," executed a bond, binding themselves, their heirs, executors and
administrators, and signed it in tiieir individual names, they were held
personally liable.**
So where a lease under seal describes the lessor as ''H. B., agent of
M. U" and it is signed "H. B. agent,** with his seal, the words "he"
and "his" being used in all the terms and covenants which name the
party of the first part, a declaration in the name of M. L. in an action
Upon the covenants is bad, on demurrer.*^
§ ZII2. The same rules apply where the promise or con-
veyance is made to the agent as when made by bun. Thus where a
contract to convey recited that it was made between W. of the first part
(who was to convey) and F., president, of the second part, and was
signed and sealed "F.,"Pres. of Buffalo Catholic Inst," it was held,
that the contract was that of F. and not of the corporation and that
the corporation could not enforce specific performance of the agree-
ment to convey.**
So where a conveyance was made to '*E. H. P. vice-president of the
National Bank of the Republic," it was held that, while a note running
to *A. B. cashier*' may be sued upon the bank, in accordance with a
rule slated in the following chapter, the conveyance vested the title in
K* H. P «
wTaft V. Brewster (1812), 9
Johns. (N. 7.) S34, 6 Am. Dec. 280.
See Fullam T. West BrooUeld
(1864), 9 AUen (Mass.),!.
•0 Dayton v. Wame (1881), 43 N.
J. L. 659.
91 Loeb V. Harris, 60 N. J. L. S82.
M Buffalo Catholic Inst v. Bitter.
87 N. Y. 250. This case, however,
was decided upon demurrer to the
complaint, which relied upon the
contract as one which on its face
was a contract with the complain-
ant There was no averment in the
complaint that F. was president of
the complainant, or its agent, or
mad« the contract as such, or that
it was intended as a contract be-
tween W. and the complainant ''It
is unnecessary to decide*' said the
court 'Whether the wrttten instru-
ment might not be hMped out by
averment so aS to entitle the plain*
tiff to relief by way of specific per-
formance."
M Greenfield Y. Stotit, 122 (kt 303.
In a conveyance to ^A. L., adminis^
trator" the last word is merely de*
scriptive. Love v. Love, T2 Itan. 658.
Where a corporation was properly
named as the grantee in a deed, the
fact that the Ttahendutm clause and
warranties ran to "the president of
the corporation, naming it, does not
defeat the deed. dt Stephen's
Church V. Pierce, 8 Del. Ch. 17^.
See also, Hamlin v. Meeting House,
103 M^ 343.
51
8oi
§ III3]
THE LAW OF AGENCY
[book UI
§ 1x13. Distinction in case of public agents.-^A distinction has
been made in the case of public agents, who have entered into agree-
ments, not negotiable, for the performance of public duties. In such a
case it is to be presumed that they did not undertake personally to as-
sume the public burdens, and although they may have entered into
covenants under seal, partaking of a personal nature, yet where the
obligation is known to be a public one, they can only be held personally
bound, if at all, where the intent is clearly apparent so to bind them.**
Said Chief Justice Marshall : 'The intent of the officer to bind himself
personally, must be very apparent indeed to induce such a construction
of the contract ; " •* and it is said by another learned judge that : "It is
much against public policy to cast tfie obligations that justly belong to
the body politic upon this class of officials." ••
These cases, however, are not to. be confounded with the cases where
the agents, like the trustees and officers of private corporations and
William P. O'Connor, attorney for
Klizabeth McColgan, to lease any
property which she owned Individ-
ually, or as executrix of her husband
John McColgan, made a lease, in her
behalf, as "William P. O'Connor, as
agent for Est. of John McColgan, as
Landlord" and signed and sealed it
''WiUiam P. O'Connor, agent" Held,
that Elizabeth McColgan could not
bring an action on the lease. McCol-
gan v. Katz, 29 N. Y. Misc. 136.
Where a lease was made between
W. O. M., for himself and as agent
of EX L. S., A. R. B. and L. V. M.,
party of the first part," the cove*
nants being made to and by "said
party of the first part," and the lease
was signed "W. G. M.» seal/' it was
held to be the lease of W. G. M. per-
sonaUy, and that E. L. S., A. R. B.
and L. V. M. could not sue upon It
Harms v. McCormlck, 132 111. 104.
04 Hodgson T. Dexter, 1 Cranch (U.
S.), 345, 2 L. Ed. 130 (Secretary of
War); Knight v. Clark. 48 N. J. L.
22, 57 Am. Rep. 534 (Township
Trustees); Jones v. LeTombe, 3 Dal-
las (U. S.), 384, 1 L. Ed. 647 (Consul
General of France) ; Fox v. Drake, 8
Cow. (N. Y.) 191 (Court House Com-
inlssloners); Tutt ▼. Hobbs, 17 Mo.
486 (School Trustees); Miller v.
Ford, 4 Rich. (S. C.) L. 376, 55 Am.
Dec. 687 (Commissioners of Roads);
Blmonds y. Heard, 23 Pick. (Mass.)
120, 34 Am. Dec. 41 (Ck>mmlttee of
town held to be personally liable on
the ground that the Intent was dear
to make them so). Brown ▼. Austin*
1 Mass. 208, 2 Am. Dec. 11 (Agent ap-
I>ointed to take depositions by com-
mittee of Congress). McClenttcks ▼.
Bryant, 1 Mo. 598, 14 Am. Dec. 310
(Town Commissioners held person-
ally liable because they exceeded
tlieir authority) ; Belknap v. Rein-
hart, 2 Wend. (N. Y.) 375, 20 Am.
Dec. 621 (Captain U. S. Army);
Stinchfield T. Little, 1 Greenl. (Me.)
231, 10 Am. Dec. 65; Dawes y. Jack-
son, 9 Mass. 490 (Superintendent of
States Prison) ; Freeman y. Otis, 9
Mass. 272, 6 Am. Dec. 66 (IT. S. Col-
lector of Customs); Walker y.
Swartwout, 12 Johns. (N. Y.) 444, 7
Am. Dec. 334 (Quartermaster gen-
eral U. S. Army) ; Wallis y. Johnson
School Township, 76 Ind. 868 (Tms-
tco of schools).
«Bln Hodgson y. Dexter, 1 Cranch
(U. S.), 345, 2 U Ed. 130.
«« Beasley, C. J. in Knight y. (Tlark,
48 N. J. L. 22, 57 Am. Rep. 634.
802
CHAP. Il] EXECUTION OF SEALED INSTRUMENTS [§ III4
religious bodies, are not public in their nature, nor with cases of nego-
tiable instruments, which stand upon different ground.
§ II 14. Whether necessary that deed should purport to be ex-
ecuted by an agent—^Whether it is necessary to the validity of the
deed that it should on its face purport to be executed by an agent, or
whether the agent may act in the principal's name throughout with
nothing to disclose the fact of the agency, are questions which have
been much discussed.
Thus in Wood v. Goodridge the agent had executed a mortgage by
simply signing the name of his principal with nothing to show that it
was signed by an agent and not by the principal in person. Fletcher, J.,
was of the opinion that such a form of execution was not authorized,
and said: —
Rule of Wood v. Goodridge. — "It should appear upon the face of the
instruments that they were executed by the attorney, and in virtue of
the authority delegated to him for this purpose. It is not enough that
an attorney in fact has authority, but it must appear by the instruments
themselves which he executes, that he intends to execute this authority.
The instruments should be made by the attorney expressly as such at-
torney; and the exercise of his delegated authority should be distinctly
avowed upon the instruments themselves. Whatever may be the secret
intent and purpose of the attorney, or whatever may be his oral dec-
laration or profession at the time, he does not in fact execute the itt-
struments ati attorney, and in the exercise of his power as attorney^
unless it is so expressed in the instruments. The instruments must
speak for themselves. Though the attorney should intend a deed to
be the deed of his principal, yet it will not be the deed of the principal,
unless the instrument purports on its face to be his deed. The author*
ity given clearly is, that the attorney shall execute the deed as attorney
but in the name of the principal." *^ The decision in the case, how-
ever, was placed upon other grounds.
How of this rule. — ^This rule, certainly, has much to commend it, as
tending to the due and orderly execution of important instruments,
and as facilitating greatly the proper preservation in the public re^*
ords of the evidence of the authority and of its exercise. But at most,
it was a mere dictum in the case, and its authority has not generally
been conceded, even in its own state **
n (1S50) 6 Cush. (Mass.) 117, 52 m Hunter y. GlddingB, 96 Mass. U,
Am. Dee. 771. 93 Am. Dec. 64.
803
§§ III5, iii6]
TUE LAW OF AG9NCY
[book III
i itis-
Further of Hm nile.--In Forsyth v. Day,** speak-
ing of this case, Rice/ J., said; "No case, I apprehend, can be found' in
the books which will sustain the rule so broadly laid down by the
learned judge in tiie case of Wood v. Goodridgce. Nor can the doc-
trine be sit^tained on principle. It is difficult lo perceive any sound
reason why, i{ one m»n may authorise another to act for him and bind
him, he may not authorise him thus to aet for and bind him in one
name as well as in another. As matter of convenience In preserving
testimony, H m^y be well that the nannes of all the parties vfho are in
any way connected with a written Instrument should appear upon the
instruments themselve$L But the fact that the name of the agent, by
whom the signature of the principal is affixed to an instrument, ^>-
pears upon the instrument itself, neither proves nor has any tendency
to prove, the authority of such agent That must be est^Uished
Qliunde, whether his name appears as agwt, or whether he simply
places the name of his principal to the Instrument to be executed.''
This, however, was the case of a promissory note and not of a deed.
Again in Devinney v, Peynolds,*^ a deed oommencing ; "To all to
vrbom these presents shall come, Know ye that Miehael Hollnaan by
William McAllister, his lawful and regularly deputed attorney in fact,
etc., grants," etc., concluded, "In witness whereof, the said Michael
Hollma3» by his attorney aforesaid, hath hereunto set his hand and
seal/' et<^ To this were appended the name and seal of Midiael HoU*
man, S^id Uie court : "The escecutiM of tfaf^ deed is in pcoper form,
and, indeeid, we seldom see such instruments executed so mtioh in ac*
cardance wil^ approved precedents. It would be useless to add the
name and seal of the attorney, for it is what it purports to be, the
deed of the principal and not the attorney, and therefore does not re-
quite his name and seal, but the name and seal of the principal only."
% Ui^ So in Berkey v. Judd,^* a deed nscittng that it was
made by the principals by their attorney in fact, was signed and sealed
•• (ia5^) 41 Me. 382.
TO (1841) 1 Watts and Serg.
(F^nn.) 828.
la Tiger v. 9«ttM Laatf Co., 91
Neb. 4%$^ tUe court, wtiUe approving
the rule of this case, points out that
where acknowledgment is a neces-
sary part of execution, the acknowl-
edgment must piu'pprt to be by
agent, and the deed ts not good if
the agent has represented to the
notary that he is acknowledging his
own deed, though he does so under
the name of the principal
7^ (1875) 2S Mian. 287. 8e In TIdd
▼. Xlas% as Mim. SOl, it was held»
that a deed signed "A. B., (the name
of the grantor) by C. D., his attor-
ney in fact," sufficiently indicates
tiiat it was executed by an attorney
in fact for and in the nan^Q of his
principal, without reciting that fact
in the body of the deed.
804
CHAP. Il] EXECUTIQ^ QF SE^^LEP I]N§THUMENTS [§§ IH7, III8
in a^e mfnf9 of th^ F^jnjfipsil^^ fplloyc^ by thi^ words, "By thqir at-
lonwy itt feci," THe toiirt 5|ii4: "As respects tiie execution o| a deed
by an attorney i^. fact, although it is v^vial ^?4 better for him to sign
the naoie ol hi3 Pffinqipal 2^n4 tq J^ th^retQ his own signature, with
proper words i«4ica|i||g that- the a^t i^^ ^o^je hjy Ijim as snch attorney,
yet it is. wy% ini all <»sf$ nfc^?s^ry th^t he^ sbpij^d ^o append Iv^ own
namo. WheA the deed pn its faci^ pi^ifp9ft€» to be the indenture of the
principal^ made by his attorney in fact, therein designating by name, it
fnay be. pfff>pecl3r ej^eout^d by such attorney by tvs subscribing and
affixing thereto the nanm a^^ si^l p| h^^ p^npipal alo^e.^^ In this
case the deed purports! on its faee to be the indenture of the principals^
and w>t that of the agent. It fully dj^lo^es that itf was made for
them and in their name by their attproey in fact whQ had full author-
ity so to do. Its execution was properly ^^H^i^wledged; by him as such
attorney in fact, and for and on behalf of his said principals. The
neglect to sign his o^n name to the wovds 'bjr their attorney in iact'
was a pijrely technical omission devoid of any legal effect whatever.*'
§ m7f >' ' -I n^ In ^tb of the ca^es las^t cited, liQwever, it will be
noticed that the fact that the deed was executed by an agepi appeared
from the face of the instruments.
In Wilks V. Back/* heretofore referred to, where the signature to
the instrument, which was an arbitration bond, was: "For James
Browne, Mathias Wilks," [Seal]. Lawrence, J., said: "Here the
bond was executed by Wilks for and in the name of his principal ; and
this is distinctly shown by the manner of making the signature. Not
even this was necessary to be shown ; for if Wilks had sealed and de-
livered it in the name of Browne, that would have been enough with-
out stating that he had so done."
Where the deed is to be signed in the presence and by the direction
of the principal, mere parol authority is, as has been seen,^* sufficient;
and in such case thei-e need be nothing in the deed to indicate that the
signature was set by an agent and not by the principal.
§ 1 1 18. — ^— - How in reason. — ^While the rule of Wood v. Good-
ridge is undoubtedly well founded in convenience and propriety, yet
it is difficult in reason to perceive why even in those cases where noth-
ing whatever appears upon the face of the instrument to indicate it,
it may not be shown by evidence aliunde that it was in fsict executed
T« Citing DeTinney ▼. Reynolds, 1 t* 2 Bast, 142.
Watts ft Serg. (Penn.) 828; and £*br- T«See ante, i 216.
sytli V. Day, 41 Me. 382.
80s
§ I up] THE LAW OF AGENCY [bOOK III
by an agent It cannot be said that tiiis is to contradict, add to or
vary the deed by parol evidence, for its legal effect remains the same,
and it is none the less afterward what it purported to be before, — ^the
deed of the principal. Neither can it be said that in one case there is,
while in the other there is not, evidence of the agency. In either
event the agency must be proved as a fact. It cannot be established
by mere recitals of authoftty or by any pretence of acting in that
capacity.
§ ZI19. Parol evidence not admissible to discharge agentj-^Where
the deed upon its face is the deed of the agent, parol evidence is not
admissible to discharge the agent by showing that it was intended or
understood to be the deed of the principal,^* but where the deed is
ambiguous, parol evidence may be resorted to, to show who was in
fact the party intended to be charged.''*
t& Willis T. Bellamy, 52 N. Y. Su- ridge, 64 N. Y. 367, 21 Am. Rep. 617;
per. Ct 373; Hlgglns v. Senior, 8 M. Schriner v. Dickiiison, 20 S. D. 433;
A W. 834; Beckam v. Drake, 9 M. A WilHama v. Empire Ins. Co., 8 Ga.
W. 79; Leadbltter v. Farrow, 5 VL App. 303. See this inbject fully dlt-
ft 8. 846; Spencer ▼. Field, 10 Wend, euned in following chapter.
(N. T.) 87; Townsend v. Hubbard, 4 Ttghuetse ▼• Bailey, 40 Mo. 69.
Hill (N. Y.), 351; Briggs t. Part-
806
CHAPTER m
OP THE EXECUTION OF SIMPLE CONTRACTS
§ 1120. Purpose of this chapter.
I. OF THS BXECUTION OF NEOOTIABLB
PAFEB.
1121. In general.
1. Form and Interpretation.
1122. In general.
1128. General mle as to form.
1124-1126. Method of signing.
1127. The Negotiable Instru-
ments Act
1128. Not necessary that
agent's name appear.
1129-1132. Not enough that princi-
pal be named only in body
of instrument.
1133, 1134. Where intent to
charge principal is mani-
fest.
1135. Effect of printed head-
ings or titles on paper.
1136. Effect of corporate seaL
1137, 1138. Other evidences of
intent — Direction to
charge to principal.
1139-1142. When no principal Is
disclosed, agent is bound
notwithstanding he signs
as "Agent."
1143,1144. Negotiable paper drawn
upon an agent and accept-
ed by him.
1145. Negotiable paper drawn pay-
able to an agent and in-
dorsed by him.
1146. Paper payable to cash-
ier of bank.
1147. Other similar cases.
1148, 1149. How when made tiy
Public AgenU.
t. The AdmisBihilitj/ of Parot Evi'
dence to show Intent.
1150, 1151. In general.
1152-1156. Cases holding such OTl-
dence admissible.
1157, 1158. Cases holding such otI-
dence not admissible.
1159-1161. What rules applied.
1162. The true rules.
1163. Further of these rules.
n. or THX BxscunoN of other sihplb
CONTBAOTS.
1164. In general
i. Written Contracts.
1165. I. The proper manner.
1166. Intention of the parties as
expressed in the instru-
ment the true test.
1167. Principal alone bound by
contract made in his name
by an authorized agent
1168. Presumption that known
agent does not intend to
bind himsell
1169. Agent bound who conceals
fact of agency or name of
principal.
1170. 1171. Known agent may bind
himself by express words.
1172-1174. Contrary intention
manifest
1175. Personal liability excluded
by terms of contract
1176. 11. The admiasibiUty of pa-
rol eyidence to show intent
1177. Right acquired under agent's
contract
1178. Contracts inyolying the Stat-
ute of Frauds.
807
§§ 1120-1122] THE LAW OF AGENCY [bOOK III
2. Oral Contracts, 1181. Agent may bind himself by
special agreement
1179. How to be executed. 1182. How qneition deter-
1180. Principal presumptlyely mined.
bound where agency di»> 1188. Or by failing to discloee hii
closed. principaL
§ XZ20. Purpose of this chapter.— It is intended in this chapter to
discuss the manner of executing contracts not under seal, including
therein such contracts whether written or unwritten. And as there
are some special rules applicable to the execution of negotiable instru-
ments^ th^t subject will first be separately considered*
I.
OF THE EXECUTION OF NEGOTIABLE PAPER.
I iiai. In general.— What was found to be true in the case of
the instrument under seal with reference to the rule* of interpreta-
tion, is also strikingly true here. It must be known what are the rules
of intetpretation which are ^ppKed to instruments of this sort^ and
what are the origins or reasons of those rules in order that safe direc-
tions for the execution of theise instruments may be laid down.
It must also be known how far thtt results reached by tiic ordinary
rules of interpretation may be affected by extrinsic evidence. In both
of these respectei, the negotiable instrument presents interesting and
difficult problettis.
In Form and InterpfefaiioH.
8 tUft^. In general.— Negotiable p^per being Intend^ to circulate
in the commercial world as the representative of ttiOnty, tt is highly
important that the character and liability of Uie parties to it, shall be
disclosed with reasonable certainty Upon tht &te of the )is|>er itself.
In no class of instruments is uncertainty, or ambiguity, or the necessity
of making outside inquiry^ so destructive to its mission^ as in this.
Granting that the agent is authorized to execute ttegotfetble paper —
and that is what the present discussion assumes, — it will ordinarily be
the purpOte of the agent to so execute the paper that it shidl bind his
principal and not hirtiself. In order to do this, ft is obvious that the
paper should be made in the name of the principal ; that the promise
should be his, and the signature his, though affixed by the hand of the
8o8
CHAP. I^l]
EXECGTION OF SIMPLE CONTRACTS [§§ II23, 1134
agent Unless it be so executed, it will not bind the principal, but
will usually bind the agent personally.
It may, of course, ordinarily be assumed that when parties have
taken the trouble to execute what purports to be a negotiable instru^
ment, it was the intention that some one should be bpund thereby.
Stich a result, however, is not indispensable, and it may be found that
the instrument binds no one: not the principal, because the promise
or the signature is not his ; and not the agent for the same reascxi or
because he has expressly excluded personal responsibility.
I 1123. General rule as to foroLt^In dealing with this general
question of how the paper may be so executed as to bind the principal
but not to charge the agent it has been said by a learned judge, that
**In order to exempt an agent from liability upon an instrument ex-
ecuted by him within the scope of his agency, he must not only name
bis principal, but he must express by some form of words that the
writing is the act of the principal though done by the hand of tfie
agent. If he expresses this, the principal is bound, and the agent is
not. But a mere description of the general relation or office which
the person signing the paper holds to another person or corporation,
without indicating that the particular signature is made in the execu-
tion of the office and agency, is not sufficient to charge the principal,
or to exempt the agent from personal liabiHty." *
§ 1124. Method of signing. — ^The method approved in the execu-
tion of instruments under seal can with great propriety be adopted
here. Thus if the bill or note be drawn, accepted or indorsed, "A B,
by C D, his attorney or agent," or "A B, by his attorney or agent
C D," there can be no question as to who is the party to be charged.
**A B by C D" is also unequivocal, though not so full.*
A form more rare, but equally unequivocal is "A (agent), per pro-
curation, P (principal)," or "Per procuration, P, A." The words
"per procuration'' are frequently abbreviated to "per proc.,** "per
pro/' or "p. p." •
iGray, J., In Tucker Mfg. Ck). v.
Falrbankfl, 98 Mass. 101.
« Tucker Mfg. Co. v. Fairbanks, 98
Mass. 101; Bradlee ▼. Boston Glass
Co., 16 Pick. (Mass.) 347; Weayer r.
Carnall, 36 Ark. 198, 37 Am. Rep. 22;
Ballon T. Talbot, 16 Mass. 461, 8 Am.
Dec. 146; Jefts t. York; 4 Cueb.
(Mass.) 871, 50 Am. Dec. 791; Page
T. wight, 14 AUen (Mass.), 182; Bar-
low V. Congregational Soefety, 8 Al-
len (Mass.), 460; Bknenon v. Provl-
ilence Mfg. Co., 12 Mass. 287, 7 Am.
Dec. 66.
« See Attwood v. MunningB» 7 B. 4k
a 278, 1 M. ft R. 66; Stagg T. BUiott,
12 C. a (N. S.) 878. With reference
to such a signature the negotiable
Instruments Act (N. Y. I 40) pro*
vld«8, ''A slgaatur* hgr 'procuration'
809
§ "24]
THE LAW OF AGENCY
[book III
These forms, however, are not imperative. Thus, *'C D agent for
A B," "C D for A B," and "For A B, C D" are now quite generally
regarded as sufficiently indicative of the intent, for although "agent
for" a particular person or corporation may either designate the gen-
eral relation ^hich the person signing holds to another party, or show
that the particular act in question is done in behalf of and as the very
contract of that other, yet the court, if such is manifestly the intention
of the parties will construe the words in the latter sense.*
"Pro A B, C D" is to the same effect and is also sufficient* "Agent
of" however is not the equivalent of "agent for," but is mere descriptio
personce; • and even the words "agent for" may under some circum-
operatea as notice that the agent has J". Marshall (Ky.), 31, where the
hut a limited authority to sign, and
the principal is hound only in case
the agent in so signing acted within
the actual limits of his authority."
«BaIlou y. Talbot, 16 Mass. 461, 8
Am. Dec. 146; Tucker v. Fairbanks,
98 Mass. 101; Rice v. Gove, 22 Pick.
(Mass.) 158, 33 Am. Dec. 724; Dolan
v. Alley, 153 Mass. 380; Jefts v. York,
4 Gush. (Mass.) 371, 50 Am. Dec.
791; Bartlett v. Tucker, 104 Mass.
336, 6 Am. Rep. 240; Tiller v. Sprad-
ley, 39 Ga. 35; Rawlings v. Rbbson,
70 Ga. 595; Hovey v. Magill, 2 Conn.
680; King T. Handy, 2 111 App. 212;
Shuetze v. Bailey, 40 Mo. 69; Roney
v. Winter, 37 Ala. 277; Wheelock ▼.
Wfnslow, 15 Iowa, 464; Bank of Com-
merce V. Cohen, 4 Sll. (N. Y.)
283, 54 Hun, 635; Alexander T. Sizer,
L R. 4 Exch. 102.
Contra: Offutt v, Ayers, 7 T. B.
Monr. (Ky.) 356, where the note
read, "I promise" and was signed,
"For B. Ayres, W. B. Ayres;" Daw-
son V. Ck)tton, 26 Ala. 591, where the
note read, "I promise to pay," and
was signed, ''B. Watson, Agent for
Cyrus Cotton."
In Cook y. Sanford, 8 Dana (Ky.),
238, where the note read, "we prom-
ise to pay * • * Witness our hands
and seals. V. M. Knight, for N. B.
Cook ft Co.," it was held that the
note was clearly that of the prlnci*
pal, because of the plural forma.
In OwlngB V. Gruhb'8 Admin., 6 J.
note was signed "For Thomas Ow-
ings, James Grubb," it wsui held that
although upon the face of the instm-
ment it wae the agent's note, parol
evidence is admissible to show that
the Instrument sued on was not the
contract of the party sued. Same ef-
fect: Early v. Wilkinson, 9 Gratt
(Va.) 68.
So in Webb v. Burke, 5 B. Monroe
(Ky.), 51, where the note read **!
promise" and was signed, "John B.
Burke, for Samuel Burke" it was held
that while prima fade it was the
note of the agent, parol evidence was
admissible to show whose the con-
tract was intended to be.
In Garrison v. Combs, 7 J. J.
Marshall (Ky.), 84, 22 Am. Dec. 120,
it was said, "An agreement, to the
validity of which a seal is not essen-
tial, signed by 'A B, agent for G D,'
is in effect and by cdnstrucfloii of
law the agreement not of A B but of
C D. Such an agreement differs ma-
terially from one signed by 'A B for
C D,' the latter being considered the
agreement of A B to do something
for C D, and the former an agree-
ment by 0 D himself."
«I/ong V. Colburn, 11 Mass. 97, 6
Am. Dec 160.
• See Tucker Mfg. Co. v. Fair-
banks, aupra; Haverhill Ins. Co. v.
Newhall, 1 Allen (Mass.), 130, and
the many other cases cited in § 1139
poat
8iO
CHAP. Ill]
EXECUTION OF SIHPLE CONTRACTS
[§ II25
Stances also be held to be merely a description of the person, as where
they are not followed by the proper name of the principal. Thus a
note signed "D. H., agent for the Churchman" (the name of the news-
paper which the agent carried on in the behalf of his principal), was
held to be the note of D. H., and not of his principal.^
In Colorado, after an exhaustive examination, the sufficiency of the
form "C D, agent for A B," was denied altogether.*
§ 1125. So "A B, C D, agent," has been held to be suf-
ficient, for while it is common and proper to say by or per, it is not
indispensable: that it was so done may be sufficiently obvious with-
out saying so. This form is most frequently adopted in the case of
corporations and is a common and familiar method of signing the cor-
porate name. Thus where a note reading "we promise to pay," was
signed "Massachusetts Steam Heating Company, L. S. Fuller, treas-
urer," the court said : "The name of the company is signed to the note.
This signature could not be made by the corporation itself and must
have been written by some officer or agent. It was manifestly proper
that some indication should be given by whom the signature was made,
as evidence of its genuineness ; and Fuller added his own name, with
the designation of his official character. And the whole taken to-
gether shows it to be the signature of the Massachusetts Steam Heat-
ing Company and not of Fuller." •
So where the note read, "we promise," and was signed, "Warrick
Glass Works, J. Price Warrick, Pres." it was held to be the note of
the corporation only.^' Said the court, "This conclusion seems to rest
TDe Witt y. Walton. 9 N. Y. 571
(but aa to this case see Qreea v.
Skeel, 2 Hun (N. Y.), 485); see also^
Shattuck y. Bastmaii, 12 AUen
(Mass.), 369.
• Tannatt y. Rocky Mountain Na-
tional Bank, 1 Colo. 278, 9 Am. Rep.
156.
9 Draper y. Massachueetta Steam
Heating Ck>.» 5 AUen (Mass.), 338.
loReeye y. Firet Nat. Bank, 54 N.
J. Law 208, 33 Am. St. Rep. 676, 16
L. R. A. 143. So in Liebscher y.
KrauB, 74 Wis. 387, 17 Am. St Rep.
171, 5 L R. A. 496, where tlie note
ran, "We promise," and was signed,
"San Pedro Mining and Milling Co.,
F. KrauB, President," it was held
that the note was that of the corpo-
ration only. Said the court* "The
corporation could not sign its own
name, and it is not otherwise shown
on the face of the note than that
Kraus signed the corporate name,
and by adding the word 'president'
to his own name, he shows conclu-
sively that, as president of the cor-
poration, he signed the note, and not
otherwise. Such is the natural and
reasonable construction of these sig-
natures, and BO it would be generally
understood. The affix 'cashier,' 'sec-
retary,' 'president,' or 'agent,' to the
name of the person sufflciently indi-
cates and shows that such person
signed the bank or corporate name,
and in that character and capacity
alone. The use of the word 'by' or
'per' or 'pro' would not add to the
certainty of what is thus expressed.
8fT
i I 126]
THE LAW OF AGENCY
[book III
upon rational ground. The name of the icoi^poratfon signed first stands
as a principal and that of the officer ts ligetit. The name of a cor-
poration, so placed, raises the iitiplieatibn di 'A corporate liability. To
so place it requires the hand of a%i agteftt. The name <^ an officer of
such corporation, to which itlame thlj official tk^e is appended, put be-
neafli the corporate name, implies tfi6 i^lati<»i 'Of principal and a^ent.
It means that, inasmuch as every corporate act must be done by a
natural per^on> this person is the ^gbht by whose hand the 'cotpof ation
did tlie particular act. This fotm of ^ighature is just ^s ftignfficant
with respect to the notes in question las if the name the 'Warrick Glass
Works' had been written, Tfer Waftick, Agent.' '* Th^re are a ffcw
cases opposed. Thus where the note tan, "we pt-orttfee,** and wis
signed, "U. S. Desk Manufacturing Co., Wm. Ltffnky Secy it was
held that this Was prima facie the note both of the mtaufacturing
company and of Lumley.** Such a decision, however, ignores busi-
ness usage and obvious intention a!nd ought not to be followed.
§ iia6. — ^- Where the named of two or moi-fe officers follow
the corporate name, the case is not quite ^0 tlear. If the two officers
who sign are those who usually and property sign for a corporation,
the instrument should be held to be that of the corporation only, in
the absence of something further to Show an intention to assume a
personal liability.^* There are, however, casei to the contrary. Thus,
It is not common to nse these worda
in commercial business. It is suffi-
ciently understood tliat the paper i)B
signed by the officer or agent named,
and for the corporatioli. But It lis
useless to prolong 3iis ^tlscufision.
It is almost too plain for argnnient
The note was that of the corporation
alone, signed by Kraos at its presi-
dent"
So a note reading "we promise to
pay * * * at office Belfast Foundry
Co.," and signed* "Belfiust Foundry
Company, W. W. Castle, President***
binds the company. Castle v. Bel*
fast Foundty 00., 72 Me. 167.
So a note reading "we promise to
pay." and signed, "Iffnglish S. M. C^.,
H. Pattberg, Manager," was held to
be the note of the company. Chase
Y. Pattberg, 12 Daly (N. T.), Itl.
See also to the same effect: Falk
V. Moebs, 127 T7. S. 597, 8 9sp. Ot
1319, 82 L. IkL 866; Abbott ▼. Shaw*
mut Ins. Co., 8 Allen (Mass.), 813;
Atkins V. Brown, 59 M<d. 90; Qleason
V. Sanitary Milk Co., 93 Me. 644, 74
Am. St R. 370; Latham y. Flour
Mills, 68 Tkx. 127; WlRiams ▼. tip-
ple, 17 I%L Sapsi*. Ct 81; Unioii Wat
BanlE ▼• Scott, 88 N. Y. App. Dir. 65;
Mion ▼« Coat08» 67 nL App. 216;
Thompson v. Hasselman, 131 111.
App. 267; Derby ▼. GlistafSon, 131
m Ap^ 281.
So a note reading *'we promise to
pay," aad signsd ^oiieelr Mining
Company, John B. Mason, Supt"
may be shown by parol to have been
Intended to bind the Company.
Bean v. Pioneer M9b. Co., 66 (M. 461,
66 Am. Rep. IO6.
60 also, SWafrts t. Ooh^ 11 Ihd.
App. 20.
11 Lumley t. Kinssila Glass Co., 85
la AP9. 418.
IS A note sisasd, 'HTldtte Loan and
Trust 0^» H. 1>. DSTrtesi PresSt W.
812
CHAP. Ill]
EXECUTION OF SI^TLZ COKTRACTS
[§ U26
where the note ran, ''we promijse/' and was signed, "Independence
Mfg Co., B. BrowncU, Pres., D* B^ Sanford, Secy.," it Was held
that the note, upon its face, purported to be th^ ndle Of the cofpora*
tion, of Browneil, and of Sanford." This c()tlclii^oyi al^ s^enis Er-
roneous and has been repudiated in other sfltfes.'^ So where the note
ran, "I or we promise/' and wa4 signed, "Cblenfian & Ames White
Lead Co., per C I. WiUiams, Sec, Geo. Jf. Wflliamft, Gen'l. Maiigr.''
and was sealed with the corporate seal, ft wctt heM by the appellate
court of Illinois to be th6 notd of the corpo#lit)6»n aild &t Geo. J. Wil-
liams.^' The signature of C. I. WitKams, through the \x^ of the word
''pet" was dearly the signature of a mere ^getity but th< couit thought
that the per did not apply to the signature of Ge6. J. Wtlliftins.^* This
decision however was r^ersed by the supreme cOtitt,^^ which said,
"We think the word 'per^ applies to both, and refers as nluch to one
as to the other. If the obligation 6i a corporation is being e^^ecuted
by two of it^ officers^ it would be both unusual and unnatul^l to plate
the word 'per* before each name, and where dadi one ^gns his own
B. Taylor, Secy./' fs held to irhbv on
its faoe no perwnal liability on the
part of Devries or Taylor. English,
etc., Mortg. Co. ▼. Globe Loan and
Trnst Ck>., 70 Keb. 435. To same ef-
fect: American Nat Bank v. Omaha
Coffin Mfg. Co., 1 Neb. (Unof.) 322;
Aungst y. Creque, f2 Ohio St S51 (a
well considered case); Northeastern
Coal Cok V. Tyrrell, 163 IlL Avp. 472.
A note signed, "The Kansas City
6 Olathe Electric Ry. Co., Wm. Lack-
miin President, D. B. Johnson, Secre-
tary," is, at least, so ambiguous as
to admit parol evidence that Lack-
man and Johnson were not Intended
to h^ Individually liable. Western
Grocer Co. t. LackmaB, 79 KasL 34
(see also, Kline v. Bank, 60 Kan. 91,
34 Am. 8t R. 107, 18 L. R. A. 563;
Bcnham v. Smith, 53 Kan. 495).
Where the note is signed by the
proper officers, e. g,, the president
and secretary, so as to bind the cor-
poration, and is also signed by oth-
ers who append to their names such
titles as "stockholders," "directors/'
and the like, these latter signers
are held to be personally bound, on
the theory that the titles so added are
ta«My desdHpHd personam. Taylor
V. R^ger, 18 Ind. Ayp. 46S^ 63 Am. St
R. 852; Savings Bank v. Central
Market Co., 122 Cal. 28.
T6 eaAe effect: Briel v. tiJxcfluitig^
Nat Bank, 17B AUl 475.
isHeffner v. Browneil, 70 Iowa,
591, 75 Iowa, 341. This case was fol-
Ioirt>^ in McOandlesS t. Belle Plaine
Canning Co., 78 Iowa, 161, 16 Am. St
Rep. 429, 4 la. R. A. 396; Lee v. Per-
cival, 85 Iowa, 639; Matthews v.
Dttbaque Maltresb Co., §7 Iowa, 246,
19 L. R. A. 676; Daj V. Ramsdell, SO
Iowa, 731.
i«Thus in English, etc., Mortg.
Co. V. Globe Loan and Trust Oo., 70
Neb. 435; the court declared tbo doc-
trine of the Iowa cases supra to be
contrary to the weight of American
authority.
ifi Harris v. Coleman, etCi Lead
Co., 98 111. App. 27.
16 See also General Electric Co. v.
Gill, 64 a d A. 99, l27 ^ed. 241, 129
Fed. 349.
17 Williams V. Harris, 198 IlL 501.
There is a dictum to the contrary in
General Blectric Co. t. Gill, supra^
813
§ 1 127] THE LAW OF AGENCY [bOOK III
name it would be equally unnatural for the second one to connect his
name with the first by the word 'and.' The word 'per^ was placed op-
posite the name of the secretary merely because his name came first,
and if the name of the general manager had been written first, the
secretary, by the same reasoning insisted upon would be individually
liable. * * * We do not regard the use of the words 'I or we,' in
the body of the note, as aflfecting or changing the legal import of the
instrument. There is no personal pronoun which is properly adapted
to use by a corporation in making a note. A proper method is to re-
peat the name of the corporation in the body of the note, but the word
'we' is frequently used by a corporation. Whether the pronoun 'I' or
the pronoun 'we' is used in the body of a note, if it is signed by the
corporation acting by its officer or officers it is the obligation of the
corporation,"
§ 1 127. -— The negotiable instruments act. — ^Upon the san^e
subject the Negotiable Instruments Act, which has now been adopted
in about forty of our jurisdictions,^' provides as fdlows, "Where the
instrument contains, or a person adds to his signature, words indicat-
ing that he signs for or on behalf of a principal, or in a representative
capacity, he is not liable on the instrument if he was duly authorized ;
but the mere addition of words describing him as an agent, or as filling
a representative character, without disclosing his principal, does not
exempt him from personal liability." *•
Unfortunately, this provision, which ought to give help, is so ob-
scure, indefinite and inadequate, that it furnishes little aid. What the
practical difference between the first clause and the second is, what
words or what sort of words shall be deemed "words indicating* that
the signer acts for a principal, etc., are not made clear, and it will re-
quire judicial interpretation to make this section definite. So far as it
goes, however, the provision seems to be in the direction of the more
recent cases. At present it is apparently necessary to still resort to
the decisions which were made before the act was passed.*®
i«Tlie last report available names A trustee of an Insolvent firm is
Ala., Ariz.. Colo.. Conn., Del., D. C, not liable, under this statute, on a
Fla., Hawaii, Idaho, 111., Iowa; Kan., note, signed by him as •trustee,"
Ky., La., Md., Mass., Mich., IVIo., given for property known to be pur-
Mont., Neb., N. H., N. J., N. Mex.. chased from the payee for the bene-
N. Y., Nev., N. Car., N. Dak., Ohio, fit of the assigned estate. Megowan
Okla., Greg., Pa., Philippine Islands, v. Peterson, 173 N. Y. 1. To same ef-
R. I., Tenn., Utah, Va., Wash., W, feet: Kerby v. Ruegamer, 107 N. Y.
Va., Wis., Wyo. App. Dlv. 491.
w Section 20 (89 in the New York wSee Birmingham Iron Foundry
act).
814
CHAP, m]
EXECUTION OF SIMPLE CONTRACTS [§§ 1 128, 1 12^
§ II38.
Not necessary that agent's name appear.*— AI-
though reasons of convenience and propriety render it highly desirable
that the fact that the note or bill is executed in the name of the prin-
cipal by the agent, should appear on the face of the instrument, it can-
not be regarded as indispensable, and the agent may sign the princi-
pal's name alone without adding anything to disclose the agency.*^
This is also true where the principal is carrying on business in some
other name than his own where that name has been adopted by him as
his trade or business name.**
§ XI 29. Not enough that principal be named only in body of in<-
strument. — It is not enough to relieve the agent that the person, for
whom or on whose account the promise is made or the bill drawn, be
named or stated in the body of the instrument alone. In such a case,
as a rule, it will be presumed that only the person who signed intended
to be charged, unless there is a clear indication to the contrary.
Thus where the form of the bill was, "Forty days after date, pay to
the order of T. L. fifty pounds, value received, which place to the
account of the Durham bank, as advised," signed "C. F.," it was held
to be the bill of C. F., though he was known at the time to be the agent
of the Durham bank. Said Lord Ellenborough : "Is it not an universal
rule that a man who puts his name to a bill of exchange thereby makes
himself personally liable, unless he states upon the face of the bill that
he subscribes it for another, or by procuration of another, which are
words of exclusion? Unless he says plainly 'I am the mere scribe,'
he becomes liable. Now in the present case, although the plaintiff
knew the defendant to be the agent of the Durham bank, he might not
know but that he meant to offer his own responsibility. Every person,
it is to be presumed, who takes a bill of the drawer, expects that his
responsibility is to be pledged to its being accepted. Giving full ef*
feet to the circumstance that the plaintiff knew the defendant to be
agent, still the defendant is liable, like any other drawer who puts his
name to a bill without denoting that he does it in the character of a
procurator." *•
v. Regnery, 33 Pa. Super. 64; Ameri-
can TruBt Co. V. Canevin, 107 C. C.
A. 543, 184 Fed. 657; Megowan v.
Peterson, supra; Kerby v. Ruegamer»
iupra; Schumacher v. Dolan, —
Iowa, , 134 N. W. 624.
See also Germanla Nat. Bank T.
Mariner, 129 Wis. 544; Daniel ▼.
Qllddeu, 88 Wash. 556.
21 First National Bank y. Gay, 6^
Mo. 33, 21 Am. Rep. 430; Forsyth T.
Day, ^1 Me. 882.
zsConroe v. Case, 79 Wis. 888;
where the principal was carrying on
busineflB in what had formerly bees
the trade name of the agent
23Leadbltter v. Farrow, 5 Maule A
Sel. 345. To the same effect see:
Penklvil y. Connell, 5 Ezch. 381;
Mayhew y. Prince, 11 Mass. 54.
81S
§§ ii30» 1 131]
THB LAW OF AGENCY
[book III
§ 1x30.
And again where a note was executed in these
words: "For value received, we, the subscribers^ jointly and severally
promise to pay Messrs. J. and T. B. or order, for the Bo^on Glass
Manufactory, thirty-five hundred dollars, on demand, with interest,"
and was signed, "], H., S. G., C. F. K.,*' it was held to be the note of
the signers and not of the manufactory. Chief Justice Shaw» in de-
livering the opinion of the court, said: "The main question in the
present case, arises from the form of the contract ; and the question is.
whether in this form it binds the persons who s^ed it, or the com*
pany for whose use the nK>ney was borrowed* As the form ci words
in which contracts may be made and executed, are almost inJSiait^y
various, the test question is, whether the person signing professes and
intends to bind himself, and adds the name of another to indicate the
capacity or trust in which he acts, or the person for whose account
his promise is made ; or whether the words referring to a principal are
intended to indicate that he does a mere ministerial act in giving effect
and authenticity to the act, promise and contract of another. Does
the person signing apply the executing hand as the instrument of an-
other, or the promising and engaging mind of a contracting party ?* **
And in a subsequent case in the same court, it is said : "It seems to
be well settled in this court, and supported by English autliority, that
the mere insertion of 'for' or 'for and in behalf of the principal, in the
body of the note does not make it the contract of the principal if
signed by the mere name of the agent without addition." ■•
§ 1x31. ■ In accordance with the same rules, it was held
that a note running "we, the trustees of the Methodist Episcopal
Church," promise, etc., and signed by the trustees as individuals, with
nothing to indicate that they signed as trustees, was their individual
promise ; ^ and the same ruling was made where a note running "we.
tABradlee v. Boston Qlass Manu-
factory, 16 Pick. (Mass.) 347. See
also, Morell v. CodAing, 4 Allen
(Mass.), 403.
s» Barlow y. Congregational Socle*
ty, 8 Allen (Mass.), 4«».
s« Hypes T. Grlffln, 89 III. 1'34, 81
Am. RepL 71; but see the decision of
the same coart trtiere the trustees
added that word to their algnatares,
Powers ▼. Brlggs, 79 III. 493, 22 Am.
Bep. 176. See also Borlingame ▼.
Brewster. 79 IlL 816^ 88 Am. Rep.
177.
In Tenbrook y. Ellars, 71 IlL App,
328, where a note was in the com-
mon form, "we promise to pay,** but
before the signatures were the
words, "signed by Trustees of I. O.
0. F. Lodge No./' etc, and then fol*
lowed the signatures of the respeo-
tive partlea, it was held that the in*
itrument was the note of the indi*
viduals signing it and that the words
"Trustees," etc, wwe merely d^
serlptiye.
In Morell t. Godding; 4 Alkn
(Mass.), 403, whc^e the note ran*
816
CHAP, hi]
EXECUTION OF SIMPLE CONTRACTS
[§ 1133
the directors of the Big^ Eagle and Harrison Turnpike G)mpany prom-
ise/' was signed by those officers in their tndividnal nanie&'^
§ ii3«. ■ But 8 contrary conclusion was reached in Maine,
where a note, beginning '^Wc, the subscribers, for the Carmel Cheese
Manufacturing G>mpany, prcwiise to pay," etc., was signed by the
makers in their individual names.'^ But this conclusion was based
largely upon the provisions of a statute of that state, which as the
court says in an earlier case : *• "was passed soon after the decision of
Stinchfield v. Little (to which reference has been made before) , and
was undoubtedly intended to modify the technical rule of the common
law as declared by the court in that case." That statute provides that
"deeds and contracts, executed by an authorized agent of an individ*
"We, the prudential committee tor
and in behalf of the Baptist Church
in Lee" and was signed simply with
the makers' names, it was held that
they were personally bound.
In Pomeroy t. Slade, 16 Vt 220,
the note read, "We, in behalf of the
First Methodist Episcopal Society
in, etc., promise to pay," and was
signed by the makers withQUt any
additions, and it was held to be
prima facie, if not conclusively, the
individual note of the maHers.
In Kendall v. Morton, 21 Ind. 205,
the note was in the following terms,
"We the subecribers of etc., promise
to pay, etc, on behalf of the Cam-
bridge City Greys" signed "James
M. Cockfair, Reese Kendall, David
Conklin Sect," and it was held, that
the Bignera were Individually liable.
27 Pack V. White, 78 Ky. 243. Fol-
lowed In Maffet v. Hampton, 17 Ky.
L. Rep. 694, 31 S. W. 881.
In Yowell v. Dodd, 60 Ky. 581, 96
Am. Dec. 256, where a note read,
"the president and directors of, etc.,
promise to pay/' and was signed "IL
J. Dodd, Pres.," and under his sig-
nature Uie 0lg»ai»rei of the four di-
rectors. It was held that whether the
note bound the corporation or the
Individuals is "a Question of inten-
tion to be detennined from what ap-
pears on tbB face of the writing" and
the court concluded that in this ease
the intention was to bind the corpo-
ration only.
In Caphart v. Dodd, 66 Ky. 584, 96
Am. Dec. 258, where the note ran,
"the pregident, by order of the board
of, etc., promise to pay," and Was
signed, "E. J. Dodd, Pres.," and un-
der his signature the signatures of
the directors, it was held, that from
the face of the Instrument, the in-
tention of the signers was to bind
themselves individually and not to
bind the corporation and hence the
signers were personally bound.
28 Simpson V. Garland, 72 Me. 40,
89 Am. Rep. 2d7.
In McKenney v. Bowie, 94 Me. 897,
the note read, "The Trustees and
Treasurer, or their Successors in of-
fice, of, etc., promise to pay/' and
was signed by five trustees; below
their names was added the word
"Trustees;" it was then signed by
the treasurer, with the word "Treas-
urer" added. Held, that the signers
were personally liable. This conclu-
sion was reached partly on the
ground that the Society for which
they purported to act was not incor-
porated: but even if it were, the
court said it would be regarded as
the note of the signers. The name of
the society was not "The trustees
and Treasurer of," etc.
M Nobleboro v. Clark, 68 Me. 87, 28
Am. Rep. 22. See also, Purinton v.
Insuranoe Co., 72 Me. 22.
5a
817
§ 1 133] THE LAW OF AGENCY [bOOK III
ual or corporation in the name of the principal, or in his own name
for his principal, are to be regarded as the deeds and contracts of such
principal." " Tor his principal/ " says the court, "are the words used
in our statute above cited, in regard to the proper execution of a con-
tract by an agent ; and 'for* when so used, means *in behalf of/ * * ♦
The words used in the body of the note, tending to show the meanii^
of the parties, should have the same force and effect as if following,
or written against the defendants* signatures/'
§ 1 1 33. — — Where intent to charge principal is manifest —
Where the body of the instrument discloses that it is evidently executed
for or in behalf of a principal therein named, and the person signing
adds to his signature such words as indicate that he was acting in a
representative and not in a personal capacity, the instrument will be
deemed to be the obligation of the principal. Thus where the con-
tract ran "We, the imdersigned committee for the first school district,
promise in behalf of said district,** etc., and was signed with the
individual names of the committee with the addition of the word "com-
mittee,** it was held that the intention to bind the district was appar-
ent upon the face of the contract and that the members of the commit-
tee were not personally bound.'®
Again, a note reading, "We promise to 'pay,*' etc., "on account of
the London and Birmingham Iron Hardware Company,'* and signed
"J. M., H. W., J. W., Directors," and countersigned "E. G., Secre-
tary,** was held to be the note of the company ; ■* a note beginning "I,
the subscriber, treasurer of the Dorchester Turnpike Corporation prom-
ise," etc., signed "A. B., treasurer of the Dorchester Turnpike Cor-
poration," was held to be the note of the corporation and not of the
treasurer ; •* a note reading, "the president and directors of the Wood-
stock Glass Company promise,*' etc., and signed "W. H., President,"
binds the company and not the president individually ; •• a note begin-
ning "we as Trustees of the Amador and Nevada Wagon Road Com-
pany promise,** etc., and signed, "J. M. K., L. N., J. T., Trustees, of
the Amador and Nevada Wagon Road Company," is the note of the
company and not of the trustees ; ■* and a note beginning "we, as the
80 Andrews v. Estes, 11 Me. 267, 26 On the other hand, a note reading.
Am. Dec. 521. "the Greenwood Gin Co. promise to
81 Llndus V. Melrose, 2 Hurl. A pay/' etc., signed ''M. A. Wlers, Pres.
Nor. 298. of Company, W. A. Moore, Sec./' was
82 Mann v. Chandler, 9 Mass. 335. said to be, if not manifestly the note
88Mott V. Hicks, 1 Cow. (N. Y.) of Wlers and of Moore, at least so
513, 13 Am. Dec. 550. ambiguous as to admit parol evi-
s^Blanchard v. Kaull, 44 Cal. 440. dence to charge them personally.
818
CHAP, in]
EXECUTION OF SIMPLE GONTRACTS
l§ JI34
trustees of the Methodist church, promise to pay," etc., and signed,
"J. W. K., J. A. P., R G. C, Trustees," is the note of the church and
not of the trustees."
§ 1 134. A note reading, "we, the trustees of the First Free
Will Baptist Society of Chicago, promise," etc., and signed "Trustees
of the First Free Will Baptist Society, of Chicago, Illinois, A. P. D.,
P. W. G.," and seven others, was held to be Ae note of the society ; ••
while a note reading "we, the trustees of the Seventh Presbyterian
Church, promise," etc., and signed "A. H. B., L. B. K., J. C. and
F. D. M., Trustees," was held by the same court to be the individual
note of the trustees, and not of the society;'^ the distinction being
based upon the fact that in the first case the exact corporate name of
the society, i. e. "The Trustees of the First Free Will Baptist Society,
of Chicago," had been used both in the body of the note and in the
signature, while in the second case it had not been, the corporate name
there being "Trustees of the Society of the Seventli Presbyterian
Church, of Chicago." The distinction here made cannot be rec(»iciled
with many of the cases cited above.
Where the note ran, "We, the Trustees of Musconetcong Grange,
No. 1 14, known as W. Fleming and Company, promise," etc., and was
s^ed "W. M. S., I. W., Trustees," it appearing that the words "the
Trustees of Musconetcong Grange, No. 114," were the legal title of a
corporation, the court said that, but for the words, "known as W. Flem-
ing and Company," the note would be clearly the note of the corpora-
tion.'* "What the significance of these added words is," said the
court, "cannot be known without a resort to parol testimony," and the
case was sent back for a new trial in order that such testimony might
be introduced.**
So where the note ran, "We, or either of us, Trustees of Dist No. 6,"
etc., promise to pay to the order of A. T., "it being money borrowed
of said T. to build a school house in said Dist. No. 6" and was signed.
Wiers V. Treese, 27 Okla. 774. See
also, Frankland v. Johnson, 147 111.
620, S7 Am. St. R. 234.
as Leach v. Blow, 8 Smedes A M.
(Miss.) 221.
So, where the note read, "I, as
treasurer of the Congregational Soci-
ety, or my successors in office, prom-
ise," etc., and was signed: "S. S. R.
Treasurer." Barlow ▼• Congrega-
tional Society, 8 Allen (Mass.), 460.
••New Market Savings Bank ▼.
aillett, 100 III. 264, 39 Am. Rep. 39.
See also, FYankland ▼. Johnson,
147 111. 620, 37 Am. St R. 284.
B7 Powers ▼. Brlggs, 79 IlL 493, 22
Am. Rep. 176.
MSlmanton v. VMet, 61 N. J. Im
696.
<• See Slmanton y. VUet, supra.
819
M ti3S, 1136]
THE LAW 0^ AGENCY
[book III
'T. W. W,, L* R G., Trustees," it v^^as held to he clearly the aote of
the sdiool district and not of the signet's.^
Where a note reading "The X company promises to p^y/* 6tc., is
signed "A, Pres. of Company, B, Sec.,'* it seems so dearly thft AOte of
the coiti^any that it is surprising to find courts holding that it is no
more thto ambiguous ; but that is the f act/^
§ 1 1 35. - Effect of printed headings or titlto on papbt.^^
The fact that the note was given for or oti account bf a principal may
sufficiently appear froih tides or headings printed t^ion die instru*
ment coupled with words indicating that the signers acted in an of-
ficial capacity. Thus, where a check Widn the words "JBttta MiDs"
printed on the margin was given in payment of a debt due from the
mills and was signed "I. D. P., Treasurer," the court held it to be
manifestly the check of the mills and not the peraOilai check of P.,^
saying, '"the court has always laid hold Of any indication on the face
of the pap^r, however infofmally expressed, to enable it to carry out
the intention Of the parties." The same doctrine has beeh applied in
numerous other cases in the same court.**
- On the other hand, where a note reading "We promise to pay," etc,
and signed, "J. C, P*^Bt., E. H. C, Treas." had printed across the aid
of it the words "Ridg«wood Ice Co.," of which corfipitiy they were
respectively the Officers, it Was held to be the note of the individual
signers, at least so far as "a holder taking bona fide and withcnit no-
tice of the cireuitisfeances of its making" was concerned. The official
titles were held to be mere descripHo personoe, and "the appearance
upon the margift of the paper of the printed name, 'Ridgewbod lee
Company,' was ^ot a fact carrying any presumption that the note was,
or was intended to be one by that company." **
§ 1 1 36. ■ ■ ' ■ ■ Effect of corporate seal.— ^The samfe effect may
often be given to the pfes^ice of a corporate seal ooupled with titles
indicating action in an official capacity.^ Thus where a fiote begih-
^Warftird v* Temple, 24 Ky. Law
Rep. 2218, 73 8. W. 1023.
♦iWlers T. Treese, 27 Okla. T74.
See also, Frankland v. Johason, 147
in. 520, 37 Am. 8t. R. 284.
«2 0srpentier v. Fbrnsworth, 106
Mass. 561, 8 Am. Rep. 300. See al0O»
Produce Eixchansie Trust Go. t. Bfe-
berbach, 176 Mass. 577 ; La Salle Nat.
Bank y. Tolu, etc., Co., 14 lU. App.
141.
«sSee Fuller y. Hooper, 3 Gray
(Mass.), 334; Slawsoa y. Lorlng^ S
Allen (Mass.), S40, 81 Am. Dec. 750.
See also, Hltehcock y. Bttctenan,
105 U. S. 416, 26 L. SU. 1078.
4« Casco Nat Bank y. Clark, 180 N.
Y. 307, 36 Am. St Rsp. 706. Same:
First Nat Bank y. Stuetaer, 80 Unm
435, afl'd 150 N. Y. 455| First Nat
Bank y. WeAlls, 84 fi«a, 376, alTd 156
N. Y. 663. Bee Daniel y. Glldden,
38 WaBh. 556.
4»See Hood y. Hallenbeck, 7 Hun
820
CHAP, in]
EXECUTION OF SIMPLE CONTRACTS
[§ "37
ning "We pramfse" and signed W. B. S*, "SecV/' had impressed upon
it the seal of the company containing the words "Neal Manufacturing
Co., Madison, Ind./' of which cbnqialiy S. Wa^ the secretiary, it was
held to be the liote of the comply and not of S.^* And Uie same ef-*
feet was given to the 6eal of the compatiy in Oregon, Illinbis afld Mass-
achuBClts. Thus a note stating, "We promise to pay/' etc., signed
"J. I., Pres,, J. J. I., Sec. G. M. Co.," which had inapcesseri vfpoia it the
seal of dae company -containitig the Words, "Granger Market Co.," is
the note of Ae compaixy and not of die ofiicers ; *' and so is a note
reading "We promise to pay," ttc^ signed "S. L. K*, Pircs., Chicago
Ready Roofitig Co.> W. H. K., Sec'y," impressed t(rith the seal of the
"Chicago Ready Roofing Compaay ;" " tad so is a note reading "Wfe
promise to pay," etc., and signed "John Rhodes, Treas\irer," upon and
around which signfeiture Was the impt'essiofi of a corporate «eal bearihg
the name of the corporatidrt.**
Bat a di^erent conclusicbi was reached in England.^^
{ 1137. ■» ■ Other evidenced of intent-^Directions to charge
to principaL — ^A bill or note drawn by an agent with such diffections
or expressions upon its face as indicate that it is drawn upon, 6r is to
be charged to, the account of bis principal, and which is signed by the
agent with such additions as to disclose that he is acting in his char^
acter as agent, will also be deemed to be a chargfe upon the principal
and not upon the agent.
And it has bbtii held that it is not necessary that the bill or note
itself should Unequivocally disclose the name of the principal in order
to exone)*ate the agent ; but that it will be sufficient if enough appears
upon th<s face of the ttansaction to put a prudent niati> before taking
the bill or note, upon inquiry .°^
Thus .a bill drawn by ai!l agent upon his (mncipal concluding "and
charge the same to Hie account of your agency at Natchez," and
signed "J. D. H., Agent" sufficiently indicates that the agent was act-
(N. Y.), %Si; Pitman ▼. Kintner, 6
Blackford (Ind.), 250, 33 Am. Dec.
4G9, and the foHowlng cases in this
sectloiL
48 Means v. Swontastedt, 82 ind. S7,
2 Am. Rep. 8^0.
« Guthrie V. Imhrle, It Ore. 182,
53 Am. Hep. 83i.
48 Scanlan ▼. Keith, 102 111. 634, t^
Am. Rep. 802. Tto same effect see
Reed ▼. Fleming, 209 111. 890. See
also, Hood V. Hallenbeck, supra.
«0 Miller V. Roach, 150 Mass. 140, 6
L. R. A. 71.
«oDuttoh Y. Mai'sh, L. R. 6 Q. B.
861. Compare Aggs T. Nicholson, 1
Hurls, ft Nor. 1^5. ^ee also Daniel
y. Glidden, 88 Wash. 666.
siBarilB T. Dendersoii, 26 Miss.
549, 59 Am. Dec. 229; Mott V. Hicks,
1 Cow. <N. Y.) 513. 18 Am. t)ec. 6S0.
821
§ 1 138] THE LAW OF AGENCY [bOOK HI
ing in a representative character ; ^'^ so a bill headed "Office of Tioga
Navigation Company," concluding, "charge to motive power and ac-
count," and signed, J. R. W., "Pres. T. N. Co.," purports upon its face
to be the bill of the corporation and not the individual bill of the
signer;" and a draft headed "New England Agency of the Penn-
sylvania Fire Insurance Company,", having the words "Foster & Cole,
General Agents for the New England States" printed in the margin,
and appearing on its face to be drawn upon said insurance company in
pa3anent of a claim against it, is the draft of the company and not of
Foster & Cole, although it is signed by them in their own names ; •*
and a bill headed "Office of Belleville Nail Mill Co.," and concluding,
"charge same to account of Belleville Nail Mill Co., W. C B., Pres.,
J. C. W., Sec'y," is the bill of the company.'*
§ 1 138. So where a draft was headed "Pompton Iron
Works" and directed that the amount should be placed "to the account
of Pompton Iron Works," it was held to be clearly the draft of the
Iron Works and not of Burtt, though it was signed "W. Burtt,
Agt.," '• and a bill headed "Adams & Co.'s Express and Banking
House," drawn on Adams & Co., concluding, "and charge same to ac-
count of this office," and signed "C. P. N. per G. W. C, Ag'ts/' is the
bill of the company.*^
So where a bill headed "Office of Portage Lake Manufacturing
Company" and concluding, "charge the same to account of the com-
pany, I. R. Jackson, Agt.," was drawn upon "E. T. Loring, Agent,"
and was accepted by him in the same manner, it was held in Mass-
achusetts that so far as the drawer, Jackson, was concerned, there was
enough upon the face of the instrument to show that the bill was
drawn as agent of the company, but it was further held that this con-
clusion exhausted the operation of the words showing that int^t, and
that they could not be used again to indicate that the acceptance of
Loring was made in the same capacity.'*
But on the other hand, in accordance with cases cited in a preced-
ing section, a draft concluding, "and charge the same to the account
62 Davis T. Henderson, supra, 6^ Hitchcock v. Buchanan, 105 U. S.
S3 Olcott V. Tioga R. R, Co., 27 N. 416, 26 L. Ed. 1078.
Y. 546, 84 Am. Dec 298. See also La so Fuller v. Hooper^ 8 Gray
Salle Nat. Bank y. Tolu, etc., Co., 14 (Mass.), 884.
111. App. 141. ft7 Sayre y. Nichols, 7 Gal. 535, 68
B« Chipman v. Foster, 119 Mass. Am. Dec. 280.
189; to same effect, Tripp y. Swan- sssiawson y. Loring, 6 Allen
zey Paper Co., 13 Pick. (Mass.) 291. (Mass.), 340, 81 Am. Dec. 750.
822
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS
[§ II39
of Proprietors Pembroke Iron Works. Joseph Barrell/* was held to
be the draft of Barrell because he had not added anything to his sig-
nature to indicate that he was acting in a representative character."*
§ 1 139. When no principal is disclosed, agent is bound notwith*
standing he signs as "agent," etc. — ^Where, however, the language
used imports an individual promise and is signed by the agent in his
own name the agent will, prima facie at least, be personally bound
notwithstanding the fact that he adds the word "agent," "trustee,"
"president," "assignee," "administrator," etc., to his name. It is to be
presumed that he intended to bind some one by the instrument, and as he
has used no apt words to bind the principal and no other contracting
party appears, he must be held to have intended to charge himself,
and the words "agent," "trustee," etc., will be regarded as mere de-
scriptio personoeJ^^
B»Bank of North America y.
Hooper, 6 Qray (Mass.), 567. 66 Am.
Dec. 390; and to the same effect Is,
Newhall v. Dunlap, 14 Me. 180, 31
Am. Dec. 45.
But where a trustee, or one In a
like situation, who has no principal,
makes a promise, the contract must
be the contract of the trustee person-
ally, unless the trustee stipulates
that the promise is merely a charge
on the trust estate. Hall v. Jameson,
161 Cal. 606, 121 Am. St. R. 137, 12 L.
K. A. (N. S.) 1190. As to his power
expressly to exclude personal liabil-
ity, see Bank v. Eaton, 100 Fed. 8,
aflSrmed per curiam, 47 C. C. A. 140,
107 Fed. 1003.
eo Drake v. Flewellen, 33 Ala. 106;
Hobson V. Hassett, 76 Cal. 208, 9 Am.
St R. 198; Savings Bank v. Central
Market, 122 Cal. 28; Hall v. Jameson,
151 CaL 606, 121 Am. St R. 137, 12
L. R. A. (N. S.) 1190; Hopson ▼.
Johnson, 110 Ga. 283; Saul v. South-
em Seating Co., 6 Ga. App. 843;
Chadsey v. McCreery, 27 111. 263;
Bickford v. First Nat Bank, 42 111.
237, 89 Am. Dec. 436; McNeil v.
Shober, 144 111. 238; Haines v. Nance,
62 111. App. 406; Reed v. Fleming, 102
111. App. 668; Reddick v. Young, —
Ind. 9 98 N. £2. 813; Prescott v.
Hixon, 22 Ind App. 139, 72 Am. St
R. 291; Dayries v. Lindsly, 128 La.
259; Blackstone Nat Bank v. Lane,
80 Me. 165; Fowler v. Atkinson, 6
Minn. 578; Brunswlck-Balke-Collen-
der Co. v. Boutell. 45 Minn. 21;
Penn. Mut Life Ins. Co. v. Con-
oughy, 54 Neb. 123; Western Wheeled
Scraper Co. v. McMillen, 71 Neb. 686;
Savage v. Rix, 9 N. H. 263; Barker
V. Mechanics' Fire Ins. Co., 3 Wend.
(N. Y.) 94, 20 Am. Dec. 664; Pentz
V. Stanton, 10 Wend. (N. Y.) 271, 25
Am. Dec. 558; Hills v. Bannister, 8
Cow. (N. Y.) 32; Cortland Wagon
Co. V. Lynch, 82 Hun (N. Y.), 173;
Manufacturers', etc., Bank v. Love,
1?> N. Y. App. Div. 561; Jenkins v.
Phillips, 41 N. Y. App. Div. 389; New
York State Banking Co. v. Van Ant-
werp, 23 N. Y. Misc. 38; Sutherland
V. St Lawrence County, 42 N. Y.
Misc. 38; Collins v. Ins. Co., 17 Ohio,
215, 93 Am. Dec. 612; Robinson v.
Kanawha Valley Bank, 14 Ohio, 441,
68 Am. Rep. 829; Ogden Ry. Co. v.
Wright, 31 Or. 150; Kitchen v.
Holmes, 42 Or. 252; Deroy v. Rich-
ards, 8 Pa. Sup. Ct 119; Moss v.
Johnson, 36 S. Car. 551; Warren v.
Harrold, 92 Tex. 417; Rand v. Hale,
3 W. Va. 495, 100 Am. Dec. 761; and
the other cases cited in this section.
823
§§ II40» 1 141] THE LAW OF AGENCY [bOOK Ul
Thus a note in the usual form, "I promise to pay/' etc., signed
"A. B., Treas. St. Paul's Parish ;" " "C. H., President of the Dor-
chester Avenue Railroad Company ;" •" "J- S. E., Trustee of Sullivan
Railroad ;"•• "A. B., Treasurer of Eagk Lodge ;"•♦ "W. H. E., Pres.
and Treas. Chelsea Iron Foundry Company ;**•• "J- B., Agent for
Lewis County ;" «• or a draft signed "W. P. C, Treas.," ^ etc., with
nothing in the body of the note to indicate that the promise is not the
promise of the signer, will be held to be the personal obligation of
him whose name is subscribed, notwithstanding the addition.
And, as is said by a learned judge, "Why should it not be so? That
is the plain and direct import of the language he uses. *V is not die
language of a corporation or association. It is that of an individual
signer. If a signer appends to his signature a description of himself
as agent, president, trustee, or treasurer of a corporation, it may im-
port a declaration on. his part that, having funds of such corporation
in his possession, he is willing to be responsible, and accordingly makes
himself responsible for a debt of theirs. And this descriptio personam
may aid him in the keeping and adjustment of his accounts with his
different principals. But without some words in the contract import-
ing that he promises for or on behalf of his principal, he cannot avoid
the personal liability he has assumed." *•
§ 1 140. The same rule was applied though the note read,
"we" promise to pay and was signed by a single individual, "D. P. L.,
Treas'r Hallowell Gaslight Co." Said the court, "We think the note
must be construed to be the note of the defendant, and not of the cor-
poration. It contains no apt words showing that the parties under-
stood it to be the contract of the corporation and not of the defendant
It nowhere appears that the defendant made the promise for the cor-
poration. The language used expresses his own promise, and what
is added after the signature is descriptive of the person." ••
§ 1 141. What is true of one individual signer is also true
of several, whether the form adopted be "I" or "we" promise. Thus
a note in the usual form, signed by several with the addition "vestry-
ei Sturdivant v. Hull, 59 Me. 172, 8 «b Davlfl v. Bngland, 141 Man. S87.
Am. Rep. 409; Mellen v. Moore, 68 •« Exchange Bank ▼. Lewis Ooonty,
Me. 390, 28 Am. Rep. 77. 28 W. Va. 278.
02 Haverhill M. F. Ins. Co. v. New- ^ Bank v. Cook, 88 Ohio St 448.
hall, 1 Allen (Mass.), 180. m Barrows, J., in Bturdlvant ▼.
•8 Flske T. Eldrldge, 18 Gray Hull, supra,
(Mass.), 474. MMcClure ▼. Wvermore, 78 Me.
a^Seaver T. Cobum, 10 Cosh. 390. To same effect is Mellen v.
(Mass.) 324. Moore, 68 Me. 390, 28 Am. Rep. 77.
824
CHAP, in]
EXECUTION OF SIMPLE CONTRACTS [§§ II42-II44
man, Grace Church" ^® or "President and Directors of the P. and S.
Cheese Co.,"" or "Trustees of First Universalist Society,"" or
"Trustees of the A. Lodge," ^* i$ the note of the individuAl signers.
g 114a. ■ The same tule applies to indorsements. Thus
the indorsement of a note by an individual whd merely appends to his
name the word "agent," "president of the X. Co.," etc., prima facie
iitiports a personal obligation.^*
§ 1 143. Negotiable paper dratra upon an agent and accepted by
hini«N^The principles which control the obligation of an agent who
signs a note, apply in general to the obligation of an agent who un-
dertakes to accept a bill for his principal, and the cases present the
same conflict. Where a bill was drawn in the name of a corporation,
by its president, with directions to charge to the account of the cor-
poration, upon F. D. H. "Treas.," and was accepted by the latter in
the same form, it was held to evince clearly an intention to charge the
corporation and not the acceptor personally.''* The same conclusion
was reached in a similar case where the bill was drawn upon L. S.
and accepted, L. S. "Treas. of L. F. and Mining Co.," that company
being the drawer.^* So where the bill Was drawn upon J, O. E.
"Treasurer of the N. & N. W. Railroad Company" and was "accepted
payaUe On return of March Estimates. J^ O. E. Treas.," it was held
not to be the personal obligation of the icceptor.^^
§ X1441 "■■ inn On the other hand where h dfaft was headed.
"OSice of Pottage Lake Manufacturing Company," Was signed I. R. J.
"Agt.," drawn upon K T. L. "Agent" and accepted by the latter m
Te Tildeit T. Barnard, 4ft Mitih. 87Bv
H Am. Rep. 197.
Ti Rendell v. Haffimaa, 71 Me. 497>
46 Aid. Rep. 421. But confm, see
Farmers' 6 Mechanics' Bafik ▼. C6lby»
64 Cal. 853, where a note reading
"we ptiomiB^^' aad aigaed "O. A. c.>
Prea. Pad. Paat deal Co»» I). K. T.i
Sec. pro tern:* was held aet to bft the
^ete of the dflfceffi pt&rsdnally and
■aid to be the note of the odinpany.
^iBurlingame v. Bremiter, 79 111.
615, 22 Am. R^p. 177; to like effect:
Powern V. BHtgB, Yd 111. 493, 22 Am.
Rep. 175; itypes T. Grtftn, 89 111. 184,
81 Aift. Rep. 71; Barlow t. Congre-
gational Bociety, 8 Allen (Maw.),
460; Cobum t. Omega Lodge, 71
Iowa, 581; Hayee t. Brubaker, 66
Ind. 27.
n Richmond LiOcontotiTe WOfka ▼.
Moragne, 119 Ala. 80; McClellan y.
Robe, 93 Indi £88; WiUiams v. Sec-
ond National Bank, 83 Ind. 287.
7i Terhune v. Parrott, 59 N. J. L. 16.
TB Hager v. Rice, 4 Cdlo. 90, 84 Am.
Rep. 68.
TkLaflln lb Rahd Pdwder Ca ▼.
Slnehelraer, 48 Md. 411, 80 Amv RAp.
472. In this and the preening caae
it was also held, ae will be seen in a
later section that if tHerfe were any
ambigaitr it could be cleared ap by
parol evidence.
T7 Amison T. Sowing, 2 Oold. (Tenn.)
66^. iTo aalne elfect id Shelton y.
Darling, 2 Oonn. 436; Orpherts ▼.
Bmith, 62 K. T. Supp. 409.
See aieo Lonlstille, etc., Ry. Co. ▼.
Caldwell, 98 Ind. 245.
825
§ "45]
THE LAW OF AGENCY
[book hi
the same form, the court applied all of the words indicating corporate
character in determining the liability of the drawer, declared that their
effect was thus exhausted, and held the acceptance binding upon the
acceptor personally.''* So where a bill drawn by Kanawha and Ohio
Coal Co. upon J. A. R. "Agent," was accepted by J. A. R. "Agent
K. & O. C. Co." it was held to be the personal obligation of the ac-
ceptor.''* So where a bill was drawn on, and accepted by, J. R. L.
"President of the Rosendale Manufacturing Co.," but there was no
proof that the president was authorized to bind the company by ac-
ceptances, it was held that the action was properly brought against
the president personally.**
§ 1145. Negotiable paper drawn payable to an agent and indorsed
by him. — Where a bill or note is drawn payable to a certain person
to whose name are appended words indicating official character or
representative capacity, the question of the nature of the title ac-
quired by him,** and which may be transferred by his indorsement, is
subject to the same conflict of authorities which has been seen in the
preceding sections. Thus, a note payable to the order of "Geo. Moebs,
Sec. & Treas.," signed, "Peninsular Cigar Co., Geo. Moebs, Sec &
Treas.," and indorsed, "Geo. Moebs, Sec. & Treas.," was held, by the
supreme court of the United States, to be "drawn by, payable to, and
indorsed by the corporation." **
On the other hand, in a case substantially identical, where a note
was made payable to the order of "Adolph Pike, Pres.," and was in-
dorsed by him in the same manner, it was held by the supreme court
TSSlawson y. Lorlng, 6 AUen
(Mass.), 340, 81 Am. Dec. 760.
7» Robinson v. Kanawha Valley
Bank, 44 Ohio St 441, 68 Am. Rep.
829.
•0M088 Y. LlvingBton, 4 N. Y. 208.
In Nicholls Y. Diamond, 9 E3xeh.
154, a bill of exchange, directed to
"J. D., purser. West Downs Mining
Company," was accepted by him:
"J. D. per proc. West Downs Mining
Go." J. D. was a member of the
company which was not incorporated.
Held, that J. D. was personally lia-
ble on this acceptance.
In Walker y. Bank, 9 N. Y. 582,
where a bill of exchange was drawn
by the Empire Mills, and addressed
to "E. C. Hamilton, Esq." and '*Ac-
cepted, • • * Empire Mills, by
0. O. Hamilton, Treas.," it was held
that the acceptance did not bind
B. C. H. personally.
•^ Paper payable to agent, — ^The
question of who may sue to enforce
payment of such paper Is discussed
in later chapters dealing with the
rights of action of agents against
third persons.
Bt Falk Y. Moebs, 127 U. 8. 597, 82
L. Ed. 266.
To same efCeet: Nichols y. Froth-
Ingham, 45 Me. 220, 71 Am. Dec. 589.
Where a foreign corporation is
represented by a local manager
called "Ck>mmerclal director/' a note
made to him in that name by one
who knows the facts, is the note of
the company. Soclete des Mines y.
Mackintosh, 5 Utah, 568.
826
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS [§§ II46, II47
of Illinois, denying the preceding case, that the word "Pres." Was
mere descriptio persona, and that the note was pa3rable to and indorsed
by Pike individually.**
§ 1 146. Paper pa3rable to cashier of baiik. — In the case of
banks, paper drawn payable to A. B. "cashier," "Cash.," or "Cas.," is
quite universally considered as payable to the bank itself and the
cashier *s signature in the same form, in drawing or indorsing such
paper, binds the bank and not himself personally.** The Negotiable
Instruments Act now covers this point.
§ 1147. Other similar cases. — So where a note ran to
C. W. S., "Treasurer of the I. M. B. Co.," and was indorsed in the
same way, it was held to be the note of the company and to be in-
dorsed by it.** And the same conclusion was reached where the note
was payable to the order of L. M. "President of the Metropolitan Fire
and Marine Insurance Company" and indorsed in the name of the
company by L. M., "President." **
So where a note or bill payable to a corporation by its corporate
name has been indorsed by an authorized agent or official, with the
title of his office appended, it is regarded as the indorsement of the
corporation ; as where a note was payable to the "Globe Mutual In-
surance Co. or order," and was indorsed "L. G., President." *^
»»Hately v. Pike, 162 HI. 241, 63
Am. St R. 304.
See also Maher y. First Nat Bank,
93 111. App. 404.
Anihiguous — Parol evidence, — In
SoahegaA* Nat Baak t. Boardman,
46 Minn. 298, where a note was made
payable to. "A. J. Boardman, Treas-
m*er/' and was Indorsed by him In
the same manner, it waa held that
the indorsement was prima facie the
individual contract of the defendant,
but that parol evidence was admia-
slble to show that he made it only
in his official capacity aa treasurer
of the maker corporation, and as its
indorsement
s«Bank V. Wheeler, 21 Ind. 90;
Nave V. Lebanon Bank, 87 Ind. 204;
Burnham v. Webster, 19 Me. 232;
Bank of Genesee v. Patchin Bank, 19
N. T. 312; Bank of New York v.
Bank of Ohio, 29 N. Y. 619; First
Nat Bank T. Hall, 44 N. Y. 395, 4
Am. Rep. 698; Robb v. Bank, 41
Barb. (N. Y.) 686; Houghton v.
First Nat Bank, 26 Wis. 663, 7 Am.
Rep. 107; Baldwin v. Bank, 1 Wall.
(U. S.) 234, 17 L. Ed. 634; Farrar y.
Oilman, 19 Me. 440, 86 Am. Dec 766;
Ballston Spa Bank v. Marine Bank,
16 Wis. 120; Rockwell v. Elkhorn
Bank, 13 Wis. 663; Mechanics' Bank
Y. Bank of Columbia, 6 Wheat. (U.
S.) 326, 5 L. Ed. 100.
MVater v. Lewis, 36 Ind. 288, 10
Am. Rep. 29. To same effect: Bab-
cock V. Beman, 11 N. Y. 200.
8« Nichols V. BYothingham, 45 Me.
220, 71 Am. Dec. 539.
8T El well V. Dodge, 33 Barb. (N. Y.)
836; same point, Russell v. Folsom,
72 Me. 436; Northampton Bank v.
Pepoon, 11 Mass. 287; Nicholas v.
Oliver, 36 N. H. .218; Mclntyre v.
Preston, 5 Gil. (111.) 48, 48 Am. Dec.
321.
S2y
6 1148}
THE LAW OF AGENCY
[book III
§ 1 148. How wbML made by pubUc ageptcLrn-As haa been seen, in
the preceding chapter,*^ contracts made by public agents while acting
in the exercise of their public functions are presiuned to be made in
behalf of the pttblic, and are not binding upon them peFsenally unJess
the intent to be so charged is very ckai . Whet)ier tiie same rule ap^
piles to the execution of negotiable instrumeirta by public agents is
not so clear, although in reason, it would seem that it ^ould, as be-
tween the immediate parties where the principal is known or disclosed,
and as against third persons wher^ enough is shown to fairly put a
prudent man upon his guard.
The cases upon this subject are not harmonious and in many of
them the distinction between public and private agents does not seem
to have received attention. Thus where a note reading, "I promise
to pay," etc., was signed by G. H. and A. P., **Sdiool trustees," it was
held that the note wias the individual obligation of the signers, and
that the words "School trustees" were but descriptive of the per-
sons ; ^ and a similar ruling was made where the paper was headed
"State of Iowa, County of Jones, Township of Hale," and was signed,
W. H. G., "Pres. School Board" and I. B. S., "Sec'y School Bokrd" »•
So where notes were signed J. B., "Agent for Lewis County" it was
held that J. B. was personally bound.^^ So a note reading "For value
received as treasurer of the town of Monmouth, I promise to pay,"
6tc., and signed **Wm, G. Brown, Tresnttreir,^ w^s hdi to be thfc in-
dividual note of Btown."
So jncjividuals who promised "as committeemen for the erection of a
scho(d house in Dist. No. i," but signed in their ow« names were held
personally liable ; •• and where a note reading 'Tor value received in
policy No. J38,i&i, * * * issued by the; Americ^ Insurance
Company * * * we promise to pay to said company," etc., was
88 See ante, S 1113.
s» Village of Cah^okla, v. Rautei^-
berg, 8S IIL 219. Xo the same effect,
see Fowler v. Atkiueon, 6 MIqq, 679.
And so where oae Dq MeroUa, tJhe
Italiaa Vice Consul at Baltimore,
borrowed money and gave a promis-
sory note headed "Hoyal Consular
Agency of Italy*" dated "Baltimore,
2 June, 1882," and reading "Received
from Charles Gola. ^sq., for the use
of this Vice Consulate of Italy, one
thousand, five hundred dollars, to be
returned within ninety dayi, with
the usual Interest and commlMlons,"
signed "E. De Merol^i^** aA4 pealed
"Royal Consula,r Agency of Italy,
Baltimore," it was hqld to f^ sim-
ply tlie personal obpgatlon of De
Merolla. De Bebian y. Ck>Ia, 64 Md.
26?.
•0 Wing T. Olick, 66 iQva, 478, also
reported i^ note to 37 Am. B^p. H^
•iE?xchange Bank of Virginia v.
{je^is County, ^8 W. Va. ?73.
»» Row V. Brown, 74 Me. 862.
99 Baylisa v. Pearson, ^5 Jowa, 27$.
0360
CQAP. ni] EXECUTION OP 5IM?LE CONTRACTS [§ II49
sigxied E. G., '^president/' J. A. C, "secretary," ^nd E. Q. "cUrqctor/*
it w^s held that it was th^ indivHlt;at note pf the persons pajne4.*^
So ag^iiiji wh^re a^ note reading, "For value received I pr©mi^ to
pay," etc, "fer canning fuft page view of the l-eonitrd grad^ school
building to ht( printed 'v(\ the atlas of Clearfield Cptmty " was. signed
J. T. L., "President Sch. Bd/' which was found to mean President of
the Sqbool Boards it wa^ held that L, was^ personally bouncj.^*
Soj where; an instrument in tlie form of an order headed with the
name of the state, county, and school district^ r^ad "Treasurer of
School Dist. No. i6, in said cow^y aivi state, w^U pay ♦ * * oqt
of any moioey belonging to said district For [hefe w^i^e enumerated
a number of §c1kx>1 boo^ and appliances]. Issui^d by authority of
officers of said di^tri^t ^x^A payment gjiiaranteed hj B. M., W. F. P„
school ofdcers/' it W£^& held to he the personal obligation of the sign-
ers, and thf words "school oflRcers'* to be mere descripHo persaft^.^^
§ U49. But upon the groimd that they were public agents,
it was held, where two notes headed "Monticello, Ind." and riding
"we promise tp payj' ^te^, wer^ ^igP^^ one, H* P. A,, W^ S* H.,
C W, K., "Trustees pf Mon*ic«llo School," and the otjiw K- P. A.,
C. W. K., "School trustees," that the words. "Trustees of MpnticellQ
School," arid "School trustees," were not mere descripHo persona,
but indicated an intent to charge the school town,^^ and thi$ doctrine
is re^girm^ in la,t^ case^ ip the wn^ court*' A fortiori would the
rule of this case apply where a note reading "I promise to pay/' ^.,:
"to be paid out of the township funds" is signed F. K. M., "Trustee
of Johnson Tp " ••
M American |nQ. Co. ▼. Str^^n, The court in theiie caaef hQUU..tl)|it,
59 Iowa, 696. under the Code, the form adopted is
These eaees in Iowa must eT^ the proper form !n which to pledge
deqtbr ^ dIstlJWiJshe* from oertaia the respqaii^^tf of the diatrkt,
others In the. same state. Thus. Tije wm^ Co4^ hov^ver, prpvidest ft
where a note reading, "We, the un- different name by which distrlctfl
dereigned, directors of school dis- shall he known and by which they
trlct No. 4, Montpelier township, shall make contraets, be vne^. etc,
propiiae to pay;" et^.. ww signed by »»Forcey v. Caldwell (Pa.). 0 Ml.
the individual names of the officers, 466.
it was held not binding on them per- »• Merrill y. Toung, 6 Kan. App.
aoiM^ly, SiOier r. Ohnnihlea, 4 761.
Greene (Iowa), 428. So, where a 97 School Town of MonticeUo ▼.
similar note reading, "We, the hoard Kendall, 72 Ind, 9X. 37 Am. Eep. W.
of school district Na 1," promise to "^ Moral School Tp. v. Harrisoa, 74
pay, etc., was signed in the in^irid- Ind. 93.
ual A^ipes. Lyon v. Adamson, 7 ^^ WalUs v. Johni^on School Tp., 7GL
Iowa, 609. Ind. 368.
829
§ 1 150] THE LAW OF AGENCY [BOOK III
And where a sealed note reading "we, A. S. C, W. M. C, and
J. H. K., members of the township committee of the township of Har-
rison, * * * and our successors in office promise to pay" was
r
signed by the parties in their individual names, the court applied the
doctrine in regard to public agents and held the signers not personally
liable.^ • .
Where a note reading, "We, as trustees of School Dist., No. 10,"
promise to pay, etc., was signed with the individual names of the
makers, the court held that there could not well be any doubt that it
was the promise of the district and not of the persons signing it, but
that, if there was, it could be removed by showing the intention.'
So, where a note ran, "We, or either of us, trustees of district
No. 6, * * * promise to pay to the order of Adam Temple,
* * * it being money this day borrowed of said Temple to build a
school house in said district No. 6,** and was signed "T. W. W.,
L, F. G., Trustees," it was held that the note Was clearly the obliga-
tion of the school district.*
The same question arises where a note is made payable to a public
agent and by him indorsed : the agent in such a case is not liable as
indorser. Thus where the note of a city was made payable "to the
order of J. V. F., City Treas.," was negotiated and indorsed in blank
thus, "J. V. F., City Treas.," it was held, that the agent was not per-
sonally liable for "it is plain that his name was used only to give the
notes currency." *
2. The Admissibility of Parol Evidence to Show Intent.
§ 1150. In general. — Passing now to the second question sug-
gested, namely, how far the interpretation of the instrument may be
affected by parol evidence. The question of tiie admissibility of parol
evidence to show who was intended to be bound by a negotiable in-
strument executed by an agent is one not free from difficulty, and the
decisions are in conflict.
Where the instrument upon its face is apparently the promise of the
agent only, there being nothing in the body of the instrument or ap-
pended to his signature to suggest the existence of a principal; and
1 Knight V. Clark, 48 N. J. L. 22, »Warford v. Temple, 24 Ky. Law
57 Am. Rep. 534. Rep. 22C8, 73 S. W. 1023.
2 Sanborn y. Neal, 4 Minn. 126, 77 « Citizens' Savings Bank v. City of
Am. Dec. 502. Newburyport, 96 C C. A. 232, 169
Fed. 766.
830
CHAP, in] EXECUTION OF SIMPLE CONTRACTS [§ II5I
where on the other hand the promise is, with equal clearness, the
promise of the principal alone, the instrument needs no explanation,
it binds him only whom it purports to bind, and parol evidence is in-
admissible to discharge the apparent maker or to charge some one not
disclosed.'
Where, however, the face of the paper itself suggests a principal as
well as an agent, where the agent adds to his signature words indi-
cating a representative capacity, or where otherwise the paper upon
its face is ambiguous and capable of more than one interpretation, a
resort to parol evidence to show the real intention will be suggested.
§ 1151. — In a recent case in Minnesota,* it was said by
Mitchell, J., "Where both the names of a corporation and of an offi-
cer or agent of it appear upon a bill or note, it is often a perplexing
question to determine whether it is in legal effect the contract of the
corporation or the individual contract of the officer or agent It is
very desirable that the rules of interpretation of commercial paper
should be definite and certain ; and, if the courts of the highest author-
ity on the subject had laid down any exact and definite rules of con-
struction for such cases, we would, for the sake of uniformity, be glad
to adopt them. But, unfortunately, not only do diflFerent courts dif-
fer with each other, but we are not aware of any court whose deci-
sions furnish any definite rule or system of rules applicable to such
cases. Each case seems to have been decided with reference to its
own facts. If what the courts sometimes call 'corporate marks'
greatly predominate on the face of the paper, they hold it to be the
contract of the corporation, and that extrinsic evidence is inadmissible
to show that it was the individual conract of the officer or agent. If
these marks are less strong, they hold it prima facie the individual
contract of the officer or agent, but that extrinsic evidence is ad-
missible to show that he executed it in his official capacity in behalf
of the corporation; while in still other cases they hold that it is the
personal contract of the party who signed it; that the terms 'agent,'
'secretary,' and the like, are merely descriptive of the person, and that
extrinsic evidence is not admissible to show the contrary. This court
has in a line of decisions held that where a party signs a contract,
affixing to his signature the term 'agent,' 'trustee,' or the like, it is
sShuey ▼. Adair, 18 Wash. 188, 39 v. Borland, 30 Hun (N. Y.), 362; An*
L. R. A. 473, 65 Am. St. R. 879; burn Bank v. Leonard, 40 Barb. (N.
Sparks v. Despatch Trans. Co., 104 Y.) 119; Babbett v. Young, 51 N. Y.
Mo. 531, 24 Am. St R. 351, 12 L. R. 238.
A. 714; Bulwlnkle v. Cramer, 27 S. ^Souhegan Nat. Bank v. Board-
Car. 376, 13 Am. St R. 645; Phelps man, 46 Minn. 293.
831
§ IXS2]
THE LAW OF AGENCY
[book ui
prima facie his individual contract^ the t^rm afiixed being presump-
tively merely descriptive of his person, but that extrinsic evidence is
admissible to show that the words were understood as determining
the character in which he cottlfacted."
. §1152. Cases holding such evidence admissible. — In a large and
increasing number of cases wherein the instrument bore upon its face
some reference to a principal, or some suggestion that the digner was
acting in a representative capacity, paml evidence has been admitted
to show who was the party intended to be bound.
Thus, in the Minnesota case^ already quoted from, where a note
signed by a corporation was made payable to the order of A. J. B.
'Treasurer," and was indorsed by him in the same way, it was held
that, though upon its face this was the indorsement of the defendant
personally, extrinsic evidence was admissible to Show that he made
the indorsement only in his official capacity as the indorsement of the
corporation.
Many other cases from the same state are to the Same effect.^
So where an agent dfew a bill tipon his pfincipal, signii^ it 'T. IL
T., agfent for S. T.," and there Was nothing in the body of the bill to
show that it was drawn its the fttt of the principal, the supreme court
of Colorado held, 1. That, contrary to the preponderance of author-
ity that the fontt "C 1>, agent for A B,** is sufficient to bind the prin-
cipal, it was the individual obligaton Of T. R. T.; tod^ ± That even
as between the original parties, parol evidence was h(A admissible to
prove that the bill was dfswn in a rept^esentatite cap&dty, and not in-
dividually, and that the payee had full knowledge of tWs fitct*
But this case was practically overruled by a subsequent case in the
same court, where it wa^ held that in th^ case of a bill drawn upon
"T. D. H., Treas." and accepted by him in the same fottn, pattrf evi-
dence was admissible, to exonet^te the agent, in an action between the
original parties, to show that the acceptance Was in kn official capacity
and was known by the payee to be so.^^ And the ^me ruling; was
made in a similai* caSe in Maryland.^^
TSouhegan Nat Bank v. Board-
man, 46 Bilnn. 293.
■ Citing Pratt v. Beaupre, 18 Minn.
187; Bingham v. Btewart, IS Bllnn.
106, and 14 Minn. 214; Deering v.
Thorn, 29 Minn. 120; Rowell y. Ole*
son, 82 Mian. 288; Peterson v. Ho-
man, 44 Minn. 166, 20 Am. St R.
564; Brunswick Balke Oo. T. Boutell*
46 Mihn. Si; Kraniger y. PiBoples
Bldg. Soc.» 60 Minn. 94.
• iTannatt y. Iftocky Mt Nat Bank
(1871)^ 1 Ck>lo. 279» 9 Anu Eep. 166.
loHager y. Bice (1877), 4 Ck>lo. 90,
34 Am. Rep. 68.
iiLaflin A Rand Powder Co. y.
Sinaheimer (1877), 43 Md. 411« 39
Am. Rep. 472.
83a
tHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS
[§ II53
And in accordance with these cases, the supreme court of Mississippi
held that where a bill was drawn upon an agent and accepted by him,
"Accepted, W. S. B., agent of H. W. H./' parol evidence was admis- *
sible, as between the original parties, to show that it was the intent
at the time to bind H., the principal, only.**
§ 1 1 53. ' Where the note read "we, the president and di*
rectors" of a turnpike company "promise to pay," etc., and was signed
by C. T. H., "President," J. H. H. and J. G. D., "directors" and E. R.
S., "secretary," the court of appeals of Maryland held that parol evi-
dence was admissible as between the original parties to exonerate the
agent by showing that the signers of the note did so as the agents of
the company and not as individuals and that the note was accepted
as the note of the company.**
So where a note reading "We promise to pay," etc., was signed
"Pioneer Mining Company, John E. Mason, Supt.," parol evidence
was held, by the supreme court of Qdifornia, to be admissible in an
action by the payee to charge Mason to show that it was understood
by the payee to have been the note of the company alone and to have
been given for a consideration passing to the company.**
So where a bill was signed "John Kean, President Elizabethtown &
Somerville R. R, Co.," the court of errors and appeals of New Jersey
held that parol proof was admissible, in an action against Kean by a
party who was apprised of that fact when he took it, to show that the
bill was the bill of the company, and not of Kean, individimlly.*'
In Kentucky, where a due bill was signed "for Thomas D. Owings,
James Grubbs," parol evidence was held to be admissible as against
the payee, to show that Grubbs was the manager of Owings' works,
and that he executed and delivered the due bill as the obligation of
Owings ; *• and the same ruling as against the payee was made in
Connecticut, where a note was signed A. W. M., "agent for the Mid-
dletown Manufacturing Company.""
12 Hardy v. Pilcher (1879), 67 Miss.
18, 34 Am. Rep. 432. See also Mar-
tin ▼. Smith, 65 Miss. 1. (The polat
in this case however was, more prop-
erly, not whether the principal could
be held upon the acceptance, hut
rather, since he drew the paper on
his own agent, it was not really to
ho regarded as his promise.)
isHaile v. Peirce (1869), 82 Md«
827, 3 Am. Rep. 189; and see Laflln
ft Rand Powder C!o. t. Sinsheimer.
9upra.
i«Bean ▼. Pioneer Mining Ca
(1885), 66 Cal. 451, 56 Am. Rep. 106.
IB Kean v. Dayis (1847), 21 N. J. L.
683, 47 Am. Dec. 182.
i« Owings V. Grubhs, 6 J. J. Marsh.
(Ky.) 31; Webb v. Burke, 6 B. Men.
(Ky.) 61.
IT Hovey V. Magill, 2 Conn. 680.
53
833
§ "54]
THE LAW OF AGENCY
[book III
In Missouri, where a note reading "I promise to pay," etc., "for
building a schoolhouse in Dist. No. 3," was signed by P. T. R., "Local
Director," it was held in an action by the payee against the director
that he might show by parol evidence that it was not intended to be his
note but that of the district." And the same ruling as against the
payee has been made in Alabama," Kansas,^^ South Dakota,*^ Okla-
homa,^^ Texas," Montana,** Virginia.^*
§ 1 154. ■ In Michigan, where the note read, "I promise,"
and was signed simply, W. S. W. "Agt." it was held, in an action by
the payee, that while upon its f^ce it was the promise of W., it could
be shown by parol evidence to exonerate him, that the parties had had
many dealings together and that this form of execution had come to •
be the recognized form for binding the principal,*'
In Indiana, where a variety of views had been expressed," the court
has held in an action by an indorsee that a note headed ''Midland Steel
isMcCleUan v. Reynolds, 49 Mo.
812; and the same ruling was made
In other cases, Shuetze v. Bailey, 40
Mo, 69; Musser v. Johnson, 42 Mo.
74, 97 Am. Dec. 316; Washington Ins.
Co. V. Seminary, 52 Mo. 480; Kloster-
mann v. Loos, 58 Mo. 290; Turner y.
Thomas, 10 Mo. App. 338.
See also Sparks v. Dispatch. Trans-
fer Co., 104 Mo. 531, 24 Am. St. R.
351, 12 L. R. A. 714, where there was
nothing at all on the face of the
note to indicate agent, and it was
held that parol evidence was not ad-
missihle.
19 Lazarus v. Shearer, 2 Ala. (N.
S.) 718. See also Baker v. Gregory,
28 Ala. 544, 65 Am. Dec. 366; Drake
V. Flewellen, 33 Ala. 106; May v.
Hewitt, 33 Ala. 161; Ware v. Morgan,
67 Ala. 461.
20 The note read "I promise," and
was signed W. M. B., "President Odd
Fellows Hall Association." A. T. L.
"Secretary." Benham v. Smith, 53
Kan. 495. See also Kline v. Bank of
Tescott, 50 Kan. 91, 34 Am. St. R. 107,
18 L. R. A. C33; Western Grocer Co.
Y. Lackman, 75 Kan. 34.
>i Miller ▼. Way, 5 S. Dak. 468, the
note read, "We the directors of the
Custer County Agricultural, etc., As-
sociation promise to pay ♦ ♦ •
Signed hy directors Custer Co. Ag-
ricnltural, etc.. Association:" A. S.
W., T. L. M., J. F. B., L. F. S., J.
I^. B., Ei. S., P. P., G. G. B.
22 James v. Citizens' Bank, 9 Okla.
546. The note read, "We promise to
pay*' and was signed R. W. P., J. G.
"President of Enid Town Co.," F. J.
"Secretary Enid Town Co."
29Traynham v. Jackson, 15 Tex.
170, 65 Am. Dec. 152, the note read,
"We, the trustees of Chappell Hill
College, promise to pay," and was
signed by eight persons. See also
Texas L. it C. Co. v. Carroll, 63 Tex.
48, though the paper here was held
to be non negotiable.
24 Knippenberg v. Greenwood Min.
Co., 39 Mont. 11.
23 Early v. Wilkinson, 9 Gratt.
(Va.) 68; Richmond, etc., R. R. Co.
V. Snead, 19 Gratt (Va.) 354, 100
Am. Dec. 670. (The action was not
fipon the note or due bill but upon
the common counts, against the
principal, and the due bill was ad-
mitted as evidence of the indebted-
ness of the latter.)
2«Keidan v. Winegar, 95 Mich.
430, 20 L. R. A. 250.
2Tin Second Nat. Bank ▼. Mid-
land Steel Co., 165 Ind. 581, 52 L. R.
A. 307, the court said, "The decis-
ions in this state upon the question
presented here cannot easily be
834
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS [§§ II55, 1156
Company," and reading, "We promise," and signed R. J. B. "Presi-
dent," while it may be prima facie the note of B., may still be shown
by parol evidence to have been intended to be the note of the com-
pany.
§ "55-
In Nebraska, it seems that parol evidence will
not support a plea at law denying liability on the notes, but that such
evidence would support an action for rectification in equity.^* In
New York, where the makers of a note designated themselves "Trus-
tees of the First Baptist Society of the Village of Brockport," it was
held that while prifna facie they were personally liable, yet, in an ac-
tion by the payees, the presumption might be rebutted by parol evi-
dence that the note was, to the knowledge of the payees, given as the
obligation of the Society," and this principle was reaffirmed in later
cases."*
§ 1156. ' '■ Such evidence has also been freely admitted by
the supreme court of the United States. Thus where a check headed
"Mechanics' Bank of Alexandria," drawn on the cashier of the Bank
reconcUed or distingulehed. Among
ttio0e holding that extrinsic evidence
is not admissible to show that a con-
tract executed by one who adds to his
signature the words, 'president,' 'sec-
retary,' 'agent,' 'trustee,' etc., is not
the contract of the party so signing,
but the obligation of another party,
are the following: Prather v. Ross, 17
Ind. 495; Kendall v. Morton, 21 Ind.
205; Wiley v. Shank, 4 Blackf. (Ind.)
420; Mears y. Graham, 8 Blackf.
(Ind.) 144; Hays v. Crutcher, 54
Ind. 260; Williams v. Second Nat
Bank, 83 Ind. 237; Wlllson v. Nich-
olson, 61 Ind. 241; Hayes v. Bru-
baker, 65 Ind. 27; Avery v. Dough-
erty, 102 Ind. 443, 52 Am. Rep. 680;
Hobbs T. Cowden, 20 Ind. 310; Jack-
son Sch. Twp. V. Farlow, 75 Ind. 118.
A different view seems to have been
taken in other cases. Means v.
Swormstedt, 32 Ind. 87, 2 Am. Rep.
330; McHenry v. Duffleld, 7 Blackf.
(Ind.) 41; Pitman v. Kintner, 5
Blackf. 250, 33 Am. Dec. 469; Ken-
yon V, Williams, 19 Ind. 44; Bing-
ham V. Kimball, 17 Ind. 396; Ind.,
etc., R. Co. v. Davis, 20 Ind. 6, 83 Am.
Dec. 303; Gaff v. Theis, 33 Ind. 307;
Vater v. Lewis, 36 Ind. 288, 10 Am.
Rep. 29; Pearse v. Welbom, 42 Ind.
331; Neptune v. Paxton, 15 Ind. App.
284; Louisville, etc., R. CJo. v. Cald-
well, 98 Ind. 245; Second Baptist
Church y. Furber, 109 Ind. 492;
Swarts v. Cohen, 11 Ind. App. 20;
Hunt y. Llstenberger, 14 Ind. App.
320."
28 Second Nat Bank v. Midland
Steel Co., 155 Ind. 581, 52 L. R. A.
307.
2» Western Wheeled Scraper Co. v.
McMillen, 71 Neb. 686. See also
Western Wheeled Scraper Co. v.
Stickleman, 122. Iowa, 396.
80 Brockway v. Allen, 17 Wend. (N,
Y.) 40.
81 See White v. Skinner, 13 Johns.
(N. Y.) 307; Barker v. Mechanic Ins.
Co., 3 Wend. (N. Y.) 94, 20 Am. Dec.
664; Babcock v. Beman, 11 N. Y. 200;
Bank of Utlca v. Magher, 18 Johns.
(N. Y.) 342; Bank of Genessee v.
Patchin Bank, 19 N. Y. 312; Randall
v. Van Vetchen, 10 Johns. (N. Y.) 60.
10 Am. Dec. 193; Newman v. Greeff,
101 N. Y. 663; Schmittler v. Simon,
114 N. Y. 176, 11 Am. St. R. 621;
First National Bank y. Wallis, 150
N. Y. 455.
83s
§ II57]
THE LAW OF AGENCY
[book Ul
of Columbia, was signed *'Wm. Paton, Jr.," parol evidence was held
to be admissible to show that Paton was the cashier of the Mechanics'
Bank; that he drew the check as such cashier and that the Bank of
Columbia knew it ; •* but where a note drawn payable to the order ol
"Geo. Moebs, Sec. and Treas.," by the "Peninsular Cigar Co., Geo.
Moebs, Sec. and Treas.," was indorsed "Geo. Moebs, Sec. and Treas.,**
it was held that the indorsement was clearly that of the cigar com-
pany and that parol evidence was not admissible to show that the in-
dorsement was intended to be that of Moebs personally.'*
§ 1 157. Cases holding such evidence not admissible. — But in
Massachusetts, where a draft headed "Office of Portage Lake Manu*
facturing Company," drawn upon "E. T. Loring, Agent," and con-
cluding "and charge the same to the account of the company," was
signed by "J. R. Jackson, Agt.," and was accepted as follows, "Ac-
cepted June 15, E. T. Loring, Agent," it was held in an action by the
payee against the acceptor, that parol evidence was not admissible to
show that the defendant was in fact the agent of the company named
on the face of the draft, that the plaintiff knew that he was so, and
that the defendant had no personal interest in the company. In tfiis
case, as has been seen, the court construed the words disclosing the
name of the company and upon whose account the bill was drawn, as
showing that the bill was drawn as the bill of the company, and that
S2 Mechanics' Bank ▼. Bank of Co-
lumbia, 5 Wheat (U. S.) 826, 5 L.
Bd. 100; see also, Baldwin v. Bank
of Newbury, 1 Wall. (IT. 8.) 234, 17
L. Ed. 534, where, in an action on a
note reading '^ive months after date,
I promise to pay to the order of 0. (7.
Hale, Esq., Cashier, Thirty-five hun-
dred dollars, payable at either bank
In Boston, value received," It was
held that parol evidence was admis-
sible to show that Hale was cashier
of the plaintiff bank, and that in
taking the note he acted as the
cashier and agent of the corpora-
tion, and Metcalf v. Williams, 104
U. S. 93, 26 L. Ed. 665, where it
is held that where a check was
signed "W. Q. Williams, V. Prea't,"
parol evidence was admdssible to
show that the person taking it, took
it as the check of the corporation of
which Williams was vice-president
83 Falk V. Moebs, 127 U. S. 597, 32
L. Ed. 266. "We conclude, there-
fore/' says Mr. Justice Lamar, In
this case, "that the notes involved
in this controversy, upon their face,
are the notes of the corporation. In
the language of the court below, they
were 'drawn by, payable to and in-
dorsed by, the corporation.' There
is no ambiguity in the indorsement,
but, on the contrary, such indorse-
ment is, in terms, that of the Penin-
sular Cigar Company. This being
true, it follows that the court below
was right in excluding from the jury
the evidence offered to explain away
and modify the terms of such In-
dorsement.** Citing White v. Bank»
102 U. S. 658, 26 L. Ed. 250; Martin
V. Cole. 104 U. S. 30, 26 L. Ed. 647;
Metcalf V. Williams, Id, 93.
See also American Trust Co. t.
Canevin, 107 C. C. A. 648, 184 Fed.
657. '
836
CHAP, in]
EXECUTION OF SIMPLE CONTRACTS
[§ "S8
they could not be again used to show that it was also accepted in that
character;** and where a note reading "I promise to pay," etc., was
signed by W. H. E., "Pres. and Treas. Chelsea Iron Foundry Com-
pany," the same court held that it was the individual promise of W. H.
E., and that it was erroneous in an action by the payee to admit oral
testimony to show that at the time the note was given and afterwards,
it was understood and agreed by the parties that it was the note of
the foundry company .•'
So in Iowa, where a note containing an individual promise was
signed "E. G., President, J. A. C, Secretary, E» S., Director," it was
held that it was the individual promise of the signers and that parol
evidence was not admissible in an action by the payee to show that it
was intended to be the promise of the school district of which the
signers were the respective officers indicated.**
Many other cases in that state are to the same effect.*^
§ II58, In Maine, where a note was drawn "we promise
to pay," etc., and was signed by four individuals, adding "President
and Directors of the Prospect and Stockton Cheese Company," the
court held tliat evidence was not admissible even between the origi-
nal parties, to show that it was intended to be the obligation of the
company.'*
In Illinois, where the note ran, "we, the trustees of the Methodist
Episcopal Church in Lebanon, promise to pay," etc., and was signed
with the individual names of the makers, the court decided that it
was the individual note of the signers and that parol evidence could
not be admitted in an action by the payee's administrator to show
"that it was well understood by the payee when the makers executed
the note, they were acting in their capacity as trustees of the church ;
that they intended to obligate the church corporation, having full au-
S4 SlawBon V. Lorlng, 5 Allen
(Mass.), 340, 81 Am. Dec 760.
sft Davis y. England, 141 Mass. 587.
To like effect: Tucker Mfg. Co. v.
Falrbax&ks, 98 Mass. 101; Bartlett v.
Hawley, 120 Mass. 92.
As to tbe reformation of the in-
strument, see Bustis Mfg. Co. v.
Saoo Brick Co., 198 Mass. 212.
80 American Ins. Co. ▼. Stratton,
59 Iowa, 696.
ST See, Heffner v. BrowneU, 70
Iowa, 591, 7& Iowa, 341; McCandless
V. Belle Plaine Canning Co., 78 Iowa,
161, 16 Am. St R. 429, 4 L. R. A. 896;
Lee V. Percival, 85 Iowa, 639; Mat-
thews V. Dubuque Mattress Co., 87
Iowa, 246, 19 L. R. A. 676.
But see Western Wheeled Scraper
Co. V. Stickleman, 122 Iowa, 896,
where the court, as now constituted,
expresses doubt as to the correctness
of the earlier rule.
MRendell T. Harriman, 76 Me.
497, 46 Am. Rep. 421.
837
§ 1 159]
THE LAW OF AGENCY
[book III
thority in that regard, and did not intend to bind themselves personally
or individually by their writing." *•
In Ohio where a bill was accepted by J. A. R., "Agent K. & O. C.
Co., parol evidence was rejected in an action by an indorsee to show
that he w^as the duly authorized agent of Kanawha & Ohio Coal Com-
pany ; that he accepted the bill for and on account of the company and
that the payee knew these facts.**'
Similar rulings have been made in South Carolina," Vermont,**
and perhaps other states.**
§ 1159. What rules applied. — ^The trouble that has been exper-
ienced in dealing with this question does not arise so much from a
lack of appreciation of the proper principle involved, as from the diffi-
culty of applying it, although the courts have not always agreed even
upon the principle.
Thus the rule has been stated by a learned judge in this way : "Ordi-
narily, no extrinsic testimony of any kind is admissible to vary or ex-
plain negotiable instruments. Such paper speaks its own language,
and the meaning which the law affixes to it cannot be changed by any
evidence aliunde. One of the few exceptions to this rule is where
anything on the face of the paper suggests a doubt as to the party
bound, or the character in which any of the signers has acted in af-
fixing his name: in which case, testimony may be admitted between
the original parties to show the true intent. Thus, where one has
signed as agent of another, while the prima facie presumption is that
the words are merely descriptio personoe, and that the signer is in-
dividually bound, yet it may be shown in a suit between the parties
that it was not so intended, but that, on the contrary, the true inten-
tion was that the payee should look to the principal whose name was
disclosed in the signature of his agent, or who was well known to be
the true party to be bound. The principle, though not recognized in
all the cases, is, we think, a sound one, and supported by the weight
of authority." **
«« Hypes V. Griffin (1878), 89 111.
134, 81 Am. Rep. 71. But see Frank-
land V. Johnson, 147 111. 620; La
Salle Nat. Bank v. Tolu Rock and
Rye Co., 14 111. App. 141.
40 Robinson v. Kanawha Valley
Bank, 44 Ohio St 441, 58 Am. Rep.
829; see also to same effect: Ck>]lina
v. Insurance Co., 17 Ohio St 215, 93
Am. Dec. 612; Titus v. Kyle, 10 Ohio
St 444.
But see Aungst v. Creque^ 72 Ohio
St 551.
41 Moore ▼. Cooper, 1 Spears (S.
Car.), 87; Fash v. Ross, 2 Hill (8.
Car.), 294; Taylor t. McLeaJi; 1 Mc-
Mul. (S. Car.) 862.
*2 Arnold v. Sprague, 84 Vt. 402.
"In Qeorgia. see, Cleaveland v.
Stewart 3 Ga. 283; Bedell v. Scai^
lett, 76 Qa. 56.
44 Chalmers, J., In Hardy v. Pll-
8.^8
CHAP. Ill] EXECUTION OF SIMPLE CONTRACTS [§ II59
And the principle has been asserted in another case as follows:
"The established rule seems to be, that an agent, in making a promise
for his principal, is liable on the promise unless it be expressed in
terms which show that it was made for and on behalf of the princi-
pal ; and where an agent makes a promissory note to a third person,
in terms sufficient to bind himself as principal, the mere addition of
the word 'agent* or other description of his office or capacity, to his
signature, does not change or vary the legal effect of the promise it-
self.** * ♦ * But sometimes the agent may attach to his signature
the character in which he signs the instrument without any corre-
spondent or other description in the body of the note— or he may, in
the body of the instrument, disclose the name of his principal and
sign his own individual name without any additional description what-
ever,— or he may sign his own name, without apt terms to charge
himself, and in the body of the note use doubtful expressions to de-
scribe the principal, leaving the precise meaning of the instrument to
be gathered from the terms on its face, so ambiguous or obscure as
to render its interpretation, per se, too difficult and uncertain for just
and sound construction. When the note is of this last description,
that is where its language or terms are so unintelligible as to admit
of no rational interpretation of the meaning, or are not sufficiently
decisive of the intention of the parties, but, on the contrary, are
equivocal and uncertain, extraneous proof, as between the original
parties, may be admitted to show the true character of the instrument,
and what party, — the principal or the agent, or both, — is liable.
"Where individuals subscribe their proper names to a promissory
note, prima facie they are personally liable, though they add a de-
scription of the character in which the note is given; but such pre-
sumption of liability may be rebutted, as between the original parties,
by proof that the note was in fact given by the makers, as agents, with
the payee's knowledge." *®
And still again it has been said that "The rule is that when words
which may be either descriptive of the person, or indicative of the
character in which he contracts, are affixed to the name of the con-
tracting party, prima facie they are descriptive of the person only, but
the fact that they were not intended by the parties as descriptive of
Cher, 67 MiSB. 18, 34 Am. Rep. 432, Ics' Bank t. Bank of Columbia, 5
citing 1 Dan. on Neg. Inst S 418; Wheat. (U. S.) 326, 5 L. Ed. 100.
Halle v.* Peirce, 32 Md. 327, 3 Am. <5 Citing Sumwalt v. Ridgely, 20
Rep. 139; McClellan v. Reynolds, 49 Md. 114.
Mo. 312; Baldwin v. Bank, 1 Wall. *« Halle v. Peirce. 32 Md. 327, 3
(U. a> 234, 17 L. Bd. 534; Mechan- Am. Rep. 139.
839
§ ri6oJ THE LAW OF AGENCY [bOOK III
the person, but were understood as determining the character in which
the party contracted, may be shown by extrinsic evidence; but the
burden of proof rests upon the party seeking to change the prima facie
character of the contract." *^
§ 1160. In Kean v. Davis,*' where the form of signature
>^as "John Kean, President Elizabethtown and Somerville R. R. Co.,"
Chief Justice Green said : "It is at best, upon the face of the instru-
ments, doubtful by whom they were executed. It is hot clear who
was the contracting party, whether the obligation was assumed by the
agent, or whether he contracted on behalf of his principal. May ex-
trinsic evidence be resorted to, to remove this doubt? Is parol evi-
dence admissible to show by whom this contract was in fact made, —
whether it is the contract of the agent or the contract of the principal ?
"If this were a verbal and not a written contract, it is not questioned
that the evidence offered is both pertinent and competent to discharge
the agent, and fix the liability upon the principal. The objection
urged to the evidence is, that the contract is in writing ; that the con-
struction of a written agreement is matter of law, to be settled by the
court upon the terms of the instrument itself; and that evidence aliunde
cannot be received to contradict or to vary the terms of a valid writ-
ten instrument.
"It is material to observe that the body of this instrument contains
not a word indicating by whom the contract was, made. The lan-
guage of the instrument is equally applicable to a contract made by
the individual or by the corporation. It cannot be said that this evi-
dence will either contradict or vary the terms of the instrument. The
whole difficulty lies, not in the construction of the instrument, but in
the import of the signature. That signature, as we have seen, may
import either the act of the company or of the individual. The terms
of the instrument are neither varied nor contradicted by proof that it
was the contract of the one or of the other.
"The question is not what is the true construction of the language
of the contracting party, but who is the contracting party? Whose
language is it? And the evidence is not adduced to discharge the
agent from a personal liability which he has assumed, but to prove
that in fact he never incurred that liability. Not to aid in the con-
struction of the instrument, but to prove whose instrument it is.
"Now it is true that the construction of a written contract is a ques-
tion of law, to be settled by the court upon the terms of the instru-
*7 Pratt v. Beaupre, 13 Minn. 187. *• 21 N. J. L. 683, 47 Am. Dee. 182.
840
CHAP, ni] EXECUTION OF SIMPLE CONTRACTS [§ II61
ment. But whether the contract was in point of fact executed, when
it was made, where it was made, upon what consideration it was made,
and by whom it was made, are questions of fact to be settled by
a jury, and are provable in many instances by parol even though the
proof conflicts with the language of the instrument itself."
So in the United States Supreme Court, Mr. Justice Bradley said :
'The ordinary rule doubtedly is that if a person merely adds to the
signature of his name the word 'agent,' 'trustee,' 'treasurer,' etc.,
without disclosing his principal, he is personally bound. The ap-
pendix is regarded as a mere descriptio personce. It does not of it-
self make third persons chargeable with notice of any representative
relation of the signer. But if he be in fact a mere agent, trustee or
officer of some principal, and is in the habit of expressing in that way
his representative character in his dealings with a particular party,
who recognizes him in that character, it would be contrary to justice
and truth to construe the documents, thus made and used, as his per-
sonal obligations contrary to the intent of the parties." *•
§ ii6i» — - The reasons given for the contrary ruling are
numerous. Thus in the Colorado case above cited,*® the court said :
"If the defendant is liable as drawer of this negotiable instrument,
that liability must be determined by the instrument itself. Parol evi-
dence can never be admitted for the purpose of exonerating an agent
who has entered into a written contract in which he appears as prin-
cipal, even though he should propose to show, if allowed, that he dis-
closed his agency and mentioned the name of his principal at the time
the contract was executed. When a simple contract, other than a
bill or note, is made by an agent, the principal whom he represents
may, in general, maintain an action upon it in his own name, and
parol evidence is admissible, although the contract is in writing, to
show that the person named in the contract was an agent, and that
he was acting for his principal. Such evidence does not deny that
the contract binds those whom on its face it purports to bind, but
shows that it also binds another.^'
In Massachusetts, the court says: "The rule excluding all parol
evidence to charge any person as principal, not disclosed on the face
of a note or draft, rests on the principle that each person who takes
«• Metcalf y. WlUiams, 104 U. S. tional Bank, 1 Colo. 278, 9 Am. Rep.
93, 26 Li. Ed. 666. 156. See contra: Hager y. Rice, 4
soTannatt v. Rocky Mountain Na- Colo. 90, 34 Am. Rep. 68.
841
§ I 162]
THE LAW OF AGENCY
[book III
b. That the instrument was, to the knowledge of the parties, in-
tended to be the obligation of the principal and not of the agent, and
that it was given and accepted as such, certainly where the purpose
is to exonerate the agent,'* or, by many authorities, to charge the prin-
cipal.**
his representative character In his
dealings with a particular party,
who reco£:nlze8 him In that charac-
ter, It would be contrary to Justice
and truth to construe the documents,
thus made and used as his personal
obligations, contrary to the Intent of
the parties." Metcalf v. Williams,
104 U. S. 93, 99, 26 L. Ed. 665. See
also, Hovey v. Magllli 2 Gonn. 680;
I^a Salle Nat Bank v. Tolu, etc, Co.,
X4 111. App. 141; MllUgan v. Lyle, 24
La. Ann. 144; Gerber v. Stuart, 1
Montana, 172.
So it may be shown tliat the prin-
cipal was doing business in the
agent's name or that he has adopted
the agenf 8 name as his own. Bank
of Rochester v. Monteath, 1 Denio
(N. Y.), 402, 43 Am. Dec. 681; Dev-
endorf v. West Virginia, etc., Co., 17
W. Va. 135; Pease v. Peade, 35 Conn.
131, 95 Am. Dec. 295; National Shoe
& Leather Bank's Appeal, 55 Conn.
469; Crocker v. Colwell, 46 N. Y.
212; Chandler v. Coe, 54 N. H. 661;
Melledge v. Boston Iron Co., 5 Cush.
(Mass.) 158, 51 Am. Dec. 59; Conroe
v. Case, 79 Wis. 338, 48 N. W. 480.
MSays Gray, J.: "As a general
proposition, it is undoubtedly true,
that one who signs a writing as
agent, trustee or president is to be
regarded as merely describing him-
self, and hence is to be held person-
ally liable. But where a writing is
thus executed, with full authority
from the principal, the party upon
whose account It Is executed Is alone
liable." Bank of Genesee v. Patchen
Bank, 19 N. Y. 312. See also. Brock-
way V. Allen, 17 Wend. (N. Y.) 40;
Keldan v. Wlnegar, 95 Mich. 432, 20
L. R. A. 430; Crandall v. Rollins, 83
App. Dlv. 618; American Trust Co.
y, Canevin, 107 C. C. A, 543; Knlp-
penberg v. Greenwood Mln. Co., 39
Mont. 11; Owlngs v. Grubbs, 6 J. J.
Marsh. (Ky.) 31; McClellan v. Reyn-
olds, 49 Mo. 312; Markley v. Quay, 14
Phlla. 164.
See also the cases cited in detail
in the preceding section.
See also Whitney v. Wyman, 101
U. S. 392, 25 L. Ed. 1050.
Oontra: Collins v. Ins. Co., 17 Ohio
St. 215, 93 Am. Dec 612, where it is
held that the agent cannot be exon-
erated, though perhaps the principal
might be held.
win Burkhalter v. Perry, 127 Ga.
438, 119 Am. St. R. 343, the payee
was allowed to recover of the prin-
cipal upon a note signed "D. C. N,
Burkhalter, Agent," where it was al-
leged that the note sued on was the
note of the principal, signed by his
duly constituted agent, with intent
thereby to charge the principal.
But the court also said that, if the
agent had been sued, he could not
have shifted the responsibility by
showing that It waa intended to be
the note of the principal. In Lock-
wood V. Coley, 22 Fed. 192 (before
the U. S. circuit court in Georgia),
recovery was also allowed to the
payee against the principal upon a
note signed "J. A. D. Cbley, Agt.," he
being shown to have been the agent
of the defendant his wife. Almost
identical in facts and holding is
Green v. Skeel, 2 Hun (N. Y.), 485.
(But there has been a good deal of
question about this case. See Mer-
chants Bank V. Hayes, 7 Hun, 580;
Crandall v. Rollins, 88 App. Dlv.
618; Cortland Wagon Co. v. Lynch,
82 Hun (N. Y.), 78). Moore v. Mc-
Clure, 8 Hun (N. Y:), 557 is also
identical Iti facts and holding. See
also Baker v. Gregory, 28 Ala. 544,
65 Am. Dec. 366.
844
CHAP. Ill]
EXECUTION OF SIlifPLE CONTRACTS
[§ II62
c. That an instrument which is so ambiguous upon its face as to
render it uncertain who was intended to be bound, was known to be
intended to be the obligation of the principal, and this whether the
purpose be to exonerate the agent or to charge the principal.**
Where parol evidence is thus admissible to exonerate the agent,
counter evidence of the same sort is also admissible to charge him by
showing that it was the intention to bind him personally.'*
2. Between one of the original parties and a third party, such evi-
dence is admissiUe to make either of the lines of proof mentioned
above:
a. Where the third person is not a bona fide holder for value and
without notice;*' or
In Brenner v. Lawrence, 27 Misc.
(N. Y.) 755, where a Arm of bank-
ers directed their cashier to draw a
check on their account which he
signed "H. M. Moore, Cashier," the
principals were held liable (but
Cashier paper has always stood upon
somewhat distinct ground).
In Washington Mut. P. Ins. Co. v.
St. Mary's Seminary, 52 Mo. 4S0, the
payee recovered assessments upon
aA insurance note signed "Daniel
McCarthy, President" (See the
comments on this case in Sparks v.
Despatch Trans. Co., 104 Mo. 531, 24
Am. St. R. 351, 12 L. R. A. 714).
In May v. Hewitt, 33 Ala. 161, the
indorsee of a bill was allowed to re-
cover of the principal upon a bill
drawn upon "Owners of S. B. Mes-
senger** and "accepted by B. W. Bell,
Capt"
In Ferris v. Thaw, 72 Mo. 446,
parol evidence was admitted to
charge the members of a lodge upon
a note signed by C. T. "W. M. [Wor-
shipful Master] Polar Star Lodge
No. 79; J. W. li. Treasure."
In Brown v. Talnter, 114 N. Y.
App. Dlv. 446, it is held that where
money is loaned upon the express
condition that a certain person shall
endorse the note and he does so, he
cannot afterwards be held as an un-
disclosed principal though he got
the benefit of the loan.
«6 This principle does not seem to
be strongly controverted, but, as has
been seen, the courts have not al-
ways agreed as to what constitutes
such an ambiguity. It is certainly
sustained by the great weight of au-
thority. Kean v. Davis, 21 N. J. L.
683, 47 Am. Dec. 182; Halle v. Pelrce,
32 Md. 327, 3 Am. Rep. 139; Early
V. Wilkinson, 9 Gratt (Va.) 68; Laz-
arus V. Shearer, 2 Ala. 718; Hardy v.
Pllcher, 57 Miss. 18, 34 Am. Rep.
483; Martin v. Smith, 66 Miss. 1;
Hager v. Rice, 4 Colo. 90, 34 Am.
Rep. 68; Lacy v. Dubuque Lumber
Co., 43 Iowa, 610; Mechanics' Bank
V. Bank of Columbia, 5 Wheat (U.
S.) 326, 5 L. Ed. 100; Baldwin v.
Bank of Newbury, 1 Wall. (U. S.)
234, 17 Lk Ed. 534; Dunbar Box Co.
V. Martin, 53 Misc. (N. Y.) 312; Sou-
hegan Bank v. Boardman, 46 Minn.
293.
For cases holding that the princi-
pal is bound where the agent signs
and the note is "ambiguous" see:
Lacy V. Dubuque Lumber Co., 43
Iowa, 610; Washington Mut. F. Ins.
Co. V. St. Mary's Seminary, 52' Mo.
480; May v. Hewitt, 33 Ala. 161.
••Wlers V. Treese, 27 Okla. 774;
Laflin, etc.. Powder Co. v. Sinshef-
mer, 48 Md. 411; Black Rivar Lum-
ber Ck). V. Warner, 98 Mo. 474 [the
last was not a case of negotiable In-
strument].
»7Metcalf V. Wllliatos. 104 U. S.
93, 26 L. Ed. 665 (where the plaintift
had full knowledge of the facts and
was not allowed to recover of one
845
§ II66J
TH£ LAW OF AGENCY
[book UX
AH considerations of propriety and convenience suggest such a clear
and unequivocal statement of the character and purpose of the act*
that there can be no misunderstanding. Hence a proper and formal
execution would require that the relations of the parties be set forth,
and that the instrument be declared to be the contract of the principal
«x^uted by his agent. As to the method of signing, the forms found
to be sufficient for the execution of n^otiable instruments may ap*
propriately be followed.
Notwithstanding this, however, it is a matter of every^day exper-
ience that in the haste and press of business, contracts are drawn not
only in inartificial, but frequently in equivocal and ambiguous lan-
guage, and by persons ignorant not only of the technical meaning of
legal phrases, but often of the accepted construction of the vernacu-
lar. From the very necessities of the case, therefore, as well as from
a desire to give effect to the intention of the parties, courts look with
indulgent eyes upon such contracts. The strict rules of the common
law which govern the execution of solemn instruments under seal, do
not apply here; neither is there the same necessity that they should
tell their own story in that direct and positive manner that has been
seen to be required of negotiable paper.^'
§ ii66. Intention of the parties as expressed in the instrument the
true test. — In determining whether a given form of execution is suf-
ficient to bind the principal, the primary consideration is, What is the
true intention of the parties as expressed in this contract? In set-
tling this question it must be borne in mind that no particular form of
words is required, and that the intention is to be gathered from the
whole instrument and not from any isolated portion of it.^* The situ-
ation of the parties and the circumstances of the case are to be taken
into consideration. So, too, a valid usage or custom may be resorted
to, in the proper cases, to aid in arriving at the intention, but not to
contradict or vary the terms expressly employed.'''
If, upon a survey of the whole instrument, it can be collected that
78 See Merchants' Bank v. Central
Bank, 1 Ga. 418, 44 Am. Dec. 665;
Andrews v. Ebtes, 11 Me. 267, 26 Am.
Dec. 521; New SSngland Insurance
Co. V. De Wolf, 8 Pick. (Mass.) 56;
Klce V. Gove, 22 Pick. (Mass.) 158,
33 Am. Dec. 724.
74 Rogers v. March, 88 Me. 106;
Whitney v. Wyman, 101 U. S. 392. 25
L. Ed. 1050; Pentz T. Stanton, 10
Wend. (N. Y.) 271, 25 Am. Dec. 558;
MagiU V. Hinsdale, 6 Conn. 464, 16
Am. Dec. 70; Hovey v. MagUl, 2
Conn. 682; Spencer v. Field, 10
Wend* (N. Y.) &7; New England Ins.
Co. y. De Wolf, 8 Pick. (Mass.) 56;
City of Detroit y. Jackson, 1 Doug.
(Mich.) 106; FoWIe y. Kerchner, 87
N. C. 49.
TsOelrlcks y. Ford, 28 How. (tl.
S.) 49, 16 L. Ed. 534.
848
CHAP, ni]
EXECUTION OF SIMPLE CONTRACTS [§§ II67, II68
the true object and intent of it are to bind the principal and not the
agent, courts of justice will adopt that construction of it, however in-
formally it may be expressed.'^
§ XZ67. Principal alone bound by c<Mitract made in his name by
an authorized agent— It is ordinarily not only the duty, but also
the interest of the agent to so execute the contract as to secure to the
principal the benefits, and to impose upon him the obligations. This
he may do by keeping within the scope of his authority, and executing
the contract in the name of his principal. If he does so, the principal
alone will be bound. The agent will not be bound upon the contract be-
cause the contract does not purport to bind him, and he will not be
liable in any other form because he has done no more than he was
legally authorized to perform."
§ 1 168« Presumption that known agent doea not intend to bincl
himself. — Here, as elsewhere, it is the presumption that a known
agent, authorized to act, who discloses his principal and avowedly
purports to act for him, does not intend to bind himself personally."
Nevertheless, as will be seen, there are many cases in which he may,
wittingly or unwittingly, do so: clearly, where his agency is not dis-
closed, and even where it is disclosed, if the agent so frames the un-
Te Merchants' Bank v. Central
Bank, 1 Qa. 418, 44 Am. Dec. 6G5;
Abbey v. Chase, 6 Cash. (Mass.) 66,
and cases cited In note 74, above.
In Whitney v. Wyman, 101 U. S.
SS2, 25 L. Ed. 1050, Mr. Justice
Swayne says: "Where the queation
of agency In making a contract
arises, there is a broad line of dis-
tinction between instruments under
seal and stipulations in writing not
under seal, or by parol. In the for-
mer case the contract must be in the
name of the principal, must be un-
•der seal, and must purport to be his
-deed and not the deed of the agent
covenanting for him. Stanton v.
Camp, 4 Barb. (N. Y.) 274.
"In the latter cases the question is
always one of intent; and the court,
being untrammeled by any other
<;onBideration, is bound to give it ef-
fect. As the meaning of the law-
maker is the law, so the meaning of
the contracting parties is the agree-
ment Words are merely the sym-
bols they employ to manifest their
purpose that it may be carried into
execution. If the contract be un-
sealed and the meaning clear. It
matters not how it is phrased, nor
how it is signed, whether by the
agent for the principal or with the
name of the principal by the agent
or otherwise.
"The intent developed is alone ma-
terial, and when that is ascertained
it is conclusive. Where the princi-
pal is disclosed and the agent is
known to be actllig as such, the lat-
ter cannot be made personally liable
unless he agreed to be so."
77 Davis V. Lee, 52 Wash. 830, 1^2
Am. St R. 973.
7«See Whitney v. Wyman, 101 U.
8. 3d2, 25 L. EM. 1050; Jones v.
Gould, 123 N. Y. App. Div. 236; HaU
V. Lauderdale, 46 N. Y. 70; Blount v.
Tomlinson, 57 Fla. 35; Durham v.
S tubbings. 111 111. App. 10; and
many other cases cited In subse-
quent sections.
54
849
§§ 1 169, 1 170] THE LAW OF AGENCY [bOOK III
dertaking as to make himself, according to the established principles
of interpretation, the contracting party to the obligation.
§ 1 1 69. Agent bound who conceals fact of agency or name of
principal.— If the agent would bind the principal he must, of course,
disclose, not only the fact of the agency, but also the name of the
principal, and make the contract in the principal's name. If, instead
of doing so, he conceals both facts and makes the contract as though
he were himself the principal, he will ordinarily be personally liable
upon it.'* So if, though disclosing the fact that he is an agent, he
does not disclose who his principal is, but keeps the latter's identity-
concealed, the agent will ordinarily be personally liable*® unless he
has clearly excluded such a result.'* The principal, as will be more
fully seen hereafter, may also be liable upon the contract when dis-
covered, in both of the cases above referred to; but that fact does not
relieve the agent if the other party prefers to hold him.
As will be seen hereafter,'* also, it is not enough to relieve the agent
that the other party had the means of ascertaining the name of the
principal.*' And the principal must be known at the time of making
the contract; his subsequent disclosure will not suffice to relieve the
agent.**
§ 1 170. Known agent may bind himself by express words. — But
although where an agent acts within the scope of his authority and
▼B See Book IV, Chap. Ill ; Amans personally, since the complaint, not
V. Campbell, 70 Minn. 493,. 68 Am. St only alleged that he purchased the
R. 547; Bacon y. Rupert, 39 Minn, goods as agent, but as agent of hi»
612; Pugh V. Moore, 44 La. Ann. 209; wife. "If in the complaint the plain-
Kneeland v. Coatsworth, 9 N. Y. tiff had stopped by alleging that W.
Supp. 416; Bassett y. Perkins, 66 E. Harter agent, had purchased the
Misc. 103. goods, that he did not, and never
80 Long y. McKissick, 60 S. Car. 218 ; has disclosed as agent for whom he
Macdonald v. Bond, 195 111. 122; Ma- had purchased the goods, the de-
gruder y. Belt, 12 App. D. C. 1151; fendant, W. E. Harter, could not have
Good y, Rumsey, 50 N. Y. App. Diy. successfully demurred." Pope ▼•
280; Nichols y. Weil, 30 N. Y. Misc. Harter, 66 8. Car. 64.
441. ^^ Aa in Ogleaby y. Ygleeias, Bl. BL
A complaint which alleges that A El. 930; Carr y. Jackson, 7 Exch.
W. E. Harter, the defendant, con- 882; Lyon y. Williams, 6 Gray (71
ducted a business as the agent of Mass.), 567.
his wife, in the name of "W. E. •« See post. Book IV, Chap. III.
Harter, agent;" that in the conduct "Cobb y. Knapp, 71 N. Y. 349, 27
of such business he purchased from Am. Rep. 51; Nelson y. Andrews, 1^
the plaintiff, and they delivered to N. Y. Misc. 623; De Remer y. Brown,
him as such agent, cerUin goods; 166 N. Y. 410; Meyer y. Redmond,
that at the time he purchased said 141 N. Y. App. Div. 123.
goods he did not disclose the name «« Cobb v. Knapp, supra; Nelson y*
of his principal, was held to state no , Andrews, supra^
cause of action against W. E. Harter*
850
•CHAP. Ill]
EXECUTION OF SIMPLE CONTILVCTS
[§ II7O
in the name and behalf of his principal, he is not personally liable;
■still it is entirely competent for him to pledge his individual responsi-
bility, and if by the terms of the contract he binds himself personally,
and engages expressly in his own name to pay money or to perform
•other obligations, he will be personally responsible even though he was
Icnown to be an agent,^* and did not really intend to bind himself, and
though he describes himself as "agent," etc.*' As in the case of nego-
tiable paper, the mere recital of the fact of agency, and the mere addi-
tion to his signature of the title of his representative character, are
prima facie to be construed as descriptive of the person only, and not
^s indicating an 'intention to charge a principal ; and if, in such- a case,
the contract contains apt words to bind the agent personally, he will
he held individually liable.
S5 Where an agent, although
known to be acting In a representa-
tive capacity, makes the written con-
tract in his own name, without add-,
ing thereto any indicia of represent-
ative capacity, or without indicating
In any manner his agency, he will
l>c bound personally; and parol evi-
dence is not competent to vary the
writing and discharge him of his
liability. Sadler v. Young, 78 N. J.
L. 594; Goodridge v. Wood, 138 111.
App. 488; Meyer v. Redmond, 141 N.
Y. App. Div. 123; Jones v. Gould, 197
"N. Y. 580; Gordon Malting Co. v.
Bartels Brewing Co.. 206 N. Y. 528;
I<eterman v. Charlottesville Lumber
jCo„ 110 Va. 769; McConnell v. Hold-
erman, 24 Ok la. 129; American Al-
Icali Co. V. Bean, 125 Fed. 828.
Although a person recites in a
contract that he makes it '^tot a
bridge company to be organized and
incorporated," but otherwise makes
and signs it in his own name, he is
personally liable. O'Rorke v. Geary,
207 Pa. 240. See also Kelner v. Bax*
ter, L. R. 2 C. P. 174.
8«Simond8 v. Heard, 23 Pick.
(Mass.) 120, 84 Am. Dec. 41; An-
drews v. Estes, 11 Me. 267, 26 Am.
Dec. 521; Burrell v. Jones, 3 Barn. A
Aid. 47; Flske v. Eldridge, 12 Gray
(Mass.), 474; Morell v. Codding, 4
Allen (Mass.), 403; Guernsey v.
Cook, 117 Mass. 548; Miller v. Early,
22 Ky. Law Rep. 825, 58 S. W. 789;
Campbell v. Porter, 61 N. Y. Supp.
712; Laramee v. Tanner, 69 Minn.
156; Marx v. Ck>Operative Ass'n, 17
Tex. Cly. App. 408; Dockarty v. Til-
lotson, 64 Neb. 432; Lewis v. Weld-
enfeld, 114 Mich. 581; Bell v. Teague,
83 Ala. 211; Mead v. Altgeld, 136
111. 298; Florida, etc., R. Co. v. Var-
nedoe, 81 Ga. 175; Candler v. De
Give, 133 Ga. 486; Zlegler v. Fallon,
28 Mo. App. 295; Hick v. Tweedy,
63 Law T. 765. See also. Fowler v.
McKay, 88 Neb. 387; Hard v. Kelley,
19 S. D. 608; Cox v. Borstadt, 49 Colo.
83; In re Miley, 187 Fed. 177 (citing
many West Virginia cases).
Where an offer was made "to
Messrs. Gill ft Co. (for the National
Umbrella Co.)" and there was a
written acceptance signed,
"Gill 6 Company,
By Sidney & Gill,
W. B. GUI,
T. Harvey Gill."
W. B. Gill being not a partner of
Gill and (^mpany, it was held that
he could not be regarded as an agent
for GiU and (Company, nor could he
be assumed to represent the Um-
brella Company, and must, there-
fore, be held liable as a Joint con-
tractor. Gill V. General Bleotric Co.,
64 C. C. A. 99, 129 Fed. 349.
851
§ II7I]
THE LAW OP AGENCY
[book 111
Thus where the committee of a town entered into a contract stated
to be made "between Horace Heard, Eli Sherman and Newell Heard,
committee of the town of Wayland, on the one part, and William
Simonds and John Chapin on the other part," and in and by which,
after a specific description of the work to be done, the committee
promised as follows: "Said committee are to pay said Simonds &
Chapin the sum of three hundred and seventy-five dollars when said
work is completed," etc., and signed it as individuals, it was held that
the members of the committee had made themselves personally liable.
Said the court, by Shaw, Chief Justice: "Two things are here ob-
servable, the first is that they do not profess to act In the name or be-
half of the town, otherwise than as such an intention may be implied
from describing themselves as a committee. But such description,
although it may have some weight, is far from being conclusive; and
in many of the cases a similar designation was used, which was held
to be a mere descriptio personarum, and designed to show for whose
account the contract was made, apd to whose account the amount paid
under such contract should be charged. The second and more de-
cisive circumstance respecting this contract is, that here is an express
undertaking on the part of the committee to pay, 'Said committee are
to pay said Simonds & Chapin,' etc. Having described diemselves as
a committee, this undertaking is as strong and direct as if the names
had been repeated, and Heard, Sherman and Heard had promised to
pay. The court are therefore of the opinion that by the terms of this
contract, the committee intended to bind themselves and did become
personally responsible, and that the action is well brought against
them." "
§ 1 171. So where a contract was made "between T. W-
Matthews, Secretary of the Mutual Endowment Association of Bahi-
more, Md., and S. T. Jenkins, of Atlanta, Ga.," and all the agree-
ments were in the form "The said Matthews agrees," etc., and the
8T simonds T. Heard, 9upra. In
Cutler v. Ashland, 121 Mass. 588,
where the speclflcatlons for the
bnllding of a road was signed W. M.,
W. A. "Road Commissioners for Ash-
land Mass.," and appended to the
specifications was a writing which
ran "We, the subscribers, the road
commissioners aforesaid, agree to
pay," and signed W. M., W. A. "Com-
missioners of Ashland" the court
distinguished Simonds v. Heard on
the ground that In that case the con-
tract was signed in their Indtvldnal
names, and said that here it was
just as if the words had been trans-
posed to read, "Fbr Ashland, Mass.,
Warren Morse, William Aldrlch,
Road Commissioners."
852
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS
[§ II72
contract was signed "T. W. Matthews, S. T. Jenkins," it was held to
be the personal contract of Matthews.**
So, where an agreement to arbitrate recited that controversies ex-
isted between "the firm of C. A. McDonald and Co., general agents,"
and Edward L. Bond, and proceeded: "Now therefore we, the said
firm of C. A. McDonald & Co. and Edward L. Bond do hereby mutu-
ally covenant and agree, to and with each other, to submit," etc. "and,
we do mutually covenant and agree, to and with each other, that the
award to be made • * * * shall in all things and in every respect,
by us, and each of us, * * * be well and faithfully kept, ob-
served, and performed," and was signed, "C. A. McDonald & Co.
[Seal]. Edward L. Bond [Seal]," it was held, that C. A. McDonald
& Co. were liable upon the agreement, and not the insurance com-
pany of which they were general agents.®*
§ 1172. Contrary intention manifest. — But where, not-
withstanding the failure to use precise and appropriate language, it
still can be gathered from the whole instrument that the agent acted
in a representative character, and made the contract as the contract of
his principal, the words used will be regarded as employed with that
intention, and not merely as descriptive of the person.*^
Thus where a lease began "This agreement, made this 25th day of
December, 1880, between Randolph Marshall, agent of Oliver Dough-
erty," etc., and was signed "Randolph V. Marshall, agent of O. R.
Dougherty," the supreme court of Indiana, while recognizing the gen-
eral rule that such expressions are ordinarily regarded as descriptive
of the person, said: "While accepting the general rule to be that
stated, the American authorities agree that if the contract itself shows
that the words were not used as merely descriptive of the person they
will not be so regarded, but will be assigned their real meaning. In
the instnimeit before us it clearly appears that Marshall was the agent
of the lessor, and acted as such, for we find this recited, 'That the said
Marsliall, . agent as aforesaid, has rented, etc.* .There are other pro-
visions in the instrument clearly showing that Marshall executed the
•B MatthewB v. JeokinB, 80 Va. 463.
See also, Grau v. -MoVlcker, 8 Biss.
(U. 8. C. C.) 13 Fed. Cas. No. 5,708.
«»Macdon8l€l v. BoBd, 195 lU. 122.
90 Rogers V. March, 33 Me. 106;
Qoodenough v. Thayer. 132 Mass.
152; Green ▼• Kopke, Ig 0. B. 540
(9 J. Scott); Cook v. Gray, 133 Mass.
106; Lyon v. Williams, 5 Gray
(Mass.), 567; McGee v. Larramore,
50 Ma 426; Smith v. Alexander, 31
Mo. 193; Ogden v. Raymond, 22
Conn. 379, 68 Am. Dec. 429; Hall v.
Huntoon, 17 Vt. 244, 44 Am. Dec.
382; Traynham v. Jackson, 15 Tex.
170, 65 Am. Dec. 152; Texas Land ft
Cattle Co. V. Carroll, 63 Tex. 48;
Franibach v. Frank, S3 Colo. 629;
Jones V. Gould, 123 N. Y. App. Div.
236.
853
ft
§ 1 173] THE LAW OF AGENCY [bOOK III
lease as the agent of Dougherty, and we have no doubt that it should
be treated as having been executed by him." ^^
And where an order for goods, beginning "our company being so
far organized, by direction of the officers, we now order from you,"
etc., was signed "Charles Wyman, Edward P. Ferry, Carlton L.
Storrs, Prudential Committee, Grand Haven Fruit Basket Co.," and
was accepted by a letter addressed to the "Grand Haven Fruit Basket
Company," the supreme court of the United States held, in an action
brought to charge the members of the committee personally, that it
was entirely clear that both parties understood and meant that the
contract was to be, and in fact was, with the corporation, and not with
the committee.**^
§ 1 173. So where an agreement recited that it was be-
tween W., "superintendent of the Keets Mining Company, and P.,"
and was signed, W., "Supt. Keets Mining Co." and by P., it was held
to be the contract of the company.''
So where a charter for the hiring of a boat, between W. L. M.
party of the first part, hereinafter called the owner," and C. S. L.
party of the second part, herein after called the hirer," all of whose
covenants were made by "the hirer," signed C. S. L. "For the Sun
Printing and Publishing Association," was accompanied by an agree-
ment of suretyship made in the name of the Sun Printing and Pub-
lishing Company, also signed C. S. L. "For Sun Printing and Publish-
ing Association," and had appended a certificate of acknowledgment
ti Avery v. Dougherty (1885), 102 district, etc., proralae to pay," and
Ind. 443, 52 Am. Rep. 680. was fligned, O. W. B., V. W. N., S. L.,
Where a lease recited that it was it was held that, the school district
made "between J. B. party of the alone was bound,
first part and the Rochester Boot 02 Whitney v. Wyman, 101 U. S.
and Shoe Company, by N. N. presl- 892. 25 L. Ed. 1050.
dent, party of the second part, and See also, State v. Conunissioners
was signed. N. N., "Pres't [seal]," it of Cass County, 60 Neb. 566, where
was held that the agent was not per- a loan was made to an unincorpo-
sonally liable. Neufeld v. Beldler, rated religious society on a mort-
37 m App. 34. gage of lands belong^ to the so-
So, in Wheeler t. Walden, 17 Neb. ciety. executed by the trustees hold-
122, where a lease recited that it ing the legal title to the lands, and
was '"between M. A. W. of the first securing bonds executed by the trns-
part and L. B. W. of the second part" tees, in their own names, adding
and was signed, D. A. W. "ag:ent," it ••Trustees M. B. Church South," the
was held to be the agreement of the trustees were held not personally
principal. liable on the bonds. Blwell t. Ta-
in Baker ▼. Chambles, 4 Greene turn, 6 Tex. Civ. App. 897.
(Iowa), 428, where a lease ran, ''We, ••Post ▼. Pearson, 108 U. S, 418,
the undersigned directors of school 27 L. Bd. 774.
854
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS [§§ II74, II75
in which the notary certified that said C. S. L., known to him to be
the managing editor of the Sun Printing and Publishing Company,
acknowledged that he executed the agreement as the act and deed of
said company under its authority, it was held, by the supreme court of
the United States, that this also was the agreement of the company.®*
§ 1 174. ■ So again, where there was a proposal in writing,
directed "to the Building Committee of the Baptist Church," to build
a church building for a certain sum, and a written acceptance read-
ing. "Bid accepted * * * to complete the church" etc., signed,
"I. A. W., R. B.," who were in fact the building committee, though
nothing in the acceptance or the signatures indicated it, and all the
payments thereafter made were made through the pastor of the church,
it was held that this did not bind the signers personally.**
And so where an agent received goods for carriage under a receipt
which stated that "the several railroads between Boston and Zanesville
agree to transport over their lines," and which he signed in his own
name "for the corporations," it was held that the agent was not per-
sonally liable, although the names of the corporations were not stated.'*
§ 1 175. Personal liability excluded by terms of contract. — ^It is
entirely possible that, though the form of the contract is such as would
ordinarily bind the agent personally, there are terms in it which ex-
pressly exclude that liability, and such terms will be given effect.
Even though the contract as so modified should not be sufficient to
bind the principal, it will not, on that account only, bind the agent.
As has often been pointed out, it is not indispensable that either one
should be bound.*^
Thus where a charter party, which was executed in such a form as
ordinarily to bind the agent, contained a clause that as the charter
was concluded by the agent "for another party, the liability of the
former [the agent] in every respect and as to all matters and things"
should cease as soon as the cargo was shipped, it was held that the
agent was not liable for demurrage at the port of discharge."
»«Suii Printing, etc., Ase'n t.
Moore* 183 U. S. 642, 46 L. Bd. 366.
Bft Johnson v. Welch, 42 W. Va. 18.
MLyon y. WilUams, 5 Gray (71
Ma80.), 567. (But compare O'Rorke
V. Geary. 207 Pa. 240; Groom v.
ParkiHi^on, 10 Vict L. R. 14; Sprent
V. Bowes; 1 AuBt. J. R. 111).
See also numerous dicta that a
broker is not personally liable (in
the absence of a custom) where he
stipulates "for his principal" though
he does not name him. Dale v.
Humfrey, Bl. B. ft Bl. 1004; Fleet v.
Murton, L. R. 7 Q. B. 126; Pike v.
Orgley, 18 Q. B. Div. 708; Southwell
▼. Bowditch, 1 Com. PI. Div. 374.
»7 See Walker v. Bank, 9 N. Y. 582.
»« Oglesby v. Ygleeias, El. B. 6 El.
930; Carr v. Jackson, 7 Exch. 382.
855
§ 1 176] THE LAW OF AGENCY [bOOK III
§ Z176. IL The admissibility of parol evidence to show intent —
The remaining question here, as in the preceding subdivisions, is, how
far the rules governing the use of parol evidence to affect a written
contract, will permit extrinsic evidence to alter the conclusions which
the rules of interpretation would otherwise require. The generally
accepted results upon this question may be shortly stated. Where an
agent has entered into a contract wliich in terms charges himself,
parol evidence is not admissible to discharge him by showing that he
intended to charge the principal,®" (although in a doubtful case, it is
admissible to show that it was the intention to charge himself per-
sonally),^ but where the contract bears upon its face evidence that
the person signing was in fact an agent,* and where the contract is so
framed as to render it uncertain whether the agent or the principal
was intended to be bound," parol evidence may be received to show
that it was the intention to bind the principal and not the agent.^
But although parol evidence may not in other cases be admissible
to release the agent, it may be made use of to charge the principal.
Thus the principal, as will be seen hereafter, may be charged as such
by parol evidence upon a simple contract made by his agent, even
though the contract gives no indication on its face of an intention to
charge any other person than the signer. And this doctrine applies
as well to those contracts which are required to be in writing as to
••Bryan ▼. BrazU, 62 Iowa, 860; facie^ descriptio peraoncB and not as
Western Publishing House y. Mur- determining the character in which
dick, 4 S. Dak. 207, 21 L. R. A. 671. he contracted. But it was open to
1 Black River Lumber Co. v. War- proof that it was the intention to
ner, 93 Mo. 374; CancUer v. De Qive, bind his principal and not himself.
133 Ga. 486. Bingham v. Stewart, 13 Minn. 106,
• Deering v. Thom, 29 Minn. 120; 8. o. 14 Minn. 214; Pratt t. Beaupre,
Pratt y. Beaupre, 13 Minn. 187; 13 Minn. 187."
Halle y. Peirce, 32 Md. 327, 3 Am. s Mechanics' Bank y. Bank of Co-
Rep. 139. In Deering y. Thom, the lumbia, 6 Wheat. (U. S.) 326, 6 L.
agent gaye the purchaser of a ma- Ed. 100; Deering y. Thom, supra,
chine an instrument as follows: "If « Southern Paa Co. y. Von
the Marsh haryester don't work to Schmidt Dredge Co., 118 Cal. 368;
hlB satisfaction, he, W. Thom, can re- Eddy y. American Amusement Co., 9
turn the machine to me, and I will Cal. App. 624; Southern Badge Co.
return his note for the same. A. M. y. Smith (Tex. Cly. App.), 141 S. W.
Schnell, agent" Gilflllan, C J., 185 (compare Marx y. liuling Co-op.
said: "The memorandum signed by Ass'n, 17 Tex. Ciy. App. 408, wBere
Schnell is standing alone and with* the instrumeat was held not amUg-
out anything k> explain it prima uous and therefore not open to parol
facie his contract, and not that of eyidence); Zles^er y, Faltoa, 28 Mo.
his principal, and the word 'agent' App. 295.
affixed to his signature is prima
856
CHAP. Ill] EXECUTION OF SIMPLE CONTRACTS [§ 1177
those to whose validity a writing is not essential." This rule is not
obnoxious to the principle which forbids the contradiction of written
instruments by parol testimony, for the effect is not to show that the
person appearing to be bound is not bound, but to show that some
other person is bound also.*
Where a contract was made in the name of the principal and was
signed in the name of the principal, by the agent, so that upon its face
it appeared to be clearly and solely the contract of the principal, it was
held that parol evidence was not admissible to show that it was really
intended to be the contract of the agent. There was no ambiguity,
and no lack of authority was alleged, the name of the principal was
not a fictitious one, nor was the form of signature one which would
be adopted where one person is doing business in the name of an-
other.^
§ 1177. Right acquired under agent's contract.--«The same gen-
eral principles will apply where the question is, not who is liable, but
who ha$ acquired rights under the agent's contract. The proper
method where an agent is commissioned to acquire rights under a con-
tract for his principal is, of course, to take the instrument by which
they are acquired, in the name of the principal. In the cases of simple
contract, now being considered, much liberality would be exercised
in so interpreting the language as to preserve the principal's rights."
5 Bylngton v, Simpson, 134 Mass. •"Where a chattel mortgage is
169, 45 Am. Rep. 314; Briggs v. Part- given to an agent, the principal,
ridge, 64 N. Y. 357, 21 Am. Rep. 617; though undisclosed may assert his
Huntington v. Knox, 7 Cush. (Mass.) rights as If named in the mortgage;
371; Eastern Railroad v. Benedict, 5 the relation of principal being shown
Gray (Mass.), 561, 66 Am. Dec. 384; by parol." State ex rel. Carpenter
Lemed v. Johns, 9 Allen (Mass.), y. 0*Neill, 74 Mo. App. 134.
419; Hunter v. Giddings, 97 Mass. ^ ^j^^^j which recited that in con-
41, 93 Am. Dec. 44; Exchange Bank . gideration of a sum "paid by R. W.
V. Rice, 107 Mass. 37, 9 Am. Rep. 1; ^gg^t" for plaintiff, the other party
National Ins. Co. v. Allen, 116 Mass. g^,j^ ^^^ conveyed a stock of goods,
398; Texas Land 6 Cattle Co. v Car- ^^^ ^^^^^ ^j^ ^^^ expressly state to
roll, 63 Tex. 48; Higgins v. Senior, 8 ^hom the conveyance was so made,
M. A W. 834. ^as held to vest the title In the prin-
ts See Higgins Y. Senior «ttpra ^jp^j ^^^ ^^^ ^^ ^^^ ^^^^^ ^^^ ^^^^
T Heflron v. Po lard, 73 Tex. 96. 15 j^ ^^ue even though the bill of sale
Am. St. Rep. 764. The contract in ^^^ ^^^^ ^^ pursuance of a contract
this case sUted. that It was made ^^^^ y^^ ^^ ^^^^ ^^^^^ ^^^ ^^
and entered into by, and between gc^bed himself as "agent for" the
John W. Fry, on the one part, and plaintiff, but signed and sealed the
other persons on the other part It contract in his own name. Hayes
was signed, "John W. Fry, per Hef- ^^^j^^ ^^ ^ McKinnon, 114 N. Car.
fron." The action was to hold Hei- ^^j
fron personally liable. I^ K^j,y ^ Thuey, 143 Mo. 422, an
^57
§§ ii7&-ii8o]
THE LAW OF AGENCY
[book III
And even though the contract is made in the agent's name, so that
the agent might sue upon it, the principaKs right, as will be more fully
seen hereafter, is usually paramount, and he may ordinarily intervene
and bring the action in his own name.*
§ 1 1 78. Contracts involving the Statute of Frauds. — ^The fact
that the contract was one which the Statute of Frauds requires to be
in writing, makes no difference. Such a contract may be signed for
the principal by a person thereunto lawfully authorized, and though
the agent sign in his own name alone, the principal may still charge
or be charged by parol evidence.*® The rule is otherwise, however,
where the agent has entered into a contract in his own name and un-
der seal.*^
2. Oral Contracts,
§ 1179. Hov^r to be executed. — Although the agent undertakes to
make a mere unwritten contract, there is still the same necessity, if
he would execute it properly so as to bind his principal and not to
charge himself, that he shall fully disclose his agency, and bargain
in the name and on the account of his principal.
This case, however, is very much more free from difficulties than
the preceding ones. Here are no formal and technical rules of in-
terpretation to be considered, and no parol evidence rule to hamper
the determination of the real intention of the parties.
§ 1 180. Principal presumptively bound where agency disclosed. —
Where an agent, who has fully disclosed his agency, or whose relation
to the subject matter is otherwise known, undertakes to make a con-
tract, or do some other act with reference to the principal's business
undisclosed principal was allowed
specific performance of a contract
made for him by his agent, overrul-
ing Kelly v. Thuey, 102 Mo. 522.
9 See poat^ § — .
i^Neaves v. North State Mining
Co., 90 N. C. 412, 47 Am. Rep. 529.
In this case it was held that a draft
for the purchase money of land,
drawn by an agent without disclos-
ing his principal's name, is a suffi-
cient memorandum to charge the
principal under the Statute of
Frauds.
It is not necessary, to satisfy the
Statute of Frauds, that a contract
for the sale of land shall name or de-
scribe the vendor so long as it is
signed for him by his agent White
V. Dahlqulst, 179 Mass. 427. To same
effect see, Growen v. Klous, 101 Mass.
449; Tobin y. Larkin, 183 Mass. 389.
Same in respect to chattels: Lerned
V. Johns, 9 Allen (Mass.), 419; San-
bom V. Flagler, 9 Allen, 474; Wiener
V. Whipple, 58 Wis. 298, 40 Am. Rep.
775.
See Karns y. Olney, 80 CaL 90, 13
Am. St. R. 101.
iiBriggs V, Partridge, 64 N. Y.
357, 21 Am. Rep. 617; Providence v.
Miller, 11 R. I. 272, 23 Am. Rep. 453.
See also, Bourne y. Campbell, 21
R. I. 490.
858
CHAP. Ill]
EXECUTION OF SIMPLE CONTRACTS
[§ II80
and within the scope of the agent's authority, it is constantly to be
presumed that he is doing so on his principars account; that the
benefits to enure from the contract are to belong to the principal, and
that the obligations which it imposes are to be assumed by the prin-
cipal and not by the agent. An intention, on the agent's part, to ob-
tain rights or incur obligations is not to be presumed, and can only be
established by clear evidence to that eflFect." Where the contract or
act is one which can only be lawfully performed on the principal's
account, the presumption that the agent intends to act for the princi-
pal is obviously stronger.**
The mere fact that the principal cannot be held upon the contract
does not, as will be seen, necessarily make the agent liable upon the
contract : ** he will often be liable upon a warranty of authority though
he may exclude even this by the form of dealing.
52 Meeker v. Clagliorn. 4"4 N. Y.
349; Ha41 ▼. Lauderdale, 46 N. T. 70;
CoveJl V. Hart, 14 Hun (N. V,). 252;
Thompson v. Irwin, 76 Mo. App. 418;
Anderson v. TImberlake, 114 Ala.
377; Owen v. Gooch, 2 Esp. 567;
CoUoty V. Schuman, 73 N. J. L« 92.
In Owen v. Gooch, supra, it was
said by Lord Kenyon: "We must
keep distinct the cases of orders
given by the parties themselves, and
by others as their agents. If the
mere fact of ordering goods was to
make the party who ordered them li-
able, no man could give an order for
a friend in the country, who might
request him to do it, without risk to
himself. If a party orders goods
from a tradesman, though In fact
they are for another, if the trades-
man was not informed at the time
that they were for the use of an-
other, he who- ordered them is cer-
tainly liable, for the tradesman must
be presumed to have looked to his
credit only. So if they were ordered
for another person, and the trades-
man refuses to deliver to such per-
son's credit, but to his credit only
who orders them, there Is then no
preteit for charging such third per-
son; or if the goods are ordered to
be delivered on account of another,
and after delivery the person who
gave the order refuses to inform the
tradesman who the person is, in or-
der that he may sue him, under such
circumstances he is himself liable.
But wherever an order is given by
one person for another, and he in-
forms the tradesman who that per-
son is for whose use the goods are
ordered^ he thereby declares himself
to be merely an agent, and there is
no foundation for holding him to be
Uable."
IS Thus where the action Is to
charge the cashier of a bank on a
contract which if made, could only
be made by him, as an officer, and
on account of the bank, namely, to
apply the proceeds of certain lands
upon a note held by the bank, the
presumption is that it was made in
bis official capacity and bound the
bank, and not the cashier person-
ally. Pease v. Francis, 25 R. I. 226.
"See Michigan College of Medi-
cine V. Charlesworth, 64 Mich. 522.
Here a tramp had been run over in
a railway yard. Some one called a
physician who telephoned to the su-
perintendent and asked If he should
go. The latter said, yes. Nothing
was said about pay, and the super-
intendent had no authority to em-
ploy a physician for this purpose at
the company's expense. Held, that
the superintendent was not person-
ally liable upon a contract of em-
ployment*
859
§§ II8I-1I83]
THE LAW OF AGENCY
[book III
§ 1 181. Agent may bind himself by special agreement. — It is
nevertheless possible, as has often been pointed out, for a known agent
to bind himself personally. The agent may proffer, or the other
party may demand, and receive the agent's responsibility instead of or
even in addition to that of a known principal; and where this is the
case the agent will be personally bound.**
Here, also, as in the preceding cases, it is possible for the agent to
bind himself without having had any intention so to do, or even though
he had a clearly defined intention not to do so. If he has given the
ordinary external evidences of assent to his personal responsibility,
he may be bound, whatever his real intention.
§ 1 18a. How question detenntned.— -Whether the agent
has thus bound himself in these cases is usually a question of fact to
be determined in view of all the circumstances of the case. The in-
tention of the parties as evidenced by their words and conduct is the
thing to be discovered, and technical rules of construction have but
little place. To whom did the promisee give credit, and to whom did
the promisor reasonably understand the credit to be given, are usu-
ally the crucial questions in the case.**
§ 1 183. Or by failing to disclose his principal.— 'As has been else-
where pointed out, it is indispensable to the agent's immunity that his
principal shall have been disclosed. Hence, if the agent conceals the
fact of his agency and presents himself as the ostensible principal, the
!■ Meeker v. Claghorn, 4f N. Y.
849: Hall y. Lauderdale, 46 N. Y.
70; Dahlstrom y. Qemunder, 198
N. Y. 449, 19 Ann. Cas. 771; Roes v.
McAnaw, 72 Mo. App. 99; Mlckle-
borry y. O'Neal, 98 Gki. 42; Dockarty
y. Tllloteon, 64 Neb. 432; Watle v.
Thayer, 66 111. App. 282; Mclntosh-
Huntington Co. v. Rice, 13 Colo.
App. 393; Long y. McKlssick, 50 S.
0. 218; Bell y. Teague, 85 Ala. 211;
Mead y. Altgeld, 136 111. 298: Miller
V. Early, 22 Ky. Law Rep. 825. 58 S.
W. 789; Johnson y. Welch, 42 W.
Va. 18.
18 See Hall y. Lauderdale, 46 N.
Y. 70; Worthlngton v. Cowles. 112
Mass. 30; Whitney y. Wyman, 101
U. S. 392, 25 L. Ed. 1050; Hovey y.
Pitcher, 13 Mo. 191; Fleming y. Hill,
62 Ga. 751; Phlnlzy y. Bush, 129 Ga.
479.
In Paterson y. Gandasequi, 15 East,
62, where the question was whether
the agent or the principal (both of
whom had taken part in the nego-
tiations) was bound, the court took
the question from the Jury. Held,
error. In Addison y. Gandasequi, 4
Taunt 574, a case growing out of
the same transaction, the case was
left to the jury who found that the
credit had been extended to the
agent. Held, that the evidence justi-
fied the yerdict In Williamson v.
Barton, 7 H. ft N. 899, the four judges
of the Exchequer were equally di-
vided on the question of fact whether
credit was given to the agent or to
hU principal.
860
CHAP. Ill] EXECUTION OF SIMPLE CONTRACTS [§ II83
agent must ordinarily be held personally responsible.^^ So, though
the agent discloses the fact of the agency, if he fails or refuses to dis-
close who his principal is, he must ordinarily be held personally liable
unless such liability be expressly excluded.^' It is of course true, as
will be seen hereafter, that the undisclosed principal when discovered
may also be held liable but this is an alternative liability and does not
of itself relieve the agent.**
17 Amans v. Campbell, 70 Minn. 49S, 218; Good v. Rumsey, 50 N. T. App.
-68 Am. St. R, 547; Bacon v. Rupert, Dlv. 280.
^9 Minn. 512; Cobb v. Knapp, 71 N. "The whole question of the Uabll-
y. 848, 27 Am. Rep. 51. ity of the agent to third persons will
18 Long T. McKissick, 50 S. Car. be found more fully discussed, P09t,
Book IV, Chapter III.
861
BOOK IV.
OF THE RIGHTS, DUTIES AND LIABILITIES ARISING OUT
OF THE RELATION
CHAPTER I
IN GENERAL
t 1184. Purpose of Book IV. 1187. In general— Duty the measure-
1185. What parties interested. of liability.
1186. How subject divided.
§ 1 184. Purpose of Book IV. — Having heretofore considered how
the relation of principal and agent may be created ; by what rules the
nature and extent of the authority conferred shall be determined ; and
in what manner the authority so conferred and construed shall be ex-
ecuted, it remains to consider in this book, what are the rights, duties-
and liabilities of all of the parties concerned, growing out of, or based
upon, the actual or attempted execution of the agency.
§ 1 185. What parties interested. — It will be obvious that the per-
sons who are interested in this inquiry are numerous, involving all of
the possible parties to the transaction, and that their several rights,
duties and liabilities inter sese will not always be identical or reciprocal,,
or determined by the same standards. Thus, as has already been seen,
the circumstances may be such that a given act of the agent must, ii>
questions arising between the principal and third persons, be deemed
to be fully authorized; while the same act, in questions arising be-^
tween the principal and the agent, may be deemed to be wholly un-
authorized. So, as has been seen, the acts of one, who was before
a mere stranger to an assumed principal, may become, by the latter's
words or conduct, binding upon him as an actual principal ; while the
acts of an agent fully authorized, may from defective or excessive ex-
ecution fail to bind the principal at all, and be binding only upon the
agent himself in some cases, and in others, upon no one.
When the agent has fully and properly executed his authority ir>
the name and for the benefit of his ostensible principal, his mission is
performed and his rights and liabilities are determined. Henceforth
862
'§ Il86] THE LAW OF AGENCY [bOOK IV
Ills principal is entitled to the benefits and is subject to the liabilities
arising from the transaction.
«
Where, however, he has executed his authority in his own name, or
so ambiguously as to render it uncertain upon the face of the trans-
action in what character and capacity he acted, it will be found in
many cases that dual rights and liabilities have been created, and that
•one or other of the parties is entitled to elect upon whom to fasten the
liability.
§ 1186. How subject divided. — Such being the general nature of
the subject, it will be found convenient to treat it under the following
heads :
1. The duties and liabilities of the agent to his principal.
2. The duties and liabilities of the agent to third persons.
3. The duties and liabilities of the principal to the agent.
4. The duties and liabilities of the principals to third persons.
5. The duties and liabilities of third persons to the agent.
6. The duties and liabilities of third persons to the principal.
No separate consideration of the rights of the parties is intended,
"because, as will be seen, the duties and liabilities of one party are gen-
erally reciprocally the rights of the other.
863
CHAPTER II
0* THE DUTIES AND LIABILITIBH9 OP THE AGENT TO HIS PRINCIPAI^
t. TO BE LOYAL TO HIS TBU6T.
1188. Loyalty to hfs trust, the first
duty of the agent
1189-1190. May not put himself in
relations antagonistic ta
his principal.
1191. May not deal in Trasiness of
his agency for his own
benefit.
1192. Agent authorized to purchase
for his principal may not
purchase for himself. —
Agent charged* as trustee.
119d. ^ Same principle applies
to leases.
1194. What evidence of trusty
sufficient.
1195, 1196. When rule does not
apply.
1197. Agent authorized to sell can
not sell for himself.
1198. Agent authorized to sell, ex-
change, or lease may not
become the purchaser or
lessee.
1199. Injury to principal not
test — Sale at fixed price.
1200. ; Public sale equally
voidable.
1201. Effect of fraud or con-
cealment.
1202. To what agents this rule ap*
plies.
1203. Further of this rule— Indi-
rect attempts.
1204. Agent authorized to insure
may not issue policies to
himself.
1206. Agent authorized to purchase
or hire may not purchase
or hire of himself.
1206. Double agency — Agent may
not represent other party
also without consent of
principal.
1207. Agent must fully inform
the principal.
1208. Agett liable for misrepresen*
tations.
1209. Agent may not take advan>
tage of confidential infor-
mation acquired in the
business to make profit at
principal's expense.
1210. After termination of
agency.
1211. — Information respecting
trade secrets, names of
eustomers, etc;
1212. Ordinary experience,
learned in the business.
1213. Information leading to^
outside profit
1214. Information leading tO"
patents or inventions.
1215. Agent employed to settle
claim, may not buy and
enforce it against his prin-
cipal.
1216,1217. Agent may not acquire
rights against his princi-
pal based on his own neg-
lect or default
1218,1219. Agent may not acquire
adverse rights in princi-
pal's property confided to
his care.
1220. These rules can not be de-
feated by usage.
1221. Agent may purchase, sell,
etc., with principal's con-
sent
1222. Principal may ratify act
1223. Gratuitous agents — Volun-
teers.
1224. 1225. ProfiU made in the
864
CHAP, l]
IN GENERAL
1226.
1227.
1228.
1229.
1230.
1231.
1232.
1383,
1236.
1236.
1237.
1238.
1239.
courae of the agency be-
long to the principal.
— Illustrations.
— Further illiuitratlonfii—
ReimtcA, CommiflBlonfl, Re>
wards. Over-charges.
— Profits must be fruits of
the agency.
Whether principal entitled to
agent's earnings.
Work out of hours.
Gratuities.
Representing other princi*
pals — Bzclusive service.
1234. Remedies of the princi-
pal.
Agency must exist
Other limitations.
— ' — Proof of the agency.
Against whom trust enforced.
Principal must not have oon-
sented to, waived or con-
doned the act.
n. KOT TO EXCEED HIS AUTHORXTT.
1240. Duty of agent not to exceed
his anthorlty.
1241. Duty of prin<^pal to make
clear the extent of au-
thority.
1242. Duty of agent to know extent
of authority.
1243. Liability of agent for exceed-
ing his authority.
IIL TO OBEY XNSTBUOnONS.
■
1244. Agent's duty to obey instruo-
tions.
1245. 1246. Results of disobedience
— Agent liable for losses
caused by it.
1247-1252. Illustrations.
1253. Form of action — When agent
liable in trover.
1254. Mere breach of instruc-
tions.
1255, 1256. Conversion.
1267. The rule stated — Intent
immaterial.
1258. How when agency is gratui-
tous.
1259. Exceptions to rule requiring
obedience.
1260.
1261.
1262,
1264.
1265.
— -^ Agent not bound to per-
form illegal or immoral
act
Agent not bound to im-
pair own security.
126.3. Departure from in-
structions may be justified
by sudden emergency.
Limitations.
1266,
1268.
1269.
1270.
1271.
1272.
1273.
Where the authority has
been substantially pursued,
agent not liable for imma-
terial departure.
1267. •— ^ Where instructions
are ambtguous, and agent
acts in good faith.
How affected by custom.
When presumption as
to custom conclusive.
No presumption of disobedi-
ence.
Measurer of damages.
Ratification.
Liability for subagents.
IV. NOT TO BB NEGLIGENT.
1274. In general.
1275. Agent bound to exercise or-
dinary and reasonable care.
1276. Agent bound to exercise
usaal precantfons.
1277. — — But not liable for mere
accident or mistake.
1278. Not bound to exercise
highest care.
1279. Good faith— Reasbnable
diligence.
1280. When agent warrants posses-
sion of skill.
1281. How when agency is gratui-
tous.
1282. ^— When employed in a ca-
pacity which implies skill.
1283. Bound to exercise the
skill he possesses.
1284. Agent not liable for unfor-
seeable dangers.
1285. But liability increased If spe-
cial risks disclosed.
1286. Agent presumed to have done
his duty.
1287. Agent not liable If principal
also negligent
55
86s
THE LAW OF AGENCY
[book it
1288. "Wlien agent liable for neglect
of tubagent.
1289. When agent liable for neglect
of co-agent.
1290. Effect of ratification upon
the agent's liability.
1291. The measure of damages.
1292. — — Judgments, costs, coun-
sel fees.
1293. The principal's remedies.
1294. Illustrations of agent's liabil-
ity.
U Neglect of agente in mafeing Unina
and inveetmente,
1295. Degree of care required.
1296. Liability for resulting loss.
B. Neglect of dgent to effect ineuT'
ance.
1297. When duty to insure arises.
1298. What the duty requires.
S, Neglect of agent in making colleo^
tions.
1299. Liable for loss from negli-
gence.
1300. Forms of negligence.
1301. Negligence as to medium of
I>aymeat.
1302. Illustrations.
1303-1806. Negligence in proceed-
ings.
1307. Neglect to give princlpi^l no-
tice of material tacts.
1808. Neglect in granting or per-
mitting delays, extensions,
or forbearances.
1309. Neglect in keeping the
money.
1310. Neglect in making remit-
tances.
1811. Liability for neglect of cor-
respondents and subage&ts.
1312. LlabiUty of banks.
1818. For the neglect of the
notary.
1814. — ^ For the neglect of a cor-
respondent bank.
1316. Liability of attorneys.
1316-1318. Liability of mercantile
or collection agencies.
1319. Liability of express com-
panies.
866
1320. The measure of damages for
agent's negligence.
1321. Prindpal's right of aetion'
against subagent.
1322. Del credere agents-^How lia-
ble of principal.
4. Neglect of agent in making salet,
1328. Nature of duty.
1324. When agent liable for selling
to irresponsible parties.
1325. Conditions of agent's liabil-
ity.
S^ Neglect of agent in m^ing pur-
chases,
1326. Nature of duty.
y. TO ACOOVNT rOB liOlfBT AND
1827. In general
1328. Account only to principal—
Joint principals.
1329. Accounting by Joint agents.
1330. Snbagents — Account to whom.
1881. Agent may not dispute his
principal's title.
1388. May not allege illegality of
transaction to defeat princi-
pal's claim.
1888. When may maintain inter-
pleader.
1884. • Agent's duty to keep correct
accounts.
1335. Duty to keep principal's prop-
erty and funds separate
from his owd — Liability for
commingling.
1336-1338. At what time agent
should account
1339. Necessity for demand before
action.
1340. Exceptions.
1341. When agent liable for intei>
est
1342. Form of action.
1343. When equitable.
1344. The burden of proof.
1345. Proof of amount due — Spe-
cial method agreed upon —
Conclusiveness of agent's
accounts.
1346-1848. When liability barred by
by statute of limitations.
CHAP. l] IN GENERAL [§§ I184, I185
1349. Of the agent's right of Bet-off. vi. to am voricx to fkncipal of
1350. How far principal may follow matbbial facts.
trust funds.
1361. Conclusiveness of account— 1^^- ^^^ <>' *S«nt to give prlncl-
Failure to object— Account P»* ^^^^ ot lacts material
sUted. ^ Ageucj.
1352. Reopening account— Im-
peachment for fraud or mis-
take.
§ 1 1 87. In general — Duty the measure of liability. — It is evident
that the extent of the liability of the agent to his principal is to be
determined by ascertaining the nature and scope of the duty owed to
him. Liability follows from the. non-performance of a legal duty ;
and if, in what shall be hereafter said, that fact may not in each in-
stance be mentioned, it must be constantly understood.
The duties which the agent owes his principal are numerous, and
many of them are peculiar. It is scarcely within the limits of an or-
dinary treatise to enter minutely into all the questions that may arise,
but it is possible to so group them under the respective principles that
govern them as to furnish a rule, not only for the same states of fact,
but also for similar ones*
I.
TO BE LOYAL tO HIS TRUST.
§ 1 1 88. Loyalty to his trust, the first duty of the agent — Loyalty
to his trust is the first duty which the agent owes to his principal.
Without it, the perfect relation cannot exist. Reliance upon the
agent's integrity, fidelity and capacity is the moving consideration in
the creation of all agencies ; in some it is so much the inspiring spirit,
that the law looks with jealous eyes upon the manner of their execu-
tion, and condemns, not only as invalid as to the principal, but as
repugnant to the public policy, everything which tends to destroy that
reliance.*
§ ZZ89. May not put himself in relations antagonistic to his prin-
cipal— It follows as a necessary conclusion from the principle last
stated, that the agent must not put himself into such relations that his
own interests or the interests of others wh(Hn he also represents become
antagonistic to those of his principal. Indeed, this rule is but a re-
statement of the previous one, and is based upon the same fundamen-
tal principles. The agent will not be permitted to serve two masters,
' 1 Kelgiiler r. Savage Mfg. Co., 12 Md. 388, 71 Am. Dec. 600,
867
§ 1 190] THE LAW OF AGENCY [bOOK IV
without the intelligent consent of both.^ As is said by a learned
judge : "So careful is the law in guarding against the abuse of fiduciary
relations, that it will not permit an agent to act for himself and his
principal in the same transaction, as to buy of himself, as agent, the
property of his principal, or the like. All such transactions are void,
as it respects the principal, unless ratified by him with a full knowl-
edge of all the circumstances. To repudiate them, he need not show
himself damnified. Whether he has been or not is immaterial. Act-
ual injury is not the principle the law proceeds on in holding such
transactions void. Fidelity in the agent is what is aimed at, and as a
means of securing it, the law will not permit the agent to place him-
self in a situation in which he may be tempted by his own private in-
terest to disregard that of his principal." • "This doctrine," to speak
again in the beautiful language of another, "has its foundation, not so*
much in the commission of actual fraud, as in that profound knowl-
edge of the human heart which dictated that hallowed petition 'Lead
us not into temptation but deliver us from evil,' and that caused the
announcement of the infallible truth that *a man cannot serve two
masters.' " *
§ 1 190. "The general interests of justice and the safety of
those who are compelled to repose confidence in others," it is further
said, in another, "alike demand that the courts shall always inflexibly
maintain that great and salutary rule which declares that an agent em-
ployed to sell cannot make himself the purchaser, nor, if employed to
purchase, can he be himself the seller. The moment he ceases to be the
representative of his employer and places himself in a position towards
his principal where his interests may come in conflict with those of
his principal, no matter how fair his conduct may be in the particular
transaction, that moment he ceases to be that which his service re-
quires and his duty to his principal demands. He is no longer an
agent but an umpire ; he ceases to be the champion of one of the con-
testants in the game of bargain, and sets himself up as judge to de-
cide, between his principal and himself, what is just and fair. The
reason of the rule is apparent; owing to the selfishness and greed of
our nature, there must, in the great mass of the transactions of man-
kind, be a strong and almost ineradicable antagonism between the in-
terests of the seller and the buyer^ and universal experience has shown
2Bentley v. Craven, 18 Beav. 76: Quoted with approval In Jansen v.
European, etc., Ry. Co. v. Poor, 59 WUUamfi, 36 Neb. 869, 20 L. R. A.
Me. 277, re-reported in note to 59 Am. 207.
Rep. 468. 4 CarutherB, J., In Tisdale v. Tis-
> Manning, J.» In People T. Town- dale, 2 Sneed (T.enn.)» 696, 64 Am.
hip Board, 11 Mich. 222. Dec. 775.
868
ciiAr. ii]
DUTIES AND LIABILITIES OF AGENT [§§ II9I, II92
that the average man will not, where his interests are brought in con-
flict with those of his employer, look upon his employer's interests as
more important and entitled to more protection than his own." ^
§ 1 19 1. May not deal in business of his agiency for his own bene^
fit. — Akin to these rules and founded upon the same principles, is
the other rule that the agent may not deal in the business of his agency
for his own benefit. His duty to his principal requires that his ef-
forts shall be in the behalf and for the benefit of his principal. He
cannot perform this duty if he is constantly attempting to use his
agency for his own purposes.*
Following these principles into details, we have: —
§ Z192. Agent authorized to purchase for his principal may not
purchase for himself — ^Agent charged as trustee. — An agent in^
structed to purchase property for his principal and relied upon to buy
it in the principal's name and for his direct account, will not be per-
mitted, without his principal's knowledge and consent, to become the
purchaser of the same property for himself. If the property be land
and is purchased with the principal's money, the agent will clearly
be a trustee ; ^ and even though he purchased with his own money, he
will, nevertheless, be considered as holding the property in trust for
hii principal, and the latter upon repaying or tendering him the amount
of the purchase price and his reasonable compensation,* may by proper
proceeding in equity compel a conveyance to himself,^ or where eject-
5 Porter ▼. Woodruff, 8S N. J. Bq.
174.
f> Switzer t. SkileB, 3 Oilman (ID.)^
529, 44 Axn. Dec. 728; Bunker v.
Miles, 30 Me* 431, 50 Am. Dec. 682;
Miller y. Davidson, Z Gflman (IU.)i
518, 44 Am. Dec. 716.
TiCraemer v. Deustermann, 37
Minn. 469; Reitz y. Reits* 80 N. Y^
538; Ballocb y. Hooper,*6 Mack. (D.
C.) 421; Gashe y. Young, 51 Ohio &t.
376; and oases cited in the following
note.
sHe will not be entitled to. com-
pensation where he acts in bad faith«
Harrison y. Craven, 188 Mo. 590;
Trice v. Comstock, 67 C. C. A. 646,
121 Fed. 620.
oRhea v. Puryear, 26 Ark. 344; Mc-
Murry v. Mobley, 39 Ark. 309; Sand-
foss V. Jones, 35 Cal. 481; Church y.
Sterling, 16 Conn. 383; Chastain v.
Smith, 30 Ga. 96; Hitchcock v. Wat-
son, 18 111. 289; Dennis y. McCagg, 32
111. 444; Bryant y. Hendricks, 5 Iowa,
266; Judd v. Mosely, 30 Iowa, 424;
Krutz y. Plsher, 8 Kan. 90; Fisher y,
Krutz, 9 Kan. 601; Rose y. Hayden.
35 Kan. 106, 57 Am. Rep. 145; Mat-
thews v. Light, 32 Me. 305; Kendall
y. Mann, 11 Allen (93 Mass.), 16;
Jackson y. Stevens, 108 Mass. 94 ; Mc-
Donough y. O'Nell, 113 Mass. 92;
Snyder y. Wolford, 33 Minn. 175, 53
Am. Rep. 22; Winn v. Dillon, 27
Miss. 494; Sogglns y. Heard, 31 Miss.
426; Glllenwaters v. Miller, 49 Miss.
150; Cameron v. Lewis, 56 Miss. 76;
Harrison v. Craven, 188 Mo. 590;
Johnson v. Hay ward, 74 Neb. 157;
Morrison v. Hunter, 74 Neb. 559;
Von Hurter v. Spengeman, 17 N. J.
Eq. 185; Bennett v. Austin, 81 N. T.
808; Wood y. Rabe, 96 N. Y. 414, 48
Am. Rep. 640; Parklst v. Alexander,
1 Johns. Ch. (N. Y.) 394; Van Home
869
§ 1 192]
THE LAW OF AGENCY
[book IV
ment is an equitable remedy, he may maintain that action.** If the
property be personalty the same considerations will ordinarily apply,
though a resort to equity will less frequently be necessary, and the
principal may maintain replevin or trover against the agent, or against
any one holding through or for him, who is not a purchaser for value."
And what the agent cannot do directly he will not be permitted to
do indirectly, as by causing the property to be purchased ostensibly
by another, but in reality for his own benefit. The court will look be-
hind the appearance sought to be put upon the transaction, and deter-
mine the case according to its true inwardness.**
V. Fonda, 6 Johns. Ch. (N. Y.) 388;
Sweet V. Jacocks, 8 Paige (N. Y.),
S55, 31 Am. Dec 25S; Vain Bpps Y.
Van Epps, 9 Paige (N. Y.). 237; Tor-
rey v. Bank of Orleans, 9 Paige (N.
Y.), 649; Bnrrell v. Bull, 8 Sanford
(N. Y.), Ch. 15; Sanford v. Norris, 4
Ahb. App. Dec. (N. Y.) 144; Har-
grave v. .King, 5 Ired. (N. C.) Bq.
430; Bdhleman v. Lewis, 49 Pa. 410;
Smith v. Brotherline, 62 Pa. 461;
Selchrist'B Appeal, 66 Pa. 237; Wol-
ford V. Harrington, 74 Pa. 311, 15
Am. Rep. 548; Peebles v. Reading, 8
Serg. ft R. (Pa.) 484; Barziza v.
Story, 39 Tex. 364; Pinnock v.
Clough, 16 Vt. 500, 42 Am. Dec. 521;
Wellford v. Chancellor, 5 Gratt.
(Va.) 39; Jackson v. Pleasonton, 95
Va. 664; Onson v. Cown, 22 Wis. 329;
McMahon v. McQraw, 26 Wis. 615;
Rlngo V. Binns, 10 Pet. (35 U. S.)
269, 9 L. Ed. 420; Roth well v. Dew-
ees, 2 Black (67 U. S.), 613, 17 L. Ed.
309; Jenkins v. Eldredge, 3 Story,
181, Fed. Caa. No. 7,266; Baker v.
Whiting, 3 Sumner, 475, Fed. Cas.
No. 787.
10 Rose V, Hayden, supra; McKay
T. Williams, 67 Mich. 547, 11 Am. St
R. 597.
11 Plaintifts in Boston engaged F
to go to Ogden to purchase hides for
them. By the written contract,
plaintiffs agreed to pay all of F's
expenses and F agreed to give his
entire services to the employment
and to engage in no other business.
Money was advanced by plaintifDi
upon drafts drawn upon them by F
and collected through Odgen banks,
F rendering the plaintiffs periodical
Btatem^its. F became eonnected
with P. C. ft Ck>., a firm engaged in
the slaughtering business and ad-
vanced them money, the proceeds of
plaintifTB drafts, which they used to
purchase cattle, the hides being sub-
sequently delivered to F. P. C. ft Co.
being indebted to the defendants,
who were hankers in Odgen, F to
secure this indebtedneBB^ gave de-
fendants a bill of sale of all the
hides in his possession. Plaintiffs
demanded the hides of the defend-
ants who refused to deliver and Boid
them to satisfy the indebtedness.
HeUd, that upon delivery of the hides
to F title to them vested in plaintiffs,
and that F having no authority to
pledge tlMm, the plaintifla could re-
cover their value. Edwards v. Doo-
ley, 120 N. T. 640.
An agent to purchase wheat for his
principal, who was to supply funds
whenever requested, bought wheat as
agent but did not ask for funds and
refused to deliver the wheat to the
principal. Held, that the wheat be-
longed to the principal, the refusal
was a conversion, and the principal
may recover for the loss of profits.
Nading v. Howe, 23 Ind. App. 690.
12 Cameron v. Lewis, 56 Miss. 76;
Eldrldge v. Walker, 60 111. 230;
Hughes V. Washington, 72 lUL 84;
Rogers v. Rogers, 1 Hopk. (K. V.)
524 (aft'd 3 Wend. 503); KruBe v.
Steffens, 47 III, 112; Forbes v. Hal-
870
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§ II93
If, in such a case, the agent colludes with a third person to buy the
property, in order to sell it to the principal at an advance in which the
agent is to share, the agent will be responsible to the principal for the
loss thereby sust^ined.^*
§ ir93, ■ Same principle applies to leases. — ^This principle
is of course not confined to transactions involving an absolute pur-
chase; it includes leasings and other similar arrangements as well.
And it is immaterial that the agent was not directly employed to pro-
cure die lease ; he will not, it is held, be permitted to avail himself of
the knowledge, acquired through the agency, that his principal de-
sires or is attempting to negotiate such a transaction, in order to fore-
stall him or to make a profit to himself.
An illustration of this principle is found in a case in California.
There a warehouseman, occupying premises under a lease about to
expire, was negotiating for a renewal. His clerk, who from his ac-
cess to his principars books and papers and his knowledge of the
business, knew of these facts, secretly obtained a lease of the premises
to himself and another person, who was a party to the scheme, by
telling the landlord that his principal would probably give up the
premises at the expiration of his term. But the court directed a con-
veyance to the principal, saying that an agent should not, any more
than a tnistee, adopt a course that will operate as an inducement to
postpone the principal's interest to his oWn ; and that an agent or sub-
agent who uses the information he has obtained in the course of his
agency as a means of buying or leasing for himself will be compelled
to convey to the principal.^*
And the same result was reached in a similar case in Illinois, where
a confidential agent of the lessee of a theater, shortly before his prin-
cipal's lease would expire, secretly procured a lease of the theater for
a new term to himself, though at a larger rent, denying to his prin-
cipal that he was trying to secure the lease. The court held that the
lease was acquired in violation of the agent's duty, and presumably
because of his peculiar means of knowledge of the profits of the busi-
ness, and that a personal benefit thus obtained by an agent would, in
equity, inure to the benefit of the principal.^
15
sey, 26 N. Y. 68; Davoue v. Fanning, » Davis v. Hamlin (1883), 108 111.
2 Johns. (N. Y.) Ch. 257; Beaubien v. 39, 48 Am. Rep. 641. See also Grum-
Poupard, Harr. (Mich.) Ch. 206. ley v. Webb, 44 Mo. 444, 100 Am. Dec.
li Boston ▼. Simmons, 150 Mass. 304; Vallette v. Tedens, 122 111. 607,
461, 15 Am, St R. 230. 3 Am. St. Rep. 502 ; Prebble v.
i4Gower ▼. Andrew (1881), 69 Cal. Reeves, [1909] Vic. L. R. 436, affirmed.
119, 48 Am. Rep. 242. [1910] Vic. L. R. 88.
871
§ 1194]
THE LAW OF AGENCY
[book IV
Other cases involving the question of taking advantage of informa-
tion acquired during the agency, are referred to in a later section.^*
§ 1 194. What evidence of trust sufficient — In order to
establish a trust in real estate, as against the ag^nt, if the trust be
denied, it has been said to be the settled rule that the evidence of it
must, to satisfy the statute of frauds, be in writing, or the principal
must have paid or furnished the pnrchasc money.^f But in a case in
Kansas, it is held after an elaborate resume of the authorities that,
though the agent was orally employed, and though.- he ptirchased with
his own money, the trust arose from the relation, and that the princi-
pal on tendering the .amount so paid, and a reasonable compensation
for his services, could, if the agent refused to convey to him, recover
■ Gower v. Andrew, and Davis v.
Hamlin, were fohowed in the late
case of Eases Trust Ca v. Enwright*
Mass. — , 102 N. E, 441. and In.
Pikes Peak Co. v. Pfuntner, 158 Mich,
412.
See also the partnership cases of
Mitchell V. Reed, 61 N. Y. 123, 19 Am.
Rep. 252; Knapp v. Reed, 88 Neb. 754/
32 L. R. A. (N. S.) 969, Ann. Cas.
1912 B. 1095; Williamson v. Monroe,
101 Fed. 322.
i« See post, I 1209.
""Where a man merely emplofys
another person by parol, as an ag&at
to buy an estate, who buys It for himt
self and denies the trust, and no part
of the purchase money is paid by the
principal, and there is no written
agreement, he cannot compel the
agent to convey the estate to him, as
that would be directly in the teeth of
the statute of frauds." 2 Sugden on
Vendors (I4th Ed.), 703, followed in
James v. Smith, [1891] 1 Ch. 384.
Same rule: Burden v. Sheridan, 36
Iowa, 125, 14 Am. Rep. 505; Bartlett
V. Plckersgill, 1 Eden, 515, cited in
1 Cox, 15, 4 East, 577, note, 4 Burr.
2255; Botsford v. Burr, 2 Johns. (N.
Y.) Ch. 405; Perry v. McHenry, 13
III. 227; Collins v. Sullivan, 135
Mass. 461; Kendall v. Mann, 11 Allen
(Mass.), 15; Davis v. Wetherell. 11
Allen (Mass.), 19; Parsons v. Phe-
lan, 134 Mass. 419; Barnard v. Jew-
ett, 97 Mass. 87; Dodd v. Wakeman,
26 N. J. Eq. 484; Fickett v. Durham,
109 Mass. 419; Firestone v. Pire-
'8t«nev ^ Ala. 128; Allen ▼. Richard,
£3. Mo. 55; Nixon's Appeal, 68 Penn.
St. 279; Steere v. Steere, 5 Johns. (N.
Y.) Ch. 1, 9 Am. Dec. 256; Walter v.
Klook, 6S 111.^62; Watson v. Erb, 83
Ohio St. 35; Pinnock t. Clou«h, 16
Vt. 500, 42 Am. Dec. 521; Hidden v.
Jordan, 21 Cat 92.
MRO»o V. Hayden, 85 Kan. 106, 57
Am..:^^. 145. Ii^ this case Valen-
tine, J., says: "The controlling ques-
tion in this case is not whether the
prlkKJIpai advanoed the purduMie
money or npV but it is whether in
equity and good conscience the agent
who in fact purchased the property
with his own money in his own
name, in violation of his agreement
with his principal and in abuae of
the confidence deposed in him by his
prin<^lpal, can be allowed to retain
the fruits of his perfidy. The weight
of authority is, we think, that he can-
not. Sandford v. Norris, 4 Abb. N.
Y. Ct App. 144; Wellford v. Chancel-
lor, 5 Gratt. (Va.) 39; Onson v.
Cown, 32 Wis. 329; Winn v. Dillon,
27 Miss. 4^4; Cameron v. Lewis, 56
Miss. 76; &illenwater8 v. Miller, 49
Miss. 150; Chastain v. Smith, 30 Qa.
96; Heard v. PlUey, L. R., 4 Ch. App.
548; Lees r. Nuttall, 1 Russ. ft M. Ch.
53; same cases afllrmed on appeal, 2
Myl. ft K. Ch. 819; Taylor v. Salmon,
4 Myl. ft a Ch. 134; Cava t. Macken-
872
CHAP, n]
DUTIES AND LIABILITIES OF AGENT
[§ I 195
the land/' and that he might even recover in ejectment, ejectment
being in that state an equitable as well as a legal remedy.^**
The same question arises in the case of alleged partnerships to deal
m lands. The weight of authority seems to be that the relation may be
shown by parol, and that the trust may arise from the relation ; *® but
there are numerous cases to the contrary.'^
§ 1 195. When rule does not apply.— But where the agent
is not employed to obtain the conveyance, but for an entirely collateral
matter, — as to bring his principal into communication with some one
who would lend him the money with which to make .the purchase, al-
though the agent, with secret intention to buy the land himself, dis-
suades the principal from seeking other assistance in finding ttie
money, — no trust is created which would be violated if the agent pur-
chases the land himself with his own. money; '' and so it has been said
that even though the agent had been employed to buy certain land»
still if he first expressly and unequivocally relinquishes his agency,*"
or if his agency has otherwise expired,*^ or if he has first exhausted
93 Collins T. Sullivan, 1S6 BCbsb.
461y dlstlnguiflbiiig hew v. Nuttall, ,1
RTI88. ft Myl. 53, 8. o,, 2 M7I. ft K.
S19, and Parkist v. Alexander, 1
Johns. (N. Y.) Cb, 391, on the
ground that there the prindfuil had
a previous Interest in the land, at
least honorary, as hy orkl agreement
With the owner, and the agent was
employed for the very purpose of pro-
curing or completing the title.
M First Nat. Bank v.. BIssell, 2 Mc-
Crary (U. 9. C. C), 78, 4 Fed. 694
(not a very anthoritattvo case upon
this point).
The agent's renunciation of the
agency in such a case must be open
and unequivocal, ai^d the burden is
upon him to show that it was so.
Bergner v. Bergner, 2ia Pa. 113. A
merely colorable renunciation will not
suffice. ViTitte v. Storm, 236 Mo. 470.
See aim dicta in McMahon v. Mc-
Graw. 26 Wis. 614; Baker y. Whiting,
3 Sumn. 475. Fed. Cas. No. 787.
But compare Trice v. Comstock, 67
O. C. A. 646, 12X Fed. 620, 61 h. R.
A. 176, and other cases cited 11 1209,
1210 pott.
2* Lamb Knli-Ooods Co. v. Lamb,
119 Mioh. 66S; Bemis v. Plato, 119
Iowa, 127; Denntoon v. Aldrich, 114
Mo. App. 700; Evans v. Evans, 196
zle, Fisher Ann. Dig. (1877), 400;
Baker v. Wliiting, 3 Svmner (tJ. 8.
C. C.) 476; Snyder v. Wolford, 38
Minn. 175, 63 Am. Rep. 22; Peebles
V. Reading, 8 Serg. ft R. (Penn.) 484;
Burrell v. Bull« S Sandl Ch. (N.
Y.) 15."
See also, Boswell v. Cunningham,
22 Fla. 277, 21 L. R. A. 54, citing in
addition to cases above given^ Fire*
stone V. Firestone, 49 Ala. 128; Mc-
Murray v. Mobley, 39 Ark. 309;
.Church V. Sterling, 16 Conn. 388;
Cotton V. Hcaiiday, 69 111. 176; SwH-
ZGT V. Skiles, 3 Oilm. (111.) 629, 44
Am. Dec. 723; Reed v. Warner, 6
Paige Ch. (N. Y.) 660; Sweet v.
Jacocks, 6 Paige Ch. (N. Y.) 366, 31
Am. Dec. 362; Wolford v. Herrlngton,
74 Pa. 311, 16 Am. Rep. 648; Jenkins
V. BMredge, 3 Story, 181; Benson v.
Heathorn, 1 Younge ft G. (Bng.) 326.
i» Rose V. Hayden, «vf>ra.
^•Seo Qilmore on Partnership, 94,
and note in 4 U R. A. (N. 8.> 427,
where the cases are folly cited.
Morgart v. Smouae, 108 Md. 463, 115
Am. St R. 367.
>i See Qilmore on Partnership, 94;
Schener v. Cochem« 126 Wis. 209, 4
U R. A. (N. S.) 427; Nester v. Salli-
van* 147 Mioh. 493; Norton v. Brink,
75 Neb. 566, 7 L. R. A. (N. S.) 945.
873
§§ II96-II98]
THE LAW OF AGENCY
[book IV
all reasonable efforts to buy on the terms fixed by the principal,**^ —
there being no sharp practice or unfairnesSjT-stnd he afterwards buys
with his own funds, no trust will arise.
So where three parties agreed to make a purchase for their joint
benefit, but one of them when called upon to furnish his share of the
necessary funds declined to do so, and the two others went on and
made the purchase, it was held that no trust could arise in favor of
the one who had not joined.**
§ 1 196. ■' The rule is also to be modified where it is the
expectation that the agent will acquire title in his own name and in
his own present right, though the principal is ultimately to acquire it
by paying the agent. Thus it is said "that where a commercial cor-
respondent advances his own money or credit for a principal for the
purchase of property for such principal, and takes the bills of lading in
his own name, looking to the property as security, for reimbursement,
such correspondent becomes the owner of the property, instead of the
pledgee, up to the moment when the original principal shall pay the
purchase price, and the correspondent occupies the position of an
owner under a contract to sell' and deliver when the purchase price
is paid/' «
§ II97. Agent authorized to sell can not sell for himself. — For
similar reasons an agent, authorized to sell or lease property for his
principal, has no right to substitute his own property and sell or lease
it for himself. If he does so^ the principal may at least have damages
against him, or, in cases where it could be ascertained, the profit made
by the agent at the expense of the principal,**
§ J 198. Agent authori^sed to sell, exchange or lease may not be-
come the purchaser or le88ee.^^For the same reasons, an agent au-
thorized to sell, exchange or lease his principal's property, may not
without the latter's consent, become the purchaser or lessee.** If he
Mo« 1; Board of Tmstaes ▼. Blair, 46
W. Va. 812; Learmontli v. Bailey, 1
Vic. L. R. (Bq.) 122.
26 Pearsall v. Hlrsh, S9 N. T. Super.
Ct 410.
se Yeager's Appeal, 100 Pa. 88.
tTDrexel v. Pease, 183 N. T. 129;
Moors y. Kidder, 106 N. Y. 32; Farm-
ers' Bank t. Logan, 74 N. Y. 568.
Min Gladiator Consol. Gold Wn,
Co. V. Steele, 182 Iowa, 446, an agent
for tlie sale of stock belonging to
the principal, upon receiving an or-
der for stock aocompanled by drafts
in payment^ Instead of supplying tke
principars stock, furnished stock pf
his own of the same sort, and kept
the drafts In payment for it Held,
that he must account to Us princi-
pal for the drafts.
soMcKlnley v. Irvine, 18 Ala. 681;
White V. Ward, 26 Ark. 445; Forres-
ter, etc.. Co, T. Bvatt, 90 Ark. 801;
Curry v. King, S Cal. App. 568;
Burke r. Boars (Cal.), 26 Pac 102:
Banks v. Jvdah, 8 Oonn« 14S; Church
874
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1X98
does so, the principal may repudiate the act and recover back his
property,'* or, if the agent has disposed of it at a profit, the principal,
guilty of no laches, may compel an accounting for the profits.*^ Here,
too, as in the preceding cases, the law looks at the natural and legiti-
mate tendency of such transactions, and not at the motive of the agent
in any given case. This tendency is demoralizing, and the fact that
in a certain case the agent's motive was honorable, or that the result
is more beneficial to the principal, will make no diflFerence if the latter
chooses to repudiate it," Said a learned judge: "If suth contracts
were to be held valid, until shown to be fraudulent or corrupt, the re-
▼. Sterling, IG Conn. 388; Hodgson v.
Raphael, 105 Ga. 480; Merryman y.
David, 31 IlL 404; Kerfoot v. Hyman,
52 m. 512; Cottom v. HoUiday, 59
lU. 176; Mason v. Bauman, 62 III. 76;
Hughes v. Washington, 72 IlL 84;
Stone V. Daggett, 73 111. 367; Tewks-
bnry v. Spruance, 76 111. 187; Francis
V. Kerker, 85 IlL 190; Cornwell v.
Foord, 96 III App. 366; Stuxdeya^t
V. Pike, 1 Ind. 277; Oreen v. Peeso,
92 Iowa, 261; Fisher y. Lee, ^4 Iowa,
611; Rogers v. French, 122 Iowa, 18;
Krhut y. Phares, 89 Kan. 516;
Butcher y. Kfauth, 14 Bush. iKf.)
713; Robertson v. Western F. ft M.
Ins. Co., 19 La. 227, 86 Am. Dec. 678;
Florence y. Adams, 2 Rob. (La.) 556,
88 Am. Dec. 226; MciClendon y: Brad-
ford, 42 La. Ann. 160; Matthews v.
Light, 82 Me. 806; Parker v. Vose, 45
Me. 54; Copeland v. Mercantile Ins.
Co., 6 Pick. (Mass.) 198; Clute v.
Barron, 2 Mich. 194; Dwight y.
Blackmar, 2 Mich 380. 57 Am. Dec.
180; Moore v. Mandlebaum, 8 Mloh.
433; People v. Township Board, 11
Mich. 222; Powell y. Conant, 33 Mich.
896; Merriam v. Johnson, 86 Minn.
61; Gnimley v. Webb, 44 Mo. 444, 100
Am. Dec. 804; Meek y. Hurst, 228 Mo.
688, 135 Am. St R. 531; Rockford
Watch Co. y. Manifold, 36 Neb. 801;
Jansen v. Williams, 36 Neb. 869, 20
L. R. A. 297; Ruckman v. B^gholz,
37 N. J. L. 487 ; Moore v. Mooro, 5 N,
Y. 256; Bain v. Brown, 66 N. Y; 285;
Cumberland Coal Oo. v. Sherman, 80
Barb. (N. Y.) 653; Clark y. Bird^ 66
N. Y. App. Diy* 284; Eyans y. Wren,
93 N. Y. App. Div. 346; Van Dufien v.
Bigelow, 13 N. D. 277, 67 L. R* A.
288; Clendennlng y. Hawk. 10 N. D.
90 (lease) ; Rich y. Black, 173 Pa.
92; Tynes y. Orimstead, i Tenn. Ch.
608; Shannon v. Marmadiike, 14 Tex.
217; Scott y^ MaHn, 36 Tex. X57; Mos-
ley v. Buck, 3 Munf. (Va.) 232, 5
Am. Dec. 508; Segar V. Edwards, 11
•Leigh (Va.), 213; Colbert v. Shep-
herd, 89 Va. 401; Chezum y. Krelgh-
baum, 4 Wash. 680 (but cf. Robinson
y. Easton, 93 (M. 80, 27 Am. St. R.
167); Stewart v. Mather, 82 Wis.
844; Marsb v. Whitmore, 21 Wall.
(0. S.) 178, 22 L. Ed. 482; Robertson
y. Chapman, 162 U. S. 678, 88 U, Ed.
592; Blank v.. Aronson, 109 C. C. A.
827, 187 Fed. 241. But in MisBiesippi
see Union Planters' Bank v. Bdgell
(Miss.), 38 So. 409.
81 Louisyille Bank v. Gray, 84 Ky.
566, and other eases cflted in preced-
ing note.
^t Forrester, etc., Co. v. Evatt, 90
Ark. 301; Rich y. Black, 178 Fa. 92;
Cornwell v. Foord, 96 111. App. 866;
Merriam v. Johnson, 86 Minn. 61;
Smit2 V. Leopold, 51 Minn. 465; Mc-
Nutt y. IMz, 88 Mich. 328, 10 L. R. A.
660; Pommerenke v. Bate, 3 Sask. L.
R. W.
See also Tyler y. Sanborn. 128 111.
136.
M People v. Township Board, 11
Mloh. 222.
87s
§ 1199]
THE LAW OF AGENCY
[book IV
suit, as a general rule, would be that they must be enforced in spite of
fraud or corruption. Hence the only safe rule in such cases is to
treat the contract as void, without reference to the question of fraud
in fact, unless affirmed by the opposite party. This rule appears to me
so manifestly in accordance with sound public policy as to require no
authority for its support." **
The prohibition applies, of course, as much to indirect violations as
to direct ones."
§ 1199. -• Injury to principal not test — Sale at fixed price,—
It is immaterial here that the principal has not been injured, or that
the agent gave him as good terms as anybody would give.*' Neither
is Ihe situation altered, ordinarily, by the fact that the principal had
fixed a price at which he was willing to sell, and that the agent buys
at that price.*^ Even in such a case, there may be a conflict between
duty and interest. The agent may know that more can be obtained,
and it would ordinarily be his duty to obtain it. So, "if before a sale
is made, the land, to the knowledge of the agent, is greatly increased
in value, or if he learns of a fact increasing the value, not known to
the principal at the time of making the price, or if, before selling at
the fixed price, he should receive an oflfer of a larger price, no one
•4 Christiancy, J., in People v.
Townsliip Board, supra,
«6 Hodgson V. Raphael, 105 Ga. 480;
Webb V. Marks, 10 Colo. App. 429;
Smith V. Tyler, 57 Mo. App. 668;
Blank v. AronsoA* 109 0. C. A. 327.
But if agent later purchases from
one who bought without any arrange-
ment to resell to the agent, the agent
may keep. Learmonth y. Bailey* 1
Vic. L. R. (E.) 122.
sc Where the agent, by misrepre-
senting the price he paid for prop-
erty, has induced the principal to
pay him the larger sum, the princi-
pal may recover the excess from the
agent even though the principal has
sold the property at a profit over the
amount so misrepresented. Sals-
bury Y. Ware» 183 111. 505.
«t Porter v. Woodruff, 36 N. J. Bq.
174; TlUeny r. Wolverton, 46 Minn.
256; Merriam v. Johnson, 86 Mum.
€1; Colbert ▼. Shepherd, 8» Va. 401;
Meek v. Hurst, 223 Mo. 688, la&Am.
St R. 531; Rich v. Black, 178 Pa. 93;
McNutt V. Dix, 83 Mich. 328; Al.
bright ▼. Phoenix Ins. Co., 72 Kan.
591.
But in SeloYer y. Isle Harbor Land
Ca, 91 Minn. 451, it was said that
"where lands were offered for sale at'
a stipulated figure which a com-
mission was allowed, there is no
rule of law to prevent the party, who
in good faith earns and receives such
jcommission by effecting a sale, from
being at the same time interested as
a purchaser. Quite another question
would arise if uq fixed price had
been established, and the agent was
relied upon and expected to obtain
the best figure possible for the
lands." citing Merriam y. Johnson,.
9uvra.
See also Oarpeater y. Fisher, 175
Mass. 9, holding* thsA one who has
had aa option to purchase land but
electa not to> exercise it, is not
thereby disqualified to act as agent
for .another purchaser*
876
CHAP. Il] DUTIES AND U ABILITIES OF AGENT [§§ I20O-I2O2
would suppose that the agent might sell at the fixed price without
informing the principal of what had come to his knowledge." *'
§ laoo. Public sale equally voidable. — It is immaterial,
also, that the sale which the agent is authorized to make, or cause to
be made, is to be a public one.'* And even though the sale be one
which the agent does not cause, and which he is not able to prevent,
as where the land which he is authorized to sell is being sold upon
the foreclosure of a mortgage, and the like, he will still, ordinarily, it
is held, be incompetent to purchase."" His interest as purchaser, to
buy as cheaply as possible, would conflict with the principaFs interest
to secure the highest price obtainable. A fortiori would this be so if
he resorts to schemes or practices to prevent competition.*^
§ I20I. Effect of fraud or concealment. — Since the sale
or lease, when voidable at all, is voidable notwithstanding the fact
that the agent act^d in good faith, it is all the more impeachable, if
such a thing be possible, where the agent has been' guilty of fraud or
sharp practice, or has concealed his relations to the transaction, or
has failed to disclose to the principal inaterial facts wilhin the agent's
possession affecting the value or situation of the property.**
§ laoa. To what agents this rule applies. — This rule is of fre-
quent application, not only to agencies which are strictly private in
their nature, but to those which are public or quasi-public as well.
wTilleny v. Wolverton, supra, property for himself at a reduced
so See the numerous cases cited in price by falsely representing to his
I 1202, post principal that the goods are for an-
*o Kimball v. Ranney, 122 Mich, other to whom the principal is wlH-
ICO, 446 Li. H. A. 403, 18 Am. St. R, ing for special reasons to make a re-
548; Adams v. Sayre, 70 Ala. 318; Al- ductlon, t^e agent is liable for the
bright V. Phoenix Ins. CJo,, 72 Kan. difference to the principal. Pierce v.
591. Beers, supra,
*3 Adams v. Sayre, 70 Ala. 318. Where agent to sell plaintiff's
4« Pierce v. Beers, 190 Mass. 199; totel, Induced plaintiff to exchange
Jansen v. Williams, 36 Neb. 869, 20 the same for a farm of little value,
L. R. A. 207; Merrlam v. Johnson, 86 by misrepresenting the character pf
Minn. 61; Fisher v. Lee, 94 Iowa, it, having a secret agreement with
611; Green v. Peeso, 92 Iowa, 261; tho owner of the farm that, on the
Rogers v. French, 122 Iowa, 18; consummation of the trade, the
Clark v. Bird, 66 N. Y. App. Dlv. owner of the farm would convey the
284; Corn well v. Foord, 96 111. App. hotel to the agent at a price repre-
366; Bnrke v. Bours, 92 Cal. 108; senting the real value of the farm,
Van Dusen v. Blgelow, 13 N. D. and thus in effect get the hotel for
277, 67 L. R. A. 288; Webb v. Marks, much less than its value, plaintiff
10 Colo. App. 429; Williams v. was held entitled to a reconveyance
Moore-Oaunt Co., 3 Ga. App. 756; of the hotel. White y. Leech
Prince V. Dupuy, 163 111. 417. (,towa), 96 N. W. 708.
Where the agent undertakes to get
877
§ I202]
THE LAW OF AGENCY
{book it
Thus an administrator,*' executor/* guardian,** sherifF,*^ deputy
sheriff,*' trustee,** assignee,** or commissioner in bankruptcy,"* judge
of probate,*^^ county treasurer,** commissioner to sell land,** school di-
rector or trustee,** members of the board of health,"* etc., will not be
permitted, either directly or indirectly, to purchase of himself the
rights or property which he is authorized in that capacity to sell.**
A public or private agent *^ authorized to let a contract will not be
permitted to let it to himself. A railroad agent authorized to furnish
an excursion train to third persons, will not be permitted to furnish
one ostensibly to a third person but in reality for his own benefit.**
These rules also apply to the directors and officers of corporations.
The former are regarded in equity as trustees, and the ministerial of-
ficers occupy the relation of agents.**
MDwight ▼. Blackmar, 2 Micli.
880, 57 Am. Dec. 180; Pearson y.
Moreland, 7 Smedes ft M. (Miss.)
609, 45 Am. Dec. 819; Scott v. Free-
land, 7 Smedes k M. (Miss.) 409, 45
Am. Dec. 810; Planters' Bank y.
Neely, 7 How. (Miss.) 80, 40 Am.
Dec. 51; Mc(>owan y. McGowan, 48
Miss. 558; HofCman y. Harrington,
28 Mich. 106; Obert y. Hammel, S
Har. (N. J. U) 74; Goat y. Coat, 63
n). 78; Kruse y. Steffens, 47 in. 112;
Smith y. Drake, 28 N. J. B^i. 802.
44 Rogers y. Rogers, 1 Hopk. (N.
Y.) 524; Schenck y. Dart, 22 N. Y.
420; "Winter y. Qeroe, 5 N. J. Ch.
819; Dunlap y. Mitchell, 10 Ohio,
117; Worthy y. Johnson, 8 Oa. 236,
52 Am. Dec. 899; Scott y. Gtorton, 14
La. 115, 88 Am. Dec. 578.
4»Ward y. Smith, 8 Sandf. (N. Y.)
Ch. 592.
4« Harrison y. McHenry, 9 6a. 164,
52 Am. Dec. 485; Carr y. Houser, 46
Oa. 477; Plury y. Grimes, 52 Ga. 348;
Mayor of Macon y. Huff, 60 Ga. 228.
47 Perkins y. Thompson, 8 N. H.
144.
4» Robertson y. Western F. ft M.
Ins. Co., 19 La. 227, 86 Am. Dec. 673;
Green y. Winter, 1 Johns. (N. Y.) Ch.
26, 7 Am. Dec. 475; Dayoue y. Fan-
ning, 2 Johns. (N. Y.) Ch. 252.
^^E» parte Lacey, 6 Yes. Jr. 626.
^Ex parte Bennett, 10 Yes. Jr.
882.
«i Walton y. Torrey, Har. (Mich.)
(3h. 259.
"Clute y. Barron, 2 Mich. 192;
Pierce y. Boughman, 14 Pick.
(Mass.) 856.
B8 Ingerson y. Starkweather, Walk.
(Mich.) Ch. 346.
»4CurrIe y. School District, 85
Minn. 163.
MFort Wayne y. Rosenthalt 75
Ind. 156, 39 Am. Rep. 127.
50 People y. Township Board, 11
Mich. 222.
»T Flint, etc, R. R. Co. y. Dewey,
14 Mich. 477.
••Pegram y. Charlotte, etc, R. R.
(3o., 84 N. C. 696, 87 Am. Rep. 639.
BB Cook y. Berlin Woolen Mills Oc*
43 Wis. 483; Cumberland Ck>al Co. y.
Hoffman Steam Coal Ck>.» 30 Barh.
(N. Y.) 159; Hodges y. New England
Screw (3o., 1 R. L 312, 58 Am. Dec
624; Jackson y. Ludellng. 21 Wall.
(U. 8.) 616, Z2 L. Ed. 492; Wllhur y.
Lynde, 49 CaL 290, 19 Am. Rep. 645;
City of San Diego y. San Diego, etc,
R. R. Co., 44 C^l. 106; Commission-
ers, etc y. Reynolds, 44 Ind. 509, 16
Am. Rep. 245; Bedford Coal C^. y.
Parke County Coal Co., 44 Ind. App.
300; Greenfield Savings Bank y. Si-
mons, 133 Mass. 415.
That offlceni or directors of a prl-
yate corporation may stand in suck
a fiduciary relation to the sharehold-
ers as to require them to disclose
878
CHAP. Il]
DUTIES AND LIABIUTIES OF AGENT [§§ I203, I204
And the principle is applied not only to the agent himself, but to
sub-agents, clerks and assistants appointed by him ; ®^ and it extends
also to his partner in business.*^ Whatever disabilities the agent labors
tmder attach equally to those whom he employs luider him.
§ 1203* Further of this rule — Indirect attempts.— It seems
scarcely necessary to repeat here^ what has already been emphasized,
that what the agent cannot do directly, he will not be permitted to do
indirectly, as by having the property acquired ostensibly by another,
but in reality for his own benefit.*?
§ 1204. Agent authorized to insure may not issue policies to him-
self.— ^The same principles apply to the agent who is authorized to fur-
nish insurance. Such an, agent may not, directly or. indirectly, without
the full knowledge and consent of his principal, issue poUcies to him-
self, or insure his own property. If he does so, the principal may re-
pudiate the act.^ The sam^ rule has been applied to cases where,
although the agent was not the sole or individual owner, he was yet
in some manner beneficially interested in the property insured.** But
information respecting the value of
the shareholderB' stock which they
propose to purchase, see Strong v,
Bapide, 21s U. S. 419; Oliyer v. DU-
ver, lis Ga. 362; Stewart v. Harris,
69 Kan* 498, 105 Am. St. R. 178, 66
L. R. A. 2S1, 2 Ann. Gas. 878. Oon-
tra: Hooker v. Midland Steel Co., 216
111. 444, 106 Am. St. R. 170; Board
of Commlssf oners v. Reynolds, 44
Ind. 509, 15 Am. Rep. 245; Walsh y.
Goulden, 130 Mitch. 531; Carpenter v.
Danforth, 62 Barb. (N. T,) 681;
O'Nelle T. Ternes, 32 Wash. ^28.
•0 Gardner ▼. (^den, 22 N. T. 827,
78 Am. Dec. 192.
•iNew York Cent Ins. Co. v. Nft»
ttonal Protection Ins. Co., 14 N.
y. 86.
ttBllrldge r. Walker, €0 in. 280;
Merriam y. Johnson, 86 Minn. 61; Ihi-
flfean y. Rieger, 106 Mo. 659; Webb
y. Marks, 10 Colo. App. 429. Or by
a third person for the Joint benefit
of himself and such third person.
Hughes y. Washington* 72 m. 84;
Fry y. Piatt, 32 Kan. 62 (the third
person was supposed to he another
agent to sell) ; Finch y. Oonrade, 164
Pa« 326. Mere fact that purchaser is
hrother-in-law of the agent wlU not
of itself inyalidate the. sale. Walker
▼. Carrington, 74 111. 446. Held in-
yaUd Where deeded to agenfe wife.
Reed y. Aubrey, 91 Ga. 485, 44 Am.
St. R. 49; Green y. Hugo, 81 Tex.
482, 26 Am. St. R. 824; Winter y. Mc-
MiUan, 87 CaL 266, 22 Am; St R. 243
(to agent and wife jointly).
See also tyler y. Sanborn, 128 111.
186.
w Zimmerman y. Dwelling-House
Insurance Co., 110 Mich. 399, 33 L.
H. A. 698 r Bentley y. Columbia In-
surance Co., 19 Barb. (N. Y.) 695;
Fireman's Fund Ins. Co. y. Mc-
Greevy, 55 C. C. A. 543, 118 Fed. 415.
wRitt y. Washington Marine Ins.
Co., 41 Barb. (N. Y.) 368 (agent was
one of several tenants in common of
a boat) ; €Uenn Falls Ins. Co; y. Hbp-
klns, 16 ni. App. 220 (agent a part-
ner of <firm whose goods he In-
sured) ; Wiidberger y. Hartford Fire
Ins. Co., 72 Miss. 388, 28 L. R. A.
220, 48 Am. St. R. 669 (agent in-
sured goods which were In his pos-
session as receiver, an<} of which he
had the legal title by assignment
for purposes of the trust); Green*
879
§ I205] THE LAW OP AGENCY [bOOK IV
if the principal, with full knowledge of the facts, assents to the act*
the insurance becomes binding.**
§ X205. Agent authorized to purchase or hire may not purchase
or hire of himself. — An agent authorized to purchase or hire prop-
erty for his principal, will not, without the intelligent consent of his
principal, be permitted to purchase or hire of himself ; and if he does
so, the principal is not bound, but may repudiate the transaction.
This rule is founded upon the same principles as the preceding ones.
The law will not permit the agent to put himself in a position where
there is such abundant opportunity, if not temptation, to take ad-
vantage of his relations for his own benefit.**
And it makes no difference that the intention of the agent was
honest and the result of his action might be to the advantage of his
principal; the latter may still repudiate it. The tendency of such
transactions is bad, and a good intention in a particular case will not
save it, unless the principal sees fit to affirm it.*^
And what was said in a preceding section applies here also. The
agent may not accomplish by indirect and covert means what he
could not do directly and openly.
The remedy of the principal in such a case is usually the repudia*
tion of the transaction. He cannot, it is held, recover, as a profit
made by the agent, the difference between the amount at which the
agent sold to him and the price which the agent may have paid for
the property before the agency was created,** thoug^i he may recover
the difference between the price paid by the principal and the fair
value.**
wood Ice Co. T. Georgia Home Ida. Seeor, 68 Conn. S6; OllYer v. Laa*
Co., 72 Miss. 46 (agent was a stock- sing, 48 Neb. 8S8; Friesenhalui v.
holder, director and vioe-president Buahn^ll, 47 Minn. 443; Whitehead ▼.
of the corporation whose property Lynn, 20 Colo. App. 61, aff'd 46 Colo,
he insured). 427.
w Pratt V. Dwelllng-Houae Ins. Co.» •f Taoaslg y. Hart, 68 N. T. 426;
130 N. Y. 206, reversing 68 Hun (N« Harrison v. McHenry, 9 Ga. 164, 62
T.), 101. Am. Dec. 436; People T. Township
••Taussig y. Hart 58 N. Y. 426; Board, 11 Mich. 222; Montgomery y.
Tewksbury y. Spruance, 76 III. 187; Hundley, 205 Mo. 188, U U IL A.
Harrison v. McHenry, 9 Qa. 164, 62 (N. S.) 122.
Am. Dec. 436; Florence y. Adams, 2 ••.Whitehead v. Lynn» 20 Colo. App.
Rob. (La.) 656, 88 Am. Dee. 226; Bly 51.
y. Hanford, 66 IIL 267; Conkey v. ••OUyer v, Lansing, 48 Neb. 838.
Bond. 36 N. Y. 427; Beal y. McKler^ In Watson v. Bayllss* 62 Wash. 829,
nan. 6 La. (O. 8.) 407; Kelghler y. 34 L. K. A. (N. S.) 1210. an agent
Savage Mfg. Co., 12 Md. 388, 71 Am. had obtained an option before his
Dee. 600; Balrd y. Ryan, 17 Ky. L. employment by the principal; the
Rep 1417, 35 S. W. 132; Disbrow y. agent was hired to purchase the prop-
880
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§ I206
§ i2o6. Double agency — Agent may not represent other party
also without consent of principaL — The principal has a right to as-
sume when he employs an agent, unless he is advised to the contrary,
that the agent is in a situation to give to his principal that undivided
allegiance and loyalty which the proper performance of the agency
requires, and that he will remain in that situation. If the agent has,
or acquires, in the subject-matter, any interest of his own which may
conflict with that of his principal, or if, by reason of being or be-
coming the agent of the opposite party, he has an interest of the
latter to protect which may conflict with the interest of the principal,
it is his duty to fully advise his principal of the circumstances, and
not to undertake to act without the principars consent J° If, after a
full and frank disclosure, the principal is willing to confide his inter-
ests to him, the principal cannot afterwards object. Otherwise, it is
the practically invariable rule that the agent may not, in the same
transaction, be both agent and opposite party, or while agent of one,
become the agent of the other party whbse interests may conflict. If,
without such knowledge and consent, he does undertake to contract,
the law deems the principal in that transaction to be practically un-
represented, and any bargain in his name, or act done on his account,
is usually voidable at the principal's option. He need not show him-
self injured, and his right to repudiate the transaction is not affected
by the good faith of the opposite party. The effect of these double
dealings, however, as between the principal and the other party, will
be more fully considered in a later chapter ."^'^ The effect as between
the principal and the agent, — the only matter under consideration
here, — is that the agent violates his duty to his principal, is entitled
to no compensation for his services, must account for any profits made
from the principal, and must indemnify his principal against any loss
thereby sustained.'* Commissions which are paid by the principal to
erty tor the principal, and, in so do- Louis Blectric, etc., Co. ▼. Edison, 64
in^, misrepresented the price at Fed. 997; Cameron r. Blackwell, 58
which it was obtainable, and thus Tex. Glv. App. 414.
made a profit to himself of the dif- ^^ See post Book IV, Chap. VII.
ference between the price at wl^ich t2As to forfeiture of compensation
he had acquired the option and the for disloyalty, see post Book IV, Chap,
price whieh the principal gave. Held, IV; Little v. Phipps, 208 Mass. 331;
that agent was liable to his principal Lemon v. Little» 21 S. D. 628; Andrew
for this dlflterence. ▼. Ramsay, [1903] 2 K. B. 635.
See also Prlmeau ▼. Oranfleld, 180 In Warren y. Burt, 68 Fed. 101, it
Fed. 847. was said, "No man, whether he be
7« Marsh v. Bnchan, 46 N. J. Bq. principal or agent, c^n be a vendor
595; Mor^y t. Laird, 108 Iowa, 670; St. and a purchaser at the same time;
56 881
§ 1207] THE LAW OF AGENCY [bOOK IV
the agent before the discovery of the double agency may be recovered
back.^'
As between the principal and the agent at least, however it may be
as between the principals themselves, the rules above given apply as
well to one of the two principals as to the other. Each may demand
of the agent that he shall both be and remain loyal to that principal's
interests, and may have remedies against the agent if he does not do so.
§ 1207. Agent must fully inform the principal. — It is always the
duty of an agent, as will be more fully seen hereafter/* to fully in-
form the principal of all facts relating to the subject-matter of the
agency which come to the knowledge of the agent, and which it is
material for the principal to know for the protection of his interests.
This duty, moreover, has a specific application in this connection
which justifies a reference to it here. As has been already seen, it is
absolutely essential, when an agent undertakes to sustain dealings
with his own principal, that it shall appear that the agent frankly and
freely gave to his principal full information respecting, not only the
agent's relation to the contract, but also, the various conditions re-
specting time, value, situation, condition, and the like, which may fairly
be deemed to be material in determining upon the desirability of
entering into tlie contract.^' But even where the agent is not per-
sonally interested in the contract, his duty to give the principal full
information of all the material facts relating to the transaction, which
are within his knowledge, still exists. A failure to perform this duty,
while not necessarily rendering transactions with third persons void-
and an agent of the vendor who in- 472, -where the agent having an nn-
tentionally becomes Interejsted as a disclosed option upon property, mis-
purchaser In the subject matter of represented to the principal the price
his agency, violates his contract of at which it could be purchased and
agency, betrays his trust, forfeits his procured its purchase by the princi-
commisslon as agent, and is liable to pal for a price higher than the option
his principal for all the profits he price, keeping the surplus himself, it
makes by his purchase." (Citing, was held that he forfeited his com-
Jtlichoud y. Glrod, 4 How. 603; mission and mittt restore it» and
Crump V. Ingersoll, 44 Minn. 84; must also restore the surikltts amount
Hegenmeyer t. Marks, 37 Minn. 6, 6 of his principal's money whieh he
Am. St. Rep. 808; Jacobus v. Munn, had so obtained. See also Watson y.
37 N. J. Eq. 48; Moore y. Zahriskie, Bayllss, 62 Wash. 329, 84 L. R. A.
IB N. J. Bq. 51; Bank y. Tyrrell, 27 (N. S.) 1210.
Beay. 278, 10 H. of U Cas. 26; ^sBurnham City Lumber Co. y.
Panama, etc., Tel. Co. y. India Rub- Rannie, 69 Fla. 179; Cannell y. Smith,
ber, etc., Co., 10 Ch. App. 616; Bent 142 Pa. St. 26, 12 L. R. A. 396.
y. Priest, 86 Mo. 476). See also Wil- uSe^ Snbd. VI of this chapter.
Hams y. Moore-Gaunt Co., 3 Ga. App. to See Neilson y. Bowman, 29 Gratt.
766. (Va.) 73^; Newsteiad v. Rowe, 3 Sask.
In Hogle y. Meyerlag, ISl Mieh^ L. R. 176.
882
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1207
able, as it would do if the agent were himself personally interested,
will still make the agent liable to the principal for any losses which
he has proximately sustained thereby^® Frequent illustrations are
found in the cases in which agents for the sale of property, and the
7«See, Hegenmyer v. Marks, 37
Minn. 6, 6 Am. St. Kep. 808; Smitz
T. Leopold. 51 Minn. 455; Schick v.
Suttle, 94 Minn. 135; Holmea v. Cath-
t:art, 88 Minn. 213, 97 Am. St. Rep.
513, 60 L. R. A- 734; Carpenter v.
Fisher, 175 Mass. 9; Emmons v. Al-
Tord, 177 Mass. 466; Prince v. Dupuy,
163 111. 417; Kramer v. Winslow, 130
Pa. 484. 17 Am. St. Rep. 782; Hum-
hird V. Davis, 210 Pa. 311; Calmon v.
Sarraille. 142 Cal. 638; Duryea y.
Vosburgh, 138 N. Y. 621; Williams v.
Moore-Gaunt Co., 3 Ga. App. 756;
Leonard v. Omatead, 141 Iowa, 485;
Burward v. Hubbell, 149 Iowa, 722;
Rorebeck v. Van Eaton, 90 Iowa, 82;
Hindle V. Holcomb, 34 Wash. 336;
Warren v. Burt. 7 C. C. A. 105, 58
Fed. 101; Ritchey v. McMichael
(Cal.), 35 Pac. 161.
Duty to dUcloae identity of pur-
chaser. — The Identity of the pur-
chaser may often be a matter of con*
sequence to the principal, and when
it appears to be so the agent should
disclose it. But an agent authorized
to sell to any purchaser he could find,
is not guilty of fraud in not disclos-
ing the identity of a prospective pur-
chaser, where the principals did not
ask or make any inquiry concerning
who such purc*haser was and some of
them, at least, admitted that they did
not care. Rank v. Garvey, 66 Neb.
767. To like effect: Ranney v. Henry,
160 Mich. 597. Compare Spinks v,
Clark. 147 Cal. 439.
Duty to disclose identity of seller,
Agent as seller. Where, without the
knowledge and consent of the princi-
pal, an agent to buy property sells
his own property to the principal, the
latter may rescind and recover what
he paid. Disbrow v. Secor, 58 Conn.
85.
Where an agent for the exchange of
lands puts his own land In without
his principal's knowledge or consent,
the trade is voidable. McLain r.
Parker, 229 Mo. 68.
Duty of broker seekinff employ'
ment to disclose facts respecting a
proposed purchaser, — In Larson v.
Thoma, 143 Iowa, 338, it was held
that the broker was not under soch
duty to disclose where his prior in-
formation consisted merely of the
facts that a particular person was de-
sirous of obtaining land of that sort,
that he was aware of the location of
principal's tract, and intending to In-
spect the same, and that he had aj>-
plicd to the broker in regard to buy-
ing such a tract.
Duty to disclose agent's previous
relations to property. — Where a per-
son has an option to purchase land
but elects not to exercise it, he is not
thereafter disqualified to become the
agent of another person to purchase
the land, and the existence of this
former option Is held not to be such
a material fact that he is bound In
good faith to disclose it to such prin-
cipal, where there was no difference
between the option price and the price
at which the principal bought. Car-
penter V. Fisher, 175 Mass. 9.
Failure of agent to disclose that he
teas irCdorser upon notes assumed and
paid hy principal. — An agent acting
for his principal in the exchange of
lands was already an endorser of
notes secured by a mortgage upon the
land which his principal received,
and which mortgage the principal as-
sumed and afterwards paid. The
agent did not disclose the fact of
such endorsement to his principal.
Held, that while this was a circum-
stance which might be taken into ac-
count, it did not constitute fraud per
se; neither did it show that the agent
had brought about the satisfaction of
his debt with the property or funds
883
§ I208]
THE LAW OF AGENCY
[book IV
like, have permitted the principal to sell his property at a certain price
without informing him of what the agent knew, namely, that he could
procure better terms.'^^
§ 1208. Agent liable for misrepdresentationg. — A fortiori will the
agent be liable to his principal where, to induce the principal to make
the contract, in order, for example, that the agent may earn his com-
missions, the agent has made false representations to the principal con-
cerning the material facts relating to the transaction, and has thereby
induced the principal to deal to his detriment.'*
of the principal. Beatty v. Bulger,
28 Tex. Civ. App. 117.
Failure to inform principal that
agent was paying taxes which debtor
should have paid. — ^Where agents for
collection of interest upon a loan se-
cured by mortgage neglected to inform
the principal for several years that
the debtor was not paying the inter-
est or taxes, and that the agent him-
self was paying the money, any loss
by depreciation of the security during
this time (in which the principal
could have foreclosed if he had known
the facts) must fall upon the agent.
Bush V. Froelich. 14 S. D. 62.
Duty to disclose facts relating to
proposed change in contract with
agent. — While the agent is negotiat-
ing with his proposed principal with
reference to becoming his agent the
parties are dealing at arm's length
and no fiduciary relation as yet exists,
but, when the relation is once entered
upon, a fldiciary relation Is .created,
and it is then the duty of the agent
to fully disclose the facts where he is
seeking to uphold a subsequent modifi-
cation of the contract in his favor.
Neilson v. Bowman, 29 Gratt. (Va.)
732.
Buh-agmis and assistant attorneys
"are the agents and attorneys of the
principal and client, it matters not by
whom they were employed, and are
subject to all the obligations of
agency or attorneyship toward their
principal or client, in so far as the
Information acquired by them during
the exercise of the agency, is con-
cerned." Dorr V. Camden, 55 W. Va.
226, 65 L. R. A. 348.
An agent to sell owes no duty to
report to his principal an ofl!er which
the principal has alrtiady said he
would not accept Burchell v. Gou-
rie, etc.. Collieries, [1910] A. C. 614.
77 See Holmes v. Cathcart, Leonard
V. Omstead, and many other cases
cited in the preceding note. Also Snell
V. Goodlander, 90 Minn. 533.
TsVarner v. Interstate Exchange,
138 Iowa, 201; Tate v. Altken, 5 Cal.
App. 505.
Agent who misrepresents the price
at which property can be purchased,
and keeps the excess, Is liable to the
principal for the amount Pouppirt
V. Greenwood, 48 Colo. 405; Hlndel v.
Holcomb, 84 Wash. S36. Principal
may also recover the commissions
paid the agent. Palmer v. Pirson, 4
N. Y. Misc. 455. The measure of
damages for falso representations
made by an agent is the difference
between the value as represented aiid
the value in fact Durward v. Hub-
bell, 149 Iowa, 722.
Where an agent for the purchase
of land for the joint account of him-
self and his principal, misrepresents
the price to be paid, tells the princi-
pal that he is himself contributing
as much as the principal, whereas he
buys the land for one-third of the
principars contribution, keeps the
residue, and pays nothing himself,,
he Is liable to the principal for the
whole amount. McLain Y. Parker,
229 Mo. 68.
884
CHAP, n]
DUTIES AND LIABILITIES OF AGENT
[§ I2C9
And where the principal, before the discovery of the, agent's double
dealing, has bound himself by contract to the other party, he need not,
it is held, rescind the contract, but may perform it, and then recover
of the agent damages for the loss he has sustained/*
§ 1209. Agent may not take advantage of confidential information
acquired in the business to make profit at principal's expense. —
Moreover, it is frequently said that an agent will not be permitted,
during the continuance of his agency, to take advantage of the knowl-
edge of the principal's situation, needs, or desires, which knowledge
he acquires by reason of his employment and in a confidential capacity,
to compete with or undermine his principal's interest by acquiring for
himself that which the principal deems it necessary or desirable to
acquire for his own interest or protection.
Whether so wide a proposition as that can be maintained or not,
there seem to be a variety of cases in which the law will not permit
the agent to acquire for himself rights or estates in which the prin-
cipal has a present or potential interest, and which, though the agent
may not owe a duty to his principal to acquire for him, the duty of
loyalty will forbid his acquiring for himself to the prejudice of the
principal. Thus, such an agent will not be permitted to acquire, on
his own account, a lease of the principal's premises which he knows
the principal desires and intends to renew.'® An agent, employed to
investigate and make an abstract of his principal's title, will not be
permitted to conceal a defect therein which he thus discovers, and buy
in and enforce the outstanding claim on his own account.*^ An agent
Where an agent, employed in th^
sale of land, represented to his prin-
cipal that he had received the cash
deposit caUed for hy the contract,
whereas he had taken the worthless
note of the vendee, the agent is liable
to the principal for the amount of
the deposit; and It is Immaterial that
the principal, on the vendee's de-
fault» resold at such a price that he
lost nothing by the breach of that
contract Wood v. Blaney, 107 Cal.
291.
»» Great Western Gold Co. v. Cham*
bers, 153 Cal. 307.
•0 Davis V. Hamlin. lOS 111. 8»» 48
Am. Rep. 541; Essex Trust Co. v. £n-
Wright, — Mass. — , 102 N. E. 441.
See also, Grumley v. Webb, 44 Mo.
444, 100 Am. Dec. 804.
An agent hired to give his entire
time to securing oil land leases for
his principal will not be permitted
while 80 employed to take and hold
leases on his own account except
with the full knowledge and consent
of the principal. Fox v. Simons, 251
lU. 316.
But in liompriere v, Waz^, 2 Vict
1, it was held that an agent, who in
the course of his agency had learned
the value of lands, was not thereby
disqualified from buying them at a
public sale, thereby being no duty on
his part to pay them for the princi-
pal, and it not being a case in which
the principal had a preferential
right.
81 Ringo V. Blnnsv 10 Peters (35 U.
S.) 269, 9 L. Ed. 520; Valletta v. Te-
88s
§§ I2IO, 121 1]
THE LAW OF AGENCY
[book IV
of a mining company who discovers defects in the location of its
claim will not be permitted to take advantage of the situation, to re-
locate it in his own name."
§ 1 2 10. After termination of agency.— Even though the
relation has terminated, the disability in this respect may still continue.
Thus in One case it is said : "The duty of an attorney to be true to his
client, or of an agent to be faithful to his principal, does not cease
when the employment ends, and it cannot be renounced at will by the
termination of the relation. It is as sacred and inviolable after as
before the expiration of its term.'* In this case it was held that an
agent who, by reason of his employment to assist his principals in
selling lands in a tract on which they had an option and which they
were exploiting, had learned of the location, value and possibilities
of the tract and who were its owners, would not be allowed, by. re-
signing his agency, to purchase the land on his own account and thus
defeat his principal's purposes. He was charged as a trustee.**
§ I2II. Information respecting trade secrets, names ot customers,
etc. — So where the agent acquires information respecting trade
secrets, formulae, lists of customers, and the like, under an express or
implied contract not to disclose it,** or under such circumstances as
dens, 122 lU. 607, 8 Am. St. Rep.
602.
Same effect: Eofl v. Irvine, 108 Mo.
878, 82 Am. St. Rep. 609.
82 Largey t. Bartlett, 18 Mont. 265.
See also Fisher v. Seymour, 23 Colo.
642; liOCkhart v. Rollins, 2 Idaho, 640.
See also Cragin v. Powell, 128 U. S.
991, 32 L. Ed. 666.
M Trice ▼. Comstock, 67 C. C. A.
646, 121 Fed. 620, 61 L. R. A. 176.
To same effect: Dennison y. Aldrlch,
114 Mo. App. 700.
In Eoff T. Irvine, 108 Mo. 878, 82
Am. St. Rep. 609, the same doctrine
WBM applied to prevent an attorney
from buying and holding land in
which hit client was interested,
merely hy terminating his relation
as attorney.
Where an agent has sold to hia
principal the benefit of certain in-
formation he cannot be allowed later
to use it to his own advantage to de*
feat the principal. Winn v. Dillon,
27 Miss. 494.
In Bemlfl v. Plato, 119 Iowa. 127,
a former agent for the payment of
taxes was permitted to hold under a
tax title acquired by him where it
appeared that the agency had ended
before this tax matured and its non-
payment was due to no fault on his
part
•«See Thum v. Tloczynaki, 114
Mich. 149, 68 Am. St. Rep. 469, 88 L.
R. A. 200 (injunction granted to re-
strain defendant from disclosing the
processes of manufacture of a sticky
fly paper in violation of implied con-
tract); Frallch v. Deepar, 166 Pa.
24 (injunction granted against dis-
closure of trade secrets, there being
an express written contract never to
divulge the same); Reichenbach v.
Eastman Kodak Co., 79 Hun (N. T.),
183 (Injunt^tion granted where de*
fendants, some of whom were under
express agreement, had organized a
company to use the trade secrets in
question, and to compete with the
plaintiff company); Peabody V. Nor-
886
CHAP. Il]
DUTIES AND LIACIUTIES 0^ AGENT
[§ I2I2
made it confidential," he, and his eoafederates usually, may be re-
strained, either during or after the determination of the agency, from
practically appropriating this property of the principal by using the
information so acquired to the principaFs detriment.
§ i3ia. Ordinary experience learned in the business. —
Tliis rule, however, will not apply to the experience, skill or training
which the agent acquires in the ordinary course of his agency. "Every
agent," it is said, "has a lawful right to carry with him into a new
employment all the skill and knowledge acquired in his previous en-
gagements and nothing short of an express contract on his part not
to do so, will debar him, and then only under the strict rules of law
especially established to protect trade secrets." ■•
folk, 98 Mass. 452, 96 Am. Dec. 664
(injunction granted; express con-
tract not to disclose); Wiggins Sons
Oo. y. Gott'A-Lap Co., 169 Fed. 160
(injunction not allowed beoause it
did not appear that there was im-
mediate danger of a disclosure as
alleged); Salomon v. Hertz; 40 N. J.
fi. 400 (Injunction granted restrain-
ing a disclosure of tanning processes,
but as to Information regarding cus-
tomers and prices tlie court held that
the restriction thereon lasted only
during the continuance of the em-
ployment).
See also Vulcan Detinning Co. v.
American Can Go., IZ N. J. Bq. 387.
12 L. R. A. (N. S.) 102; Stone v,
Qoss, etc., Co., 65 N. J. Bq. 756, 103
Am. St. Rep. 794, 63 L. R. A. 344;
Phlladeliphia Bxtracting Co. v. Key-*
Btope Extracting Co., 176 Fed. 830;
Lord V. Smith, 109 Md. 42: Little v.
Gallus, 4 N. y. App. Div. 669; Mori-
son V. Moat, 9 Hare, 241.
But in Taylor Iron Co. v. Nichols,
73 N. J. E. 684, 133 Am. St. R. 753,
£4 Ia R. A. (N. S.) 938, an injunc-
tion to restrain disclosure of secrets
was denied, because, the contract not
to dlTulge was too broad; and be-
cause, the time limit in the contract
did not correspond with the time of
the plaintifiC'8 exclusive control of
some of the secrets in question.
M In a variety of cases, the former
agent has been restrained from using
lists of customers, codes, diagrams.
patterns, catalogues, price lists, etc.,
which constituted the principal's prop-
erty, and which' the agent acquired or
oopied, without his principal's consent
to thedr subsetuent use, while he was
in the principal's employment See
Merryweather v. Moore, [1892] 2 Ch.
518 (patterns); Robb v. Oreen,
[1896] 2 Q. B. 1, 316 (list of custo-
mers); Louis v. Smellie, 73 L. T.
Rep. 226 (list of agents); .Lamb v.
Evans, [1893] 1 Ch. 218 (memoranda,
lists, and material from prihcipal%
catalogues) ; Simmons Hardware Co.
V. Waibel, 1 S. D. 488, 36 Am. St.
R. 755, 11 L. R. A. 267 (Code of price
marlm); Stevena y. StUes^ 2& H. I.
399. 20 L. R, A. (N. S.) 933, 17 Ann.
Cas. 140 (list of patrons);. Summers
V. Boyce, 97 L. T. Rep. 505.
See also K3rchner v. Clmban,
[1909] 1 Ch. 413,
Agent will not be allowed to regis-
ter as his own the principal's trade
marks. Munoz v. Struckmann, 9
Philipp. 52.
86 New Era Gas Co. v. Shannon, 44
III. App. 477.
As to the right of the agent» after
the terminatidn of his agency, to
solicit the business of the patrons
of his former principal with whom
he had become acquainted during the
agency, see Proctor v. Mahin, 93 Fed.
875 (holding that he may do so).
Compare Tregd v. Hunt, [1896] App.
Cas. 7.
887
§§ I2I3-I2I5]
THE LAW OF AGENCY
[book IV
§ 1213.
Information leading to outside profit. — ^In a part-
nership case, in which the firm claimed the right to profits made by
one partner as the result of information which he acquired as a part-
ner, it was said by Lindley, L. J., "As regards the use by a partner
of information acquired by him in the course of the transaction of
partnership business, or by reason of his connection with the firm, the
principle is that if he avails himself of it for any purpose which is
within the scope of the partnership business, or of any competing busi-
ness, the profits of which belong to the firm, he miist account to the
firm for any benefits which he may have derived from such informa-
tion, but there is no principle or authority which entitles a firm to
benefits derived by a partner from the use of infonnation for purposes
which arc wholly without the scope of the firm's business." "^
§ 1 2 14. Information leading to patents or inventions. —
So far as patents for inventions made by others than the agent are
concerned, they stand upon no different footing with respect of the
questions considered in this chapter than any other species of prop-
erty ; but patents for inventions made by the agent, even though made
during the agency, and even though the agent's attention to the matter
was the result of the knowledge or information acquired in the prin-
cipal's business, are not regarded as a fruit of the agency within the
rules here being dealt with, and the principal cannot' have them merely
as the result of the relation. There must be an employment to make
the inventions or a contract that the principal shall have them.®"
§ 1215. Agent employed to settle claim, may not buy and enforce
it against his principal — ^The principles now being considered find
further illustration in the rule that an agent, who is employed to settle
or compromise a claim against his principal, will not be permitted to
avail himself of the benefit of a favorable settlement, by purchasing
the claim himself at a discount and enforcing it against his principal
for the full amount.**
ST Aas V. Benham, [1891] 2 Ch. 244.
Followed In Latta v. Kilbourn, 150
U. a 624, 37 L. Ed. 1169.
See also Trego v. Hunt, 8upra,
88 American Circular Loom Co. y.
Wilson, 198 Mass. 182, 126 Am. St
Rep. 409; Dalzell v. Dueber Watch
Case Co., 149 U. S. 316, 37 L. Ed. 749;
Hapgood T. Hewitt, 119 U. S. 226» 30
L. Ed. 369; Solomons ▼. United
States, 137 U. S. 342, 34 U Ed. 667;
Pressed Steel Car Co. y. Hansen, 71
C. C. A. 207, 187 Fed. 408, 2 L. R. A.
<N. S.) 1172; Deane T. Hodge, 36
Minn. 146, 69 Am. Rep. 321; Burr ▼.
De La Vergne, 102 N. T. 415.
See also National Wire Bound Box
Co. T. Healy, 110 C. C. A. 618, 189
Fed. 49.
89 Davis Y. Smith, 48 Vt 269; Case
Y. Carroll, 35 N. Y. 885; Albertaon v.
Fellows, 46 N. J. Eq. 8^, 17 AtL 816;
888
CHAP. Xl]
DUTIES AND LIABILITIES OF AGENT
[§ iai6
Thus where two partners who were financially embarrassed em-
ployed an agent to assist them in settling with their creditors, and the
agent, while so employed, purchased an outstanding claim against the
firm, at a large discount, but did not disclose the fact of the discount
to his employers, who gave him their note for the full amount of the
claim, it was held that the benefit of the discount inured to the prin-
cipals, and that there was a failure of consideration of the notes to
that extent .•**
§ i^i6. Agent may not acquire rights against his principal based
on his own neglect or default. — It is the duty of the agent to protect
the interest of his principal confided to his care. He will not there-
fore, be permitted to build up in himself rights and interests against
his principal based upon, his own neglect or default in the performance
of his duty.
Thus an agent whose duty it is to pay the taxes or othjer charges
upon his principal's lands, cannot by neglecting to pay such taxes or
charges acquire a valid title to the lands upon a sale of them for .the
non-payment thereof, and, if such purchase be. made, the agent will be
deemed to hold it in trust for his princips^l.*^ This rule applies al-
tliough the duty of paying the taxes is not directly imposed. It is
enough that such a course puts the interests of the agent, in the course
of his agency, in conflict with those of the principal, — a result which
it is his duty to avoid. Tlius an agent authorized to care for, or to'
manage, or to sell his principal's real estate, will not be permitted to
acquire adverse interests by purchasing the same at a tax sale.** Nor
Quinn v. Le Due (N. J. Eq.), 51 AtL
199; Smith v. Brotherline, 62 Pa.
461; Reed y. Norrls, 2 Myl. k C. 361.
80 Noyes v. London, 59 Vt 569,
wCurts V, Ciana, 7 Bias. (U. S. C.
G.) 260, Fed. Caa. No. 3,507; Franks
V. Morris, 9 W. Va. 664; Barton v.
Mobs, 32 111. 60; Oldhams v. Jones, 6
B. Mon. (Ky.) 458; Krutz v. Ftsher,
8 Kan. 90; Matthews ▼. Light, 82
Me. 305; Huxsard v. Trego, 36 Pa. 9;
Bartholomew r. Lieech, 7 Watts
(Penn.), 472; Young v. Goodhue^ 106
Iowa, 447; Stanley v. McConnell, 64
111. App. 591; Fox v. Zimmerman, 77
Wis. 414; McMahon y. McQraw, 26
Wis. 614; CurUs y. Borland, 35 W.
Va. 124; Siers y. Wiseman, 68 W. Va.
340; Backus v. Cowley, 162 Mich.
585; Hudson y. Herman, 81 Kan. 627;
Gamble v. Hamilton, 31 Fla. 401;
Knupp y. Brooks, 200 Pa. 494.
In Enalen v. Alien, 160 Ala. 529, an
agent authorised to manage property,
collect rents, etc., arranged and hast-
ened the foreclosure of an outstand^
ing mortgage^ and bonsht in the
property at the sale. Held^ that the
agent was construotiye trustee fior
the principal.
That agency inyolylng payment of
taxes may be found from conduct
and clrcumstajiees and the presumed
continuance of prior agency. See
Siers y. Wiseman; Gamble y. HamU>
ton; Knupp y. Brooks, $upra.
•2 Ellsworth y. Gordrey, 63 Iowa,
675; Collins y. Rainey, 42 Ark. 531;
Woodman y. Dayis, 32 Kan. 344.
889
§ I2I7]
THE LAW OP AGENCY
[book IV
will an agent employed to loan money on mortgage securities, and
owing a duty to look after and supervise such loans, and collect and
remit installments of principal and interest, be permitted to undermine
the securities so taken by buying, for himself or another, the mort-
gaged property at tax sales.*'
§ 1217, The mere fact that the principal has not furnished
the agent with the money with which to pay the taxes, makes no dif-
ference,** nor will the neglect of the principal to reimburse the agent
for money expended in such a purchase, authorize him to acquire and
hold the title, unless he has first made a full and complete renuncia-
tion of his agency .••
Where the agent was supplied with funds, either directly or through
collections, etc., in his hands, and available for the purpose, with which
to pay the taxes, the principal may compel a cancellation or convey-
ance without tendering to the agent the amount paid by him;** but,
where the agent was not so supplied, a tender of reimbursement is es-
sential.*^
For reasons similar to those which apply to the tax case, an agent
employed to do the annual assessment work on a mining claim, will
not be permitted, after having thus lulled his principal into a sense of
security, to defeat his interests by omitting to do the work and thereby
causing his principal's claim to lapse, and then relocating the mine in
his own name and on his own account.**
BSAbramB v. Wingo (Kan. App.)>
69 Pac. 661; Dana v. Duluth Trust
Co., 99 Wis. 663; Bush v. Froellch, 14
S. D. 62; GonzaUa v. Bartelsman* 14S
111. 634.
M Bowman v. Officer, 53 Iowa, 640;
Page V. Webb (Ky.), 7 S. W. 308.
»s Bowman v. Officer, $upra; Me-
Mahon v. McGraw, 26 Wis. 614;
Krutz ▼. Fisher, 8 Kan. 90.
But In Eckrote y. Myers, 41 Iowa,
324, where an attorney was retained
to foreclose a mortgage and In so
doing expended money for necessary
fees which the client not only re-
fused to pay, but made no response
whatever to repeated demands, it
was held that the attorney, after a
lapse of three years, i^as entirely
Justified in purchasing the property
at a tax sale and that the client could
not, seven years subsequently, have
the deed set aside.
Although an attorney employed to
collect a note may be liable in dam-
ages for not properly docketing a
judgment so as to make It a lien
upon the debtor's land, be is not, be-
cause of such negligence, to be
charged as a trustee if, after the
termination of the relation and the
death of the client, he buy? the land
at a tax sale. Farrand v. Land ft
River Impr. Co., 30 C. C. A. 128, 86
Fed. 893.
••Fox V. Zimmerman, 77 Wis. 414,
46 N. W. 533; Dana v. Duluth Trust
Co., 99 Wis. 663, 76 N. W, 429;
Young V. GJoodhue, 106 Iowa, 447. 76
N. W. 822.
•T Bush V. Proellch, 14 S. D. 62, 84
N. W. 230.
••Argentine Mining Co. v. Bene-
dict, 18 Utah, 18S, 55 Pac. 659;
O'Neill V. Otero, 15 N. M. 707, 133
Pac. 614.
890
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ I2l8, I219
§ 1 2 18. Agent may not acquire adverse rights in principal's prop-
erty confided to his care.— The rule stated in the preceding section
may be given a still wider range. For, it is well settled that the agent
may not, during the continuance of his agency, acquire adverse rights
in the property or interests of his principal which were confided to his
care and which would be defeated or impaired by the enforcement of
the interest acquired by the agent. To hold otherwise is to say that
an agent, who has undertaken a duty with reference to certain in-
terests of his principal, may practically render the performance of
that duty impossible by acquiring for himself that which formed the
occasion and foundation of it. Even though there may be no specific
duty like that to pay taxes, referred to in the preceding section, the
general duty to protect his principal's property, and to be loyal to his
interests, requires that any acquisition of outstanding rights or in-
terests in the principal's property concerning which the agent has un-
dertaken a duty, the performance pf which would be inconsistent
with the agent's claims, shall be deemed to have been made on the
principal's accpunt, and the principal may have the benefit on reim-
bursing the agent for his outlay. ••
§ 1219. Thus, as stated in the preceding section, the agent
authorized to sell, care for, or manage his principal's lands or se-
curities will not be permitted to acquire and hold adverse tax titles,
even though he was not charged specifically with the duty to pay
taxes.^*^*' So an agent authorized to manage and sell lands will nof^
be permitted to acquire a title to them by bidding them iii at a mort- \
gage sale.^ Nor, as has been seen, will an agent whose duty it is to
buy up and remove an outstanding claim against his principal's title,
be permitted to buy it in his own name and enforce it against his^
principal.* Nor can an agent employed to settle a debt against his
••Robertson v. Chapman, 162 U. S.
673, SS L. Ed. 592; Dana v, Duluth
Trust Co., 99 Wig. 663; Bush v. Froe-
lich, 14 S. Dak. 62; Abrams v. Wingo,
9 Kan. App. 884; McKinley v. Will-
lams, 20 C. C. A. 312, 74 Fed. 94.
An agent to rent lands and have
the care of the property cannot make
himself a tenant of any part of the
land or the owner of a crop grown
thereon without his principal's con-
sent. Paige y. Akins, 112 Cal. 401;
Moneta v. Hoffman, 249 111. 56.
100 Dana t, Duluth Trust Co.> 99
Wis. 663; Bush ▼. Froelich, 14 S,
Dak. 62; Abrams v. Wingo» 9 Kan.
App. 884.
I Adams y. Sayre, 70 Ala. 818.
Agent owing duties to acquire, sell
or manage a mining claim will not
be permitted to relocate it for him-
self. Largey y. Bartlett, 18 Mont
265; Fisher y. Seymour, 23 Colo. 642;
Lockhart y. Rollins, 2 Idaho, 508.
3 Smith y. Brotherline, 62 Pa. 461 ;
Case y. Carroll, 35 N. T. 886; Wltte y.
Storm, 236 Mo. 470.
891
§§ I220, 122 1 ] THE LAW OF AGENCY [bOOK IV
principal, be permitted to take an assignment of it to himself and en-
force it against his principal.*
So, if an agent discovers a defect in his principal's title, he cannot
use it to acquire a title for himself; and if he does so, he will be
deemed to be a trustee holding for his principal.*
If an agent wishes to acquire such a title, he must first make an
unambiguous relinquishment of his agency,* and if any doubt exists
as to whether he had done so, it will be solved in the principars favor.*
§ I220, These rules cannot be defeated by usage. — The law will
not permit these important safeguards to be easily defeated. Hence
it has been held that the rule that an agent who undertakes to act for
his principal may not, without the latter's consent, in the same matter
act for himself, cannot be avoided upon the authority of any local or
temporary usage of which the principal was ignorant and which he
had no reason to anticipate.^
§ 1221. Agent may purchase, sell, etc., with principal's consent. —
It. is not to be inferred, however, that there is any inherent incapacity
in an agent to purchase from his principal or to sell to him. Where
the facts are fully disclosed, and the agent acts in good faith, taking
no advantage of his situation, the principal may, if he sees fit, deal
with the agent as with any other person.*
The same thing is true where the question is as to the capacity of the
agent to buy for himself that which it would ordinarily be his duty
to buy for his principal. If the principal, with full knowledge, cori*
sents to it, there can be no objection."
But, as is said in a recent case,^® "while a transaction of the char-
acter disclosed is not necessarily voidable at the election of the prin-
• Reed v, Norrla, 2 My, ft C. 361. Am. Dec. 168; Raialn v. Clark, 41 Md.
*Ringo V. Binns, 10 Pet. (U. S.) 158, 20 Am. Rep. 66; Bartram v.
269, 9 L. Ed. 420; VaUette v. Tedens, Lloyd, 88 L. T. 286.
122 III 607, 3 Am. St. Rep. 502. See also Van Dusen-Harringtoa Co.
» Continental L. Ins. Co. v. Perry, v. Jungeblut, 75 Minn. 298, 74 Am. St.
65 Iowa, 709. R. 463, where a custom of the par-
0 Fountain Coal Co. v. Phelps, 95 ticular market was held to justify it
Ind. 271. 8 Rochester v. Levering, 104 Ind.
T Butcher V. Krauth, 14 Bush (Ky.), 562; Fisher's Appeal, 34 Pa. 29; Uh-
713; Ferguson v. Gooch, 94 Va. 1; llch v. Muhlke, 61 111. 499; Burke v.
Roblson V. Mollett, L. R., 7 H. of L., Bours (Cal.), 26 Pac. 102.
802; reversing same case, L. R., 5 • American Mortgage Co. v. W^ill-
C. P. 646, and L. R., 7 C. P. 84; Com- lams, — Ark. , 145 S. W. 234.
monwealth v. Cooper, 130 Mass. 285; lo Rochester v. Levering, supra, cit-
Farnsworth v. Hemmer, 1 Allen ing: McCormick v. Malin, 5 Blackf.
(Mass.), 494, 79 Am. Dec. 758; (Ind.) 609, 522; Cook v. Burlin, etc..
Walker v. Osgood, 98 Mass. 348, 93 Co., 43 Wis. 433; Porter v. Woodruff,
892
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
L§ I22I
cipal, a court of equity, upon grounds of public policy, will neverthe-
less subject it to the severest scrutiny. Its purpose will be to see that
the agent, by reason of the confidence reposed in him by the principal,
secures to himself no advantage from the contract. When the trans-
action is seasonably challenged, a presumption of its invalidity arises,
and the agent then assumes the burden of making it affirmatively ap-
pear that he dealt fairly, and in the strictest of faith imparted to his
principal alf the information concerning the property possessed by
him. The confidential relation and the transaction having been shown,
«
the onus is upon the agent to show that the bargain was fair and
equitable; that he gave all the advice within his knowledge pertain-
ing to the subject of the sale and the value of the property ; and that
there was no suppression or concealment which might have influenced
the conduct of the principal."
If, therefore, it does not appear that the principal was fully in-
formed,^^ and a fortiori where the agent has practiced concealment,,
evasion, or misrepresentation, the transaction cannot stand.^*
36 N. J. Eq. 174; Young v. Hughes,
32 N. J. Eq. 372; Farnum v. Brooks,
^ Pick. (Mass.) 212; Moore v. Man-
diebaum, 8 Mich. 433.
11 The burden is upon the agent to
show that the principal had knowl-
edge and gave his free consent. Tyler
V. Sanborn, 128 111. 136, 15 Am. St.
Rep. 97, 4 L. R. A. 218; Webb ▼.
Marks, 10 Colo. App. 429; Rubidoex v.
Parks, 48 Cal. 215; Alwood v. Mans-
field, 69 111. 496; McKinley v. Will-
iams, 74 Fed. 94, 20 C. C. A. 312;
Boyd ▼. Jacobs, 7 Tex. Civ. App. 131;
Wells v. Cochran, 84 Neb. 278; Ingle
V. Hartman, 37 Iowa, 274; Green v.
Peeso, 92 Iowa, 261; and cases cited
In preceding note.
Purchase "by agent who was not
cgent to sell. — In Collar v. Ford, 45
Iowa, 331, it was held that a person
who had been requested by a non-
resident owner of land to ascertain
and report the amount of t&xes due
upon it, did not thereby become such
an agent that, if he bought the land,
he was bound to disclose its value.
<See comments in Green y. Peeso, 92
Iowa, 261.)
And in Douglass v. Lougee, 147
Iowa, 406, it is held that one who
was merely agent to lease and collect
rents was not obliged, on buying the
property of his principal, to disclose
to the principal what he knew about
its value. But this case is not very
convincing, to say the least.
12 Jansen v. Williams, 36 Neb. 869,
20 L. R. A. 207; Van Dusen v. Bige-
low, 13 N. D. 277, 67 L. R. A. 288;
Rogers v. French. 122 Iowa, 18;
Clark V. Bird, 66 App. Div. (N. Y.)
284; McKinley v. Williams, supra.
An agent for sale of lands, by mis-
representing to his principal the
value and prospect of sale, secured
conveyance to himself of land and
crops for much less than value. Held,
sale may be set aside. Green v.
Peeso, 92 Iowa, 261, relying particu-
larly upon Savage v. Savage, 12 Ore.
459, and Rochester v. Levering, 104
Ind. 562.
See also Fisher v. Lee, 94 Iowa,
611, where sale to agent was set aside
because he had not disclosed all the
facts affecting value. So in Corn-
well V. Foord, 96 111. App. 366, where
agent purchased, not disclosing better
offers which he had received.
893
§§ I 222- I 224]
THE LAW OF AGENCY
[book IV
§ 1222. Principal may ratify act — It is not infrequently said, in
discussing the questions now under consideration, that the agent's act
is void. No more is meant by this, however, than that the act is void-
able at the principal's election. The rule is designed for the prin-
cipal's protection, and, like other similar rules, its benefit may be
waived if the principal sees fit to do so." If he is satisfied with the act^
after full knowledge, no one else can complain. He may expressly
approve and enforce the contract against the agent; or here, as in
other cases, his ratification may be presumed if he does not repudiate
it within a reasonable time after the facts come to his knowledge.^*
It does not lie in the agent's mouth to say, when his principal elects
to stand by the contract, that the contract was void because ol his
own default or breach of duty.
§ 1223. Gratuitous agents — Volunteers. — The fact that the agent
acted gratuitously makes no difference in the application of these
rules.^* Neither does the fact that he was a volunteer whose services
had been accepted.^* In either case if he undertakes to act as agents
he must act with loyalty to the principal's interest. He must, how-
ever, actually be agent ; otherwise no confidential relation will arise.*'^
§ 1234. Profits made in the course of the agency bdong to the
principal.— The well settled and salutary principle that a person
who undertakes to act for another shall not, in the same matter, act
for himself, results also in the other rule, that all profits made and
advantage gained by the agent in the execution of the agency belong*
18 Boyd V. Jacobs, 7 Tex. Civ. App.
131; Bartelson v. Vanderhoff, 96
Minn. 184.
1* Marsh v. Whitmore, 21 WalL
(U. S.) 178, 22 L. Ed. 482; Eastern
Bank v. Taylor, 41 Ala. 72; Bassett
V. Brown, 105 Mass. 551; Disbrow v.
Secor, 58 Conn. 35; Wenham v. Swit-
zer, 51 Fed. 351; U. S. Rolling Stock
Co. V. Atlantic, etc., R. Co., 34 Ohio
St. 450, 32 Am. Rep. 380; Anderson
V. First Nat Bank, 5 N. Dak. 451.
But full knowledge of the facts Is
indispensable. Boyd v. Jacobs, 7 Tex.
Civ. App. 131, and long silence will
not amount to a ratification where
there was neither actual knowledge
nor anything to arouse suspicion.
Barnett v. Daw, 55 N. Y. App. Div.
202.
But where the principal with
knowledge refuses to act while the
matter Is still executory, he cannot
afterward complain. Bartelson v»
Vanderhoff, 96 Minn. 184.
10 Hunsaker v. Sturgls, 29 Cal. 142;
Bergner v. Bergner, 219 Pa. 113;
Rankin v. Porter, 7 Watta (Pa.), 887;
Smltz V. Leopold, 51 Minn. 455;
Thalman v. Canon, 24 N. J. Eq. 127;
Battelle v. Cuehlng, 21 D. C. 69; Mai^
shall V. Ferguson, 94 Mo. App. 176;
Criswell v. Riley, 6 Ind. App. 496.
10 Salisbury v. Ware, 188 111. 605;
Dennis v. McCagg, 32 111. 429; Wat-
son V. Steel Co., 15 111. App: 509;
Kevane v. Miller, 4 Cal. App. 598;
Satterthwaite v. Loomis, 81 Tex. 64.
But compare Walton v. Dore, 115
Iowa, 1, cited post, % 1235.
lYBrinson v. Exley, 122 Qa. 8;
Walton V. Dore, 8upi<i,
894
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
l§ 1225
to the principal. And it matters not whether such profit or advantage
be the result of the performance or of the violation of the duty of the
agent if it be the fruit of the agency. If his duty be strictly performed,
the resulting profit accrues to the principal as the legitimate conse-
quence of the relation; if profit accrues from his violation of duty
while executing the agency, that likewise belongs to the principal, not
only because the principal has to assume the responsibility of the trans-
action, but also because the agent cannot be permitted to derive ad-
vantage from his own default.^'
It is only by rigid adherence to this rule that all temptation can be
removed from one acting in a fiduciary capacity, to abuse his trust or
seek his own advantage in the position which it affords him.
§ 1225. It matters not how fair the conduct of the agent
may have been in the particular case, nor that the principal would
have been no better off if the agent had strictly pursued his authority,
nor that the principal was not in fact injured by the intervention of
the agent for his own benefit. The result is still the same. If the
agent dealing legitimately with the subject-matter of his agency, ac-
quires a profit ; or if by departing from his instructions, he obtains a
better result than would have been obtained by following them, the
principal may claim the advantage thus obtained, even though the
agent may have contributed his own funds or responsibility in produc-
ing the result. All profits and every advantage beyond lawful com-
pensation, made by the agent in the business, or by dealing or specu-
lating with the effects of his principal, though in violation of his duty
as agent, and though the loss, if one had occurred, would have fallen
on the agent, will, wherever they can be regarded as the fruit or the
outgrowth of the agency, be deemed to have been acquired for the
benefit of the principal."
18 See Graham v. OummingB, 208
Pa. 516; Humblrd v. Davis, 210 Pa.
811, and cases cited in following note.
!• Leake v. Sutherland. 25 Ark.
219; For law v. Augusta Naval Stores
Co., 124 Ga. 261; Jas. T. Hair Co. v.
Dalley, 161 111. 379; Salsbury v. Ware,
183 111. 505; Snow v. Macfarlane, 61
111. App. 448; Lafferty v. Jelley, 22
Ind. 471; Ackburg v. McGool, 36 Ind.
478; Krhut v. Pharos, 80 Kan. 515;
Holmes v. Cathcart, 88 Minn. 213, 97
Am. St. R. 513, 60 L. R. A. 734; Snell
V. Goodlander, 90 Minn. 533; Schick
v. SuUle, 94 Minn. 135; Dodd v.
Wakeman, 26 N. J. Eq. 484; Davoue
V. Fanning, 2 Johns. (N. Y.) Ch. 252;
Moore v. Moore, 5 N. T. 266; Gardner
V. Ogden, 22 N. Y. 327, 78 Am. Dec.
192; Ehitton v. Willner, 52 N. Y. 312;
Price v. Keyes, 62 N. Y. 378; Duryea
v. Vosburgh, 138 N. Y. 621; Wilson v.
Wilson, 4 Abb. (N. Y.) App. Dec. 621;
Densmore y. Searle, 7 N. Y. App. Div.
45; Bartholomew v. Leech, 7 Watts
(Pa.), 472; Simons ▼. Mining Co., 61
Pa. 202, 100 Am. Dec. 628; Coursln*8
Appeal* 79 Pa. 220; Graham t. Gum*
895
§ 1226]
THE LAW OF AGENCY
[book IV
In such a case the principal may at his option compel the agent to
account for or convey to him the profits thus acquired.^® And evea
though the transaction was outside of the actual purview of the agency,
yet if the agent at the time professed to act for the principal and in
his behalf, the benefit of the transaction will inure to the principal."
g 1226. Illustrations. — In accordance with this rule, where
one who while pretending to act as the agent of the purchaser of cer-
tain real estate, was in reality acting as the agent of the seller, and
received as his compensation from the seller ^ note given by the pur-
chaser as part of the purchase price, it was held that he should be re-
strained from enforcing payment of the note, and that it should be
delivered up and cancelled.^*
And if the agent, while secretly negotiating a sale of his principal's
land or other property to third persons for a large sum, by conceal-
ment of the facts as to the value and demand of the property, obtains
from his principal a conveyance of it to himself for less than it is
worth, and then conveys it to third persons, he will be held to account
to his principal for the excess so received.^*
mings, 208 Pa. 516; Molnett v. Days,
56 Tenn. (1 Baxter) 431; Ringo v,
Binns, 10 Pet. (35 U. S.) 269.0 L. Ed.
420; Sandoval v. Randolph, 222 U. S.
161, ^6 L. Ed. 48; Keech v. Sandford,
3 Eq. Cas. Abr. (Eng.) 741; Hall v.
Noyea, 2 Bro. CHi. (Eng.) 483; Crowe
V. Ballard, 2 Bro. Ch. 117; York
Buildings Co. v. McKenzie, 3 Paton
(Scot), 378; Herzf elder v. McArthur,
[1908] Tranav. L. R., S. C. 332.
20 Greenfield Savings Bank v.
Simons, 133 Mass. 415; Holman v.
Holman, 66 Barb. (N. Y.) 222; Gard-
ner V. Ogden. 22 N. Y. 327, 78 Am.
Dec. 192; Dutton v. WiUner, 52 N. Y.
812.
21 SalBbury v. Ware, 183 111. 505;
Dennis v. McCagg, 32 111. 429; Watson
y. Union Iron ft Steel Ck)., 15 111. App.
509.
MMoinett V. Days, 1 Baxt. (Tonn.)
431.
"«Stoner v. Weiser, 24 Iowa, 434.
Defendant undertook to act as agent
for non-resident owners of land, sup-
posed to be heavily encumbered with
taxes and to be of small value. He
assured them he would do for them
"the same as he would for his own
folks." Later he reported that he
had an ofTer of $100 (probably mythi-
cal, the court thought) and advised
plaintiffs to accept it Acting on his
advice, they did so, and, to facilitate
the transfer as he claimed, made a
deed to his wife. He sent the $100.
The proposed sale did not go through,
but defendant did not advise plaintiffs
of this fact, and kept the deed. Two
years later, he recorded this deed to
his wife, and sold the land, which
had greatly increased in value, to a
bona fide purchaser for 16,588. Later
he obtained from plaintiffs a new
deed, without consideration, 'to per-
fect the title of the purchaser" first
reported. He did not advise plaintlfTs
of the new facts. Held, that he must
account for the profits. Smits ▼. Leo-
pold, 51 Minn. 455.
In Snell v. Gk)odlander, 90 Minn.
533, where the agent had taken in his
own name the principal's contract to
sell land, having represented to him
that the real purchaser was buying
also one-third of the standing crops,
it was held that the agent was not
896
CIIAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1226
So if an agent who is authorized to sell land or other property at a
given price, succeeds in realizing more than that price for it, the excess
belongs to his principal;** or if, being authorized to purchase at a
entitled to the crops under the con-
tract, after the land had been con-
veyed to the real purchaser.
So where an. agent to buy land
falsely represented that the seller In-
sisted upon a deed to another lot
owned by the principal and thereby
secured the principal's signature to a
deed made out to himself, it was
held that the principal could set
aside the deed. Cafanon y. SMrraille,
142 Cal. eS8.
An agent, haying induced his prin-
cipals to accept in exchange a piece
of land which he grossly misrepre-
sented as to value, secured that land,
through confederates, and shared in
the profits made by later trading of
the Isad of the principals. Seld, that
the principals were entitled to the
profits. Warren v. Burt, 7 C, C. A.
106, 58 Fed. 101.
See also, Duryea t. Vosburgh, ISS
N. Y. 621; Prince v. Du Puy, 16S 111.
417; Smith v. Tyler, 57 Mo. App. 668;
Bain y. Brown, 66 N. T. 285; Savage
V. Savage, 12 Ore. 459; Northern Pa-
cific R. R. Co. V. Kindred, 14 Fed. 77;
Thompson v. Hallet, 26 Me. 141;
Moseley v. Buck, 3 Munf. (Va.) 232.
5 Am. Dec. 508; Bell y. Bell, 3 W.
Va. 183; Tate v. Aitken, 6 Cal. App.
505.
24Merryman v. David, 31 111. 404;
Kerfoot v. Hyman, 52 111. 612; Lewis
V. Dennison, 2 App. D. C. 887; Barbar
V. Martin, 67 Neb. 445; Tilden v.
Blackwell, 94 111. App. 605.
In Mulvane v. O'Brien, 58 Kan. 463,
the stockholders of a corporation put
their stock in the hands of the presi-
dent with authority to sell at par.
He so manipulated as to make a large
pi'ofit. J7eZd, that he must account
to the stockholders for this profit.
Ill Merrill y. Sax, 141 Iowa, 386,
the defendant was entrusted by a
group of the stockholders, with the
duty of selling their stock. He re-
ceived an offer which his principals
authorized him to accept. To facili-
tate the sale, the stock itself was as-
signed to the defendant. The defend-
aht exacted from the purchaser a
large bonus. Held, that he must ac-
count for this bonus and that the fact
that the price was fixed, and that de-
fendant acted gratuitously did not
change the result.
See also, Graham v. Cummings, 208
Pa. 516, where the defendant was
held to account for a large bonus
which he had procured in selling out
the stock of himself and the plaintiff
to another corporation.
In Humbird v. Davis, 210 Pa. 311,
several persons combined to raise a
fund to buy a mine; the money was
put in the hands of one of the group
with authority to purchase. He
bought and reported a purchase at a
larger sum than, in fact, had been
paid. Beld, that the agent was bound
to answer to his associates for this
profit.
In Clifford v. Armstrong, — Ala.
— , 58 So. 430, where the agent used
the principal's bond of an insolyent
company to pay the bonus required
for refunding his own stock in the
company, it was held that the new
stock secured belonged entirely to the
principal.
But in Illingworth v. De Mott, 59
N. J. Bq. 8, affirmed, 61 N. J. Bq. 6T2,
it is held that if the agent of the
seller fraudulently enters into the em-
ployment of the buyer, the latter,
while he might rescind the contract
or have an action against the agent
for damages, can not recover from
the agent the profits which the agent
received from the seller. "To hold
that the purchaser, defrauded by dis-
honesty of this kind in a person who
assumed to act as his agent, can re-
cover the profits fraudulently received
as money which belongs to him as
57
897
§ 1227]
THE LAW OF AGENCY
[book IV
given price, he makes the purchase for less;" or if being employed
to settle a claim at a given sum, he obtains a reduction,^' the amount
saved belongs to the principal. The same thing is true where an
agent to deal upon the best terms he can get, reports less favorable
terms than those actually secured, and keeps the difference.**
So where the treasurer of a savings bank who was directed to sell
certain rights for not less than a certain price, and to buy shares in a
national bank with the proceeds, bought the rights for himself and
others at the minimum price, although they could easily have been sold
for more, it was held that he must account to his principal for the
difference between the minimum price and the price for which they
might have been sold.*'
«
As has already been pointed out the fact that the agent acts gratu-
itously ordinarily makes no difference.*®
g 1227. Further illustrations — Rebates, commissions, re-
wardSy overcharges. — So where a purchasing agent secures from
principal, Is to affirm as legal an
agency which in its origin was iUegal
and dishonest. The remedy of the
principal in such case is a rescission
of the contract for fraud, or an action
to recover the loss he has sustained
by reason of the fraud. But he can-
not recover as money belonging to
him in his character as principal, the
profits received by an agent who was
the seller's agent, and afterwards
fraudulently assumed to act as his
agent."
2s Bunker v. Miles, 30 Me. 431, 50
Am. Dec. 632; Kanada v. North, 14
Mo. 615; Dolinski v. First Nat. Bank,
Tex. Civ. App. , 122 S. W. 276;
Laurence v. Kilgore, 154 Cal. 310;
Hutchinson v. Fleming, 40 Can. S. C.
134.
An agent to buy who, by misrepre-
sentations to his principal as to the
price asked by the seller, succeeds in
getting a conveyance to himself and
then selling to his principal at an ad-
vance, must account for the difference.
Rorebeck v. Van Eaton, 90 Iowa, 82.
To same effect see, Hindle v. Hol-
comb, 34 Wash. 336.
So where an agent permitted his
principal to make an exchange of
lands at a certain price, without in-
forming him that the other party
would take less for his land, and tbes
bought the land given ttp by his
principal from the other party on the
basis of netting to the other party
the lower price, thereby making a
profit, it was held that the agent
must account to the principal for that
profit Leonard v. Omstead, 141 Iowa,
485; White v. Leech (Iowa), 96 N. W.
709, is similar.
One who has undertaken to act as
agent to purchase at not exceeding a
certain price cannot then avail him-
self of a previous unexpired option
and purchase the property himself at
a less price, turn it over to his prin-
cipal, and keep the difference as
profit. Sandoval v. Randolph, 222 U.
S. 161, 56 L. Ed. 142.
2«Ant6, S 467, and cases cited.
ST Maiden ft Melrose Gas L. Co. v.
Chandler, 211 Mass. 226; Sandoval
V. Randolph, 222 U. S. 161, 56 L. Bd.
142 (where agent bought in Mexican
money but reported in U. S. money).
28 Greenfield Savings Bank v.
Simons, 133 Mass. 415.
2» Merrill v. Sax, 141 Iowa, S86;
Smitz V. Leopold, 51 Minn. 456, and
other cases cited, ante, § 1223. .
898
CHAF. Il] DUTIES AND UABILITIES OF AGENT [§ 122/
those with whom his principal dealt, commissions in consideration of
buying goods from them, the principal is entitled to recover from the
agent the amount of the commissions thus received.**^
Clearly, also, agents for the purchase of land or goods, or the letting
of contracts, and the like, who have arranged with the sellers or bid-
ders to increase the expected price and to pay to or divide with the
agent this excess, may be compelled to account to the principal for the
sums so received.**
In the former cases, where what the agent has received is money or
property before then belonging to the other party, but which the law
gives the principal the right to demand, the agent may be compelled
to account for such property or money, but he cannot be charged as a
trustee. In the latter cases, however, wherein the agent, through col-
lusion with the other party, receives what was before the principal's
property or money, he may be charged as a trustee, and the property
or money may be followed as a trust fund.'*
So money paid to the agents of the insured by the agents of the
insurer, for taking out the insurance in the companies of the latter,
belongs to the principal as a profit of the agency, even though the
cost of the insurance to the principal was not thereby enhanced.'*
And one who employs another to pursue and capture a horse thief
and pays the person so employed for his services and expenses, will
be entitled to receive a reward offered for the apprehension of the
thief, which the agent earns by such apprehension.**
M Lister ▼. Stubbs, 45 Ch. Div. 1. An agent to trade land may be
See also, to same effect: Hay's Case, compelled to turn over "boot" money
L. R. 10 Ch. 698; Archer's Case, received from third party unless he
[1892] 1 Ch. 322; Andrews v. Ram- satisfies the burden of proving that
say, [1908] 2 K. B. 685; Merrill v. his principal with full knowledge
Sax, supra; United States v. Carter, consented. Wells v. Cochran, 84 Neb.
217 U. 8. 286, 64 L. Bd. 769; Pindlay 278.
V. Pertz, 66 Fed. 427, 13 C. C. A. 559, '^ See Lister v. Stubbs, supra;
29 L. R. A. 188; Webb v. McDermott, United States v. Carter, supra. In
3 Ont. W. R. 365 (but see 5 id. 566). Powell v. Jones, [1905] 1 K. B. 11, it
The agent was also held to forfeit is ^eld that the principal cannot re-
his commissions in several of these cover of the agent a commission
cases. which he has stipulated for but not
See also, Little v. Phipps, 208 yet received— at least, where the
Mass. 331, 34 L. R. A. (N. S.) 1046. other party was not a party to the
»i United States v. Carter, 217 U. action.
S. 286, 54 L. Ed. 769; Cllnkscales v. ^^ Patterson v. Missouri Glass Co.,
Clark, 137 Mo. App. 12; Hogle v. 72 Mo. App. 492.
Meyering, 161 Mich. 472; McMillan " Montgomery County v. Robinson,
v. Arthur, 98 N. Y. 167; Weruth v. 85 111. 174. In Mitchell v. Sparling,
Lashmett, 82 Neb. 376.
899
§§ 1228, 1229]
THE LAW OF AGENCY
[fpo^
IV
§ 1228.
Profits must be fruits of the agency:^— But in or*
der to entitle the principal to the profits, they must, as stated, be the
fruits of the agency. Of transactions outside the scope of the agenc}-
and not done as agent, the principal cannot demand the profits, nor
charge the agent as a trustee. Even though the agent may have
agreed not to do these outside acts, or that, if he did them, he would
divide with his principal, he is not to be charged as a trustee. The
remedy must be to recover damages for the breach of the contract."
§ 1229. Whether principal entitled to agent's earnings. — Where
the agent undertakes to give his entire time and energies to the prin-
cipal's business, it will be a breach of duty for him, without the prin-
cipal's consent, to use the time belonging to the principal in performing
services for third persons.'* If, nevertheless, the agent does so, the
-principal is clearly entitled to damages for any injury thereby caused
lo his business. Instead of damages, he is, it is held, entitled to re-
ceive what the agent has earned,*^ and may compel the agent to ac-
count to him for it." But, as a universal rule, this may not be en-
tirely free from doubt.*®
8 Sask. L. R. 213, after aa agent for
the purchase of land had completed
the purchase, the vendor gave the
agent five acres of land. There was
no proof of any agreement for It or
of any corruption; nevertheleaa, the
principal was allowed to recover the
amount for which the agent had sold
the five acres.
85Latta V. Kllbourn. 150 U. S. 524,
37 L. Ed. 1169; Sheppard Pub. Co. ▼.
Harkins, 9 Ont. L. R. 504.
8« Jackson v. Seevers, 115 Iowa,
370; Clarke v. Kelsey, 41 Neb. 766;
Atlantic Compress Co. v. Young. 118
Ga. 868; Adams Express Co. v. Trego,
85 Md. 47; Gardner v. McCutcheon, 4
Beav. 534.
87 Thompson v. Havelock, 1 Camp.
527; Stansbury v. United States. 1
Ct. of CI. 123; Leach v. Hannibal,
etc., R. R. Co., 86 Mo. 27, 56 Am.
Rep. 408; Jaques v. Edgell, 40 Mo. 77.
»« Jackson v. Seevers, supra ; Clarke
V. Kelsey, supra.
In Sumner v. Nevin, 4 Cal. App.
347, it is held that where an agent,
under obligation to give his entire
time to his principal, makes a con-
tract for service with third perscms^
the principal may not compel an as-
signment of that contract to himself,
or a holding of it in trust for him-
self, if it is based upon personal con-
siderations; but he may compel the
agent to account for his earnings un-
der It.
Official eaiary received lyg agent, —
An agent appointed postmaster
through the efforts of the principal,
and who maintains the poetofflce in
the principars store without being
charged for rent, heat or light, is,
■ nevertheless, entitled, as against the
principal, to the salary as postmas-
ter. The law would not Imply a
contract that the principal should
have the salary, and an express con-
tract to that effect would ordinarily
be opposed to public policy. Bailey
V. Sibley Quarry Co., 166 Mich. 321.
s» If the agent totally abandons the
service and accepts service with some
one else, the principal may havs
damages, but he could not recover
the earnings in the new employment
If the agent remains in the service,
but uses the principal's time to earn
900
CHAP. li]
DUTIES. AND LIABILITIES OF AGENT
I§ 1^30
Clearly^ it would be a brea<ph of duty for such an agent, without
the principars knowledge or consent, to carry on a business compet-
ing with the principal's, and thus to divert to himself the profit^
which otherwise might have accrued to the principal. If he does so,
the principal may lawfully discharge him,*® or may compel him to ac-
count for the profits of the business thus secretly carried on.*^
Where, however, the other service is performed as a distinct under-
taking, with the principal's knowledge and apparent consent, and
especially where the principal is himself interested in having it per-
formed, he will ordinarily not be permitted to recover the earnings.*'
8 1230. Work out of hours. — Even if the rule were that
the principal is entitled to the outside earnings of an agent who has
undertaken to give him his entire time and eflFort, it would not, of
course, apply to earnings made in time not fairly belonging to the
principal, and in no way affecting his interests. As has been pointed
out in one case,** there must, in practically every business, be seasons
of leisure and circumstances under which the principal's business can-
not be done. What the agent earns at such times, in no way com-
peting with the principal, or injuring the service, the principal will
not be entitled to recover.**
money for hiniBelf, the principal may
certainly have damages, but may he,
if he prefers, have the earnings? The
reasoiiB In favor of such a rule which
seem strongest are the policy of the
law to remove temptation from the
agent to sacrifice the principaFs in-
terests to his own, and the difficulty
under which the principal may labor
in showing the loss to himself. SbaU
he be confined to the mere fkro m^
cost to him of the agent's time?
What would be said if the agent
abandons the service for a day or
two in order to do profitable work
for some one else, and then resumes
his original service? Shall the prin-
cipal have the earnings or merely
damages?
*o Adams Express Co. v. Trego.
Bupra.
«t Where a manager of a company
Individually undertakes a contract
which the company could and would
have accepted, he must account to the
company for the profits. Transvaal
Cold Storage Co. v. Palmer, [1904]
Transv. L. R. S. C. 4.
An agent under contract to sell
only the goods of his principal, sold
goods of his principars competitors.
Beld, that he was liable to his prin-
eipal for all the profits mrade on such
sales. Nitedals Taendstikfabrik v.
Buster, [1906] 2 Ch. 671; Reis v.
Volck, 161 N. Y. App. Div. 618, 186
N. Y. Supp. 867.
4< In Reid v. MacDonald, 4 Com. L.
R. (Austra.), 1572, the plaintiff, who
was manufacturer of Ice making ma-
chines, employed defendant as man-
ager, with the knowledge and without
objection of plaintifF, the defendant
promoted the formation of an ice
skating rink company and became its
consulting engineer. Through this
connection, plaintiff was enabled to
sell machinery to the skating rink
company. When the work was com-
pleted, the latter company gave de-
fendant for his services certain paid
up shares in the company. Plaintiff
claims these shares. Held, that he Is
not entitled to them.
*» Geiger v. Harris, 19 Mich. 209.
4*Hinsboro Nat. Bank v. Hyde, 7
901
§ 1231]
THE LAW OF AGfiNCY
[book IV
§ 1231.
Gratuities. — So, the rule that all profits and ad-
vantage made by the agent in the course of his agency belong to the
principal, does not apply to mere personal gratuities or gifts from third
persons to the agent, which neither he nor the principal had any right
to expect, and which did and could offer no inducement to the agent
to violate his duty, although they were made in consideration of bene-
fits incidentally derived from the performance of the agent.
This principle was applied where the agent of an insurance com-
pany had been presented with a sum of money by another company in
recognition of the benefit the latter company had derived from an
adjustment of a loss by the agent for his own company."
N. D. 400; Jones v. Llnde Refrlg. Co.,
2 Ont. L. R. 428.
And a clerk and book-keeper in an
insurance office who, outside of busi-
ness hours, and sometimes during
business hours hut with his em-
ployer's consent, performs the senr^
ices of an accountant for a person
other than his employer, may re-
cover for such services. Wallace v.
De 7ounge/98 111. 638, 38 Am. Rep.
108. But see Atlantic Compress Co.
V. Young, 118 Qa. 868.
An agent employed to give his full
time to the purchase or leasing of
property for his principal will not be
allowed while so employed to take
and keep title in himself unless he
shows that he did so with the full*
knowledge and consent of his princi-
pal. Fox V. Simons, 251 111. 316.
« Aetna Ins. Co. v. Church, 21
Ohio St. 492. "Tips" given to an
employee at a shoe polishing stand
belong to him, and if he has mis-
takenly paid them over to the em-
ployer he may recover them back.
Pontes V, Barlin, 149 Ky. 376, 41 U
R. A. (N. S.) 1217; Zappas v. Roum-
eliote (Iowa), 137 N. W. 935. In
The Blaireau, 2 Cranch (U. S.), 240,
2 L. Ed. 266, a master of a vessel
was held not to be entitled to sal-
vage awarded apprentices on the
vessel. "The right of the master
to the earnings of his apprentice,
in the way of his business, or
of any other business which is sub*
stituted for it, is different from a
right to his extraordinary earnings
which do not interfere with the pro-
fits the master may legitimately de-
rive from his service. Of this latter
description is salvage. It is an ex-
tra benefit, the reception of which
does not deduct from the profits the
master is» entitled to from his serv-
ice."
In Lamb Knit Qoods Co. t. Lamb,
119 Mich. 568, an agent properly com-
pleted his undertaking. Later he re-
ceived from the party with whom he
had dealt as agent certain stock of
the par value of $200, which was ap-
parently given In recognition of a
moral consideration arising ont of
other dealings. Held, that the prin-
cipal was not entitled to it To same
effect, Oinh v. Almy, 212 Mass. 486.
In Gay v. Paige, 150 Mich. 468,
agent was employed to go wherever
directed to aid local agents in writ-
ing insurance. In an action by his
employer to obtain a sum received by
the agent from a certain solicitor,
held that if it was a gratuity, given
voluntarily and in good faith, agent
might retain it But in Mitchell T.
Sparling, 3 Sask. L. R. 213, the prin-
cipal was allowed to recover an al-
leged gratuity from the agent.
Property found by agent does not
usually belong to principaL Burns v.
Clark, 133 Cal. 634, 85 Am. St Re?.
233, and cases.
902
CHAP. U] DUTIES AND LIABIUTIES OF AGENT [§ 12^2
Obviously, of course, the rule does not apply to gratuities received
by the agent as his own, with the express or implied approval of the
principal. If, for example, as seems to be common in these days, it
is the expectation that a servant or agent shall receive part or all of
his compensation in "tips" or gratuities from third persons, it could
scarcely be contended that the principal or master has the right to de-
mand them from the servant or agent. The established customs of
the business, in accordance with which the parties have presumptively
dealt, may work the same result.
§ 1239. Representing other principals — ^Exclusive service. — The
amount of time which an agent is required to devote to his principal's
interests in order to satisfy the requirement of loyalty, must, of course,
depend upon the circumstances of the case. Where, he has agreed
to pve his entire time, as in the cases referred to in the preceding
sections, the rules applicable are those there considered. Where there
is no such agreement, a general rule is difficult to state other than that
there shall be a fair and reasonable devotion to the business of the
principal. Loyalty on the part of an attorney does not require that
the attorney shall refuse the business of any other client. A real
estate agent may have many properties on his list and endeavor to
sell all of them. An auctioneer need not spend his entire time in
endeavoring to sell the goods of a single principal. A commission
merchant or sales agent may receive and attempt to sell the goods of
many principals. The mere fact that he is made the "exclusive"
agent, or is given an "exclusive" territory, does not justify the infer-
ence that he is to give to any principal his entire time or effort.** On
the other hand, a commercial traveler would not usually be deemed
M In Hichhorn y. Bradley. 117 although plaintiff had before and dur-
lowa, 130, the defendant was made ing the term of employment been rep-
sole distributor of a certain brand of resenting in like capacity other manu-
plaintiff's cigars, and agreed to use facturers of threshing machinery, and
his best efforts to promote the sale although in the very transaction for
of them, but did not agree to give his which commission is sought the plain-
exclusive efforts. Defendant was held tiff had also endeavored to sell a 00m-
not to have broken his contract by petitor's machine,
selling cigars of his own make while In Butterick Pub. Co. v. Boynton.
he was engaged in selling the cigars 191 Mass. 175, the defendant dry
of the plaintiff. goods merchants in consideration of
In McGeehan v. Oaar, Scott ft Co., being made ''special agents" for dis-
122 Wis. 630, plaintiff agent was given tribution of plaintiff's patterns
a territory in which he was to have agreed: "to keep the patterns on the
exclusive right to sell defendant's ground floor; to give proper attention
threshing machines. Plaintiff was to the sale of the patterns; to en-
permitted to recover commissions for deavor at all times to conserve the
a sale made by an intruding agent, best interests of the agency; not to
903
§ 1233] THE LAW OF AGENCY [SOOK IV
justified in attempting to represent two or more houses in the same
line, or even in carrying "side lines." In the former cases there is
no contract for entire time, and the compensation usually takes the
form of a commission. In the latter case there is usually a contract
of hiring for a definite period, and the compensation is ordinarily a
fixed salary.*^
§ 1233. Remedies of the principal. — In most of the cases which
have arisen in the field now being considered, the remedy which the
principal has sought has been an equitable one, to rescind or set aside
transfers, to obtain an accounting, or to charge the agent as a trustee.
The principal's right to these remedies in a proper case is abundantly
established, but there are other remedies also of which he may avail
himself. And-in cases in- which specific property has been transferred
to a bona Hde purchaser, or has otherwise passed beyond recall, some
other remedy is desirable. In practically every case wherein the prin-
cipal has proximately suflfered loss, the principal may sustain an action
of tort against the agent based upon the latter's breach of duty.** In
such an action he may join, as codefendants, third persons who have
colluded or conspired with the agent to defraud the principal.** He
may also recover back money which the agent has obtained from him
in violation of his duty,*® and where the agent has in his hands the
remove the stock from its original 48 it Ig an actionable tort, for
location nor to assign the agency.** which the principal may recover
Defendants accepted the agency for damages, for a real estate broker to
a rival pattern company and plain- understate the purchaser's offer to
tiff sought to enjoin defendants from the principal and tippropriate the dif-
selling any patterns except plaintiff's ference between the real offer and the
own. Injunction refused, ''Conserv- offer as he stated it Emmons v. Al-
ing best interests': does not mean vord, 177 Mass. 466. See also Pierce
agreement not to act as agent for Co. v. Beers, 190 Mass. 199.
competitor. It is an actionable wrong for agent
In Amber Petroleum Co. v. Breech employed to purchase property at the
(Tex. Civ. App.), Ill S. "W. 668, an lowest price obtainable, to misrepre-
agent who undertook to get "some" gent the price and retain the dlffer-
oil leases for a principal, and who ence. HLndle v. Holcomb, 34 Wash,
obtained some for him but more for 335 j pouppirt v. Greenwood* 48 Goto,
himself, was held not obliged to ac- 405^
count for the latter. 49 Emmons v. Alvord, supra; Bos-
*7 In Reis v. Volck, 136 N. Y. App. ton v. Simmons, 150 Mass. 461, 16
Div. 613, where a salesman on com- Am. St. Rep. 230, 6 L. R. A. 629;
mission, who had agreed to give his Rundell v. Kalbfus, 125 Pa. 123.
exclusive services, sold a line of slml- so McMillan v. Arthur, 98 N. Y.
lar articles, it was held that the prln- le?; Ritchey v. McMichael (Cal.),
cipal could recover the commissions 35 Pac. 151; Kramer v. Winslow, 180
earned on the competing line without pa. 434^ 17 Am. St Rep. 782.
proving special damage from the
breach of contract
904
CHAP. Il]
DUTIES AND UABILITIES OF AGENT
[§ 1234
proceeds of property wrongfully acquired and disposed of, the prin-
cipal may waive the tort and recover as for money had and received
to his use."^ Where, before the principal can recover it, specific prop-
erty to which the principal would be entitled has been conveyed by
the agent or by his manipulation to a bona fide purchaser, so that the
principal cannot recover it specifically, he may have compensation
from the agent for its value.'*
§ 1234. ' In practically any case in which an action of tort
for breach of duty might be maintained, an action of assumpsit/ coul4
be used instead, based upon the theory that wherever a duty arises
from the relation there is a promise, either implied in fact or created
by mere operation of law, to perform that duty."
•1 Chalisfl Y. Wylle, 85 Kan. 506.
BsMoneU v. Hoffman, 249 IH. 66;
DennU y. McCagg, 32 IU» 429; Oont-
well V. Foord. 96 111. App. 366.
63 The syllabus is Heeslde's Ex'r v.
Reeside, 49 Pa. 822, 88 Am. Dec. 608,
weU shows the holdings of the court.
It follows:
"1. Where a duty arises out of an
implied undertaking to do an act
requiring skill or fidelity, an ac-
tion of assumpsit upon the special
promise or an action upon the spe-
cial case for the tort will lie for
breach.
"2. If an agent who receives
money from his principal to perform
a certain trust wholly neglects to
perform his duty and converts the
money, he Is liable to an action in
form ex delicto, or to an action for
money had and received to plaintiff's
use.
''3. But neither action will lie
against the agent for an alleged bal-
ance of moneys intrusted to be laid
out in a special manner where he
actually enters upon and performs
the duties of his trusts; the remedy
is by bill in equity or account ren-
der.
''4. The nature of the duty to be
performed by the agent determines
the form of action against him on
the part of the principal: if the
trust be to pay to him directly, then
assumpsit is the proper action; but
where it is one of outlay, requiring
an exhibit of the sums expended,
assumpsit will not lie until it be as-
certained in an action of account
render that a balance is due."
[The common-law action of ac-
count render is now obsolete in
most states.]
Where an agent undertaking to
sell the stock of a number of owners
obtained a secret profit for himself,
an action at law for money had and
received may be maintained by each
principal for his share, and he need
not resort to equity. Gralvam v.
Cummings, 208 Pa. 616.
(In this case, the court says that
the "contract" is one arising ear Zeire.)
But where several persons unite to
create a Joint fund which they put
into the hands of an agent to buy
property, all may unite in an action
at law to recover a secret profit.
Humbird v. Davis, 210 Pa. 311.
Where a sales agent makes sales
to himself at a lower price than he
was authorized to make them, under
the false pretence that they were
really made to a wholesale agent of
the principal [which agent was en-
titled to a reduced rate] and there-
90s
S 1235I
THE LAW OF AGENCY
[book IV
In practically any case, also, in which the agent has received money
which equitably and in good conscience belongs to the principal, an
action for money had and received might be maintained.**
In any case, also, in which the principal would have an action at
law he may, instead of maintaining an action thereon as plaintiff,
avail himself of it by way of defence if sued by the agent for com-
pensation, reimbursement or the like."
Moreover, as will be seen in a later section, the agent may often
forfeit all right to compensation by his disloyalty ; and, if the principal
has paid him before discovering the facts, he may, upon discovery,
maintain an action against the agent to recover back the amount so
paid."
It has been held in Illinois that where the principal has conveyed
to the agent under such circumstances as to entitle the principal to
rescind, he may do so by conveying to a third person, and that the
latter may then maintain a bill against the agent to quiet the title."
§ 1235. Agency must exist — ^It must be constantly borne in mind
that, in order to make the rules here dealt with applicable, the relation
of agency must exist between the person claiming the benefit of the
rule and the person against whom the rule is sought to be enforced.**
by induced the principal to receive
lower paymentfl than he was entitled
to receive, the principal may main-
tain an action [in this case of con-
tract with counts in tort] to re-
cover the difference. Pierce Co. v.
Beers, 190 Mass. 199.
fi« Sandoval v. Randolph, 222 U. 8.
161, 56 L. Ed. 142; Reeside's Bx'r ▼.
ReeMde, supra; Graham v. Cum-
mings, supra; Moore v. Petty, 68 C.
C. A. S06, 136 Fed. 668; Boston Deep
Sea Fishins Ck). v. Ansell, 89 Ch. Div.
889.
"It would be a great scandal if a
principal betrayed by his agent
might not declare in assumpsit
without relying upon fraud and de-
ceit in an action for damages.
* * * Neither is it contended that
an agent who makes a secret profit
in the execution of his agency may
not be compelled to disgorge, and
required to do so in an action upon
an implied promise." Sandoval v.
Randolph, supra.
See also McLain v. Parker, 229 Mo.
68.
» Shick V. Shuttle, 94 Minn. 136.
MSee Little v. Phipps, 208 Mass.
881, 34 L. R. A. (N. S.) 1046; An-
drews V. Ramsay, [1903] 2 K. B. 686;
Myerscough v. Merrill, 12 Ont W.
R. 399; Webb v. McDermott, 3 Ont.
W. R. 866; Pommerenke v. Bate, 3
Sask. L. R. 61; Hutchinson v.
Fleming, 40 Oan. Sup. Ct 134. Many
other cases are cited post.
»T Prince v, Du Puy, 163 111. 417.
«8 Walton V. Dore, 118 Iowa, 1;
Bartleson v. VanderhotE, 96 Minn.
184; State v. State Journal Co., 75
Neb. 276. 9 L. R. A. (N. S.) 174, 13
Ann. Cas. 264.
In Walton v. Dore, tupro, there
was a judgment outstanding against
plaintiff. The defendant, a stranger,,
proposed to buy it for plaintiff, say-
ing he thought he could buy at a
discouAt and would boy it as cheap
as he could. Plaintiff "told him to
go ahead and do so." Plaintiff gave
906
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1235
In general, with respect of interests acqwred before the commence-
ment of the agency, one will not be charged as a trustee, but such an
interest may easily disqualify one from becoming an agent where such
interest would conflict with interests of the principal; and the duty of
disclosure may require that either interests or knowledge, acquired
before the commencement of the agency, should be made known to
the principal.'*
With reference to what occurs after the agency is ended, it is, in
general, true that the duty and responsibility of the agent terminate
with the agency.*^ On the other hand, there is, as has been seen, a
considerable class of cases in which it is held that an agent will not
be permitted, after the termination of his agency^ to take advantage
of information which he acquired in a confidential capacity during the
agency, respecting the principal's business, plans, or purposes, to ob-
tain for himself rights or interests which he thus learned that the prin-
cipal intended to acquire, and the acquisition of which by the agent
would defeat the purposes of the principal. If the agent does so ac-
quire them, he may be charged as trustee for the principal.*^
defendant no money to pay for the
Judgment, did not promise to do so,
and did not promise to take the
judgment from defendant if he
bought it. Defendant did buy it.
Plaintiff seeks to have the benefit,
upon reimbursing defendant. Beld,
that plaintiff Is not entitled to It.
There was no agency created, and
defendant's promise to buy for plain-
tiff was without consideration. But
compare this case with those cited
ante, § 1223.
A4J€nt or optionee, — In Robinson v.
Easton. 93 Cal. 80, 27 Am. St. Rep.
167, where real estate agents were
given authority to sell at a net price,
to receive as commission all that
they could get over that price, it
was held that a contract of sale was
made by them on their own account
as purchasers and not as agents, and
that they were under no duty to ac-
count for money received under it
Bd In Larson v. Thoma, 143 Iowa,
338, a real estate broker who had a
customer in view for a certain piece
of land obtained employment from
the owner, as agent to sell It BeXd,
that he was entitled to commissions
for negotiating the sale. He was not
the agent of the buyer, and he owed
no duty to disclose to his principal
the fact of his prospective buyer.
See also Pneumatic Weigher Co.
V. Burnquist, 128 Iowa, 709, as to
duties arising before the relation be-
gan.
fto An agent to sell bought the land
from his principal, and resold It next
day at a profit Principal was held
not entitled to the profits, as the
agent disclosed to his principal that
he himself was buying, and had not
obtained Information of the pur-
chaser, and had not opened negoti-
ations for the second sale, until af-
ter his purchase from the principal.
Rathke v. Tyler, 136 Iowa, 284.
«i See ante, § 1210; Trice v. Com-
stock, 57 C. C. A. 646, 121 Fed. 620,
61 L. R. A. 176; Eoff v. Irvine, 108
Mo. 378, 32 Am. St Rep. 609; Denni-
son V. Aldrich, 114 Mo. App. 700.
One person suggested to another
that the latter act aa the former's
agent to get oil leases. The proposed
agent took some of the former's
907
§§ 1236, 1237]
THE LAW OF AGENCY
[book IV
§ 1236
Other limitaticms. — And not only must there be
agency, but it must also be agency for the person who now claims pro-
tection as the principal.^* Thus it has been held that the agent of
one of two tenants in common cannot be charged as trustee for the
other tenant, where he was not the agent of that tenant and his own
principal consented to what he did.**
The agency also must be one which involves a duty having some
reference at least to the subject-matter of the daim now ihade. If
there be no agency, and hence no duty, with reference to that subject*
matter, no duty of loyalty arises In respect of it, and no foundation of
any rights growing out of that duty can be laid.**
§ 1237. ' Proof of the agency. — ^That the agent was acting
as such in the case in question, may be shown by the facts and cir-
cumstances, or result from the presumed continuance of a prior re-
lation."
Even though the alleged agent may contend that he never was, nor
ever intended to be, agent in the transaction, his conduct, in leading
the assumed principal to rely upon his undertaking to act as such, may
estop him from denying it.** And where one who purports to act as
blanks and said "if he could he would
get him some leases." He procured
a number of leases, most of which he
took In his own name and sought to
keep; a few were taken in the princi-
pars name. In an action by the
principal to compel him to turn over
the others. Held, that there was no
exclusive agency and no duty to turn
over all the leases. Amber Petroleum
€0. V. Breech (Tex. Civ. App.), Ill
S. W. 668.
•2 Illlngworth v. De Mott, 69 N. J,
Eq. 8, ard 61 N. J. Bq. 672.
•8 Hill V. Coburn, 105 Me. 437.
«*In Kellogg Lumber Co, v. Web-
ster Mfg. Co., 140 Wis. 341, the su-
perintendent of a lumber company
bought a tax title of land belonging
to the company; it was not his duty
to pay taxes. Held, that the act was
not Impeachable.
In Collar v. Ford, 45 Iowa, 331, it
was held that a person who had been
requested to ascertain and report to
the owner, who lived In another
state, the amount of taxes upon cer-
tain land did not thereby become such
an agent that, upon buying the land of
the principal, he owed him any duty
to disclose Its real value.
Douglass V. Lougee, 147 Iowa, 406,
holds the si^^^ where one, who had
been merely an agent to rent and
collect rents, bought the land of the
principal. Bed quaere.
«5 See Siers v. Wiseman, 58 W. Va.
340; Knupp v. Brooks, 200 Pa. 494;
Gamble v. Hamilton, 31 Fla. 401.
"Walters v. Bray (Tex. Civ.
App.), 70 S. W. 448; Siers v. Wise-
man, supra; but in Brinson v. Ex-
ley, 122 Ga. 11, it was held that the
principal could not maintain an ac-
tion of deceit where the only agcnqy
possible was one by estoppel and
where the conduct constituting the
estoppel was negligent not fraudu-
lent.
In Dennis v. McCagg, 32 111. 429,
it is said that a volunteer agent Is
as much subject to the duties of the
relation as any other agent, and
many other cases are to the same
effect 8alBbury t. War^^ 188 IIL
505.
908
CHAP, h]
DUTIES AND LIABIUTIES OP AGENT [§§ I238, I239
agait for a principal, receives a benefit intended for him, it is held that
the principal may compel a transfer to himself.*^
§ 1338. Against whom trust enforced — As in other similar trusts,
the trust in behalf of the principcil, when such a trust exists, may be
enforced, not only against the agent himself, but also against his
heirs, creditors, legal successors, confederates and purchasers with no-
tice.*»
§ 1239. Principal must not have consented to^ waived or con-
doned the actr— Finally, it must be observed that, in any case in
which the principal complains of the misconduct or breach of loyalty
of his agent, the principal cannot, even as against the agent, recover
where he himself has consented to, waived or condoned the act. And
where, while the whole matter still remains executory, he learns of the
proposed act and does nothing to prevent it or even to object to it, he
cannot 'afterwards, it is held, recover damages for it.*' "To allow a
person who has discovered the fraud, while the contract is still wholly
executory, to go on and execute it, and then sue for the fraud, looks
very much like permitting him to speculate upon the fraud of the
•T Robertson v. Rawlins County,
S4 Kan. 52. In Virginia Pocahontas
Coal Co. V. Lambert, 107 Va. 368, 122
Am. St Rep. 8^0, a person who was
not agent, but who pretended to be
agent of complainant to obtain from
third persons conveyances of land,
which they made because they 8up»
posed they were neoessary to perfect
titles previously conveyed by those
persons to the complainant, was
charged as a trustee eit male/lcio, al-
though it was held that there could
be no ratification which would make
him agent since he had not really
acted as such. Rollins v. Mitchell,
52 Minn. 41, 38 Am. St. Rep. 619; and
Hanold v. Bacon, 36 Mich. 1, were
relied upon.
In Garvey v. Jarvis, 46 N. Y. 310,
7 Am. Rep. 835, it appeared that one
Malcom had a judgment against
Garvey. He offered to Garvey to dis-
charge it for a certain sum less than
its face, but Garvey did not accept. In
this situation, it was alleged that de-
fendant by falsely representing that
he was a friend of plaintiff and act-
ing for him, induced Malcom to as-
sign the judgment to defendant for
this smaller sum, and defendant then
began to enforce the Judgment
against the plaintlit for the full
amount. Held, that the only one
who was injured was Malcom, and
that plaintiff was not entitled to the
benefit of the purchase.
68 Trust enforced against heirs.
Siers v. Wiseman, 58 W. Va, 840;
Hudson v. Herman, 81 K&n. 627;
Walters T. Bray (Tex Civ. App.), 70
S. W. 443.
Enforced against agent's widow to
whom he had made a voluntary con-
veyance. Pansing v. Warner, 48
Wash. 531.
Against purchaser with notice.
Young V. Iowa Protective Ass'n, 106
Iowa, 447.
Secret and roundabout purchase
set aside. Carry v. King, 6 Cal. App.
568.
^•Bartleson v. Vanderhoff, 96
Minn. 184. See also Webb v. Mc-
Dermott, 5 Ont. W. R. 566.
909
§§ I240, I241] THE LAW OF AGENCY [bOOK IV
Other party. It is fraudulent to allow a man to recover for self-
inflicted injuries." ^*
II.
NOT TO EXCEED HIS AUTHORITY.
§ 1240. Duty of agent not to exceed his authority. — It is the duty
of the agent, in ail of his acts and contracts, to keep within the limits
of his authority, and he must, in general, indemnify his principal
against the consequences of not doing so." Where the failure to
keep within the authority conferred upon him takes the form of a
failure to obey instructions, the question is considered under a separate
head ; ^* where it takes the form of a negligence, that also is separately
Considered ; '• but there are many cases in which no specific instruc-
tions are given, and which can not be disposed of merely upon the
ground of negligence in the execution of the authority and those are
the cases which are considered here.
The measure of the authority as between the principal and third
persons, as has already been seen in many places, is not by any means
necessarily the measure as between the principal and the agent. To
the actual authority as it exists between the latter, the principal may
have added by his conduct. Personal estoppels may operate in favor
of third persons which would not be available to the agent. Usages
and appearances may as to third persons extend the apparent range
of the authority to a point to which the agent knows it was not in-
tended to go. The agent himself may also, in certain cases, by rep-
resentations concerning extrinsic facts on which his authority depends,
bind his principal even though in doing so he knowingly exceeds the
authority with which he has actually been endowed.
§ 1241. Duty of principal to make clear extent of authority. — It
is, of course, the duty of the principal, as between himself and his
agent, to make clear to the latter the nature and extent of the authority
he is to exercise. The principal usually takes the initiative; it is his
will and his purpose which the agent is to execute; and the principal
can ordinarily not complain that the agent has not kept within the
scope of his authority if the principal himself has failed to make rea-
To Per Mitchell. J., in Thompson v. B. 272; Rush v. Rush, 170 111. 628;
Llbby. 36 Minn. 287. Holmes v. Langston, 110 Ga. 861.
71 Pape V. Westacott, [1894] 1 Q. tz See po9t, § 1244 et seq.
TB See post, i 1274 et seq.
910
CHAP, ll] DUTIES AND LIABILITIES OF AGENT [§§ I242-I244
sonably clear and certain what was the extent of the authority and the
circumstances and conditions under which it was to be exercised.^*
§ 1242. Duty of agent to Imow extent of authority. — It must also
be the duty of the agent, ordinarily, to know the extent of his author-
ity. Commonly there can be no excuse for not knowing. If there
are doubts, the principal is usually where he can be communicated
with, and the doubts may be removed. If new issues present them- \
selves, the principal is ordinarily at hand to give new directions. — J
A number of considerations, however, may affect the matter. The
authority may have been couched in ambiguous terms, and the am-
biguity may not be patent. Emergencies may arise when the prin-
cipal cannot be consulted. The proper construction of the authority
may be uncertain, and may require expert or professional aid for its
determination, which the agent cannot command.
The law, of course, in these cases will make no unreasonable re-
quirements, much less impose impossible demands ; and the agent will
not be held responsible where he cannot be deemed at fault.
§ 1243. Liability of agent for exceeding his authority. — ^Where
the agent, through a culpable failure to regard the limits set to his
authority, has caused loss to his principal, he will be liable to the lat-
ter for the loss thereby sustained.''* The measure of damages will
ordinarily be the amount of the loss which is the natural and proxi-
mate result of the wrongful act complained of ; but the circumstances
may be such as to justify a recovery for other losses, if they can fairly
be deemed to have been within the contemplation of the parties at the
time the service was undertaken.
III.
TO OBEY INSTRUCTIONS.
§ 1244. Agent's duty to obey instructions. — It is also a funda-
mental duty of the agent to obey all of the reasonable and lawful in-
structions given him by his principal. That the agent shall, for the
time being, put his own will under the direction of another, is one of
the primary elements in the relation. It is the idea, the desire, the
purpose, perhaps the mere whim or caprice of the principal, and not
of the agent, that is to be executed ; and it is ordinarily to be executed
in the manner, although perhaps capricious, which the principal di-
T4See ante, § 792. Cooper v. Cooper, 90 Neb. 209; Per-
T6 Pape V. Westacott, [1894] 1 Q. B. sons v. Smith, 12 N. Dak. 403.
272; Rush T. Rush. 170 111. 623;
011
§ 1245]
THE LAW OF AGENCY
[book xy
rects. It is not within the province of the agent to call in question
the prudence of the instructions, or to inquire as to the facts or mo-
tives which induced the principal to give them, provided the instruc-
tions are explicit and intelligible, and the principal furnishes him with
the means necessary to execute themJ* As said in one case/^ "When
an agent acts under a general authority, he is botmd to act for his
principal as he would act for himself; when he acts under a particu-
lar authority and for a special purpose he has no discretion. If h$
thinks fit to accept such a commission, he must perform that commis-
sion according to his duty."
§ 1245. Results of disobedience — Agent liable for losses caused
by it*— It being thus the duty of the agent to obey the instructions
of his principal, he should, in general, so long as the instructions are
lawful, perform that duty and leave the consequences of performance
to the principal. If he fails to perform, whether by exceeding, vio-
lating, or neglecting his instructions, he will, ordinarily, be liable to
the principal for the loss sustained thereby, unless the violation has
been waived or the wrongful act has been ratified/* The fact that
the agent acted in good faith, or with the intention of benefiting the
principal, is entirely immaterial.''* Instructions may ordinarily be
TeSee Coker v. Ropes. 126 Miass.
577.
TT Bertram v. God fray, 1 Knapp
Pr. C. 881.
So in Kraber v. Unicm Ins. Co.,
129 Pa. 8, It was said, "Where an
agent is charged with the perform-
ance of some particular duty or the
conduct of some undertaking and is
left without instructions as to the
manner in which the work is to be
done, he must exercise his own Judg-
ment in the premises, with good
faith towards his principal. Porter v.
Patterson, 15 Pa. 229; Conway v.
Lewis, 120 Pa. 215, 6 Am. St Rep. 600.
But when the principal gives instruc-
tions, they are binding on the agent
and he must follow them. He has no
legal right to sit in judgment on the
wisdom or the expediency of the di-
rections that are given him. His
duty as agent is to execute the orders
of his principal, with reasonable
promptness and with fidelity."
T8 Whitney v. Merchants Union Ex-
press Co., 104 Mass. 152, 6 Am. Rep.
207; Scott y. Rogers, Si N. Y. 676;
Wilts V. Morrell, 66 Barb. (N. Y.)
511; Adams v. Robinson, 65 Ala. 58;
Dodge V. Tileston, 12 Pick. (Mass.)
333; Dickson ▼. Screven, 23 S. 0. 212;
Magnin v. Dinsmore, €2 N. Y. 35, 20
Am. Rep. 442; Frothingham v, E^ver-
ton, 12 N. H. 239; Amory v. Hamil-
ton, 17 Mass. 103; Harvey v. Turner,
4 Rawle (Pa.), 223; Brown v. Arrott,
6 Watts & S. (Pa.) 402; Blot v.
Boiceau, 3 N. Y. 78, 51 Am. Dec. 345;
Northern Assurance Co. v. Borgelt. 67
Neb. 282; CavB r. Lougee, 184 Oa.
135; McAnow v. Moore, 163 Mo. App.
598.
Infant agent — In Vasse v. Smith, 10
U. S. (6 Cranch) 226, it is held that
infancy in the agent is a bar to lia-
bility for breach of instructions, but
not for conversion.
See also post. Chapters on Attain
neys. Auctioneers^ Brokers and Fac-
tors; and see cases cited in notes to
following section.
T»Rechtsherd v. Bank, 47 Mo. 18J;
Dickson y. Screven, 23 S, C. n2.
91a
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§§ I246-I248
obeyed at the risk of the principal ; they will ordinarily be disobeyed
at the risk of the agent.
§ 1346. Where the agent refuses or neglects to follow
the instructions given, one, or either, or both of two remedies may be
open to the principal, as the peculiar circumstances of the case may
determine. Thus if the disobedience be such as affects merely the
manner of the execution but does not affect the result, and causes the
priocipal no loss or injury, no substantial damages could be recovered
from the agent, though he might be liable to nominal damages, unless
the departure from the line marked out were so insignificant as to fall
within the domain of the maxim de minimis non curat lex. The prin-
cipal might, however, very properly refuse to longer continue the re-
lation with an agent who habitually disregarded his instructions, even
tiiough no actual loss or injury had ensued.**^
But if the disobedience be not such as affects the manner only, but
results in actual loss or injury to the principal, the latter may, subject
to the exceptions to be hereafter named, recover from the agent such
substantial damages as he can show he has sustained by reason of
such disobedience. He may also remove the agent from his trust.**
§ 1247. Illustrations. — Thus if an agent who was in-
structed to collect a claim by the employment of certain methods, elects
to pursue other methods and the claim is lost thereby, he will be lia-
ble for the loss, and it will be no defense that he used reasonable dili-
gence in the prosecution of the claim* according to the method of his
own selection.*^
So where an agent authorized to collect at a distant place, was in-
structed to remit the proceeds to his principal by express, but made
the remittance by check of a third person who failed before payment.
It was held that the loss must fall upon the agent ;•* and the same
result was reached where such an agent, being instructed to send the
money in fifty or one hundred dollar bills sent it in smaller bills, which
were lost ; •* and where, being instructed to remit by draft, the agent
sent the money in a letter which was lost."
§ 1248. So if, being instructed to ship goods at a certain
time, or by a designated carrier, the agent ships at another time or
by a different carrier, and loss thereby results, the agent will be liable.
w See ante. Chapter on Terminor «* Wilson v. Wilson, 26 Pa. St. 393.
Hon of the ReUitian. m Poster ▼. Preston, 8 Cow. (N. Y.)
Si See idem, 198; Kerr v. Cotton, 23 Tex. 411. See
32 Butts V. Phelps, 79 Mo. 802. Bnell r. Chapln, 99 Mass. 694^ 97 Am
M Walker ▼. Walker. 6 Helsk. Dec. 6S.
(Tenn.) 42&.
58 913
§ 1249]
THE LAW OF AGENCY
[boor IV
By pursuing his own notions in opposition to the express instructions
of his principal, the agent will be held to have assumed the risks in-
cident thereto and will be treated as an insurer of the goods.**
So if an agent is instructed and agrees to store goods in a ware-
house for his principal at a particular place, but he stores them at an-
other place, where, though without any negligence on his part, they
are destroyed by fire, the agent will be responsible for their loss.*^
§ 1249. So if being expressly instructed to sell only to
persons of undoubted responsibility, the agent sells to persons notori-
ously insolvent, the principal may recover of the agent for the loss
thereby occasioned.** And in such a case it will be no defense to the
agent that he acted in pursuance of an alleged custom among similar
agents to rely upon the purchaser's statements as to his own responsi-
bility, without making further inquiry." But where the principal with
knowledge of the facts has retained the notes taken by the agent for
an unreasonable period, as for instance for two years, without com-
plaint, he will not then be permitted to allege that the agent violated
his instructions by selling to irresponsible parties.**
An agent instructed to sell for cash, who gives credit, or accepts a
note or check payable, for example, the next day,*^ or ten days," after
the sale, will be liable for the loss, if the buyer Joes not pay or the
drawer fails before the note or check can be paid.** And a local cus-
torn to give such credit,'* or trgat such checks as cash, will not avail
him.**
He will also be liable where, being instructed not to deliver goods
88 Johnson v. New York Cent.
Transp. C5o., 33 N. Y. 610, 88 Am. Dec.
416; Ackley v. Kellogg, 8 Cow. (N.
Y.) 223.
See also. Buck v. Reed, 27 Neb. 67.
87 Lilley v. Doubleday. 7 Q. B. Dlv.
510. The Judges declined to consider
whether he was liable for conversion;
they treated it as a breach of con-
tract.
88 Robinson Machine Works y.
Vorse, 52 Iowa, 207; Osborne v. Rider,
62 Wis. 235; Clark v. Roberts, 26
Mich. 506.
See also, Nichols v. W^adsworth; 40
Minn. 547; Tate v. Marco, 27 S. Car.
493; Robson y. Sanders, 25 S. Car.
116.
8» Robinson Machine Works v.
Vorse, supra.
••Piano Mfg. Co. v. Bttxton, 36
Minn. 203.
•1 Hall V. Storrs, 7 Wis. 258.
•2 Harlan y. Ely, 68 Cal. 522.
M Pape y. Wcstacott, [1894] 1 Q. B.
272; Hall v. Storrs, supra; Harlan y.
Ely, supra; Bliss v. Arnold, 8 Vt. 252,
30 Am. Dec. 467; Sheffield v. Linn, 62
Mich. 151.
An agent, authorized to sell his
principars land for money, who ac-
cepts bonds in payment, which after-
wards prove worthless. Is liable to
the principal. Paul v. Grimm, 16( Pa.
189, 183 Pa. 330.
8« Bliss y. Arnold, supra.
•8 Hall y. Storrs, supr<i.
914
CHAP. 11 ]
DUTIES AND LIABILITIES OF AGENT
[§ I2SP
until he receives payment or security, he permits the goods to be taken
without either, whereby the principal sustains loss.®*.
If he be instructed not to sell for less than a certain price/^ or to
sell when the goods reach a certain price,** or to sell only in certain
lots or quantities,®® or to sell at a certain time,* and, without sufficient
excuse, disobeys the instructions be will be liable to the principal for
the resulting loss.
If the agent be instructed to take the goods for sale to a particular
place or market, and does not take them at all,, or takes them to a dif-
ferent place, he will be liable to the principal for a loss of market
sustained, or for additional expense incurred.-
§ 1250. An agent instructed to insure property, who neg-
lects without sufficient reason to do so, or to .give his principal timely
information of his inability to effect the insurance, will be liable, if a
loss occurs, for the full insurable value of tlie property less the amount
of the premiums, unless the amount of insurance was limited to a less
sum.' And where the agent of an insurance company was instructed
by his principal to cancel a certain policy of insurance, but, without
sufficient reason, delayed for a number of days to do so, in which time
••Case Threshing Machine Co. v.
Folger, 136 Wis. 468.
But the agent would not be liable
under the contract where the only
sale made by him was made before he
was appointed agent. Pneumatic
Weighar Co. v. Bumqulst, 128 Iowa,
709.
87 Sargeant v. Blunt, 16 Johns. (N.
Y.) 74; Dufresne v. Hutchinson, 8
Taunt 117; Union Hardware Co. v.
Plume Mfg. Co.. 5B Conn. 219; High-
land Buggy Co. V. Parker, 27 Ohio
Clr. Ct. 115.
08 Bertram v. Qodfray, 1 Knapp,
381.
•0 Where a wholesale -dealer con-
signed for sale a lot of about twenty-
five tons of shells, with directions to
sell at a certain price per ton for
the "total consignment," the agent
is not Justified in selling four tons
selected from the lot, even though he
sells for more than the rate fixed, and
the average value of the residue Is
not affected. By such a sale, which
put It out of the agent's power to re-
turn the whole shipment, the agent
was held to make himself liable for
the whole shipment at the rate orig-
inally fixed. Levison v. Balfour, 84
Fed. 382.
Under a written contract to sell for
the owner a team of horses with
wagon and harness for a certain sum,
and to forward the proceeds,, less com-
missions and certain advances, within
a certain time, the agent will be liar
ble when he sells the horses to one
person and the wagon and harness to
another for sums aggregating less
than the price fixed. Henry v. Buck-
ner, 13 Colo. 18.
1 Zimmerman v. Heil, 156 N. Y. 703.
2 Fuller V. EUIg, 39 Vt 345, 94 Am.
Dec 327.
» Park V. Hamond, 4 Camp. 344;
Perkins v. Washington Ins. Co., 4
Cow. (N. Y.) 645; DeTastett v.
Crousillat, 2 Wash. (U. S. C. C.) 132;
Thome v. Deas, 4 Johns. (N. Y.) 84;
Sboenfeld v. Fleischer, 73 111. 404;
Sawyer v. Mayhew, 51 Me. 398; Kaw
Brick Co. v. Hogsett, 73 Mo. App. 432.
See also Backus v. Ames, 79 Minn.
145.
915
§§ I25I, 1252]
THE LAW OF AGENCY
[hOOK IV
the property *was destroyed by fire and the company was compelled* to
pay the loss, it was held that the company could recover from the
agent the amount so paid.* Other cases involving the same principle
are cited in the notes.
§ 1251. An agent to loan money with instructions to loan
It to a particular person, or upon particular security, or upon stated
terms, as to duration, rate of interest, and the like, must obey the in-
structions so given, and will be liable to the principal fo^ any loss
which he may proximately sustain by reason of their violation.'
So if, in taking security, he prejudices the principal by securing his
own claim equally with that of the principal, and, a fortiori, if he gives
preference to his own claim over that of the principal, he will be lia-
ble to the principal for any loss thereby sustained.* So where an
agent, directed to foreclose a mortgage, and to purchase the property
at the sale, unless third persons bid therefor a specified sum, permits
the property to be sold for a less sum, he will be liable to the princi-
pal for the difference between the amount for which the property sold
and its market value.'
§ 1252. An agent for the purchase of goods of a certain
sort who finds the purchase of such goods impracticable, is not thereby
authorized, without having communicated with his principal, to pur-
chase goods of an inferior sort ; and if he does so he will be liable to
his principal for a loss thereby sustained.*
4 Phoenix Ins. C5o. v. FrlBteU, 142
Mass. 513. See also to the same ef-
fect: Franklin Ins. Co. v. Sears, 21
Fed. 290; Kraber v. Union Ins. Co^
129 Pa. 8.
Same, where the Instmctions were
to reduce the amount. Queen City F.
Ins. Co. v. First Nat. Bank, 18 N.
Dak. 603; British American Ins. Co.
v. Wilson, 77 Conn. 559.
Same, where agent issued policy in
violation of instructions and fraudu-
lently failed to report it to the com-
pany. Continental Ins. Co. v. Clark,
126 Iowa, 274, citing many cases.
Agent held not liable where under
ambiguous authority the (Company did
not promptly direct cancellation. Me-
chanics Ins. Co. V. Rion (Tenn. Ch.),
62 S. W. 44.
See also, Franklin Fire Ins. Co. v.
Bradford^ 201 Pa. 32, 88 Am. St. R.
770, 65 L. R. A. 408» Where an insur-
ance agent was held liable for insur-
ing a forbidden kind of property,
through his sub-ftgent In Bradford
V. Hanover Ins. Co., 43 C. C. A. 310,
102 Fed. 48, 49 L. ft. A. 530, the same
agent was held not liable but upon
the ground that the act of the sub-
agent was not one for which he was
responsible.
• Welsh ▼. Brown, 8 Ind. App. 421.
See also Bank of Owensboro v.
Western Bank, 18 Bush. (Ky.) 626,
26 Am. Rep. 211.
• Marshall v. Ferguson, 78 Mo. App.
645, 94 Mo. App. 175, 101 Mo. App. 658.
See also, Knape y. Nunn, 81 Hun
(N. Y.), 349 (ard 161 N. Y. 606);
lAinn V. Guthrie, 116 Iowa, 601.
T Dazey ▼. Roleao, 111 111. App. 367.
8 Llssberger ▼. Kellogg, 78 N. J. I*
85.
916
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ I233, 1 254
§ 1253. Form of action— When agent liable iii trover.— The fbffti
of action in which the h'ability of the agent is determined is usually
assumpsit or a special action on the case, but there are cases in which
trover is the proper remedy, as where the conduct of the agent amounts
to a conversion.
Conversion has been defined to be an unauthorized assumption and
exercise of the right of ownership over goods belonging to another, to
the exclusion of the owner's rights.* A constructite conversion takes
place when a person does such acts in reference to the goods of an-
other as to amount in law to an appropriation of the property to him-
self. Every unauthorized taking of pers6nal property, and all inter-
meddling with it beyond the extent of the authority conferred, in case
a limited authority has been given, with intent so to apply and dispose
of it as to alter its condition or to interfere with the owner's dominion,
is a conversion."^**
lii many cases it becomes difficult to determine whether the mis-
conduct of the agent consists in a mere breach of instructions or
amounts in law to a conversion; and the distinctions made in many
cases seem to be exceedingly technical. A distinction is, nevertheless,
to be made.
§ 1254. Mere breach of instructions. — ^Thus it has been
held that if property be delivered to an agent with instructions to sell
it at a certain price, and he sells it for less than that price, he is not
liable in trover as for conversion. In such a case the agent had a
right to sell and deliver, and in that respect did no more than he was
authorized to do. He disobeyed instructions as to price only, and was
liable for misconduct but not for conversion of the property." So
where an agent w^as authorized to deliver goods on receiving suffi-
cient security, but delivered them on inadequate security, it was held
that trover would not lie." So where an agent, instructed to sell for
cash only, makes a sale on credit, it is held that there was a breach of
instructions merely and not a conversion.^* So where he is author-
0 Adams v. Robinson, 65 Ala. 586;
Myers v. Gilbert, 18 Ala. 467.
^oBouv. Law Diet. "Conversion;"
tiaverty v. Snethen, 68 N. Y. 522, 23
Am. Rep. 184.
11 Sarjeant v. Blunt, 16 Johns. (N.
Y.) 74; Dufresne v. Hutchinson, 8
Taunt. 117; Palmer v. Jarmaln, 2 M.
& W. 282.
i2 0airneB v. Bleecker, 12 Johns.
(N. Y.) 300.
Text quoted with approval In Min-
neapolis Trust Co. V. Mather, 181 N.
Y. 205.
13 Loveless v. Fowler, 79 Ga. 134, 11
Am. St. R. 407. "Certainly not," the
court added, '^unless It appears that
the purchaser had notice of the Itmita-
tion in the agent's instructions."
Clark V. Gumming, 77 Ga. 64, 4 Am.
8t R. 72, yrtM distinguished.
917
§ I2SS]
THE LAW OF AGENCY
[book IV
ized to sell, and is tp account for the proceeds, it has beon held that
the mere failure of the agent to pay over or account to his principal,
for the money received, will not constitute a conversion, since the
agent is not bound to pay over the identical money received, and the
transaction creates merely the relation of debtor and creditor between
the agent and his principal.**
So where an agent, who is instructed to foreclose securities in his
possession and, if necessary, bid in the property "for something near
its present value," bids it in at an excessive price, so. that the principal
loses the benefit of any claim for deficiency, the agent is liable for the
loss so sustained, but he is not liable as for a conversion of the securi-
ties."
§ 1255, Conversion.'^On the other hand, where the agent
has no right to debit himself with the proceeds, but the principal is
entitled to receive, and the terms of employment of the agent require
him to pay over, the very money received, and the agent fails to do so,
it is held that an action of trover will lie for its conversion.**
So where a factor in Buffalo was directed to sell wheat at a certain
specified price on a particular day, or if not so sold to ship to New
York, and did not sell or ship it on that day, but sold it the next day at
the price named, it was held to be a conversion.*^ So where an agent,
intrusted with goods to sell when directed by his principal and account
for the proceeds, wrongfully refuses to sell or account when directed,
and wrongfully retains possession against the will of the principal, he
is held liable for conversion.*' So where goods were put into the
custody of a bank to be delivered after a sale by the agent, only when
the principal directed, and upon the actual receipt of the price by the
bank, it was held that if the agent obtains possession of the goods
without the consent of the principal and sells them for less than the
i*Royce v. Cakes, 20 R. I. 418, 39
L. R. A. 845. See also, Borland ▼.
Stokes, 120 Pa. 278; Vandelle v.
Rohan, 36 N. Y. Misc. 239; Wright v.
Duffle, 23 N. Y. Mlac. 338; Greentree
V. Rosenstock, 61 N. Y. 683; Walter v.
Bennett, 16 N. Y. 250. But In New
York, see now Brltton v. Ferrin, 171
N. Y. 235, holding that where the
money is received in a fiduciary ca-
pacity, an action of tort will lie un-
der the code. See also, Jones v.
Smith. 65 N. Y. Misc. 528.
ift Minneapolis Trust Co. ▼. Mather,
181 N. Y. 205.
i« Salem Light A Traction Co. v.
Ansom, 41 Ore. 562; Farrelly ▼. Hub-
bard, 148 N. Y. 592.
See Bunger v. Roddy, 70 Ind. 26;
Wells V. Collins, 74 Wis. 841, 6 L. R.
A. 531.
This was held to be the situation
here, where the defendant was agent
to collect money due the plaintiff, but
with no authority or duty except to
turn it over to his principal.
iT Scott V. Rogers, 31 N. Y. 676.
18 Coleman v. Pearce, 26 Minn. 123.
Laverty y. Snethen, aupra^ was re-
lied upon.
918
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ 1256, I257
price fixed, he is liable for conversion.^^ So where an agent who is
entrusted with the possession of the property, but instructed not to
sell until the price had been submitted to and approved by the princi-
pal, sells without such approval, he is held liable for conversion.*®
§ 1256. So where the plaintiff delivered to the defendant
a promissory note to get it discounted, but with instructions not to let
it go out of his hands without receiving the money ; and the defendant,
without wrongful intent, delivered it to F, who promised to get and
return the money on it, but who, having obtained the money, ap-
propriated it to his own use, it was held that the defendant was liable
for the conversion of the note. The court said that the defendant had
a right to sell the note, and if he had sold it for less than the price
stipulated, he would not have been liable in trover, but he had no right
to deliver it to F, to take away, any more than he had to pay his own
debt with it."
So where the principal entrusts money to an agent, to be loaned or
invested by him in the principal's name, but the agent loans it in his
own name and for his own benefit, he has been held liable for con-
version.**
And so where an agent, who had collected money for his principal
under directions to pay it to a third person, pslid it neither to that
person nor to the principal, but applied it to his own use, he was held
liable for conversion.*'
§ 1257. — — The rule stated — ^Intent immaterial. — ^The result
of the authorities may be said to be, that if the agent parts with the
property in a way or for a purpose or upon an event not authorized,
that is to say, if he makes a disposition of a kind not contemplated, or
before his authority to make the disposition had matured, — as because
a condition precedent had not been complied with, — or after it had
19 Chase v. Baskerville, 98 Minn.
402.
20 Comley v. Dazian, 114 N. Y. 161.
"The agent," said the court, "did not
simply depart from his Instructions
as to the manner of making the sale,
but he had no right to sell at all until
his principals had consented. His
power to sell depended upon their
consent, which he never received."
To like effect is Kennedy v. State
Bank, N. Dak. , 182 N. W. 657,
where an agent (the bank) was said
to be liable In conversion for deliver-
ing a draft without receiving a deed
and abstract showing good title.
21 Lave rty v. Snethen, 68 N. Y. 522,
23 Am. -Rep. 184. "If one man who
is intrusted with the goods of an-
other, put them Into the hands of a
third person contrary to orders, it Is
a conversion." Syeds v. Hay, 4 T. R.
260. Same point, Spencer ▼. Black-
man, 9 Wend. (N. Y.) 167.
22 Farrand v. Hurlbut, 7 Minn. 477.
23 Wells V. Collins, 74 Wis. 841, 5
L. R. A. 531. See Kidder t. Biddle,
13 Ind* Appb 653.
919
§ 1258]
THE LAW OF AGENCY
[book IV
expired, he is liable for a conversion; but if he parts with it in ac-
cordance with his authority, that is to say, if he makes the very dis-
position of it that he was authorized to make, but makes it in a dif-
ferent manner, as where he sells it at a less price, or takes inadequate
security, and a fortiori where the default was merely in the perform-
ance of that which he was to do after the disposition had been made,
as where he misapplies the proceeds, he is not liable for a conversion
of the property, but only in an action for damages on account of the
misconduct.'*
In such cases the question of good faith is not involved. A wrong-
ful intent is not an essential element of the conversion. It is enough
if the owner has been deprived of his property by the act of another
assuming an unauthorized dominion and control over it.**
§ 1258. How when agency is gratuitous. — The rules heretofore
laid down are those which apply to cases where the service is to be
performed for a reward. Where, however, the service is to be gra-
tuitous (meaning by gratuitous here, not merely where no compensa-
tion is to be paid, but where there is no other consideration to support
a contract), certain other considerations become important.
If in such a case the agent refuses to enter upon and perform the
service at all ; if his default consists in the mere not doing of a thing
which he had promised to perform, and it be not a case where the law
imposes upon him the duty to perform it, the fact that the performance
was to be gratuitous, that the promise to perform was entirely with-
24 Laverty v. Snethen, 68 N. Y. 522,
23 Am. Rep. 184. "Trover," says
Bronson,. J., "may be maintained
when the agent has wrongfully con-
verted the property of his principal
to his own use, and the fact of the
conversion may be made out by show-
ing either a demand and refusal, or
that the agent has without necessity
sold or otherwise disposed of the
property contrary to his instructions.
Where an agent wrongfully refuses
to surrender the goods of his princi-
pal, or wholly departs from his au-
thority in disposing of them, he
makes the property his own and may
be treated as a tort feasor." McMor-
rls V. Simpson, 21 Wend. (N. Y.) 610.
See also, Galbreath v. Epperson
(Tenn.), 1 S. W. 157.
In Com ley v. Dazian, 114 N. Y. 161,
8upra, where the agent's instructions
were not to sell until the price had
been approved by the principal, the
court said that the agent "did not
simply depart from his instructions
as to the manner of making the sale,
but he had no right to sell at all un-
til his principals had consented. His
power to sell depended upon their
consent, which he never received.
His authority was limited to nego-
tiating a sale, subject to their ap-
proval as to price and until that ap-
proval was obtained, he had no right
to complete the sale or deliver the
property. An unauthorized sale of
personal property, with delivery of
possession is a conversion."
.2B Laverty v. Snethen, 68 N. Y. 52g,
28 Am. Rep. 184; Scott v. Rogers, SI
N. Y. 676.
920
CHAP. II ]
DUTIES AND LIABILITIES OP AGENT [§§ 1259, I26o
out consideration, will furnish a complete defense to a claim for dam-
ages on account of such default.** This is upon the familiar ground
that the non-performance of a gratuitous executory cohtract consti-
tutes no cause of action.
But where, on the other hand, the agent has entered upon the per-
formance of the service, although it be gratuitous, it then becomes
his duty to conform to the instructions given. If he were not willing
to do so, he should have declined to serve ; but having entered upon
the performance of the service, he must obey instructions, and a fail-
ure to do so, will subject him to liability for the loss or damage oc-
casioned thereby."
§ lasQ. Exceptions to rule requiring obedience. — ^This rule which
requires adherence to the instructions of the principal is subject to
certain exceptions, growing out of the nature of the duty to be per-
formed, or the necessities or circumstances of the case. Thus —
§ 1260. — — « Agent not bound to perform illegal or immoral
act — ^The law will not lend its sanction to the commission of an
illegal or immoral act. • An agent therefore cannot be held responsible
for the disobedience of instructions which required the performance
of an act illegal or immoral in itself, or opposed to public policy or
one whose natural and legitimate result would be of that nature. *•
2«Balfe y. West, 13 C. B. 466, 22
Eng. L. & Bq. 606; Elsee v. Qatward»
5 T. R. (Eng.) 143; Thome v. Deas,
4 Johns. (N. Y.) 84; Spencer v.
Towles, 18 Mich. 9; McGee v. Bast,
6 J. J. Marsh. (Ky.) 453; Fellowes T.
Gordon, 8 B. Monroe (Ky.), 415.
See Nixon v. Bogin, 26 S. C. 611;
Benden v. Manning, 2 N. H. 289.
sTPassano v. Acosta, 4 La. 26, 23
Am. Dec. 470; Williams v. Higgins,
80 Md. 404; Short v. Skip with, 1
Brock. (U. S. C. C.) 103, Fed. Gas.
No. 12,809; Walker v. Smith, 1 Wash.
(IJ. S. C. C.) 152, Fed. Gas. No. 17,086;
Spencer v. Towles, 18 Mich. 9; Mc-
Gee ▼. Bast, 6 J. J. Marsh. (Ky.) 453;
Fellowes v. Gordon, 8 B. Monroe
(Ky.), 415; Marshall v. Ferguson, 94
Mo. App. 175; Criswell v. Riley, 5
Ind. App. 496; Battelle ▼. Gushing,
21 t). C. 59.
Thus if a person undertakes, even
voluntarily and gratuitously, to in-
vest money for another, and disre-
gards positive instructions given as
to the specific character of the secur-
ity to he taken, he is liable if the in-
vestment should fail on that aocoant.
Williams V. Higgins, 80 Md. 404.
But where agency is gratuitous, an
agent is not liable for not collecting
without proof of negligence. Nixon
V. Bogln, 26 S. G. 611.
In Baxter v. Jones, 6 Ont. L. R.
360, an insurance agent gratuitously
undertook the care of plaintiff's in-
surance, and, in one instance, to get
an increase of insurance; when this
increase was obtained, plaintiff di-
rected the agent to give notice thereof
to other companies in which the
plaintiff was Insured, and which the
agent represented. . The agent did
not give proper notices; and the
plaintiff failed to recover on certain
policies. Held, that the agent was
liable.
28 Brown v. Howard, 14 Johns. (N.
Y.) 119; Davis v. Barger, 57 Ind. 54;
Elmore v. Brooks, 6 Heisk. (Tenn.)
45.
921
§§ I26I-I263]
THE LAW OF AGENCY
[book IV
§ I261.
Agent not bound to i
his own security. —
So an agent, for example, a factor, who has made advances to his
principal, or incurred obligations for him, upon the security of the
principal's goods or property in the agent's possession, is not obliged
to obey instructions to sell or other>\'ise dispose of the property in such
a way as to imperil his security, if the principal fails to reimburse or
indemnify him or to furnish him with other acceptable security.**
§ 1262. Departure from instructions may be justified by
sudden emergency.— Another exception to this rule is based upon
the necessities of the case, as where, without the agent's fault or neg-
lect, some sudden emergency or supervening necessity arises, or some
unexpected event happens, which will not admit of delay for com-
munication or consultation with the principal, and a literal adherence
to instructions becomes impossible' or would defeat the very object
sought to be attained. In such a case if the agent, exercising pru-
dence and sound discretion, in good faith adopts the course which
seems best under the circumstances as then existing, he will be justi-
fied although subsequent events may demonstrate that some other
course would have been better.**
Qearly, of course, if the performance of the agency in any way be-
comes wholly impossible, without the agent's fault, he will be ex-
cused.'^
§ 1263. The English cases ** manifest a tendency to limit
the doctrine rather more narrowly, perhaps, than the American. The
2« See p08t, Book V, Chap. IV.
80 See Milbank v. Dennistoun, 21 N.
Y. 386; Green leaf v. Moody, 13 Allen
(Mass.), 363; Williams v. Shackle-
*ford, 16 Ala. 318; Bernard v. Maury,
20 Gratt. (Va.) 434; Jervis v. Hoyt,
2 Hun (N. Y.), 637; Shipmaster's,
supercargoes and other similar cases.
Forrestier v. Bordman, 1 Story (U.
S. CO, 43, Fed. Gas. No. 4,945; Jud-
son V. Sturges, 5 Day (Conn.), 556;
Goodwillie v. McCarthy, 45 111. 186;
Catlln V. Bell, 4 Camp. 183; Foster
V. Smith, 2 Cold. (Tenn.) 474, 88 Am.
Dec. 604; Dusar v, Perit, 4 Binn.
(Penn.) 361; Drummond v. Wood, 2
Cai. (N. Y.) 310; Lotard ▼. Graves, 3
Cai. (N. Y.) 226; Lawler v. Keaquick,
1 Johns. Cas. (N. Y.) 175; Gould v.
Rich, 7 Mete. (Mass.) 538.
Cases involving other agents.
Greenleaf v. Moody, 13 Allen (Mass.),
363; Bartlett v. Sparkman, 95 Mo.
136, 6 Am. St Rep. 35; Mllhank v.
Dennistoun, 21 N. Y. 386; Jerris v.
Hoyt, 2 Hun (N. Y.), 637; Barter t.
Blanchard, 64 Barb. (N. Y.) 617;
Perez v. Miranda, 7 Martin N. S.
(La.) 493.
•1 Weakley ▼. Pearce, 6 Heisk.
(Tenn.) 401.
32 Thus In Gwllliam v. Twist,
[1895] 2 Q. B. 86, it was said by Lord
Esher, "I am very much inclined to
agree with the view taken by Byre,
C. J., in the case of Nicholson v.
Chapman, 2 H. Bl. 254, and Hawtaync
v. Bourne, 7 M. & W. 595, to the effect
that this doctrine of authority by
reason of necessity is confined to
922
CHAP^ II]
DUTIES AND LIABILITIES OF AGENT
[§ 1264
case most commonly arising is that of a master of a ship who finds
himself confronted with an emergency at a time when communication
with his principal is impracticable. The rule, however, is not con-
fined to such cases. Thus, where a messenger, sent in haste to pro-
cure a physician and told to call Dr. A., found that Dr. A was absent,
and therefore summoned Dr. B., under circumstances making com*-
munication with the principal impracticable, and having reason to sup-
pose that some physician rather than a particular one was needed, and
having no reason to suppose that Dr. B. would not be acceptable, the
employment of Dr. B. was held to be authorized.*'
§ 1264. ' '■ ■ Limitatiofis.-— But while extraordinary circum-
stances may thus justify the assumption of extraordinary powers, it
does not necessarily follow that an agent may assume any or all extra-
ordinary powers, and bind his principal by acts done under such as-
sumed powers. The same general principles apply here that govern
the implication of authority from circumstances in other cases. The
powers assumed must not exceed the exigencies of the occasion. They
must be limited both in nature and extent by the necessities of the
case, and must bear as close relationship as possible to the authority
actually conferred.**
Thus where an agent was employed to transfer wheat upon a river
boat, and the boat sank in shallow water, it was held that, while the
agent would have authority in such an emergency to take care of the
wheat, and to employ hands or take such other steps as were necessary
to preserve it, he was not justified in selling the wheat, and certainly
certain well-known exceptional cases,
such as those of the master ot a ship
or the acceptor of a bilf of exchange
for the honor of the drawer;" and by
Smithy U J., "To constitute a person
an agent of necessity he must be un-
able to communicate with his em-
ployer; he cannot be such an agent
if he is in a position to do so. The
impossibility of communicating with
the principal is the foundation of the
doctrine of an agent of necessity. I
adopt the passage in Carver's Car-
riage of Goods by Sea, § 299, where
he says in relation to the sale of
cargo by the master of the ship as
being an agent of necessity: 'If there
is a fair expectation of obtaining di-
rections, either from the owners of
the goods or from agents known by
the master to have authority to deal
with the goods, within such time as
would not be imprudent, the master
must make every reasonable endea-
vor to get those directions, and his
authority to sell does not arise un-
til he has failed to get them.'"
See also Sims v. Midland Ry. Co.,
[1913] 1 K, B. 103. Authority by
necessity has been discussed in sev-
eral of the preceding sections. See
5 320.
83 Bartlett v. Sparkman, 95 Mo. 13S,
6 Am. St. Rep. 35.
34 Foster v. Smith, 42 Tenn. (2
Cold.) 474, 88 Am. Dec. 604.
923
§§ 1265, 1266] THE LAW OF AGfiNCY [bOOK IV
not justified in selling it to the carrier in consideration of the small
sum due to the latter for the transportation.'*
§ 1265. Where the authority has been substantially pursued,
agent not liable for inunaterial departure. — ^As has been already
stated^ no substantial damages can be recovered from the agent for a
purely circumstantial departure from instructions, not afifecting the
result.'^ Where it is shown that the instructions have not been fol-
lowed and that a loss has ensued, the burden of proving that the de*
parture from the course prescribed was immaterial and did not cause
the loss, is upon the agent.*^ The very fact that the principal gave
directions is evidence that he regarded them as material, and if the
agent, except in the case of sudden emergency before referred to, vol-
untarily elects to disregard them and ptirsue a course of his own elec-
tion, he must be prepared to show that the instructions were not in
fact material. And it is evident from the very nature of the case that
such proof is often difficult to make.
Thus in a case above referred to, if the agent had made his re-
■
mittance in large bills as directed, the letter containing them tnight
have been lost in the same manner that the more bulky package con-
taining the larger number of small bills was lost ; but it was obviously
impossible to prove that as a matter of fact it would have been lost ;
and the court properly held that the agent was the insurer of the safety
of the method which he adopted.'^ In such cases, it has been said,
that every doubtful circumstance will be construed against the agent**
In short, as has been stated, instructions are followed at the princi-
pal's risk ; they are violated at the risk of the agent.
§ 1266. Where instructions are ambiguous^ and agent
acts in good faith. — If the principal desires his instructions to be
pursued, it is obviously necessary that he should make them intelligible
and clear. If however they are so ambiguous as to be fairly capable
of two interpretations, and the agent in good faith and with due dili-
gence adopts one of them, he cannot be held liable to the principal for
a loss that may result, upon the latter's claim that he meant the other.**
M Foster v. Smith, supra. Com- National Bank v. Merchants Bank,
pare Jervis v. Hoyt, 2 Hun (N. Y.), 91 U. S. 92, 23 L. Ed. 208; Shelton v.
637. Merchants Dispatch Transp. Co., 59
M See ante, S 1085. N. Y. 258; lie Roy v. Beard, 8 How.
ST Wilson V. 'Wilson, 26 Pa. 393; (U. S.) 451, 12 L. Ed. 1151; Lioraine
Walker v. Walker, 5 Heisk. (Tenn.) v. Cartwright, 3 Wash. (U. 8. C. C.)
425. 151, Fed. Cas. No. 8,500; DeTastett
«8 Wilson V. Wilson, supra. v. Crousillat, 2 Wash. (U. S. C. C.)
i!l» Adams v. Robinson, 65 Ala. 586. 132, Fed. Cas. No. 3,828; Pickett ▼.
^oBessent v. Harris, 63 N. C. 542; Pearsons, 17 Vt 470; Minnesota Lin-
924
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ 1267, I268
This subject has been discussed in a preceding section, and what is
there said is applicable here.**
§ 1267. — T "But," as is said in a recent case** "because an
agent's instructions will admit of different interpretations, he is not
thereby authorized to disregard them entirely, and substitute his own
judgment in the place thereof. If he acts at all in such cases, he must
follow one of the interpretations .reasonably derivable from the un-
certain terms of the instructions. In this case defendant did neither ;
but, on the contrary, substituted its own ideas of what was proper un-
der the circumstances, thereby acting directly antagonistic to its in-
structions.*'
§ 1268. How affected by custom. — As has been already seen, it
is not only within the agent's power, but it is also his duty, in the ab-
sence of countervailing circumstances, to conform to such valid and
established usages and customs as apply to the subject-matter or the
performance of his agency. One who makes a contract in the face
of an established custom relating to the matter, will, in the absence of
anything to the contrary, be presumed to have made it subject to the
custom. So a person who employs another to act for him in a par-
ticular place or market, where he knows that local customs prevail,
or where it is reasonable to anticipate that they may prevail, will be
presumed, when nothing appears to indicate a different intent, as in-
tending that the business to be done, will be done according to the
usage or custom of that place or market.**
Custom cannot, however, as between the principal and his agent,
override positive instructions to the contrary.** If, ip such a case,
the agent is not able, or does not wish, to conform to the instructions,
he should refuse to accept, or should renounce the trust.
seed Oil Co. v. Montague, 65 Iowa,
67; Very ▼. Levy, 13 How. (U. S.)
345, 14 L. Ed. 173, 1 Myer's Fed.
Dec. 9 458; Mechanics' Bank v. Mer-
chants' Bank, 6 Mctc. (Mass.) 13;
Poster V. RockweU, 104 Mass. 167;
Long V. Pool, 68 N. Car. 479; Marsh
V. Whitmore, 21 Wall. (U. S.) 178,
22 L. Ed. 482; Anderson v. First Nat.
Bank, 4 N. D. 182; Oxford Lake Line
V. First Nat. Bank, 40 Fla. 349; Hop-
wood V. Corbin, 63 Iowa, 218; Berry
V. Haldcman, 111 Mich. 667; Bevis v.
Big Bend Abstract Co., 62 Wash. 513;
Falsken v. Falls City Bank, 71 Neb.
29.
«See ante, §§ 792, 793.
"Oxford Lake Line ▼. First Nat.
Bank, supra,
*8 Bailey v. Benaley, 87 111. 556;
Lyon v. Culbertson, 83 111. 38, 25 Am.
Rep. 349; United States L. Ins. Co. v.
Advance Co., 80 lU. 549; Byrne r.
Schwing, 6 B. Mon. (Ky.) 199; De
Lazardi v. Hewitt, 7 B. Mon. (Ky.)
697; White v. Fuller, 67 Barb. (N.
Y.) 267; Smythe v. Parsons, 87 Kan.
79.
^^Waftless V. McCandless, 38 Iowa,
20; Robinson Machine Works v.
Yorse, 52 Iowa, 207; Osborne v.
Rider, 62 Wis. 235; Qreenstlne v.
925
§ I269T
THE LAW OF AGENCY
[book IV
So, as has been seen, a custom, unless shown to have been known
and assented to, will not justify the changing of the essential charac-
ter of the relation between the principal and his agent," nor can it
operate to authorize the making of an invalid instead of a valid con-
tract, or to bind the principal to take one thing when he has ordered
another.*'
But, as has already been stated, where no contrary instructions are
given, it is the duty of the agent to conform to the custom, and failure
to do so will subject him to liability for such losses as may result
therefrom.*'
§ 1269. When presumption as to custom conclusive.—-
How far the presumption, that the parties had the custom in contem-
plation, is conclusive, is a question not always easy of determination.
Some customs are so well established and so universally recognized as
to have become a part of the law of the land and a party will not be
heard to allege his ignorance of them. Others, however, are so re-
stricted as to locality or trade or business, that ignorance of them is a
valid reason why a party may not be held to have contracted in ref-
erence to them.
Not only the existence of such a custom, but whether knowledge of
it exists in any particular case, are questions of fact for the jury. It
is for them to determine, under proper instructions from the court,
whether from the evidence as to the existence, duration and otlier
characteristics of the custom, and as to the knowledge thereof by the
parties, there is shown a custom of such age and character that the
law will presume that the parties knew of, and contracted in reference
to, it ; or whether the custom is so local and particular that knowledge
in the party to be charged must be affirmatively shown and may be
negatived.*'
Borchard, 50 Mich. 434, 45 Am. Hep.
51; Barksdale v. Brown, 1 Nott. &M.
(S. C.) 517, 9 Am. Deci 720; Hall v.
Storrs, 7 Wis. 253; Bl«Bfv. Arnold, 8
Vt. 252, 30 Am. Dec. 467; Hutchlngs
y. Ladd, 16 Mich. 498; Leland v.
Douglass, 1 Wend. (N. Y.) 490; Clark
V. Van Northwick, 1 Pick. (Mass.)
348; Catlln v. Smith, 24 Vt. 85; Day
V. Holmes, 103 Mass. 306; Parsons v.
Martin, 11 Oray (Mass.), lli; Led-
yard v. Hibbard, 48 Mich. 421, 42 Am.
Rep. 474; Morton v. Morris, 27 Tex.
Civ. App. 262.
« Robinson T. Mollett, L. R. 7 H.
L. 802.
« Perry v. Barnett, 15 Q. B. Dlv.
388.
*7 0reely v. Bartlett. 1 Oreenl.
(Me.) 172, 10 Am. Dec 54.
48 Walls V. Bailey, 49 N. Y. 464, 10
Am. Rep. 407; Williams v. Oilman, 3
Qreenl. (Me.) 276; Bradley v. Whee-
ler, 44 N. Y. 500; Higgins v. Moore,
34 N. Y. 425; Dawson v. Kittle, 4
Hill (N. Y.), 107; Caldwell ▼. Daw-
son, 4 Mete. (Ky.) 121; Barnard v.
Kellogg, 10 Wall. (U. S.) 383, 19 L.
926
CHAP. H]
DUTIES AND LIABILITIES OF AGENT [§§ J27O-I272
§ 1270. No presumption of disobedience. — ^The law does not pre-
sume that the agent has not obeyed his instructions or that he does not
intend to obey them, "It matters not what the intent or supposition
of the principal may be, the law will presume that the agent obeyed
the instructions that were given and as they were given, and if the
contrary is alleged, it must be proved." *•
§ 1271. Measure of damages.-^The general rules applicable to the
recovery of damages in other cases obtain here. Thus the losses for
which damages are sought must not be too remote, nor of a purely
speculative or problematical character. They must, in other words,
be the natural and proximate result of the act complained of.'* As
is said by a learned judge: "It is the first duty of an agent whose
authority is limited, to adhere faithfully to his instructions, in all cases
to which they can be properly applied. If he exceeds, or violates, or
neglects them, he is responsible for all losses which are the natural
consequence of his act." "^
Many illustrations have already been seen, and more will hereafter
arise, especially in the case of brokers who have disregarded instruc-
tions to buy or sell."^
§ Z272. Ratification. — Even though the agent may have violated
his instructions, it is still possible that the principal may so far ratify
his act as to relieve the agent from liability.*' This ratification may
Bd. 987; Martin v. Maynard, 16 N.
H. 166; Dodge v. Favor, 15 Gray
(Mass.), 82; Fiaher v. Sargent, 10
Gush. (Mass.) 250; Stevens v. Reeves,
9 Pick. (Mass.) 200; Citizens Bank
V. Grafflin, 31 Md. 507; 1 Am. Rep.
66; McMasters v. Pennsylvania R. R.
Co., 69 Pa. 374, 8 Am. Rep. 264;
Farnsworth v. Chase, 19 N. H. 534,
51 Am. Dec. 206; Randall v. Smith,
63 Me. 105, 18 Am. Rep. 200.
*» Brewer, J., in Bangs v. Hornick,
30 Fed. 97. Citing Bartlett v. Smith,
13 Fed. 263; Kirkpatrick v. Adams,
20 Fed. 287.
fto3 Sutherland on Damages, 6.
»i Colt, J., in Whitney v. Merchants
Union Exp. Co., supra,
S2 See post. Brokers.
63Lunn V. Guthrie, 115 Iowa, 501;
Evans v. Lawton, 34 Fed. 233; Piano
Mfg. Co. v. Buxton, 36 Minn. 203.
Defendant, who was a salesman of
plaintiff, collected; without authority,
the price of certain goods sold. Plain-
tiff sued the customer, but, upon dis-
covering that defendant had col-
lected the bill, discontinued that ac-
tion and brought this one against
the salesman for a conversion. Held,
that he was liable; that their suing
him ratified his collection of the
money only, but not his retention of it
thereafter, and that it was his duty
to pay to them the identical money
he had collected. Schanz v. Martin,
37 N. Y. Misc. 492; Carver v.
Creque, 48 N. Y. 385, was cited as
being nearest in point.
But see Anderson v. First Nat.
Bank, 5 N. D. 451, holding that waiv-
ing the tort and suing in assumpsit
for a wrongful disposition of prop-
erty is not to be deemed a ratifica-
tion of the original act.
927
§§ 1273-1275]
THE LAW OF AGENCY
[book IV
be express, or it may arise by implication as in other cases.** What
the conditions are under which ratification may become effective, as
between the principal and the agent, has already been considered in
a previous section, and need not be repeated here.
§ 1273. Liability for sub-agents. — The same considerations ap-
ply to the agent's liability for breach of instructions by his sub-agents
as in other cases.'* If the sub-agent is the agent of the agent, the
latter must answer for his disobedience where any other principal
would be liable ; "*• if he is the principal's agent, then the intermediate
agent is not responsible where he is free from fault."
IV.
KOT TO BE NEGLIGENT,
•
§ 1374. In genicral. — Many of the questions that might fall under
this head would also properly be classed under the preceding. That
is, the negligence complained of may be the result of a failure to ob-
serve positive instructions, as well as of a failure to perform the gen-
eral duties, which pertain to the undertaking, but which were not the
object of express directions. No harm can come, however, if strict
lines of demarcation be not always drawn.
§ 1275. Agent bound to exercise ordinary and reasonable care-
It is the duty of every agent, when no other arrangement is made, to
bring to the performance of his undertaking, and to exercise in such
performance, that degree of skill, care and diligence which the nature
of the undertaking and the time, place and circumstances of the per-
formance ordinarily and reasonably demand. A failure to do this,
whereby the principal naturally and proximately suffers loss or injury,
constitutes negligence for which the agent is responsible.**
i4 Osborne v. Durham, 157 N. C.
262.
•ft See ante, § 383.
80 So held in Cowley y. Fftbien, 204
N, Y. 566. (There was also evidence
of ratification and approval by the
agent of the act of the subagent.)
Franklin Fire Ins. Co. v. Bradford,
201 Pa. 32, 88 Am. 8t Rep. 770.
Compare Bradford v. Hanover Ins.
Co., 43 C. 0. A. 310. 102 Fed. 48, 49
L. R. A. 530, where, on the same fadts,
it was held that the agent was not
liable, because the act of the sub-
agent was not such an one as would
make a principal liable.
6T Ante, §S 332, 333.
BSLelghton v. Sargent, 27 N. H.
460, 59 Am. Dec. 388; Gill v. Middle-
ton, 105 Mass. 477, 7 Am. Rep. 548;
Holly y. Boston Gaslight Co., 8 Gray
(Mass.), 123, 69 Am. Dec. 233;
Gaither v. My rick, 9 Md. 118, 66 Am.
Dec. 316; Whitney v. Martine, 88
N. T. 535; Heinemann ▼. Heard* 50
N. y. 35.
928
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT [§§ 1^6-1378
§ 1276. Agent bound to exercise usual precautions. — ^The agent
is also bound to exercise and observe all the precautions ordinarily
pursued in relation to the particular business in which he is employed,"
and according to the known usages of the place, and the circumstances
of the times, within which the business is to be transacted.** If, there-
fore, the usage of the business in which he is engaged imposes upon
such an agent the performance of a certain duty, it will be presumed,
in the absence of anything to indicate the contrary, that the duty ex-
isted in his case ; and for failure to perform it, he will be liable to the
principal for the loss thereby sustained." The customs of the par-
ticular principal must also be observed, where the agent knows them,
and was evidently expected to conform to them.**
§ 1277. But not liable for mere accident or mistake. — But
the agent is not liable for losses resulting from his action or non-action,
if he was guilty of no negligence or other breach of duty. Mere acci-
dent or mistake, in this sense, imposes no liability upon the agent.**
§ Z278. Not bound to exercise highest care. — Except in
those cases in which he voluntarily and without sufficient reason, vio-
lates express instructions, the agent is not ordinarily an insurer.**
Unless he expressly agrees to do so, he is not bound to exercise the
highest possible degree of care. Unless he professes to be an expert,
he is not ordinarily bound to bring his performance up to the standard
of an expert. If he be, for example, a general practitioner in the
country, he cannot be required to have and exercise that high degree
B»In Williams Co. v. Dotterer» 111
La. 822, a receiver of a railroad who
was given charge of plaintiff's goods
to store pending further shipment,
was held liable for surrendering the
goods pursuant to an invalid order
of stoppage in transit.
«o Wright V. Central R. R. Co., 16
6a. 38.
«iAn agent employed to take care
of property, who neglected the pre-
cautions shown to be customary
when buildings were vacant, held
responsible to his principal for loss
caused by the bursting of heating
pipes and radiators in freezing
weather. Cameron v. Real Estate
Co., 76 Mo. App. 866.
•2 Beach v. Travelers' Insurance Co.,
78 Conn. 118.
•s "An agent is never liable to hie
principal for a mere mistake In the
performance of a duty within the
general scope of his authority."
Brlere v. Taylor, 126 Wis. 847.
•«"it Is the duty of an agent to
obey the Instructions of his principal,
and exercise In his employment rea-
sonable skill and ordinary diligence.
But he is not an insurer, and is only
liable for losses arising from a neg-
lect of such duties." Rice v. Long-
fellow, 82 Minn. 154. To same effect:
Norton v. Melick, 97 Iowa, 564; V^Tlll-
son V. Fertilizer Co., 67 S. Car. 467;
Caruthers v. Ross (Tex, Civ. App.),
63 S. W. 911.
59
929
§ 12791
THE LAW OF AGENCY
[book IV
of skill to which the specialist of the metropolis attains, and which can
only be reasonably expected from one in his position.**
§ 1279. Good faith — Reasonable diligence. — But the agent
is, in all cases, bound to act in good faith, and to exercise reasonable
diligence, and such care and skill as are ordinarily possessed by per-
sons of common capacity engaged in the same business.*' As was
said by Judge Cooley: "Whoever bargains to render services for an-
other undertakes for good faith and integrity, but he does not agree
that he will commit no errors. For negligence, bad faith or dishon-
esty, he would be liable to his employer ; but if he is guilty of neither
of these, the master or employer must submit to such incidental losses
as may occur in the course of the employment, because these are in-
cident to all avocations, and no one, by any implication of law, ever
undertakes to protect another against them.""
Further than this, general statements of the principle cannot use-
fully go. The principle is not an uncertain one, though the question
of what is reasonable in any given case is not one which can ordi-
narily be measured by any pre-established inflexible standard. There
are cases, it is true, where a limit must be fixed, and one so fixed, though
purely arbitrary, is to be observed. But there is a growing tendency
on the part of courts, and it is in furtherance of justice, to measure
each case by the more flexible standard of its own facts and circum
stances. "Care and diligence should vary according to the exigencies
which require vigilance and attention, conforming in amount and de-
«5 Small v. Howard, 128 Mass. 131,
35 Am. Rep. 363; Leighton v. Sar-
gent, 27 N. H. 460, 59 Am. Dec. 388.
••Leighton v. Sargent, 27 N. H.
460, 59 Am. Dec. 388; Whitney v.
Martine, 88 N. Y. 535; Heinemann ▼.
Heard, 50 N. Y. 35; Gaither v. My-
xick, 9 Md. 118, 66 Am. Dec. 316;
Fletcher v. Boston & Maine R. R., 1
Allen (Mass.), 9, 79 Am. Dec. 695;
Varnum v. Martin, 15 Pick. (Mass.)
440; Stimpson v. Sprague, 6 Greenl.
(Me.) 470; Crooker v. Hutchinson, 1
Vt 73; Holmes v. Peck, 1 R. I. 242;
Wilson V. Rubs, 20 Me. 421; Grannis
v. Branden, 5 Day (Conn.), 260, 5
Am. Dec. 143; Landon v. Humphrey,
9 Conn. 209, 23 Am. Dec. 333; How-
ard v. Grover, 28 Me. 97, 48 Am.
Dec. 478; Myles Y. Myles, 6 Bush
(Ky.), 237; Kempker v. Roblyer, 29
Iowa, 274; Stevens v. Walker, 55 III.
151; Chandler v. Hogle, 58 111. 46;
Deshler v. Beers, 32 111. 368, 83 Am.
Dec. 274; Phillips v. Molr, 69 111. 165;
Babcock v. Orbison, 25 Ind. 75; Lev-
erick v. Meigs, 1 Cow. (N. Y.) 645;
Van Alen v. Vanderpool, 6 Johns. (N.
Y.) 69, 5 Am. Dec. 192; Howatt v.
Davis. 5 Munt (Va.) 34, 7 Am. Dec.
681; Greely v. Bartlett, 1 GreenL
(Me.) 172, 10 Am. Dec. 54; Folsom v.
Mussey, 8 Greenl. (Me.) 400, 23 Am.
Dec. 522.
«7ln Page v. Wells. 37 Mich. 416.
Agent may be held liable to principal
for deceit. Miller v. John, 111 111.
App. 56; Hindle v. Holcomb, 34
Wash. 336; Wood v. Blaney, 107 Cal.
291.
930
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ I280, I281
grce to the particular circumstances under which they are to be ex-
erted." •»
§ Z280. When agent warrants possession of skill. — ^Wherever the
luidertaking of the agent is one which in its nature requires the pos-
session and exercise of professional skill, the law will presume, in the
absence of anything to the contrary, an undertaking on the part of the
agent that he possesses and will exercise a reasonable and competent
degree of the skill required."
And the same rule applies to any other case requiring special or'
peculiar skill. If the agent imdertakes, for a reward, the performance
of such a duty, without possessing, a reasonable and competent degree
of skill, of which fact the principal is ignorant, he will be liable to the
principal for the loss or injury resulting therefrom.'^* If, however,
the principal had notice or knowledge of the deficiency at the time of
the employment, the agent who has not expressly promised more will
not be so liable.*^ The same thing is true where the agent is em-
ployed out of the line of his known employment. If the principal sees
fit to employ an auctioneer to conduct his case in court, he cannot
complain of his attorney's want of skill, unless the latter expressly
warranted that he possessed it.
§ 128Z. How when agency is gratuitous. — Where the duty to be
performed by the agent is purely voluntary in its nature, a somewhat
different rule applies. Friends and neighbors are every day render-
ing mutual services for the accommodation and convenience of each
other, with no thought of exacting or receiving a reward. These
services, too, are often of such a nature that professional or skilled
agents might well have been employed if they were accessible or within
the means of the parties ; as where, in rural districts, neighbors render
for each other simple medical aid or give each other assistance, coun-
sel or advice, in the transaction of their affairs.
«8 Merrick, J., In Holly y. Boston and see cases cited in preceding seo-
Gaslight Co., S Gray (Mass.). 131, 69
Am. Dec. 233.
w Wilson V. Brett, 11 M. & W. 113;
Stanton v. Bell, 2 Hawks (N. C), 145,
11 Am. Dec. 744; Leigh ton v. Sar-
gent, 27 N. H. 460, 59 Am. Dec. 388;
Varnum v. Martin, 15 Pick. (Mass.)
440; Stlmpson v. Spra^ue, 6 Greenl.
(Me.) 470; Crooker v. Hutchinson, 1
Vt. 73; Holmes v. Peck, 1 R. I. 242;
Grannls v. Branden, 6 Day (Conn.),
260, 5 Am. Dec. 143; Howard v.
Grover, 2S Me. 97, 48 Am. Dec. 478,
tion.
70 Klrtland v. Montgomery, 1 Swan
(Tenn.), 452; McDonald v. Simpson,
4 Ark. 523, 38 Am. Dec. 45; Wilson
V. Brett, 11 M. ft W. 113; Money*
penny v. Hartland, 1 Car. ft P. 352,
8. 0. 2 Id. 378; McFarland v. Mc-
Glees (Pa.), 5 Atl. 50, and see gen-
erally cases cited in preceding seo-
tion.
71 Felt y. School District, 24 Vt
297.
931
§§ 1284, 1285] THE LAW OF AGENCY [bOOK IV
a person conversant with and skilled in the use of horses. The trial
court left it to the jury to say whether the nature of the ground was
such as to render it a matter of culpable negligence in the defendant to
ride the horse there ; and instructed them, that under the circumstances
the defendant, being shown to be a person skilled in the management
of horses, was bound to take as much care of the horse as if he had
borrowed it, and that if they found that the defendant had been neg-
ligent in going upon the ground where the injury was done, or had
ridden the horse carelessly while there, they should find for the plain-
tiff, which they accordingly did. Upon appeal, this direction was ap-
proved.
§ 1284. Agent not liable for unforeseeable dangers. — It follows
as a corollary from the principles above stated, that while the agent is
bound to exercise, for the protection of the principal, a reasonable
degree of care and skill, and will be liable for any loss or damage
which the principal may sustain on account of a failure so to do, yet
the agent can not be held responsible for unforeseen and unexpected
losses or damage out of the ordinary course of business or of natural
events, and which could not be guarded against by reasonable dili-
gence or foresight.**
§ 1285. But liability increased if special risks disclosed.— But, on
the other hand, the liability of the agent may be increased beyond that
existing in the ordinary case, where the agent, at the time of under-
taking the service, is informed of special circumstances demanding
more than ordinary care or diligence. Frequent illustrations are found
in the case of sheriffs and attorneys who undertake to serve process or
collect claims in view of special exigencies disclosed to them, mak-
ing delays dangerous. For similar reasons, a merchandise broker
employed to enter goods at the custom house •• or to bring suit for
the recovery of excessive duties exacted,** and apprised of circum-
stances making unusual diligence necessary, may be held liable, even
though he does all that would be required of him if no unusual cir-
cumstances were present. As pointed out in such a case, "the term
negligence is a relative one, and whether or not it exists is to be de-
cided by the situation of affairs at the time the defendant is required
82 Johnson y. Martin, 11 La. Ann. They acted in the usual way, but
27, 66 Am. Dec. 193. the circumstances disclosed demanded
83 In Vernier v. -Knauth, 7 N. Y. App. unusual action. The result was a loss
Div. 57, brokers were held liable under of |G,800.
rather extraordinary circumstances, 8*Bowerman v. Rogers, 125 U. S.
for not entering a delayed cargo be- 585, 31 L. Ed. 815.
fore a new tariff was to go into effect.
934
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ 1 286-1 288
to act The degree of diligence which any contractor is called upon
to exercise is proportionate to the duty imposed, and the existence of
negligence depends upon the failure to exercise the degree of dili*
gence which the peculiar conditions require. Whether in any given
case a party has been guilty of negligence necessarily depends then
upon what is required of him in the particular case, and it is a trite
saying that what would be due diligence in one case might, under
other conditions with regard to the same kind of business, be serious
negligence." *'
§ 1286. Agent presumed to have done his duty. — ^The law does
not presume negligence on the part of the agent. On the other hand,
it presumes that the agent has done his duty, until the contrary ap-
pears, and the burden of proof is upon him who alleges a misfeasance,
to establish it.®*
§ 1287. Agent not liable if principal also negligent.— »The ordi-
nary rules of contributory negligence apply to the question under con-
sideration. If therefore the principal has by his own negligence, con-
tributed to cause the injury, or if, by the use of reasonable diligence
on his own part, he could have prevented the injury, the agent can not
be held responsible for it.'^ Thus the failure of the principal to ap-
prise the agent of the existence of sp€:cial circumstances making un-
usual diligence necessary," or the failure of the principal to give the
agent correct information, where this information was to be the founda-
tion of the agent's actions," will relieve the agent from liability which
might otherwise be incurred.
§ 1288. When agent liable for neglect of sub-agent. — ^The ques-
tion of the liability of the agent for the misconduct of a sub-agent, has
already been considered in an earlier portion of the work to which the
reader is referred." As has there been seen, the material question is,
whose agent is the sub-agent. If, under the circumstances, the agent
M Vernier v. Knauth, 7 N. T. App. for negligently felling a tree so
Div. 57.
M Galther v. Myrick, 9 Md. 118, 06
Am. Dec. 316; Lampley v. Scott, 24
Miss. 533.
See also, Emerson v. Turner, &5
Ark, 597.
87 Sioux city, etc., R. R. Co. v. Wal-
ker, 49 Iowa, 273.
Contributory negligence of felUyio
servant — ^A servant is liable to his
master for Injuries caused by his neg-
ligence to the master's property, e. (7.,
that it injured the master's team,
although the negligence of another
servant, e, g., the driver of the
team, not joined In the action, con-
tributed to produce the Injury. Zul-
kee V. Wing, 20 Wis. 408, 91 Am. Dec.
425.
80 Freeholder r. State Bank, 32 N.
J. Eq. 467.
80 Chapman v. Union Bank, 82 How.
Pr. (N. Y.) 95.
00 Ante, SS 832, 333.
935
§ 1289]
THE LAW OP AGENCY
[book IV
was authorized, either expressly or by implication, to employ sub-
agents, on the principal's account, then the sub-agent is the agent of
the principal only, and the agent is not responsible unless he has been
negligent in the selection of the sub-agent. If, on the other hand, the
sub-agent can be regarded as the employee of the agent only, then
the latter is responsible to the principal for the negligence of the sub-
agent.*^
§ 1289. When agent liable for neglect of co^gent — ^As has been
seen in an earlier section,*^ the principal may often employ several
agents to act independently respecting tiie same subject-matter, or, on
the other hand, he may employ two or more agents who jointly and
collectively undertake to perform the act in question. Where, as in
the former case, they are merely co-agents, one is not ordinarily re-
sponsible to the principal for the neglect of his co-agent, if h^ is him-
self free from fault.*'
But where they are joint agents a different rule applies. "It is
familiar law," it is said in one case, "that where two or more persons
undertake to execute a private agency together, they are jointly liable
each for the acts of the other ; nor is it any defense that one of them
wholly transacted the business with the knowledge of the principal.
Each is liable for the whole, if they jointly undertake the agency, not-
withstanding an agreement between themselves to the contrary, or
that one shall have all the profits.'* ♦*
So although the relation would ordinarily appear to be that of co-
agents or fellow servants merely, it may yet appear in the particular
•iAppIeton Bank v. McGilvrs^y, 4
Gray (Mass.), 518, 64 Am. Dec. 92;
Sexton V. Weaver, 141 Mass. 273;
Campbell v. Reaves, 8 Head (Tenn.),
226; Commercial Bank v. Jones, 18
Tex. 811; Barnard v. Coffin, 141 Mass.
37, 55 Am. Rep. 443; Warren Bank v.
Suffolk Bank, 10 Cush. (Mass.) 582;
Pownall V. Hair, 78 Penn. St. 408;
Darling v. Stanwood» 14 Alien
(Mass.), 504; Stephens v. Babcock, 3
B. & AdoL 354; McCants v. Wells, 4
S. C. 881; Hoag v. Graves, 81 Mich.
628; Davis V. King, 66 Conn. 465, 60
Am. St. Rep. 104; Morris v. WarUck,
118 Ga. 421. An agent Is liable to
his principal for funds received for
the jirlnclpal and misapplied by the
agent's clerk. St. Louis, etc., Ry. Cp.
V. Smith, 48 Ark. 317.
•2 See ante, S 195.
9* An agent employed by the trus-
tees of an estate to collect Its Income
Is not responsible for the loss of
funds through the misconduct of an
assistant employed at the suggestion,
with the consent, and by the author-
ity of the trustees. The assistant was
simply a fellow-agent and not de-
fendant's agent. Nor was defendant
liable because he failed to discover
the default of his fellow-agent, as the
responsibility for supervision was
not on him but upon the trustees.
Sergeant v. Emlen, 141 Pa. 580. To
same effect: Regents v. Rose, 46
Mich. 284.
»* Milwaukee Harvester Co. v. Fio-
negan, 43 Minn. 188.
936
CHAP, a]
DUTIES AND LIABILITIES OP AGENT [§§ 1290-129^
case that one was charged with the duty of supervision and control
over the other, or even that he was employed for Ihe very purpose of
protecting his principal from the negligence of the other, and in such
a case responsibility for the negligence of the other, whkh proper su-
pervision would have prevented, may well entail responsibility.^**
§ Z290. Effect of ratification upon the agent's liability, — ^This
question also has been already discussed in a previous chapter,** and
nothing need be added here in reference tx> it, beyond recalling that
by a ratification under the conditions there referred to, tlie principal
absolves the agent from all responsibility to him for the loss or injui*y
resulting from the unauthorized act.
§ 1291. The measure of damages,— The question of the measure
of the damages to be recovered for the agent's neglect is substantially
the same that arises where an injury has been sustained by reason of a
violation of instructions. The principal is entitled to full compensa-
tion ; to be put into that situation in which he would have been if the
agent had performed his duty. In other words, he is entitled to re-
cover such damages as naturally and proximately result from the
wrongful act complained of. Profits which are possible or specula-
tive merely, are not to be recovered, but at the same time, it is not
necessary that the loss or damage shotdd be directly or immediately
caused by the default, if such loss or damage can fairly be considered
as the natural result or just consequence of it.®' Losses, however,
cannot be included which were not. the natural and proximate result
of the default in question.**
The biirden of showing loss la upon the priimpal, and more than
nominal damages, at least, cannot be recovered without proof of act-
ual injury.**
§ 1292. I Judgments, costs, counsel fees.— The principal
may often be made liable in actions brought against him by third per-
w Memphis, etc.. Railroad Co. v.
Greer, 87 Tenn. 698, 4 L. R. A. 858.
Here a conductor was lield lial^le to
the company for the amount of a
judgment, recovered against the com*
pany, for the negligence of other serv-
ant causing injury to one permitted
upon the train by the conductor in
violation of his duty.
08 See <mte, § 491 et «e^.
»T Bell V. Cunningham, 8 Peters (U.
S.), 69, 7 L. Ed. 606; Gilson v. Col-
lins, 66 111. 136; Walker v. Walker, 5
Heisk. (Tenn.) 425; Memphis, etc..
Railroad Co. v. Greer, 87 Tenn. 698,
4 U R. A. 858; Wilson v. Wilson, 26
P&. 893; First Nat Bank v. Hayes,
64 Ohio St. 100.
••Hurley v. Packard, 182 Mass.
216. So if the servant has injured a
third party, and the master makes a
settlement for more than the actual
d&mage, he can hold the servant only
for the actual damage. Smith v.
Foran, 43 Conn. 244, 21 Am. Rep. 647.
»» Emerson v. Turner, 95 Ark. 597.
937
§ 1296]
THE LAW OF AGENCY
[book IV
of the title ; in the procuring of proper conveyances ; in making the nec-
essary records, and in the performance of those other acts which may
be necessary under the circumstances to perfect and protect the se-
curity. If he fails in the performance of this duty, and loss thereb)
results to his principal, the agent is responsible for the amount of the
loss.
Where the negligence complained of is the acceptance of forged
securities, the agent may show that other persons who were careful
business men were similarly deceived ; • but where reliance upon securi-
ties insufficient in point of law was complained of, it was held incom-
petent to show that careful business men relied upon the same kind."
The fact that the agent acted in good faith is no defence, because it
Bkill In business would esteem good."
Bank of Owensboro v. Western Bank,
13 Bush (Ky.), 526, 26 Am. Rep. 211.
Clearly he is liable if be makes the
loan without any security to an in*
solvent person. Hitchcock v. Gosper,
164 Ind. 633; Bronnenburg v. Binker,
2 Ind. App. 391. Especially where he
does BO, and fails to enforce payment,
in order to promote the payment of
a claim due to himself. Samonset v.
Mesnager, 108 Cal. 354. So if he loans
without any other knowledge of the
security than the borrower's own
statement, when the borrower was a
stranger to him. Van Ck>tt v. Hull, 11
N. Y. App. Dlv. 89. So if he accepts
the statements as to value of persons
not shown to have any experience as
land valuers or otherwis3 competent
to make an estimate. Iiowenburg v.
Wolley, 25 Can. Sup. Ct. 51. So if he
loans on second mortgage and fails to
record it so that principal loses an
opportunity to protect himself by not
being notified of a foreclosure of the
first mortgage. DeHart v. DeHart,
7T0 N. J. Eq. 774.
To loan $1,200 on land worth $2,300
and already mortgaged for $1,800,
Justifies a finding of negligence. Har-
low V. Bartlett, 170 Mass. 584.
See also, Bannon v. Warfield, 42
Md. 22.
• Isham V. Poet, 141 N. Y. 100, 88
Am. QU Rep. 766w 23 U B. A« 90.
To the same effect: Rand v. Johns
(Tex. Civ. App.), 15 S. W. 200 (where
It was held competent to show that a
bank whose officers were competent
men had been deceived in the same
way).
10 Thus where the agent relied upon
the security of the debtor's wife, who
could not legally bind herself in that
way, it was held incompetent to show
that business men generally consid-
ered that the wife oould be held.
Murrah v. Brichta (Tex.), 9 S. W.
185.
Where all that the agent undertook
to do for his principal was to exercise
such care on the latter's loans as the
agent was aocostomed to take in his
own, the agent will not be liable if he
honestly does that, although a loss
results. GKwdwin v. Kraft, 23 Okla.
239. Here the agent was in the habit
of passing upon the abstracts of title
without professional advice, and in
this case made a mistake as to the ef-
fect of the homestead laws.
In La Banaue Provinciale v. Char-
bonneau, 6 Ont L. B. 802, where the
local manager of the plaintiff's branch
bank altered a note in an endeavor
to correct a prior error, but with the
result that the parties thereto were
discharged, it was held that he had
not failed to exercdae the skill re-
quired of one in his positioA.
940
CHAP. Il]
DUTIES AND LIABILITIES OP AGENT
[§ 1297
is negligence and not bad faith which is imputed to him ; " nor, as has
been seen, is it a defence that he acted without compensation."
Where the agent fraudulently makes misrepresentations to his prin-
cipal concerning the security, it is no defense that the principal **had
full opportunity to test their correctness by examining the land for
herself." "
5. Neglect of Agent to Effect Insurance.
§ 1297. When duty to insure arises. — ^The same general rules ap-
ply to the case of an agent whose duty it is to insure the property of
his principal. This duty may arise as has been seen," from express
instructions; but while, in other cases, the duty does not arise from
the mere fact of agency, it will arise wherever the agent has in his pos-
session property of his principal of a kind which it is the usage to in-
sure,^*^ or which it has been the agent's habit to insure," or which rea-
sonable care and prudence requires shall be protected against loss.*'
Where a sales agent was, by his contract, required to effect insur-
ance, but no time was fixed for its continuance, it was held that the
agent was not obliged to continue the insurance after the normal sales
period and into a time in which the principal might reclaim the goods
at any time without reimbursing the agent for the premiums, even
though the goods remained unclaimed in the possession of the agent.**
And where an agent who had undertaken to insure failed to do so, and
the principal thereupon took the matter into his own hands, the agent
was held not liable for losses thereafter occurring.**
iiMurrah r. Brichta (Tex.), 9 S.
W. 1S5.
12 See ante, § 12S1; Isham ▼. Post,
141 N. Y. 100, 88 Am. St. R. 766, 23 U
R. A. 90; Marrah v. Brichta, »upra;
Samonset v. Mesnager, 108 Cal. 354.
isRnbens T. Mead (Cal.), 53 Pac.
432.
14 § 1245.
i» Kingston v. Wilson, 4 Wash. (U.
S. C. C.) 310, Fed. Cas. No. 7,823;
SMrtUff V. Whitfield, 2 Brev. (S. C.)
71, 3 Am. Dec. 701; Berthoud v. Gor-
don, 6 La. 579, 538; Ralston v. Bar-
clay, 6 Martin (La.), 649, 12 Am. Dec.
483; Lee v. Adsit, 37 N. Y. 78; Shoen-
feld V. Fleisher, 73 111. 404; Schaeffer
V. Kirk, 49 111. 251; Brlsban v. Boyd,
4 Paige (N. Y.), Ch. 17.
!• Schoenfeld v. Fleisher, supra;
Schaeffer v. Kirk, supra; Lee v. Ad-
sit, supra; Brlsban v. Boyd, supra;
Ralston v. Barclay, supra; Berthoud
V. Gordon, supra.
ttAnie, §§ 1276, 1279.
i«Milburn Wagon Co. v. Evans, 30
Minn. 89. But where the contract ex-
pressly required the agent to keep the
property insured while in his cus-
tody, it was held that he must main-
tain Insurance on property left in his
control, even though the period of his
agency had expired. Prichard v.
Deering Harv. Co., 117 Wis. 97.
i» Brant v. Gallup, 111 IlL 487, 53
Am. Rep. 638.
941
§ 1298]
THE LAW OF AGENCY
[book IV
§ Z298. What the duty requires. — ^The duty of the agent when
not otherwise limited by express instructions, requires the exercise on
his part of reasonable care and prudence in the selection of the in-
surer ; *® in the determination of the duration and amount of the risk ;
in procuring proper and sufficient policies*^ or contracts and in in-
serting such special stipulations and provisions as the circumstances
of the case reasonably require." But unless expressly instructed so
to do, he would not be bound to insure against unusual and unforeseen
dangers, but only against such as an ordinarily prudent man would
select under the circumstances. If the agent is unable to procure the
insurance,^ or if after having been in the habit of insuring upon his
own motion, he determines no longer to do so,** he should promptly
notify his principal in order to give the latter an opportunity to in-
sure. Failing in the performance of his duty, the agent is liable for
the full amount of the insurance which he should have effected, less
the premium.**
His duty is not performed if he selects underwriters who are notori-
ously in bad credit or insolvent;** or if he accepts of manifestly in-
sufficient or invalid policies.*^ If the principal has by express instruc-
tions fixed the amount of the insurance and such amount might, by
reasonable diligence, have been obtained, the agent who neglects to
«o strong V. High, 2 Rob. (La.) 103,
S8 Am. Dec. 195.
-isHe must procure written poUcies
and not expose his principal to the
risks and uncertainties of oral con-
tracts. Manny v. Dunlap, 1 Wool,
372, 16 Fed. Cas. p. 658.
«2 Mallough V. Barber, 4 Camp. 150.
«3 Callander v. Oelrichs, 5 Bing. N.
C. 58; Smith v. Lascelles, 2 T. R. 187.
-«Area v. Milliken, 35 La. Ann.
1150.
2BStorer v. Eaton, 50 Me. 219, 79
Am. Dec. 611; Mallough v. Barber, 4
Camp. 150; Park v. Hamond, 4 Camp.
344; Perkins v. Washington Ins. Co.,
4 Cow. (N. Y.) 645; DeTastett v.
Crousillat, 2 Wash. (U. S. C. C.) 132,
Fed. Cas. No. 3,828; Thome v. Dcas,
4 Johns. (N. T.) 84; Sboenfeld v.
Fleisher, 73 III 404; Callender v. Oel-
richs, 5 Bing. N. C. 58; Gray v. Mur-
ray, 3 Johns. (N. Y.) Ch. 167.
Where the Insurance fails because
the agent who has taken charge of
the matter, although acting gratui-
tously, fails to give notice of subse-
quent insurance, the agent will be
liable to his principal for the loss.
Baxter v. Jones, 6 Ont. L. R. 860.
In a tort action for the alleged
negligence of an Insurance broker in
failing to replace two policies of fire
insurance, held, that, until he had
exhausted all reasonable efforts to
replace the policies, the broker was
under no duty to give notice to the
principal of his inability to do so,
and if the loss occurs before such
time arrives, it would be idle for
him to give notice. Backus v. Ames.
79 Minn. 145.
20 Strong V. High, 2 Rob. (La.) 103,
88 Am. Dec. 195.
27 Mallough V. Barber, Mupra,
94a
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT [§§ I299-I3OO
insure is liable for that amount as on a valued policy.*® Where no
amount is so fixed, the agent should ordinarily procure insurance to
the full insurable value.'*
S. Neglect of Agent in Making Collections.
§ 1299. Liable for k>88 from negligence. — ^The liability of an agent
employed to collect a demand, depends largely upon the nature of his
undertaking. Such an agent may, undoubtedly, by express contract,
impose upon himself the absolute duty to collect the demand in any
event. In such a case he becomes, practically, a guarantor of the
debt and is liable as such.
Where no such express contract is made, however, the agent by as-
suming the cipllection of the claim, undertakes that he will exercise
reasonable care, skill and diligence in making the money. If he does
this, and is unable to collect the demand, he is not liable ; but if from
his neglect to exercise this degree of care, skill and diligence, the
claim or any part of it is lost, the agent is liable for the loss.***
This rule imposes upon the agent the duty to take all the precautions
and avail himself of all the remedies, which are reasonable and proper
under the circumstances, — which a reasonably prudent and careful
man would avail himself of under like circumstances."^
§ 1300. Forms of negligence. — ^The forms in which the negligence
of an agent, who has undertaken to make collections, may manifest
itself, are obviously very numerous, and no attempt can be made to
deal with all of them. The cases, however, which most commonly
arise, have usually to do either with the medium of payment which
the agent has accepted, or with the various steps and proceeding nec-
essary to secure payment, and it is possible to classify most of the
cases which arise with reference to this distinction.
M Miner v. Tagert, 3 Binn. (Pa.)
204.
Aji instruction to secure a policy
covering "all risks" means one which
actually and not merely one bo de-
scribed by insurance agents. Yuill v.
RobBon, [1907] 1 K. B. 685.
2»Beard8ley v. Davis, 52 Barb. (N.
T.) 159; Betteley v. Stainsby, 12 C.
B. (N. S.) 499; Douglass v. Murphy,
16 U. C. Q. B. 113.
iOAUen v. Snydam, 20 Wend. (N.
T.) 821, 32 Am. Dec. 655; BueU v.
Chapin, 99 Mass. 694, 97 Am. Dec. 68;
Reed v. Noithrup, 50 Mich. 442; Flck
V. Runnels, 48 Mich. 302; Capitol
State Bank v. Lane, 52 Miss. 677; Oil
Well Supply Co. v. Exchange Nat.
Bank, 131 Pa. 100. In order to re-
cover against the agent for failure to
collect it is sufficient to show that
debtor was solvent, and that with
proper exertion, claim could have
been collected. Wiley v. Logan, 96
N. C. 858.
81 Allen V. Suydam, Bupra.
943
§§ 1301, 1302]
THE LAW OF AGENCY
[book IV
§ 1301. Negligence as to medium o£ paymeat.*-It has been seen
in an earlier section •* that an agent authorized to receive i^yment or
to collect debts, has ordinarily no implied authority to receive any-
thing but money in satisfaction of the demand. He cannot, therefore,
usually bind his principal by accepting checks, notes, drafts and similar
documents, on the one hand, or merchandise or property of any kind,
on the other. In most cases, the result of the agent's viobition of his
duty in this regard, would simply be that the demand was not paid,
and the principal could proceed to enforce his original claim without
reference to such an unauthorized attempt to discharge it.'* There
may be cases, however, in which the principal has parted with some
right, waived some claim, or surrendered some security, upon such an
unauthorized payment, in such a form that his original demand is ex-
tinguished, and he will have no remedy unless he can find it against
the defaulting agent.
§ 1302. Illustrations. — Thus, as a typical and not uncom-
mon case, if an agent who is authorized to sell and deliver goods for
cash, sells the goods to an irresponsible purchaser and delivers them
for a check which proves to be worthless, so that both the goods and
the price are lost to the principal, the agent will be liable," So if an
agent who is authorized to deliver a conveyance, release a lien, give a
consent, execute a license, and the like, only upon receiving payment,
does so upon the receipt of a worthless check, note or other security,
and the principal sustains loss, the agent will be responsible.*' So,
for like reasons, if an agent authorized to collect a check or note or
draft, surrenders it to the principal's detriment, upon receiving some
other check or note or draft, instead of the money, he will be answer-
able to the principal for the loss.** So, if the agent takes goods in
payment and turns them into money at a loss, he must answer for the
loss.*^
82 Ante, I 946.
33 See Western Brass Mfg. Co. T.
Maverick, 4 Tex. Civ. Apii. 635.
8* Harlan v. Ely, 68 Cal. 522; Hall
V. Storrs, 7 Wis. 253.
38 Pape v. Westacott, [1894] 1 Q. B.
272. In this case a landlord had
agreed to consent to an assignment of
the lease upon the payment of a cer-
tain amount of rent. He executed the
consent and put it into the hands of
an agent to be delivered upon the re*
ceipt of the money. The agent deUv-
ered the consent upon receipt of a
check which proved to be worthless,
and the agent was held liable.
36 Fifth National Bank v. Ashworth,
123 Pa. 212, 2 U R. A. 491; Hazlett v.
Oommer. Nat. Bank, 132 Pa. 118; Mer-
chants' Nat. Bank of Philadelphia ▼.
Goodman, 109 Pa. 422, 58 Am. Rep.
728; Marine Bank v. Fulton Bank, 2
Wall. 252, 17 L. Bd. 785; Gowling v.
American Bxpresa Co., 102 Mo. App.
366.
87 Rush y. Rush, 170 111. 623. See
also, Holmes v. Luigston, 110 Ga. 861.
944
CHAP. U]
DUTIES AND LIABILITIES OP AGENT [§§ 1303; I304
§ 1303. Negligence in proceeding8.-**If certain proceedings are,
by law, required to be taken, for the protection of his principal, the
agent must see that these requirements are complied with. Thus it
is the duty of an agent who receives negotiable paper to collect, to so
act as to secure and preserve the liability thereon of all parties prior
to his principal; and if he fails in this duty, and thereby causes loss
to his principal, he becomes liable for such loss.'^ Such an agent
must therefore present the bill or note for acceptance without delay
and present it for payment at maturity. If the bill or note be not duly
accepted or paid, he must cause it to be immediately protested, where
protest is necessary, and cause notice to be duly given of its dishonor.
Whether the agent shall g^ve notice of the dishonor to prior parties
directly, or to his principal only, but in time to enable him to give such
notice to prior parties, is a question upon which the authorities are
not harmonious. The weight of authority, however, seems to be that
the agent is only bound to notify his principal.** For the purposes of
notice, therefore, a banker or other agent to whom a note or bill has
been transmitted for collection, is' to be considered as though he were
the real holder, and his principal a prior indorser. The agent may
therefore notify his principal only, and the latter has the same time
to notify prior parties.*®
§ 1304. But this is not the utmost limit of the agent's
duty and liability. He may so act as to charge all of the parties to the
paper, and yet become liable to his principal for a loss occasioned by
his negligence. The rule which will measure the diligence which is
exacted of a holder of such paper in order to charge the prior parties,
S8 First National Bank of Meadvllle
V. Fourth National Bank of N. Y., 77
N. Y. 320, 33 Am. Rep. 618; Allen v.
Merchants' Bank, 22 Wend. (N. Y.)
216, 84 Am. Dec. 289; Chapman ▼.
McCrea, 63 Ind. 360; Oil Well Supply
Co. V. Exchange Nat. Bank, 131 Pa.
100; City Nat. Bank v. Clinton County
Bank, 49 Ohio St 351; Borup v. Nin-
inger» 6 Minn. 528; Jagger v. Na-
tional Germ.- Am. Bank, 53 Minn. 386;
West Y. St. Paul Nat. Bank, 64 Minn,
466; Roanoke Nat. Bank v. Ham-
brick, 82 Va. 185.
»» Colt V. Noble, 6 Mass. 167; First
Nat. Bank of Lgmn ▼. Smith, 132
Mass. 227; United States Bank y. God-
dard, 6 Mason (U. S. C. C), 366, Fed.
Cae. No. fil7; Farmers' Bank y. Vail,
21 N. Y. 485; Bank of Mobile y. Hug-
gins, 3 Ala. (N. S.) 206; Mead y.
Engs, 6 Cow. (N. Y.) 803; Phipps y.-
Millbury Bank, 8 Mete. (Mass.) 79;
Howard y. Ives, 1 Hill (N. Y.), 263;
Seaton y. Scoyill, 18 Kan. 433, 26 Am.
Rep. 779. Contra, Thompson y. Bank
of South Carolina, 3 Hill (a Car.),
Law, 77, 30 Am. Dec. 854; Smedes y.
Bank of Utica, 20 Johns. (N. Y.) 372;
Merchants' Bank y. Stafford Bank, 44
Conn. 565; McKinster y. Bank of
UUca, 9 Wend. (N. Y.) 46.
*o Seaton y. ScoviU, 18 Kan. 433, 26
Am. Rep. 779, and cases, supra.
60
945
§ 1305! THE LAW OF AGENCY [bOOK IV
will not always measure the diligence which is required of a collecting
agent in the discharge of his duty to his principal."
Thus it is said by a learned judge: "Suppose an agent receives for
collection from the payee, a sight draft. No circumstance can make
it his duty, in order to charge the drawer, to present it for payment
until the next day. He has entered into no contract with the drawer,
is not employed or paid by him to render him any service, and owes
him no duty to protect him from loss. What is required to be done
to charge the drawer is simply a compliance with the condition at-
tached to the draft, as if written therein ; and that condition is in all
cases complied with by presentation, demand and notice on the next
day after receipt of the draft. But suppose the agent, on the day he
receives the draft, obtains reliable information that the drawee must
fail the next day, and that the draft will not be paid unless immedi-
ately presented ; what then is the duty he owes his principal whose in-
terests, for a compensation, he has agreed with proper diligence and
skill, to serve, in and about the collection of the draft? Clearly, all
would say, to present the draft at once ; and if he fails to do this, and
loss ensues, he incurs responsibility to his principal ; and yet the drawer
would be charged if it was not presented until the next day. Where
an agent receives a bill for collection, payable some days or months
after date, in order to charge the drawer, he need not present it for
acceptance until it falls due ; and if he then presents it and demands
payment, and protests it and gives the notice, the drawer is held ; and
yet in such a case he owes his principal the duty to present the bill for
acceptance at once, and if he fails in such duty and loss ensues to his
principal he becomes liable for such loss." *•
§ 1305- In accordance with these principles it was held
that an agent intrusted, for collection, with a draft or bill payable on
a particular day, is liable for any unnecessary delay in presenting it
for acceptance, although it may not be yet due." So the defendant,
a bank in New York, received for collection a draft upon a firm in
that city upon the morning of a certain day and, upon presentation,
received in payment the drawee's check upon another bank in the
same city, and delivered up the draft. The check, however, was not
presented until the next day, and then through the clearing house.
*i First National Bank v. Fourth <2 First Nat. Bank v. Fourth Nat.
Nat. Bank, 77 N. Y. 320. 33 Am. Rep. Bank, supra,
618; Smith v. Miller, 43 N. Y. 171. 3 «* Allen v. Suydam, supra.
Am. Rep. 690, again reported in 52
N. Y. 545.
946
CHAP. Il]
DUTI£S AND LIABILITIES OF AGENT
t§ 1306
On that day, and before it was presented for payment, the drawers of
the check failed and payment was refused. The defendant thereupon
returned the check to the drawers, got back the draft, made a formal
demand for its payment, caused it to be protested, and, on the next
day, gave due notice of its dishonor. It appeared that the bank upon
which the check was drawn paid all of th€ drawer's checks down to the
time of the failure, and that the check would have been paid if pre-
sented, as it might easily have been, for payment upon the day it was
given. Upon this state of facts it was held that, though the action of
the defendant bank might have been sufficient to charge prior parties, it
was negligent in not securing payment of the check on the day that it
was drawn, and hence was liable for the loss.** Indeed, as has been
seen,*'* there is no implied authority, in an agent to collect, to receive a
check in payment at all. It is, undoubtedly, a common practice among
business men in their own transactions, to give and receive checks in
payment of demands. This is, however, a matter of convenience only,
and the check does not constitute payment unless expressly received as
such. But this practice falls short of a usage applying to the collection
of drafts for absent parties. And it is not a reasonable usage that one
who undertakes to collect a draft for an absent party should be allowed
to give it up to the drawee, and sacrifice the claim which the owner may
have on prior parties upon the mere receipt of a check which may turn
out to be worthless.*®
§ 1306. And not only must the agent, as has been seen,
duly present the paper for acceptance in proper cases, but he must
also exercise reasonable care, at least, to see that the acceptance is in
proper form and so executed as to bind the drawee.*^ For negligence
in ascertaining the identity of the parties,** or in determining the au-
** First Nat Bank v. Fourth Nat.
Bank, supra.
A collecting bank accepted from the
debtor a check on another bank in the
same city. That night, at close of
banking hours, the second bank sus-
pended payment. It was held to be
the duty of the collecting bank to
present checks so received for pay-
ment within banking hours of the
day received; failing to do so, it is
liable to the drawer thereof. Morris
v. Eufaula Nat. Bank, 106 Ala. 383.
8. o. 122 Ala. 580, 82 Am. St. Rep. 95.
45 Ante, i 949.
46 Whitney v. Esson, 99 Mass. 308,
96 Am. Dec. 762.
47 "Where the holder of a biU of ex-
change transmits it to his agent for
presentment to the drawee, such
agent has no right to receive anything
short of an explicit and unequivocal
acceptance, without giving notice to
the holder, as in case of fion-accept-
ance; and he will be liable for any
loss the holder may sustain In conse-
quence of his neglect so to do."
Walker v. The Bank of the State of
New York, 9 N. Y. 582.
^ A bank sent paper for collection
947
§§ I307» 1308] THE LAW OP AGENCY [bOOK IV
thority of one who assumes to act for the drawee, he would also be
liable. A fortiori would he be liable where he takes an acceptance
from one known by him to have no authority to bind the drawee, and
gives the principal no notice so that he may otherwise protect himself.**
§ 1307. Neglect to give principal notice of material facts. — It is
also the duty of the agent here, as in other cases, to give the principal
timely notice of facts within the agent's knowledge and essential for
the principal's protection. Thus if unexpected contingencies arise, if
imusual delays occur, if the usual and expected course cannot be pur-
sued, and the like, it is the duty of the agent to give notice to the prin-
cipal, so that he may either take the steps necessary for his own pro-
tection, or give fresh instructions to the agent in view of the altered
circumstances. For a failure in this respect, from which the princi-
pal suflFers loss, the agent will be responsible.*®
It must be borne in mind, however, in dealing with this question
that, unlike the case of giving notice of dishonor, this is not a matter
concerning which the law has prescribed any particular time within
which notice shall be given. It is simply a question of what should
reasonably have been done under the circumstances of the case; and
among these circumstances the general usage in such cases and even
at times the custom of the particular place, may be material.'*
§ Z308. Neglect in gmnting or permitting delays, extensions or
forbearances. — ^The agent also will clearly be liable where loss has
happened to the principal because the agent has failed to press the
collection with due diligence, has granted unauthorized extensions or
permitted other unjustifiable delays. Thus where a bank which had
received a draft for acceptance and collection was authorized to grant
an extension for twenty days, but granted an extension for thirty
to Its correspondent bank, knowing not liable for loss occasioned through
there was another person of the same i^o notice of protest being sent to the
name as the endorser In that vicinity, Indorser. Mount v. First Nat. Bank,
but not informing its correspondent 37 Iowa, 457.
of the fact. Beld, that the bank hav- *» Kirkeys v. Crandall, 90 Tenn.
ing the Information and not divulg- 532.
Ing it. Is liable for the loss Incurred ^^ See Omaha Nat Bank v. Klper,
through the mistake. Borup v. Nin- 60 Neb. 33; Dem v. Kellogg. 54 Neb*
Inger, 5 Minn. 523. 560; Mound City Paint Co. v. Com-
But where a bank received for pro- mercial Nat. Bank, 4 Utah, 353; Krafft
test a note Indorsed by one John v. Citizens' Bank, 139 N. Y. App. Dlv.
Becker, and notice of protest wag 610; Selz v. Colllna, 55 Mo. App. 55.
se nt to one John Becker, who lived in »i See Sahlien v. Bank, 90 Tenn.
that vicinity and was the only person 221; Bank of Washington v. Trlplett,
of that name known to the bank or 1 Pet. (U. S.) 25, 7 L. Ed. 37,
its officers. Held, that the bank is
948
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1309
days, without notice to or authority from the principal, mislaid and
ignored the draft for a number of days and took no steps to collect
until after the drawee had failed, not even notifying the principal of
his failure until more than a week after it occurred, it was held that
the bank was properly chargeable for the loss sustained."
So where a bank permitted a draft sent to it for collection, to lie un-
accepted and unpaid from February 19 until March 7, without notice
to the principal, and then before the principal had been heard from,
took a conveyance to itself of all the debtor's property to secure other
claims, the bank was likewise held."
So where a bank held a sight-draft without any notification to the
principal and without taking any steps to collect it, for forty-seven
days, during which time it might probably have been collected, and
then returned it as uncollectible, the bank was held.** And so, again,
where the collecting bank sent the paper directly to the drawee, by a
letter which actually miscarried, but which otherwise should have been
heard from in two days, and the bank waited nineteen days without
any inquiry and until the drawee had failed, the bank was held liable.*'*
§ 1309. Neglect in keeping the money. — ^The agent having re-
ceived the money, question may arise respecting his liability if the
money be lost while yet under his control. If the money were kept in
violation of express instructions or a clear duty to remit it to his prin-
cipal or to make some other disposition of it, the agent would ordi-
narily be liable for the loss. But if the agent were not thus in default,
and no special arrangement respecting its care existed, the agent
would not be responsible except for failure to exercise reasonable and
ordinary care.**
If, however, having received the money for the principal the agent
B2 Omaha Nat. Bank ▼. Kiper, 60
Neb. 33.
BSDern v. Kellogg, 54 Neb. 560.
The court said it was an act of char-
ity to designate the defendant's con-
duet as negligence; "a harsher term
might be more appropriate."
^^ Mound City» etc.» Co. v. Commer-
cial Nat. Bank. 4 Utah. 853.
BB First Nat Bank of Trinidad ▼.
First Nat Bank of Denver, 4 Dill.
(U. S. C. C.) 290. Fed. Cas. No.
4,810.
Be The agent of a railroad received
money which he was unable to send
in on the day collected because the
last train had gone before It was re-
ceived. On leaving at the end of the
day. he locked it up in the office safe,
provided by the company, and fast-
ened the windows and locked the door
of the office. Held^ not answerable to
his principal for a loss occasioned by
burglary that night. Louisville, etc..
R. C. V. Buffington. ISl Ala. 620. In
American Express Co. v. Stuart 134
111. App. 390. tt was held that a drug-
gist, who sold plaintiffs money or-
ders, was not liable for a loss which
occurred through the theft by a drug
clerk who had learned the combina-
tion of the safe, where it was kept
949
§ I3IO]
THE LAW OF AGENCY
[book IV
without the principars authority, returns it to the payer upon a claim
which proves to be unfounded, he must answer for it to the principal.*^
And where the agent, a bank, having received money for a non-
resident principal, was served with garnishment or attachment process
respecting it, at the suit of an adverse claimant, and gave to the prin-
cipal such misleading and indefinite information respecting the pro-
ceedings that the principal's money was lost, the agent was held
liable."
§ 13x0. Neglect in making remittances. — ^Where, as has been
seen, the principal directs his agent to send the money in a certain way
or through a particular channel, transmitting it in a different mode is
evidence of disobedience.** But unless so bound by express instruc-
tions, the agent is held only for reasonable skill and diligence in send-
ing the money.'®
Thus where the principal sent a claim of about sixty dollars to his
agent by mail, with instructions to the agent to ''forward'* the pro-
ceeds, it was held that the agent was warranted in believing that he
was authorized to transmit the proceeds in the same way.*^ Said
Gray, J. : "There is no rule of law that the postoffice established by the
government for the purpose of carrying letters is a less safe or ap-
propriate means of forwarding money than a private carrier or banker.
Whether it is so in any particular case is a question of fact, depending
upon the amount to be sent, the proportionate expense of different
modes of transmission, the time and distance intervening, the prevail-
ing usage in similar cases, and oliier circumstances surrounding the
transaction, all of which are proper for the consideration of the jury." •*
Where the agent in ordinary course remits by bill or draft bought
by him for that purpose without negligence, and in so doing indorses
it, he is not, as between himself and his principal, liable upon his in-
dorsement."
1(7 An agent sold land and received
a deposit from the purchaser; pur-
chaser claimed that the principars
title was Imperfect, and agent re-
turned the deposit after notification
by the principal not to do so; agent
held liable to the principal for the
amount of the deposit, principal's
title being perfect Montgomery ▼.
Pacific Coast Land Bureau, 94 Cal.
284, ^8 Am. St R. 122.
osKrafft v. Citizens' Bank, 139 N.
Y, App. Div. 610.
99 Ante, f 1247.
•0 Buell V. Chapin. 99 Mass. 594, 97
Am. Dec. 58; Kingston v. Klncaid, 1
Wash. (U. S. O. C.) 464, Fed. Gas. No.
7,822; Mechanics' Bank v. Merchants'
Bank, 6 Mete. (Mass.) 26.
61 Buell V. Chapin, supra; Morgan
V. Richardson, 13 Allen (Mass.), 410.
M In Buell y. Chapin, supra,
«« Sharp V. Emmet 5 Whart (Pa.)
288, 84 Am. Dec. 664; Byers v. Har-
ris, 66 Tenn. (9 Heisk.) 652.
950
CHAP. Il] DUTIES AND LIABILITIES OP AGENT [§§ I3II-I313
§ 13 II* Liability for neglect of correspondents and sub-agents. —
As has been already stated, the principle which runs through the cases,
is that if an agent employs a sub-agent for his principal and by his
authority, express or implied, then the sub-agent is the agent of the
principal and is responsible directly to the principal for his conduct.
In such a case the agent is not liable for the negligence of the sub-
agent, unless he has failed to exercise due care in the selection of such
sub-agent. But where the agent, having undertaken to do the busi-
ness for his principal, employs a servant or sub-agent on his own ac-
count to assist him in what he has undertaken, then the sub-agent or
servant is the representative of the agent only, and is responsible to
him for his conduct, and the agent is responsible to the principal for
the manner in which the business has been done, whether by himself
or by his servant or agent.'* In the latter case, the agent stands in
the position of an independent contractor, at liberty to perform the
undertaking by the agencies of his own selection, and is responsible to
his principal for the due execution of the enterprise by the means he
has selected. As has been seen, the authority of the agent to employ
a sub-agent on his principal's account, may, in certain cases, be im-
plied.'*^ The application of these principles to the case of collecting
agents has not been altogether harmonious, yet the preponderance of
authority is believed to be in accordance with them.
§ 1312. Liability of banks. — ^There can be no question of course,
that the bank is liable for the neglect of its own immediate officers and
servants ; ®® these are the direct executive actors of the bank through
whom all of its transactions must necessarily be performed.
But when it becomes necessary to employ an independent agency,
such as a notary public to protest the paper, or another bank when the
demand is payable in a distant town, other questions arise.
§ I3I3- For the neglect of the notary. — The doctrine was
established in New York at an early period and has since been main-
tained, that a bank receiving negotiable paper for collection, in the ab-
sence of an express agreement or recognized custom limiting its lia-
bility, stands in the attitude of an independent contractor, and that if,
in the course of the performance, it employs a notary to present the
paper for payment and give the proper notice to charge the parties,
the notary is the agent of the bank and not of the depositor or owner
««See ante, § 333. of Its branch banks. Bird ▼. Louis-
es See ante, § 314 et seq, iana State Bank, 93 U. S. 96, 23 L
••Bank is liable also for defaults Ed. 81S.
951
§ I3I4]
THE LAW OF AGENCY
[book IV
of the paper at least so far as those acts are concerned which, like
mere presentment and notice, may be done by unofficial agents.*^ The
bank is therefore liable for his negligence. The same rule formerly
prevailed in Louisiana •* and South CaroHna,*^ but has since been over-
ruled. It appears to be approved in Indiana^® and is unqualifiedly
indorsed m New Jersey."'^ It is also approved in Kansas.^^
But the weight of authority is believed to be that if the notary is
employed in the line of his office — even though an official act, like
protest, is not indispensable — and the bank exercises due care in the
selection of a competent notary, it is not liable for his neglect in the
performance of the duty entrusted to him.''* Where, however, the
bank employs a notary by the year, and takes from him a bond for the
faithful discharge of his duties, he is to be regarded as an officer of
the bank, and the bank will be liable for his negligence or default.'^*
And where the president and manager of the bank himself acts as
the notary, the bank will be responsible for his default.^'
§ 1314. ' For the neglect of a correspondent bank.— The
same conflict of authority exists as to the liability of a bank which re-
ceives, in the ordinary manner, a note or bill payable at a distant place,
and sends it to its correspondent there for collection. It is well estab-
«7 Ayrault v. Pacific Bank, 47 N. Y.
570, 7 Am. Rep. 489.
M Miranda v. City Bank, 6 La. 740,
26 Am. Dec. 493, overruled in Hyde
y. Planters' Bank, 17 La. 560, 36 Am.
t)ec. 621; Baldwin v. Bank of Louis-
iana, 1 La. Ann. 13.
8s Thompson v. Bank of South
Carolina, 8 Hill L. 77, 30 Am. Dec.
354.
70 American Express Co. y. Haire,
21 Ind. 4, 83 Am. Dec. 884. The
point was not directly involved, but
the court seems to approve the doc-
trine of the New York cases. The
question at issue was the liability of
an express company, which, having
undertaken the collection of a bill of
exchange caused it to be protested
too soon. It was held to be liable.
See Tyson v. State Bank, 6 Blackf.
(Ind.) 226.
7iDavey y. Jones, 42 N. J. L. 28,
36 Am. Rep. 606.
TsBank of Llndsborg T. Ober, 81
Kan. 599.
78Tiernaii y. Commercial Bank, 7
How. (Miss.) 648, 40 Am. Dec. 88;
Agricultural Bank v. Commercial
Bank, 7 Smedes ft M. (Miss.) 692;
Bowling V. Arthur, 34 Miss. 41;
Third National Bank y. Vicksburg
Bank, 61 Miss. 112, 48 Am. Rep. 78;
Bellemlre v. Bank of U. S., 4 Whart
(Pa.) 106, 88 Am. Dec. 46; Warren
Bank v. Suffolk Bank, 10 Cush.
(Mass.) 682; Stacy v. Dane County
Bank, 12 Wis. 629; Britton v.
Nichols, 104 U. S. 757; Bank v. But-
ler, 41 Ohio St. 519, 52 Am. Rep. 94;
Citizens' Bank v. Howell, 8 Md. 530,
68 Am. Dec. 714; First National
Bank v. German Bank, 107 Iowa, 643,
70 Am. St. R. 216, 44 L. R. A. 138.
See also, May v. Jones, 88 Ga. 308,
80 Am. St. R. 154, 16 L. R. A. 637.
74Gerhardt v. Boatmen's Savings
Inst, 38 Mo. 60, 90 Am. Dec. 407.
T5Wood River Bank Y. First Nat
Bank, 36 Neb. 744.
952
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT
I§ 1314
lisbed in New York '• that in such a case the correspondent bank is
the agent of the bank from which it received the paper, and not of the
depositor or owner of the paper. The transmitting bank is, therefore,
iiaUe for the neglect or default of the correspondent bank in making
the collection and transmitting the proceeds. This rule prevails also
in Georgia,'^ Kansas/^ Louisiana,^* Michigan,®* Minnesota,'* Mon-
tana,** New Jersey ,•• Ohio,** the suj^eme court of the United States *^
and in England.** It is based upon the principle that the home bank
having undertaken the collection of the paper stands in the attitude
of an independent contractor who is left at liberty to select and does
select his own agents and correspondents, and is, therefore, liable for
their default*^ '
But in the majority of the states, however, a different rule prevails,
and it is held that the liability of the home bank, in the absence of
instructions or an agreement to the contrary, extends merely to the
selection of a suitable and competent agent at the place of payment
and the transmission of the paper to such agent with proper instruc-
tions, and does not involve responsibility for the default or miscon-
duct of the correspondent bank. This rule was early established in
Massachusetts, and is often called the Massachusetts rule.** It is
19 Ayrault v. Pacific Bank, 47 N. Y.
570, 7 Am. Rep. 489; Bank of Orleans
V. Smith, 3 Hill (N. Y.), 560; Mont-
gomery County Bank y. Albany City
Bank, 7 N. Y. 459; Commercial Bank
V. Union Bank, 11 N. Y. 212; Allen v.
Suydam, 22 VSTend. (N. Y.) 821, 32
Am. Dec 655; Allen v. Merchants'
Bank, 22 V^end. (N. Y.) 215, 34 Am.
Dec. 2S9.
7T Bailie V. Augusta Savings Bank,
95 Ga. 277, 61 Am. St. R. 74.
T» First Nat Bank v. Craig, 3 Kan.
App. 166.
7» Martin v. Hibemia Bank, 127 La.
301.
80 Simpson V. Waldby, 63 Mich.
439.
81 StreisBguth v. Nat Germ. Am.
Bank, 43 Minn. 5D, 19 Am. St. Rep.
213, 7 L. R. A, 363.
82 Power V. First Nat Bank, 6
Mont. 251. This case contains a very
full resume of the cases.
83 Titus V. Mechanics' Nat Bank,
36 N. J. L. 588.
«4 Reeves v. State Bank, 8 Ohio St
465. See this case discussed and ex-
plained in Bank v. Butler, 41 Ohio
Bt 619, 62 Am. Rep. 94.
8ff Exchange Nat Bank v. Third
Nat. Bank, 112 U. S. 276, 28 L. Bd.
722, limiting Britton v. Nlccolls, 104
U. S. 757, 26 L. Ed. 917; Hoover v.
Wise, 91 U. S. 308, 23 L. Ed. 392. At
the Circuits see Kent v. Dawson
Bank, 13 Blatchf. 237, Fed. Cas. No.
7,714; Taber v. Perrot, 2 Gall. 566,
Fed. Cas. No. 13,721; First Nat Bank
of Trinidad v. First Nat. Bank, 4
Dill. 290, Fed. Cas. No. 4,810; Hyde
V. Bank, 7 Biss. 156, Fed. Cas. No.
6,970,
soMackersy v. Ramsays, 9 Clark A
F. 818 (House of Lords); Van Wart
V. Woolley. 3 B. & C. 439.
87 See Exchange National Bank v.
Third National Bank, supra.
88 Dorchester, etc., Bank v. New
England Bank, 1 Cush. (Mass.) 177;
Fabens v. Mercantile Bank, 23 Pick.
(Mass.) 330, 34 Am. Dec. 59.
953
§ I3I41
THB LAW OF AGENCY
[book IV
adopted also in Connecticut,** Illinois,**® Indiana,*^ Iowa,** Maryland,**
Mississippi,** Missouri,*"^ Nebraska,** Pennsylvania,*^ South Dakota,**
Tennessee,** and Wisconsin.*
This rule is based upon the theory that, from the nature of the case,
there is necessity for the appointment of a sub-agent, that the principal
impliedly authorizes the appointment of one on his account, and that
in this, as in other cases, the agent fulfills his duty when he uses due
care in the selection of the sub-agent*
A bank, however, does not exercise due care in the selection of its
correspondent when it sends the paper for collection to the debtor
himself, as, for example, to the very bank upon which the check or
draft is drawn. In such a case the bank is liable for a loss occasioned
by the failure of the drawee.*
And where a note is, by its terms, payable at the banking oflSce of
the bank to which it is sent for collection, that bank, it is held, has no
implied authority to send it on for collection to another bank nearer
w Lawrence v. Stonlngton Bank, 6
Conn. 521; East Haddam Bank v.
Scovil, 12 Conn. 303.
•0 Aetna Ins. Co. v. Alton City
Bank, 25 111. 243, 79 Am. Dec. 328.
•1 Irwin V. Reeves Pulley Co., 20
Ind. App. 101.
»2Guelich v. National State Bank,
56 Iowa, 434, 41 Am. Rep. 110.
OS Jackson v. Union Bank, 6 Har. &
J. (Md.) 146; Citizens' Bank v. How-
ell, 8 Md. 530, 63 Am. Dec. 714.
»*Tieman v. Commercial Bank, 7
How. (Miss.) 648, 40 Am. Dec. 83;
Agricultural Bank v. Commercial
Bank, 7 Sm. ft M. (Miss.) 592; Bowl-
ing V. Arthur, 34 Miss. 41; Third
National Bank v. Vlcksburg Bank,
61 Miss. 112, 48 Am. Rep. 78.
w Daly V. Butchers' & Drovers'
Bank, 56 Mo. 94, 17 Am. Rep. 663.
But in Landa v. Traders' Bank, 118
Mo. App. 356, it was held that where
there was an agreement to collect
for a consideration, the other rule ap-
plied.
M First Nat Bank v. Sprague, 34
Neb. 318, 33 Am. St. Rep. 644, 15 L.
R. A. 498.
07 Merchants' National Bank v.
Gk)odman, 109 Pa. 422, 58 Am. Rep.
728; Bank v. Earp, 4 Rawle (Pa.),
386; Bellemire v. Bank of U. S., 4
Whart. (Pa.) 105, 33 Am. Dec. 46;
Wingate v. Mechanics' Bank, 16 Pa.
104.
»« Plymouth County Bank v. Oil-
man, 9 S. Dak. 278, 62 Am. St. Rep.
868; Fanset v. Garden City Bank,
24 S. Dak. 248.
Compare Sherman v. Port Huron
Engine Co., 8 S. Dak. 343.
9»Bank of Louisville v. First Na-
tional Bank, 8 Baxt. (Tenn.) 101, 35
Am. Rep. 691.
1 Stacy V. Dane County Bank, 12
Wis. 629.
2 See Guelich v. National State
Bank, 56 Iowa, 434, 41 Am. Rep. 110.
3 Drovers' National Bank v. Anglo-
American, etc., Co., 117 111. 100, 67
Am. Rep. 855; Merchants' National
Bank V. Goodman, 109 Pa. 422, 58
Am. Rep. 728; Farwell v. Curtis, 7
Biss. C. C. 162, Fed. Cas. No. 4,690;
First Nat. Bank of EvansviUe t.
Bank of Louisville, 56 Fed. 967; Ger-
man Nat. Bank v. Bums, 12 Colo.
539, 13 Am. St. Rep. 247; Anderson
V. Rodgers, 53 Kan. 542, 27 L. R. A.
248.
See also, Mcintosh v. Tyler, 47 Hun
(N. T.), 99. The case of Indig v. Na-
tional City Bank, 80 N. t. 100. as
954
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ I315, I316
to the residence of the maker, in such wise as to constitute the latter
the agent of the payee, or to make a payment to the latter bank a pay-
ment to the payee.*
§ 1315. Liability of attorneys. — ^The liability of an attorney for
the neglect or default of other attorneys or agents employed by him
in the collection of claims, depends upon the nature of his undertak-
ing. He is, of course, liable for the neglect or default of his own
immediate clerks or agents, employed by him to assist him in the col-
lection. And where he undertakes the collection of a claim at a place
distant from that in which he does business, his liability usually ex-
tends to the neglect or default of another attorney or agent to whom
he transmits the claim for collection, and is not limited to the selection
of, and transmission to, a suitable and proper agent. In this respect
his liability differs from that which, as has been seen, is, by a majority
of the courts, imposed upon banks for the defaults of their corre-
spondents, though many of the cases which have arisen have turned
upon the peculiar language of the engagements entered into. He may,
of course, in such a case limit his liability by express agreement, but
in the absence of such an agreement, an attorney taking a claim "for
collection" is looked upon as an independent contractor, and is there-
fore liable for the default of his correspondent.*
§ 1316. Liability of mercantile or collection agencies. — ^The same
rules which have been applied to attorneys who undertake the collec-
tion of claims, apply to the so-called commercial or collection agencies,
through which a large portion of the collection business is now trans-
acted. In a leading case * upon this subject the defendants gave the
Interpreted by Judge Scholfleld In
Drovers' National Bank t. Anglo-
American, etc., Co., supr<i, is not in
conflict with the statement in the
text; nor as interpreted by the judge
who wrote the opinion and by the
court which pronounced it, in the
later case of Briggs v. Central Na-
tional Bank, 89 N. Y. 182, 42 Am. Rep.
285, does it conflict.
4 Sherman v. Port Huron Engine
Co., 8 S. Dak. 343.
6 Cummins v. Heald, 24 Kan. 600,
36 Am. Rep. 264; Walker v. Stevens,
79 111. 193; Abbott v. Smith, 4 Ind.
452; National Bank v. Old Town
Bank, 112 Fed. 726; Lewis v.
Peck, 10 Ala. 142; Riddle v. Poor-
man, 8 Pa. 224; Cox v. Living-
ston, 2 Watts A Serg. (Pa.) 103,
37 Am. Dec. 486; Krause v. Dor-
rance, 10 Pa. 462, 51 Am. Dec. 496;
Rhlnes v. Evans, 66 Pa. 192, 5 Am.
Rep. 864; Pollard v. Rowland, 2
Blackf. (Ind.) 22; Cummins v. Mc-
Lain, 2 Ark. 402; Wilkinson v. Gris-
wold, 12 Smedes & Marsh. (Miss.)
669. See also, Bradetreet v. Everson,
72 Pa. 124, 13 Am. Rep. 665, and
Sanger y. Dun, 47 Wis. 615, 82 Am.
Rep. 789; Dale v. Hepburn, 11 N. Y.
Misc. 286; cited In the following sec-
tion.
« Bradstreet v. Everson, 72 Pa. 124,
13 Am. Rep. 665. To same effect
see Hoover v. Wise, 91 U. S. 308, 22
955
§ 13 17] T^^ ^^^ O^ AGENCY [book IV
plaintiffs a receipt stating that certain claims had been received "for
collection." Defendants sent the claims to their agent in Memphis,
who collected the money but failed to pay over the proceeds. The
court held the defendants liable, saying, "It is argued, notwithstanding
the express receipt 'for collection,' that the defendants did not under-
take for themselves to collect, but only to remit to a proper and re-
sponsible attorney, and made themselves liable only for diligence in
correspondence, and giving the necessary information to the plaintiffs ;
or in briefer terms, that the attorney in Memphis was not their agent
for the collection, but that of the plaintiffs only. The current of de-
cision, however, is otherwise as to attorneys at law sending claims to
correspondents for collection, and the reasons for appl3nng the same
rule to collection agencies are even stronger. They have their selected
agents in every part of the country. From the nature of such ramified
institutions we must conclude that the public impression will be, that
the agency invited customers on the very ground of its facilities for
making distant collections. It must be presumed, from its business
connections at remote points, and its knowledge of the agents chosen,
the agency intends to undertake the performance of the service which
the individual customer is unable to perform for himself. There is
good reason, therefore, to hold that such an agency is liable for col*
lections made by its own agents, when it undertakes the collection by
the express terms of the receipt. If it does not so intend, it has it in
its power to limit responsibility by the terms of the receipt."
§ 1317. Limitations of the kind indicated by the court in
the passage just cited are valid. Thus in an action ^ brought against
a similar agency it appeared that the defendants had given and the
plaintiffs had accepted a receipt for the claim, stating that it was to be
transmitted to an attorney by mail for collection or adjustment, at the
risk and on the account of the plaintiffs. Plaintiffs had also signed a
memorandum to the same effect upon the defendants* books. It was
contended on behalf of the plaintiffs not only that the receipt was not
sufficient in terms to limit the defendant's liability to a mere trans-
mitter of the claim, but that even if it would bear this construction it
would permit the defendants to take advantage of their own wrong
and was void as opposed to public policy, and that therefore the de-
fendants were liable for the negligence or misconduct of the attorney
L. Ed. 892; Weyerhauser v. Dun, 100 torney employed by the agency. Dale
N. Y. 150. V. Hepburn, 11 N. Y. Misc. 286.
A person wbo puts claim in charge f Sanger v. Dun, 47 WiB. 615, S2
of collection agency for collection is Am. Rep. 789.
not responsible for the fees of an at-
956
CHAP. Il] DUTIES AND LIABIUTIES OF AGENT [§§ I318, I319
whom they employed and who had collected the money and appropri-
ated it to his own use. In answer to this contention the court said :
"It well may be that such would be the responsibility of the defend-
ants, were it not for the restrictive clause in the receipts. But that
clause, if any effect is given to it, clearly limits that liability; for it
provides that the account is to be transmitted to an attorney for col-
lection at the risk of the plaintiflFs. Such being the case, we think the
defendants are not liable for the acts or default of the attorney em-
ployed by them, unless in the selection of such attorney they were
guilty of gross negligence; for it seems to us it was competent for the
parties, by express contract, to limit the liability which the law would
otherwise impose upon the defendants for the acts of the attorney
employed by them to make the collection. We are not aware of any
principle of law or public policy which condemns such a contract."
§ 1318. — — Where, however, the agency retains the right to
control the means and methods of collection, it will be held liable for
the faithful performance of the sub-agencies it employs, in the ab-
sence of such a stipulation to the contrary. Thus where the claim was
taken "to be forwarded by us for collection by suit or otherwise, at
our discretion," the agency was held liable for the default of its sub-
agent.*
§ I3i9» Liability of express companies^— The same general prin-
ciples are applied to express companies which undertake the collection
of demands. Thus where the plaintiff at Brockport, New York, de-
livered to the American Express Co. a note made by a resident of San
Francisco, with instructions to take it to San Francisco, demand pay-
ment, and, if not paid, to have suit instituted at once for its collection
(the plaintiff supposing the company's line to extend to San Francisco,
although in fact it did not), and the express company carried the note
to the termination of its line and there delivered it to another com-
pany, whose line extended the remainder of the distance, with the
instructions, to be by the latter company carried out, it was held that
the first company was responsible for a loss occurring from the neg-
ligence of the latter company in making the collection.*
So where an express company having undertaken the collection of
a bill, delivered it to a notary for protest, it was held that the com-
pany was responsible for a loss occasioned by the notary's protesting
it too soon."
8 Morgan v. Tener, 83 Pa. 305. i« American Express Co. v, Haire,
» Palmer v. HoUand, 51 N. Y. 416, 21 Ind. 4, 83 Am. Dec. 334.
10 Am. Rep. 616.
957
§ 1320]
THE LAW OF AGENCY
[book IV
§ 1320. The measure of damages for agent's negligence. — ^The
measure of damages in an action against an agent for negligence in
collection is the actual loss sustained." The negligence being estab-
lished, and it appearing with reasonable probability that but for such
negligence the loss would not have happened, that loss prima facie is
the amount of the claim," but the agent may show that, notwithstand-
ing his negligence, the principal has suffered no loss, and the recovery
can then be for nominal damages only. Thus he may show in reduc-
tion of damages that if he had used the greatest diligence, the debt
could not have been collected ; " or that the principal's claim against
the debtor is delayed only and not lost,** or that he is wholly or par-
tially protected by securities which he holds,*' or that though the prin-
cipal's claim against certain of the parties is lost, there are still others
liable who are amply responsible, from whom the debt can be col-
lected.**
The burden of making such showing seems to rest upon the agent.
Thus in a recent case to recover damages against a bank for negli-
gence, it was said : "It is claimed that there was no proof of damages ;
that is, that it was not shown that had the bank been diligent the drafts
could have been collected. In such cases it is usually impossible to
show with certainty that if due care had been observed the collection
would have been made. The law is not so rigid in its requirements
for the protection of the negligent agent. It is only necessary' to
show a reasonable probability that with due care the collection would
11 Paul V. Grimm, 183 Pa. 330.
Here an agent for the sale of land
accepted In payment bonds which
proved to be worthless. Held, that
the amount named In the deed as the
consideration received was not con-
elusive of the amount of the loss, and
that the agent might show that the
amount so named had been inflated
in view of the doubtful character of
the bonds.
1- Allen V. Suydam, 20 Wend. (N.
Y.) 321, 32 Am. Dec. 555; Durnford
V. Patterson, 7 Mart. (La.) 460, 12
Am. Dec. 514; Miranda v. City Bank,
6 La. 740, 26 Am. Dec. 493; Bank of
Washington v. Triplett, 1 Pet. (U. S.)
25, 7 L. Ed. 37; First National Bank
V. Fourth National Bank, 77 N. Y.
320, 33 Am. Rep. 618; Dern v. Kel-
logg, 54 Neb. 560; Omaha Nat. Bank
V. Klper, 60 Neb. 33; Fahy v. Fargo,
17 N. Y. Supp. 344; First Nat Bank
of Trinidad v. First Nat Bank of
Denver, 4 Dillon (U. S.), 290, Fed.
Oas. No. 4,810.
But compare Fox v. The Daven-
port Bank, 73 Iowa, 649; Collier v.
Pulliam, 13 Lea (Tenn.), 114; Bruce
V. Baxter, 7 Lea (Tenn.), 477; Sah-
lien V. Bank, 90 Tenn. 221.
13 First National Bank v. Fourth
National Bank, 77 N. Y. 320, 33 Am.
Rep. 618.
i*Van Wart v. Woolley, 8 Bam. ft
Cress. 439.
iBBorup V. NIninger, 6 Minn. 523.
i« First Nat Bank v. Fourth Nat
Bank, 77 N. Y. 320, 33 Am. Rep. 618.
9S8
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ I32I
have resulted. The burden then rests cm the defendant to show that
there was no damage." *^
§ 1321. Principars right of action against sub-agent. — ^Whether
the principal may hold. the sub-agent directly responsible is a question
upon which there is also much conflict of authority. The question
may present itself in two forms: I. Whether the principal may hold
the sub-agent directly liable for his negligence, and II. Whether the
principal may recover from the sub-agent the proceeds of the collec-
tion then in his hands.
I. The determination of first form must depend largely upon the
view which shall be taken of the general relations of the parties as
discussed in the preceding sections. If the sub-agent is to be treated
as the agent of the agent only, then there is no privity between them
upon which* such an action can be based ; " but if on the other hand
the sub-agent is to be treated as the agent of the principal, the prin-
cipal may proceed against him directly for his default," This con-
clusion IS in accordance with the general principles governing the ap-
pointment of sub-agents which have been heretofore stated.
II. The determination of the second form must also rest upon the
same general principles, so far as the remedy sought depends upon
privity of contract between the principal and the sub-agent ; but privity
of contract is not always required. The fact of the negotiable or
non-negotiable character of the claim is also material. The decisions
of the courts have not been harmonious, nor have the decisions of the
same court always been in harmony upon both forms of the question.
It is therefore difficult to extract uniform principles from them, but
the following may be said to be supported by a preponderance of au-
thority, most of the cases being those in which the claim was in the
form of negotiable paper:
iTDern v. Kellogg, 54 Neb. 560.
Quoted and foHowed In Omaha Nat.
Bank V. Klper, 60 Neb. 33. To same
effect: Allen v. Suydam, 20 Wend.
(N. Y.) 321, 82 Am. Dec. 555; Mi-
randa V. City Bank, 6 La. 740, 26 Am.
Dec. 493; First Nat. Bank v. Fourth
Nat Bank, 77 N. Y. 320, 33 Am. Rep.
618; Fahy v. Fargo, 17 N. Y. Supp.
344.
In Talcott V. Cowdry, 17 N. Y.
Misc. Rep. 333, it was said that **very
Blight evidence of the collectibility
of the whole of the plaintiff's demand
would be sufficient to throw upon the
collecting agents the burden of show-
ing that the amount was not collect-
ible."
But compare Fox v. The Davenport
Bank, 73 Iowa, 649; Collier v. Pul-
liam, 13 Lea (Tenn,), 114; Bruce v.
Baxter, 7 Lea (Tenn.), 477; Sahllen
V. Bank, 90 Tenn. 221.
18 See ante, § 333.
See also Steenkamp v. Du Toit,
[19101 Trans V. L. R. 17L
i» See ante, S 333.
959
§ I32IJ
THE LAW OP AGENCY
[book IV
1. That where, by special arrangement or custom of dealing be-
tween the owner of the paper and the bank or the agent undertaking
the collection, the latter at once places the amount thereof to the credit
of the owner, upon which he thereupon draws or is entitled to draw
as cash, this works a transfer of the title to the paper in such a way
as to prevent the owner from following the paper or its proceeds into
the hands of a third party who has received the paper in good faith
and due course of business from the agent for collection.*'
2. That, except as above, the bank or agent actually making the
collection may be held responsible directly to the true owner, unless,
before receiving notice of the owner's claim, it has paid over the pro-
ceeds to the bank or agent from which it received the paper, or unless
it has made advances or given credit to the bank or agent from which
it received the paper in such a way as to make it a bona fide holder of
the paper for value.** Unless it be a bona fide purchaser of it for
soAyres v. Farmers' ft Merchants'
Bank, 79 Mo. 421, 49 Am. Rep.
235. In this case the plaintiff depos-
ited with the Mastin bank for coUec-
tion and credit on his account a
check drawn on defendant In favor
of a third person. Under an express
arrangement the amount of the check
was immediately passed to the credit
of the plaintiff, who drew upon it the
same day. The Mastin bank sent
the check to defendant who charged
it to the maker and credited the
Mastin bank. The Mastin bank in
the meantime had failed, but defend-
ant did not know it. Plaintiff then
sued defendant to recover the amount
of the check, but was held not en-
titled to recover. The arrangement
between the plaintiff and the Mastin
bank was held by the court to
amount to a purchase of the paper by
the latter.
SI Thus bank A, the owner of a
check drawn on bank D, indorsed
and transmitted It for collection and
credit on its account to bank B.
Bank B did not, however, give bank
A credit for the check, but entered it
on its collection register merely, and
indorsed and transmitted it for col-
lection to bank C, with directions to
credit bank B with the proceeds.
Bank 6 on the same day failed in
debt to bank A. Bank C collected
the check and credited the proceeds
to bank B, which was in debt to bank
0. Before the collection the cashier
of bank C had heard of bank B's
failure, but did not inform bank D,
which was ignorant of it. The
United States band examiner having
taken charge of the affairs of bank
B, without the knowledge of bank A,
credited bank A and charged bank B
with the amount on the books of
bank B. Bank A sued bank C to re-
cover the amount of the check.
Upon this state of facts it was held
that bank C was the agent of bank B
for the purposes of the collection;
that the form of the indorsement
from bank A to bank B was sufficient
to apprise bank C that bank B was
not the owner of the check, but an
agent for collection merely; that the
insolvency of bank B, of which bank
C had notice, was sufficient to revoke
the authority conferred by bank A
upon bank B, to mingle the proceeds
with the general funds of bank B, by
entering the amount to the credit of
bank A, even if it did not revoke
bank B's authority to collect alto-
gether; that bank A was therefore
entitled to recover the proceeds from
960
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT
[§ I32I
value or for advances made upon it in good faith without notice of any
defect in the title, the bank or agent actually making the collection
acquires no better title to the paper or its proceeds than was possessed
by the bank or agent from whom it was received.^*
3. That in the last mentioned case, the sub-agent cannot be deemed
to be such a bona fide holder where the paper bears upon its face evi-
dence that the bank or agent from which it was received was an agent
for collection merely."
bank C, and that the fact that bank
G had credited the amount on its
books to bank B did not defeat the
recovery. "No objection," said the
court, "can be successfully made on
the ground of want of privity. There
is some discrepancy in the decisions
as to whether the collecting agent, or
the subagent, should be sued by the
holder of paper for the failure of the
subagent to perform some duty, or
for some negligence whereby the
debt Is lost. See 1 Dan. Neg. Inst.
§ 344 and notes. But the rule
scarcely admits of an exception that
where one has in his hands money
which rightfully belongs to another,
the latter may sue for and recover
It" First National Bank of Crown
Point V. First National Bank of Rich-
mond, 76 Ind. 561, 40 Am. Rep. 261,
citing Hall v. Marston, 17 Mass. 574.
In Hyde v. First Nat. Bank, 7 Blss.
C. C. 156, Fed. Cas. No. 6,970, the rule
laid down In subdivision 2 of the
text is thought to be overruled by
Hoover v. Wise, 91 U. S. 308, 23 L.
Bd. 392, but in First National Bank
of Chicago V. Reno County Bank,
3 Fed. Rep. 257, Judge McCrary
reaches the opposite conclusion as to
the effect -of Hoover v. Wise, and an-
nounces the same rule as is laid down
in Indiana, saying, "I fully improve
the doctrine announced by the Su-
preme Court of Massachusetts In Hall
V. Marston, 17 Mass. 674, as follows:
'Whenever one man has In his hands
the money of another which he ought
to pay over, he is liable in this ac-
tion (<iS8ump8it) although he has
never seen or heard of the party who
has the right. When the fact is
proved that he has the money, if he
cannot show that he has legal or
equitable grounds for retaining it*
the law creates the privity and the
promise.' This doctrine is not in
conflict with the decision of the Su-
preme Court in Hoover v. Wise."
The doctrine of the text has since
been recognized and applied by the
Supreme Court of the United States.
Bvansville Bank v. German Am.
Bank, 165 U. S. 556, 89 h. Ed. 259;
Commercial Bank v. Armstrong, 148
U. S. 50, 37 L. Ed. 363. To the same
effect: Armstrong v. National Bank
of Boyertown, 90 Ky. 481, 9 L. R.
A. 553; Tlie National Butchers, etc..
Bank v. Hubbell, 117 N. Y. 384, 15
Am. St. Rep. 615, 7 L. R. A. 852;
Manufacturers' Bank v. Continental
Bank, 148 Mass. 553, 12 Am. St. Rep.
598, 2 L. R. A. 699; Freeman's Bank
V. National Tube Works, 151 Mass.
413, 21 Am. St. Rep. 461, 8 L. R. A.
42; Commercial National Bank v.
Hamilton National Bank, 42 Fed. 880.
See also Wallis v. Shelly, SO Fed.
747; Elliott v. Swartwout, 10 Pet. (U.
S.) 137, 9 L. Ed. 378; Gaines v. Mil-
ler,' 111 U. S. 395, 28 L. Ed. 466; Mil-
ton V. Johnson, 79 Minn. 170, 47 L.
R. A. 629.
2-*Dickerson v. Wason, 47 N. Y.
439, 7 Am. Rep. 455; McBrlde v.
Farmers' Bank, 26 N. Y. 450; Steven-
son V. Fidelity Bank, 113 N. C. 485.
'•First National Bank of Crown
Point V. First National Bank of Rich-
mond, 76 Ind. 561, 40 Am. Rep. 261;
City Bank v. Weiss, 67 Tex. 333, 60
Am. Rep. 29; First National Bank v.
Bank of Monroe, 33 Fed. Rep. 408;
In re Armstrong, 33 Fed. Rep. 405;
61
961
§ 1322] THE LAW OF AGENCY [bOOK IV
4* That the bankruptcy of the bank or agent which has taken the
paper for collection and credit when collected, before it has received
the funds from the sub-agent, terminates the authority to so receive
the proceeds and credit them to the account of the owner.**
§ 1322. Del credere agents — ^How liable to principaL — Whenever
an agent, in consideration of additional compensation, guarantees to
his principal the payment of the debts that becqme due through his
agency, he is said to act under a del credere commission.
Whether the legal effect of such a commission is to make the agent
primarily liable in air events for the proceeds of the goods as for goods
sold to him, or whether he is a mere surety for the vendee to pay for
the goods if the latter does not, is a question upon which there has
been great conflict of authority. After much vacillation, the doctrine
is settled in the English courts that he is not liable to his principal in
the first instance, but is only to answer for the solvency of the vendee
and to pay the money if the vendee does not."
But the prevailing doctrine in the United States seems to be in ac-
cordance with the more stringent rule< that he is absolutely liable in
the first instance for the payment of the price of the goods sold by
him, to the same extent and in the same manner as if he were himself
the purchaser.^* His liability is thus made an original and not a col-
lateral one, and his undertaking is not, therefore, a promise to answer
for the debt of another within the contemplation of the Statute of
Frauds and void if not in writing."
Evansville Bank ▼. Qerman American See earlier cases, contra^ Qrove v.
Bank, 155 U. S. 656, 39 U Ed. 259; Dubois, 1 T. R. 112; Mackenzie v.
Commercial Bank v. Armstrong, 148 Scott, 6 Bro. P. C. 280; Houghton v.
U. S. 50, 37 L. Ed. 363; Armstrong v. Matthews, 3 Bos. & Pul. 489.
National Bank of Boyertown, 90 Ky. se Lewis v. Brehme, 33 Md. 412, 3
431, 9 L. R. A. 553; National Butch- Am. Rep. 190; Wolff v. Koppel, 2
ers, etc., Bank v. Hubbell, 117 N. Y. Denio (N. Y.), 368, 43 Am. Dec. 751;
384, 15 Am. St. Rep. 515, 7 L. R. A. Swan v. Nesmith, 7 Pick. (Mass.)
852; Manufacturers' Bank v. Conti- 220. 19 Am. Dec. 282; Cartwrlght v.
nental Bank, 148 Mass. 553, 12 Am. St. Greene, 47 Barb. (N. Y.) 16; Sher-
Rep. 598, 2 L. R. A. 699; Freeman's wood v. Stone, 14 N. Y. 268; Lever-
Bank ▼. National Tube Works, 151 Ick v. Meigs, 1 Cow. (N. Y.) 645;
Mass. 413, 21 Am. St. Rep. 461, 8 U Blakely v. Jacobson, 9 Bosw. (N. Y.)
R. A. 42; Commercial National Bank 140.
y. Hamilton National Bank, 42 Fed. Contra, Thompson v. Perkins, 3
880; Milton v. Johnson, 79 Minn. 170, Mason (U. S. C. C), 232, Fed. Cas.
47 L. R. A. 529. No. 13,972.
3« See cases cited in preceding note. 27 Wolff v. Koppel, 5 Hill (N. Y.),
28 Hornby v. Lacy, 6 Maul. & Sel. 458; Swan v. Nesmith, supra; Sher-
166; Morris v. Cleasby, 4 Maul, ft wood v. Stone, supra; Bradley v.
Sel. 566; Couturier v. Hastie, 8 Ex. Richardson, 23 Vt 720.
10; Peele v. Northcote, 7 Taunt 558.
962
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§§ I323, I324
4, Neglect of Agent in Making Sales.
§ 1323. Nature of duty. — It is, of course, the duty of the agent
charged with the sale of goods or other property to exercise reason-
able care, skill and diligence in the performance of his undertaking.
Often and perhaps usually his course will be governed by express in-
structions with which it is his duty to conform, and many illustrations
of his liability for a failure to do so have been given in another place.
Where no such instructions have been given, the general duty of rea-
sonable care and diligence will apply as to all various aspects of time,
place, quality, price, terms, parties, and the like.** Most of these
require no separate consideration ; but one question arises so frequently
as to justify more extended treatment in the following section.
§ 1324. When agent liable for selling to irresponsible parties. —
It IS the duty of an agent, intrusted with goods to be sold, to sell them,
in the absence of a usage or of authority to the contrary, for cash
only ; *• and even when authorized to sell upon credit, he is bound to
exercise reasonable care and prudence in selling only to responsible
purchasers. For a loss occurring from his failure to observe his duty
in this regard, the agent is liable.^^
Contracts for the employment of sales agents not infrequently con-
tain minute and precise provisions respecting the class of persons to
whom the agent shall sell, the terms upon which he may extend credit,
and the kinds of securities which he is permitted to receive. Such
provisions it is, of course, in general, the duty of the agent to observe,
and for a loss occasioned by his failure to do so, he will be responsible
to the principal.'^ Thus if under the agent's contract it is his duty
to sell for cash if possible, but if he gives credit at all, to do so only
to those who are good and responsible, and to take no paper but that
^L08S of order hecauae counter- See Phillips v. Moir, 69 111. 155,
manded before $ent in by agent where the agent was held to have ex-
Where a salesman neglected to write ercised reasonable care and was there-
out a complicated order until four- fore not liable,
teen days after It had been taken and The delivery man of a laundry is
it was in the meantime counter- not liable for giving credit to cub-
manded by the buyer, it was held tomers where that was the custom of
that even if this was negligent, the all other delivery men of the prlnci-
countermandlng was not an event pal to the latter'a knowledge. Shove-
whlch was reasonably foreseeable, so lin v. Hanson, 30 Quebec S. C. 360.
he was not liable. Hurley v. Packard, «i Tate v. Marco, supra; Frlck v.
182 Mass. 216. Larned, supra; Clark v. Roberts, 26
«aee ante, § 858. Mich. 606; Osborne v. Rider, 62 Wis.
•oTate V. Marco, 27 S. C. 493; Prick 235; Robinson Machine Works v.
T. Larned, 60 Kan. 776; Morris v. Vorse, 52 Iowa, 207; Harlow v. Bart-
Bradley, 20 N. Dak. 646; Singmaster lett, 170 Mass. 5S4.
T. Beckett, 86 Kan. 494.
963
§ 1325]
THE LAW OF AGENCY
[book IV
which is good and collectible, he will be liable if he negligently takes
the notes of purchasers who are not responsible.'" So if he is re-
quired to obtain property statements or to verify those received, he
will be responsible for a loss resulting from his failure to comply."
Where the contract requires him to verify the statements, he cannot
escape his responsibility for not doing so by offering to show a gen-
eral custom among such agents, to rely upon the buyer's statement
without further inquiry.**
§ 1325. Conditions of agent's liability. — In such a case, however,
if the principal would take advantage of the agent's negligence or dis-
obedience, he must act within a reasonable time, and if he does not, he
cannot afterwards complain.*'*
So where the agent under his contract with the principal agreed
that, upon request of the principal, he would receive back for collection
any of the notes taken by him, and the principal took control of the
notes and made efforts of his own to collect them, but neither offered
to return them to the agent nor requested him to collect them, it was
held that the agent could not be charged with the amount remaining
uncollected.'^ And so, under a similar contract, which the court con-
strued as making the agent a guarantor of collection rather than a
surety, it was held that if the principal retained the notes and neither
returned them to the agent nor authorized him to collect them, and if
while so retained by the principal they might with due diligence have
been collected, the agent could not afterwards be held responsible for
their amount.'^
82 Clark V. Roberts, 26 Mich. 506;
-Osborne v. Rider, supra; Frlck v.
Larned, supra; Robinson Machine
Works V. Vorse, supra; McCormick
Harvesting Co. v. Carpenter, 1 Neb.
(Unoff.) 273.
88 Frlck V. Larned, supra; Osborne
v. Rider, supra; Robinson Machine
"Works V. Vorse, supra.
An agent who agrees to verify the
purchaser's property statement from
the public records, and who endorses
on the statement that he has made
Buch personal examination will be
bound to the principal as though he
had done so. Avery Planter Co. Y.
Murphy, 6 Kan. App. 29.
84 Osborne v. Rider, supra; Robin-
son Machine Works v. Vorse, supra.
85 Piano Mfg. Co. v, Buxton/ 86
Minn. 203. In this case it was held
that the principal who had for two
years retained notes taken by the
agent could not complain that he had
sold to irresponsible parties.
30 Tate V. Marco, 27 S. C. 493.
See also, McCormick Harvesting
Machine Co. v. Haug, 88 111. App.
674.
3T Piedmont Mfg. Co. ▼. Morris, 86
Va. 941. An agent who has agreed to
be responsible for all goods sold by
him during his conduct of the prin-
cipaVs business, is not a surety but a
guarantor, and therefore is not dis-
charged from that liability by the
fact that the principal renews a note
taken .by the agent during his con-
964
CHAP. Il]
DUTIES AND LIABILITIES OP AGENT [§§ I326, 1 327
6. Neglect of Agent in Making Purchases.
§ 1326. Nature of duty. — Similar considerations control the ques-
tion of negligence on the part of a purchasing agent. He owes a duty
of reasonable care in securing goods or other property of the kind,
amount, quality, and condition which he is authorized to purchase;
in agreeing upon price, terms, and conditions; in examining into the
matter of the seller's title and freedom from incumbrances where this
IS involved in the purchase ; in looking after the question of securing
delivery of the property purchased, and at the time and place, and
under the conditions, agreed upon wherever he is relied upon to re-
ceive the delivery ; and generally in doing all of those acts which are
confided to him and which are necessary to be done in order to prop-
erly safe-guard the principal's interests.**
V.
TO ACCOUNT FOR MONEY AND PROPERTY,
§ 1337. In general. — It may be stated as a general rule that the
agent is bound to account to his principal for all money and property
which may come into his hands by virtue of the agency.'* Tliis rule
embraces not only such money and property as may be received di-
rectly from the principal, but also that which comes into the agent's
hands for the principal as the result of his agency. As has been seen
in a previous section,** to the principal ordinarily belong all profits
and advantages made by the agent, beyond lawful compensation.
duct of the business. It not being
contended that either note has been
paid. Bueiterman v. Meyer, 132 Mo.
474.
B8 Agent for the purchase of land
who contracted for the assumption of
Incumbrances as part of the purchase
without ascertaining essential terms
aftectlng their amount, held liable to
the principal for his negligence. Hln-
rlcks V. Brady, 20 S. D, 599.
Broker for the purchase of bonds Is
liable for negligence In buying bonds
which are subject to so many prior
liens that they must be deemed "a
hopeless speculative purchase." Hop-
kins V. Clark, 158 N. Y. 299.
Agent instructed to purchase \B
not liable to his principal for doing
so after revocation of his authority
but before he was notified of it. Dart
v. Coward Inv. Co., (Manitoba) 14
West L. R. 62.
»» Baldwin v. Potter, 46 Vt. 403;
Taul T. Edmonson, S7 Tex. 566;
Bedell v. Janney, 4 Qllm. (111.) 193:
Armstrong v. Smith, S Blackf. (Ind.)
251; Heddens v. Younglove, 46 Tnd.
212; Jett v. Hempstead, 26 Ark. 462;
Whitehead v. Wells, 29 Ark. 99; Haas
Y. Damon, 9 Iowa, 589; Robson v.
Sanders, 25 S. C. 116; Hartmann ▼.
Schrugg, 113 App. Dlv. 254, affirmed
188 N. Y. 617; Wasey v. Whitcomb, 167
Mich. 68; Ck)ffln v. Craig, 89 Minn. 226.
*oAnte, n 1224-1228.
96s
§§ 13^8, 1329]
THE LAW OF AGENCY
[book IV
whether such profit or advantage be the fruit of the performance or
of the violation of the agent's duty, or whether they are the result of
transactions within or beyond the scope of his authority, provided the
acts from which they accrue were assumed to be done in the behalf and
for the benefit of the principal.** The principal, in such cases, may
by ratification, make the act his own, and he is then entitled to its
proceeds as though he had originally authorized it." If, however, he
repudiates the act, he cannot claim its proceeds, but must seek his
remedy against the agent in some other form."
Money or property put into the agent's hands to be used for a pur-
pose which failed or was abandoned or countermanded by the principal
before the agent had parted with or become liable to third persons for
the property or money, is also clearly within the rule.** So also is
money or property put into the agent's hands for a certain use and
appropriated by him to some unauthorized use.^'
§ 1328. Account only to principal — ^Joint principals. — As a rule,
the agent is bound to account to his principal only,** and where there
are several common principals he will not be held to account to each
separately.*"^ He may, however, either expressly or by implication
assume the duty to account to e^ch separately, and in that event each
may demand an accounting for his respective interest.*"
§ 1329. Accounting by joint agents. — Where two or more agents
have jointly undertaken to act, the duty to account lies usually as
much upon one as upon another.*® But one will not ordinarily be lia-
ble for the default of another which he did not sanction and did not
^1 Graham v. CnmmlngB, 208 Pa.
516; Sherman v. Morrison, 149 Pa.
386; Salebury v. Ware, 183 111. 506;
Hindle v. Holcomb, 34 Wash. 886; Mc-
Clendon v. Bradford, 42 La. 160; Ault-
man v. Loring, 76 Mo. App. 66; Beale
V. Barnett, 23 Ky. L. R. 1118, 64 S. W.
838; Kimball v. Ranney, 122 Mich. 160,
80 Am. St. Rep. 648, 46 L. R. A. 408.
•tf Thus where an agent for the col-
lection of a note, took In settlement
thereof certain horses, and his princi-
pal ratified the transaction, it was
held that the latter could maintain an
action against the agent to recover
them. Hermann v. Sherin, 6 8. D. 82.
(Compare Antiseptic Fiber Package
Co. V. Klein, 119 Mich. 225.) See also.
Snow y. Carr, 61 Ala. 363, 32 Am. Rep.
3; Miltenberger y. Beacom, 9 Pa. St.
198; Anderson v. First Nat. Bank, 4
N. D. 182.
^ Perkins y. Hershey, 77 Mich. 504.
«4 See § 1447.
« Where principal gives money to
an agent to buy certain property and
the agent buys other property, the
principal is not obliged to accept the
latter and may recover the amount
from the agent. Allison y. Byrne, 8
Vict. L. R. 165.
M Attomey-Cleneral y. Chesterfield,
18 Beav. 596.
*T Trustees, etc., y. Dupuy, 81 La.
Ann. 305.
-M Lawless y. Lawless, 39 Mo. App.
639.
*• Mason y. Wolkowick, 80 C. C. A.
486, 150 Fed. 699, 10 L. R. A. <N. S.)
766.
966
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT [§§ I33O, 133!
participate in, and which was not made possible by any neglect of his
own.*®
§ 1330. Sub-agents—Account to whona. — ^The principles govern-
ing in this case have already been referred to in preceding sections.
Wherever the appointment of the sub-agent is by the express or im-
plied consent of the principal, such a privity exists between them as
makes the sub-agent liable directly to the principal.'* Where, how-
ever, the sub*agent is to be regarded as the agent only of one who
stood in the relation of independent contractor to the principal, there,
as has been said, there is ordinarily no privity by virtue of which the
sub-agent can be held accountable to the principal.'* Yet even in this
case, as has also been seen, where funds of the principal come into
the hands of a sub-agent or other third person who has no duty in re-
spect to them but to pay them over to the person to whom they be-
long, the principal, by timely information as to his claim, may recover
them directly from such sub-agent or other third party.*'
§ 1331. Agent may not dispute his principal's title.-— It is a gen-
eral principle in the law of agency that the agent may not dispute his
principal's title. Having assumed the performance of the agency by
virtue of which he has received the property or money of his princi-
pal, he will not be permitted, when called upon by his principal to
account for the property or money so received, to deny his principal's
title to it.'* This general principle, however, is subject to certain ex-
50 See (cases of co-trustees), Colburn
V. Grant, 16 App. D. C. 107; Barroll v.
Forman, 88 Md. 188, 12 Am. St. Rep.
764; Bruen v. Gillett, 115 N. Y. 10,
4 L. R. A. 529; Graham's Estate, 218
Pa. 344.
»Ante, § 333. Guelich v. National
State Bank» 56 Iowa, 434, 41 Am. Rep.
110; Sergeant v. Emlen, 141 Pa. 580.
Agents employed to secure a loan for
a commission, with the consent of
their principal, employed a subagent
to assist them and promised to divide
the commission with him. The sub-
agent knew the fact of the agency.
The subagent secured the loan, and
also received from the lenders a
secret bonus. Held, that there was
privity between the principals and
the subagent, but even If there were
none there was such a fiduciary rela-
tion between the principals and the
subagent that the former could com-
pel the latter to account to them for
this bonus. Powell v. Jones, [1905]
1 K. B. 11.
52 Ante, S 333. Guelich v. National
State Bank, supra; Sergeant v. Em-
len, supra; New Zealand, etc., Land
Co. v. Watson, 7 Q. B. Dlv. 374.
69 Ante, § 1321.
64 Monongahela Nat. Bank v. First
National Bank, 226 Pa. 270, 26 L. R.
A. (N. S.) 1098; Collins v. Tillou, 26
Conn. 368, 68 Am. Dec. 398; Holbrook
v. Wight. 24 Wend. (N. Y.) 169, 85
Am. Dec. 607; Marvin v. Ellwood, 11
Paige (N. y.), 365; Roberts v. Ogllby,
9 Price, 269; Kleran v. Sandars, 6 Ad.
6 El. 515; Day v. Southwell, 3 Wis.
657; Von Hurter v. Spengeman, 17 N.
J. Eq. 185; Witman y. Felton, 28 Mo.
601; Hungerford v. Moore, 65 Ala.
232; Wilt v. Redkey, 29 Ind. App. 199.
Q67
§ 1332]
THE LAW OF AGENCY
[book IV
ceptions as well settled as the principle itself. It is always competent
for the agent to show in his own defense that he has been divested of
the property by, or has yielded to, a title paramount to that of his
principal.*** He may also show that since the delivery to him the title
of his principal has been terminated *• or that the principal has trans-
ferred his interest or title to another under whom the agent claims."
Where the principal demands an accounting from the agent, of
moneys received from a third person, the agent may show that it was
paid to him under a mistake and that he has returned it to the payer
upon the latter's demand,*®
§ 13312. May not allege illegality of transaction to defeat princi-
pal's claim.— An agent who has received money from, or in behalf
of, his principal, can not defeat an action brought by the principal to
recover it, upon the ground that the contract under which the money
was paid, or the transaction from which it was realized, or the pur-
pose to which it was to be devoted, was illegal, if the alleged illegal
transaction was separate and distinct and the maintenance of the ac-
tion in no wise involves the enforcement or recognition of the illegal
act.*^* The agent, having received the money under an express or
implied promise to pay it to his principal, will not be allowed to keep
it for himself by alleging that it was unfit for the principal to receive
because its source was tainted.
58 Moss Merc. Co. v. First Nat,
Bank, 47 Greg. 361, 2 L. R. A. (N. S.)
657, 8 Ann. Cas. 569; Western Trans-
portation Co. V. Barber, 56 N. Y. 562;
Biddle V. Bond, 6 Best & Smith 224;
Bliven v. Hudson River R. R. Co., 36
N. Y. 406; Doty v. Hawkins, 6 N. H.
247, 25 Am. Dec. 459; Burton v. Wilki-
Bon, 18 Vt. 186, 46 Am. Dec. 145; King
V. Richards, 6 Wharton (Pa.), 418,
37 Am. Dec. 420; Bates v. Stanton, 1
Duer (N. Y.), 79.
Be Marvin v. Ellwood, 11 Paige (N,
Y.), 365.
»T Duncan v. Spear, 11 Wend. (N.
Y.) 56; Harker v. Dement, 9 Gill
(Md.), 7, 52 Am. Dec. 670; Snodgrass
V. Butler. 54 Miss. 45; Roberts v.
NoyeB, 76 Me. 590.
58 See post, §§ 1432, 1433.
An agent of an insurance company
when called upon by the latter to
pay over premiums collected cannot
defend upon the ground that the com-
pany has not performed a term of
the contract with him, namely, to ad-
vance money to him to be used as a
deposit, where the agent has in-
curred no personal liabilities, and the
company is unquestionably financially
responsible. Equitable Mut. F. Ins.
Co. V. McCrae, 156 111. App. 467.
BoQ'Bryan v, B^tzpatridk, 48 Ark.
487; First Nat. Bank v. Leppel, 9 Col.
594; Crescent Ins. Co. v. Bear, 23 Fla.
50, 11 Am. St. Rep. 331; Snell v. Pells,
113 111. 145; Daniels v. Barney, 22
Ind. 207; Reed v. Dougan, 54 Ind.
307; Wilt V. Redkey, 29 Ind. App. 199.
and other Indiana cases there cited;
Chinn v. Chinn, 22 La. Ann. 599; Gil-
liam V. Brown, 43 Miss. 641; Decell v.
Hazelhurst, 83 Miss. 346; Souhegan
Bank v. Wallace, 61 N. H. 24; Super-
visors V. Bates, 17 N. Y. 242; Murray
V. Vanderbilt, 39 Barb. (N. Y.) 140;
Boehmer v. Schuylkill, 46 Pa. 452;
Monongahela Nat Bank v. First Nat
968
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1333
Thus a collector of taxes cannot deny the right of his principal to
receive them on the ground that they were illegally levied ; ^^ an agent
who in unlawful speculations has received money belonging to his*
principal can not refuse, on that ground, to pay it to him ; ^^ nor can an
agent who has received money from his principal to be employed for
an unlawful purpose, but who has not so employed it, refuse to return
the money to his principal because of the illegality of the purpose con-
templated.**
Where, however, the duty to account arises out of or was a part of
the illegal transaction itself, so that to require an accounting involves
the recognition and enforcement of the illegal contract, the courts will
give no aid.**
§ X333. When may maintain interpleader.^— An agent being bound
to recognize and respect his principals title can not, in general, com-
pel his principal to interplead with a stranger who claims, by a para-
mount and adverse title, the property or funds intrusted to the agent
by the principal.** Where, however, the third person claims under a
Bank, 226 Pa. 270, 26 L. R. A. (N. S.)
1098; Baldwin v. Potter, 46 Vt 402;
Cheuvront v. Horner, 62 W. Va. 476;
Klewert v. Rlndskop, 46 Wis. 481, 32
Am. Rep. 731; Brooks v. Martin, 2
Wan. (69 U. S.) 70, 17 L. EW. 732;
Gilbert v. American Surety Co., 57 C.
C. A. 619, 121 Fed. 499, 61 L. R. A.
253; In re Dorr, 108 C. C. A. 822, 186
Fed. 276; Cambridge Corporation v.
Sovereign Bank, 18 Que. K. B. 423.
See also De Leon v. Trerino, 49
Tex. 88, SO Am. Rep. 101, with criti-
cisms in the note.
See also the cases next cited.
•0 Placer County v. Astin, 8 Cal.
308; Clark v. Moody, 17 Mass. 145;
Hammond v. Christie, 5 Robt. (N. Y.)
160; Galbalth v. Gaines, 10 Lea
(Tenn.), 568. So a county treasurer
receiving money from an illegal sale
of bonds. Boehmer v. Schuylkill,
46 Pa. 452; Indianapolis v. Skeen, 17
Ind. 628.
•1 Norton v. Bllnn, 39 Ohio St. 145;
Brldger y. Savage, L. R. 15 Q. B. D.
868; (money won on bets made as
plaintiff's agent); Lovejoy y. Kauf-
man, 16 Tex. Civ. App. 377; O'Bryan
▼. Fitzpatrick, 48 Ark. 487.
o2Kl0W6rt y. Rindskopf, 46 Wis.
481, 32 Am. Rep. 731; Clarke v.
Brown, 77 Ga. 606, 4 Am. St. Rep. 98;
Gilbert v. American Surety Co., 57
C. C. A. 619* 121 F^d. 499, 61 L. R. A.
258; Ware v. Spinney, 76 Kan. 289,
18 L. R. A.'(N. S.) 267, 13 Ann. Gas.
1181.
es Leonard v. Poole, 114 N. Y. 371,
11 Am. St 667, 4 L. R. A. 728; Cen-
tral Trust Co. V. Respaas, 112 Ky. 606,
99 Am. St Rep. 317, 56 L. R. A. 479;
Lemon v. Orosskopf, 22 Wis. 447, 99
Am. Dec. 58; Buck v. Albee, 26 Vt
184, 62 Am. Dec. 564.
It Is not unlawful or Immoral for a
principal, desiring to secure conces-
sions from a foreign government, to
pay the legitimate expenses involved;
and if he puts money into the hands
of his agents for that purpose but the
agent does not so apply It the princi-
pal may require the agent to account
for it Allen v. O'Bryan, 118 App.
Div. 218.
«*Crawshay v. Thornton, 2 My. ft
Cr. 1; Smith v. Hammond, 6 Sim. 10;
Atkinson v. Manks, 1 Cow. (N. Y.)
691; United States Trust Co. y. Wiley,
41 Barb. (N. Y.) 477; Lund v. Sea-
969
? it.l*
3C
>- «^
f
r^r "Ttf .'. iSL
lattcr's -.-
the pojs^?? >
rEiade or eve:
tD interplca«i*' 'i
- title ; the cc _■
As a ncce-- '
z ^ zis iuty to ket; jl
T Tr::«inGe, true ani : '
T-m Tirhicri he is intr:":- .
r*i -r-iiences of iica'irzii
■« r:e ietails of the tnr*-
. jrira. rjtnre liabilir^' . " -'
^*r.
-4 *«
#v
*-- 11
'' ' ^/^'•'-^t T Fji'i^r. 1 Hart *3»5-
z'.'. 1
'-*?
V
«::.
» < -- *A ^.**^ 4-^ r^ti-i^r tc lis pi
*' ','4 *n v^w^.-.t <;< mil r*r.ie:-tj
9/r ^ f f*f. ;*«fM ti> do so, to ic^e
*M ::, -*-*/!-* *f, w^ prin-lpal a f^l
x^'A ^f/^' ' 'f'"^, %*hf^:.^.TX at Lis deai-
,' z'* *'>*, --.A gr;9t/>» of the account be-
Ur f,i.f'Arf9 T;»> lb Trngt Co. t.
''>"J, ;U (J. >ij/j>, 227. it U said
•'"' ";• U tr.^ dfJtr of an agent to
v»*^f HtA pr*^t4^rrt true and correct
himself and ^
bint >
c: :>
Tri*^rH srost 'je jf sndk. a ciiarmcter ^
s ssMOi^ tiif ?n3i:l7al to make s*'^'
ri flcnis aUscc see Bri^haBi t. Nev
-xriL. Iwi i^a, iso; Is re Piersccs
U X. T- A9VL DiT. 478; Ri>::
5^ 3. C 5«: Bojce t. Bojc^
11^ ^c^ «Hc Kcigkicr t. SaTar-
Krz; Ca^ II Mi. 383^ 71 Am. Dec 60v;
Hidft T. T^TT«Tc 9 Iowa. dSa; Clark t.
K:oiy. IT Xaa. 145: Kerfoot t. Hy-
*: Mc. I5J; DoLWidie t. Kerley, « J.
J. 3£ars^ iKj # 5<>1; Schedda t. Saw-
\ 4 McLean lU. a C. &)» 181, Fed.
Nol 12.443: Bidder ▼. WhlUoc^
12 HcTT. iX. T.) Pr. 20S; Chinn ▼.
China, S3 La. Ann. 599; Holmea ir.
Mcrdock. 125 La- 916.
PriucipoTs right to inspect agentm
^oo«:*— Tbe asent'a dnty to keep and
render proper accoonts ''InTolves the
right of the principal to assure him-
self that the accounts are proper and
correct Measures taken in good
faith hy the principal to secure a
proper accounting and to assure
himself of !*« propriety, are there-
970
CHAF. Il]
DUTIES AND UABILITIES OF AGENT
[§ I33S
Tqchnical nicety of bookkeeping is not, of course, in general to be
expected. What is a reasonable fulfillment of the agent's duty in this
case as in others, depends upon the particular circumstances requiring
care and diligence.®^
So while it is thus the agent's duty to keep correct accounts yet if
the principal himself has by his own interference or looseness of
methods created, or so contributed to, such confusion as to render an
absolutely satisfactory accounting impossible, the agent ought not to
be held to the most rig^d rule ; •* and where the principal has, either
expressly or by implication, assured the agent or reasonably led him
to believe that no formal accounts would be required, or that a par-
ticular method of accounting would be satisfactory, he cannot com-
plain that the agent, if he has acted in good faith, has not kept the
accounts with the strictness which might otherwise have been re-
quired.*"
The duty to keep correct accounts of course includes the require-
ment that they shall be true and honest. The agent who knowingly
renders false accounts, charging his principal with more than the true
amount or crediting him with less, is guilty of such disloyalty as to
justify his discharge and to forfeit his right to compensation.'®
§ <335« Duty to keep, principal's property and funds separate from
his own — Liability for commingling. — It is the duty of the agent to
keep the property and funds of his principal separate from his own. If,
without necessity, he has so commingled the goods or funds of his
principal with his own that he cannot discriminate between the two,
the whole mass so undistinguishable must be held to belong to the
principal.'* If, without authority, he commingles in his dealings the
goods of his principal and of himself, the principal will have the first
charge upon the proceeds.'* So if he mingles the funds of his prin-
fore not in violation of the contraot,
although they may not be within its
express terms." Walker v. Hancock
Mut L. Ins. Co., 80 N. J. U 342,
Ann. Gas. 1912 A, 526, 35 L. R. A.
(N. S.) 153.
07 Makepeace v. Rogers, 34 L. J. Ch.
367.
osRobblns v. Robbina (N. J. Eq.>,
a Atl. 264; Macauley v. Slrod (Ky.),
28 S. W. 782.
•8 See Ccurau v. Chapotel* 47 La.
408; Succession of Borge, 44 La. 1;
Hamilton y. Hamilton* 15 N. T. App.
Dlv. 47.
70 See post. Book IV, Chap. IV. Lit-
tle V. Phipps, 208 Mass. 331, 34 L. R.
A. (N. S.) 1046; Boston Deep Sea
Fishing Co. v. Ansell, 39 Ch. Div.
839; Hutchinson v. Fleming, 40 Can.
Sup. Ct. 134.
71 Hart V. Ten Eyck, 2 Johns. (N.
Y.) Ch. 62; Jewett v. Dringer 30 N.
J. Eq. 291; Atkinson v. Ward, 47 Ark.
533; Allsopp v. Hendy Machine
Works, 5 Cal. App. 228; First Nat.
Bank v. Schween, 127 111. 573, 11 Am.
St. Rep. 174; Lance v. Butler, 135 N.
Car. 419.
72Kennesaw Guano Co. v. Wappoo
971
§ 1334]
THE LAW OF AGENCY
[book IV
title derived from the principal and created by the latter's own act
subsequently to the time the agent was intrusted with the possession —
as through an assignment, sale, mortgage or lien made or given by
the principal — ^the agent may compel the parties to interplead/' In
this case, there is no denial of the original right or title ; the only dis-
pute is as to the effect of the subsequent act.
§ 1334. Agent's duty to keep correct accounts.— As a necessary
consequence of the agent's duty to account, it is his duty to keep and
preserve and at all proper times to be ready to produce, true and cor-
rect accounts and statements of the business with which he is intrusted,
together with all such receipts, vouchers and evidences of dealing as
may be necessary to fully and fairly disclose the details of the trans-
action and not only to protect the principal from future liability, but
also to furnish the means for the complete settlement between them-
selves.®*
man's Bank, 37 Id. 129; Vosburgh
V. Huntington, 15 Abb. (N. Y.) Pr.
254; Bank v. Blninger, 26 N. J. Eq.
345; Tyus y. Rust, 37 Ga. 574, 95 Am.
Dec. 865; Hatfield v. McWhorter, 40
Ga. 269; Crane v. Burntrager, 1 Ind.
165.
M Gibson v. Goldthwaite, 7 Ala. 281,
42 Am. Dec. 592; Bechtel v. Sheafer,
117 Pa. 555; McFadden v. S\frlnerton,
36 Ore. 336; Sammls v. L'Engle, 19
Fla. 880; Roaelle v. Farm/M>s Bank,
119 Mo. 84; Hechmer r. GllUgan, 28
W. Va. 750; Brock v. Southern R. Co.,
44 S. 0. 444; Smith v. Hammond, 6
Sim. 10; Wright v. Ward, 4 Rubb.
215; Crawford v. Fisher, 1 Hare, 486;
Tanner v. European Bank, L. R. 1
Bxcb. 261.
«• In Dodge ▼. Hatchett, 118 Go. 883,
it was said to be "the duty of the
agent to keep and render to his prin-
cipal an account of all receipts and
disbursements, and, whenever rea-
sonably requested to do so, to make
and present to his principal a fall
and complete statement of his deal-
ings and the state of the account be-
tween them."
In Chicago Title & Trust Co. v.
Ward, 113 111. App. 327, it is said
that "it is the duty of an agent to
keep and preserve true and correct
accounts between himself and hlB
principal, and to furnish him de-
tailed and itemized statements of re-
ceipts and expenditures. The state-
ments must be of such a character as
to enable the principal to make some
reasonable test of their honesty and
accuracy."
To same efTect see Brlgham v. New-
ton, 106 La. 280; In re Pierson's
Estate, 19 N. T. App. Div. 478; Riley
V. Bank, 57 S. 0. 98; Boyce v. Boyce,
124 Mich. 696; Keighler v. Savage
Mfg. Co., 12 Md. 883, 71 Am. Dec 600;
Haas V. Damon, 9 Iowa, 589; Clark v.
Moody, 17 Mass. 145; Kerfoot v. Hy-
man, 52 111. 512; Matthews v. Wilson,
27 Mo. 155; Dunwidie v. Kerley, 6 J.
J. Marsh. (Ky.) 501; Schedda v. Saw-
yer, 4 McLean (U. S. C, 0.), 181, Fed.
Cas. No. 12,443; Ridder v. Whitlock,
12 How. (N. y.) Pr. 208; Chinn v.
Chinn, 22 La. Ann. 599; Holmes v.
Murdock, 125 La. 916.
PrinoipaVa right to inspect agenf*
l>ook9 — ^The agent's duty to keep and
render proper accounts "involves the
right of the principal to assure him-
self that the aceounta are proper and
correct Measures taken in good
faith by the principal to secure a
proper accounting and to assure
himself of its propriety, are there-
970
CHAP. II ]
DUTIES AND UABILITIES OF AGENT
[§ I33S
Technical nicety of bookkeeping is not, of covirse, in general to be
expected. What is a reasonable fulfillment of the agent's duty in this
case as in others, depends upon the particular circumstances requiring
care and diligence.«^
So while it is thus the agent's duty to keep correct accounts yet if
the principal himself has by his own interference or looseness of
methods created, or so contributed to, such confusion. as to render an
absolutely satisfactory accounting impossible, the agent ought not to
be held to the most rigid rule ; •* and where the principal has, either
expressly or by implication, assured the agent or reasonably led him
to believe that no formal accounts wotdd be required, or that a par-
ticular method of accounting would be satisfactory, he cannot com-
plain that the agent, if be has acted in good faith, has not kept the
accounts with the strictness which might otherwise have been re-
quired.*®
The duty to keep correct accounts of course includes the require-
ment that they shall be true and honest. The agent who kpowingly
renders false accounts, charging his principal with more than the true
amount or crediting him with less, is guilty of such disloyalty as to
justify his discharge and to forfeit his right to compensation.^®
§ 1335- Duty to keep principal's property and funds separate from
his own — Liability for commingling. — It is the duty of the agent to
keep the property and funds of his principal separate from his own. If,
without necessity, he has so commingled the goods or funds of his
principal with his own that he cannot discriminate between the two,
the whole mass so undistinguishable must be held to belong to the
principal.''* If, without authority, he commingles in his dealings the
goods of his principal and of himself, the principal will have the first
charge upon the proceeds.^* So if he mingles the funds of his prin-
fore not In violation of the contraot,
altliough they may not be within its
express terms." Walker v. Hancock
Mut L. Ins. Co., 80 N. J. U Zi^,
Ann. Gas. 1912 A, 526, 35 U R. A.
(N. S.) 153.
07 Makepeace t. Rogers, 34 L. J. Ch.
367.
MRobblns V. Robbina (N. J. Eq.),
Z Atl. 264; Macauley v. Slrod (Ky.),
28 S. W. 782.
. •» See Carrau v. Chapotel, 47 La.
408; Succession of Borge, 44 La. 1;
Hamilton ^v. Hamlltont 16 N. T. App.
Div. 47.
70 See poaty Book IV, Chap. IV. Lit-
tle V. Phipps, 208 Mass. 331, 34 U R.
A. (N. S.) 1046; Boston Deep Sea
Fishing Co. v. Ansell, 39 Ch. Div.
339; Hutchinson v. Fleming, 40 Can.
Sup. Ct. 134.
71 Hart V. Ten Eyck, 2 Johns. (N.
Y.) Ch. 62; Jewett v. Dringer 30 N.
J. Eq. 291; Atkinson v. Ward, 47 Ark.
533; Allsopp y. Hendy Machine
Works, 5 Cal. App. 228; First Nat.
Bank v. Schween, 127 111. 573, 11 Am.
St. Rep. 174; Lance y. Butler, 135 N.
Car. 419.
72Kennesaw Guano Co. v. Wappoo
971
§ 1334]
THE LAW OF AGENCY
[book IV
title derived from the principal and created by the latter's own act
subsequently to the time the agent was intrusted with the possession —
as through an assignment, sale, mortgage or lien made or given by
the principal — the agent may compel the parties to interplead.*' In
this case, there is no denial of the original right or title ; the only dis-
pute is as to the effect of the subsequent act.
§ 1334. Agent's duty to keep correct accounts.— As a necessary
consequence of the agent's duty to account, it is his duty to keep and
preserve and at all proper times to be ready to produce, true and cor-
rect accounts and statements of the business with which he is intrusted,
together with all such receipts, vouchers and evidences of dealing as
may be necessary to fully and fairly disclose the details of the trans-
action and not only to protect the principal from future liability, but
also to furnish the means for the complete settlement between them-
selves.*'
man's Bank, 37 Id. 129; Vosburgh
V. Huntington, 15 Abb. (N. Y.) Pr.
254; Bank ▼. Blninger, 26 N. J. Eq.
S45; Tyua y. Rust, 37 Ga. 674, 95 Am.
Dec. 865; Hatfield v. McWborter, 40
Ga. 269; Crane ▼. Bumtrager, 1 Ind.
165.
•• Gibson v. Goldthwaite, 7 Ala. 281,
42 Am. Dec. 692; Bechtel v. Sheafer,
117 Pa. 555; McFadden v. SWinerton,
36 Ore. 336; Sammls v. L'Engle, 19
Fla. 880; Roselle ▼. Farmers Bank,
119 Mo. 84; Hechmer v. Gllligan, 28
W. Va. 750; Brock v. Southern R. Co.,
44 S. 0. 444; Smith v. Hammond, 6
Sim. 10; Wright ▼. Ward, 4 Russ.
215; Crawford y. Fisher, 1 Hare, 486;
Tanner v. European Bank, L. R. 1
Bxch. 261.
M In Dodge v. Hatchett, 118 Go. 883,
it was said to be "the duty of the
agent to keep and render to his prin-
cipal an account of all receipts and
disbursements, and, whenever rea-
sonably requested to do so, to make
and present to his principal a full
and complete statement of his deal-
ings and the state of the account be-
tween them."
In Chicago Title A Trust Co. v.
Ward, 113 111. App. 327, it is said
that "it is the duty of an agent to
keep and preserve true and correct
accounts between himself and his
principal, and to furnish him de-
tailed and itemized statements of re-
ceipts and expenditures. The state-
ments must be of such a character as
to enable the principal to make some
reasonable test of their honesty and
accuracy."
To same effect see Brigham v. New-
ton, 106 La. 280; In re Pierson's
Estate, 19 N. Y. App. Div. 478; Riley
V. Bank, 67 S« C. 98; Boyce v. Boyce,
124 Mich. 696; Kelghler v. Savage
Mfg. Co.» 12 Md. 383, 71 Am. Dec. 600;
Haas y. Damon, 9 Iowa, 589; Clark v.
Moody, 17 Mass. 145; Kerfoot v. Hy-
man, 62 111. 612; Matthews v. Wilson,
27 Mo. 165; Dunwidie y^ Kerley, 6 J.
J. Marsh. (Ky.) 501; Schedda v. Saw-
yer, 4 McLean (U. S. C. C), 181. Fed.
Caa. No. 12,443; Ridder v. Whitlock,
12 How. (N. y.) Pr. 208; Chinn v.
China, 22 La. Ann. 599; Holmes v.
Murdock, 125 La. 916.
PrindpaVs right to inspect agent**
"books — ^The agent's duty to keep and
render proper. accounts "involves the
right of the principal to assure him-
self that the accounts are proper and
correct Measures taken in good
faith by the principal to secure a
proper accounting and to assure
himself of its propriety, are there-
970
CHAP. Il]
DUTIES AND UABILITIES OF AGENT
[§ 1335
Technical nicety of bookkeeping is not, of course, in general to be
expected. What is a reasonable fulfillment of the agent's duty in this
case as in others, depends upon the particular circumstances requiring
care and diligaice.®^
So while it is thus the agent's duty to keep correct accounts yet if
the principal himself has by his own interference or looseness of
methods created, or so contributed to, such confusion as to render an
absolutely satisfactory accounting impossible, the agent ought not to
be held to the most rigid rule ; •* and where the principal has, either
expressly or by implication, assured the agent or reasonably led him
to believe that no formal accounts woxild be required, or that a par-
ticular method of accounting would be satisfactory, he cannot com-
plain that the agent, if he has acted in good faith, has not kept the
accounts with the strictness which might otherwise have been re-
quired.**
The duty to keep correct accounts of course includes the require-
ment that they shall be true and honest. The agent who kiiowingly
renders false accounts, charging his principal with more than the true
amount or crediting him with less, is guilty of such disloyalty as to
justify his discharge and to forfeit his right to compensation.^®
§ 1335* Duty to keep, principal's property and funds separate from
his own — Liability for commingling. — It is the duty of the agent to
keep the property and funds of his principal separate from his own. If,
without necessity, he has so commingled the goods or funds of his
principal with his own that he cannot discriminate between the two,
the whole mass so undistinguishable must be held to belong to the
principal.^* If, without authority, he commingles in his dealings the
goods of his principal and of himself, the principal will have the first
charge upon the proceeds.^' So if he mingles the funds of his prin-
fore not in violation of the contract,
although they may not be within its
express terms." Walker v. Hancock
Mut L. Ins. Co., SO N. J. U 342,
Ann. Gas. 1912 A, 526, 35 U R. A.
(N. S.) 153.
07 Makepeace v. Rogers, 34 L. J. Ch.
367.
•BRobbins v. Robbins (N. J. Eq.),
a Atl. 264; Macauley v. Slrod (Ky.),
28 S. W. 782.
•0 See Carrau v. CbapoteU 47 La.
408; Succession of Borge, 44 La. 1;
Hamilton ^v. Hamilton* 15 N. T. App.
Div. 47.
TO See post. Book IV, Chap. IV. Lit-
tie V. Phipps, 208 Mass. 331, 34 L. R.
A. (N. S.) 1046; Boston Deep Sea
Fishing Co. v. Ansell, 39 Ch. Div.
839; Hutchinson v. Fleming, 40 Can.
Sup. Ct. 134.
71 Hart V. Ten Eyck, 2 Johns. (N.
Y.) Ch. 62; Jewett v. Dringer 30 N.
J. Eq. 291; Atkinson v. Ward, 47 Ark.
533; Allsopp v. Hendy Machine
Works, 5 Cal. App. 228; First Nat.
Bank v. Schween, 127 111. 573, 11 Am.
St. Rep. 174; Lance v. Butler, 135 N.
Car. 419.
72 Kennesaw Guano Co. v. Wappoo
971
§ 1334]
THE LAW OF AGENCY
[book IV
title derived from the principal and created by the latter's own act
subsequently to the time the agent was intrusted with the possession —
as through an assignment, sale, mortgage or lien made or given by
the principal — the agent may compel the parties to interplead.*' In
this case, there is no denial of the original right or title; the only dis-
pute IS as to the effect of the subsequent act.
§ 1334. Agent's duty to keep correct accounts.-*As a necessary
consequence of the agent's duty to account, it is his duty to keep and
preserve and at all proper times to be ready to produce, true and cor-
rect accounts and statements of the business with which he is intrusted,
together with all such receipts, vouchers and evidences of dealing as
may be necessary to fully and fairly disclose the details of the trans-
action and not only to protect the principal from future liability, but
also to furnish the means for the complete settlement between them-
selves.'*
man's Bank, 37 Id. 129; Vosburgh
V. Huntington, 15 Abb. (N. Y.) Pr.
254; Bank v. Binlnger, 26 N. J. Eq.
345; Tyua y. Rust, 37 Ga. 674, 95 Am.
Dec. 865; Hatfield v. McWhorter, 40
Ga. 269; Crane ▼. Burntrager, 1 Ind.
165.
M Gibson V. Goldthwaite, 7 Ala. 281,
42 Am. Dec. 592; Bechtel v. Sheafer,
117 Pa. 555; McFadden v. S^frlnerton,
36 Ore. 336; Sammis ▼. L'Engle, 19
Fla. 880; Roselle ▼. Farmerfl Bank,
119 Mo. 84; Heehmer v. Gtlllgan, 28
W. Va. 750; Brock v. Southern R. Co.,
44 S. C. 444; Smith v. Hammond, 6
Sim. 10; Wright v. Ward, 4 Rubs.
215; Crawford v. Fisher, 1 Hare, 486;
Tanner v. European Bank, L. R. 1
Bxch. 261.
M In Dodge v. Hatchett, 118 Go. 883,
it was said to he "the duty of the
agent to keep and render to his prin-
cipal an account of all receipts and
disbursements, and, whenever rea-
sonably requested to do so, to make
and present to his principal a full
and complete statement of his deal-
ings and the state of the account be-
tween them."
In Chicago Title ft Trust Ca v.
Ward, 113 111. App. 327, it la said
that "it is the duty of an agent to
keep and preserve true and correct
accounts between himself and his
principal, and to furnish him de-
tailed and itemized statements of re-
ceipts and expenditures. The state-
ments must be of such a character as
to enable the principal to make some
reasonable test of their honesty and
accuracy."
To same efTect see Brigham v. New-
ton, 106 La. 280; In re Pierson's
Estate, 19 N. T. App. Div. 478; Riley
y. Bank, 57 S^ C. 98; Boyce v. Boyce,
124 Mich. 696; Kelghler v. Savage
Mfg. Co^ 12 Md. 883, 71 Am. Dec. 600;
Haas V. Damon, 9 Iowa, 589; Clark v.
Moody, 17 Mass. 145; Kerfoot v. Hy-
man, 52 111. 512; Matthews v. Wilson,
27 Mo. 155; Dunwidie v^ Kerley, 6 J.
J. Marsh. (Ky.) 501; Schedda v. Saw-
yer, 4 McLean (U. S. C. C), 181, Fed.
Cas. No. 12,443; Ridder v. Whitlock,
12 How. (N. Y.) Pr. 208; Chinn v.
Chlnn, 22 La. Ann. 599; Holmes v.
Murdock. 125 La. 916.
PrindpaVa right to inspect agent'B
hooks — ^The agent's duty to keep and
render proper. accounts "involves the
right of the principal to assure him-
self that the aceounta are proper and
correct Measures taken in good
faith by the principal to secure a
proper accounting and to assure
himself of its propriety, are there-
970
CHAP. Il]
DUTIES AND UABILITIES OF AGENT
[§ I33S
Technical nicety of bookkeeping is not, of course, in general to be
expected. What is a reasonable fulfillment of the agent's duty in this
case as in others, depends upon the particular circumstances requiring
care and dilig^ice.®^
So while it is thus the agent's duty to keep correct accouxats yet if
the principal himself has by his own interference or looseness of
methods created, or so contributed to, such confusion as to render an
absolutely satisfactory accounting impossible, the agent ought not to
be held to the most rigid rule ; •* and where the principal has, either
expressly or by implication, assured the agent or reasonably led him
to believe that no formal accounts woxild be required, or that a par-
ticular method of accounting would be satisfactory, he cannot com-
plain that the agent, if he has acted in good faith, has not kept the
accounts with the strictness which might otherwise have been re-
quired.*®
The duty to keep correct accounts of course includes the require-
ment that they shall be true and honest. The agent who kpowingly
renders false accounts, charging his principal with more than the true
amount or crediting him with less, is guilty of such disloyalty as to
justify his discharge and to forfeit his right to compensation.^®
§ X335* Duty to keep, principal's property and funds separate from
his own — Liability for commingling. — It is the duty of the agent to
keep the property and funds of bis principal separate from his own. If,
without necessity, he has so commingled the goods or funds of his
principal with his own that he cannot discriminate between the two,
the whole mass so undistinguishaWe must be held to belong to the
principal.^* If, without authority, he commingles in his dealings the
goods of his principal and of himself, the principal will have the first
charge upon the proceeds.^* So if he mingles the funds of his prin-
fore not In violation of the coatraot,
although they may not be within its
express terms." Walker v. Hancock
Mut U Ins. Co., 80 N. J. li. 342,
Ann. Cas. 1912 A, 526, 35 L. R. A.
(N. S.) 153.
•7 Makepeace v. Rogers, 34 L. J. Ch.
367.
«8RobbinB V. Robbing (N. J. Eq.>,
a Atl. 264; Macauley v. Elrod (Ky.),
28 S. W. 782.
. 00 See Carrau v. Cbapotel, 47 La.
408; Succession of Borge, 44 La. 1;
Hamilton ^v. Hamilton* 15 N« Y. App.
Div. 47.
70 See poaty Book IV, Chap. IV. Lit-
tle V. Phipps, 208 Mass. 331, 34 L. R.
A. (N. S.) 1046; Boston Deep Sea
Fishing Co. v. Ansell, 39 Ch. Div.
339; Hutchinson v. Fleming, 40 Can.
Sup. Ct. 134.
71 Hart V. Ten Kyck, 2 Johns. (N.
y.) Ch. 62; Jewett v. Dringer 30 N.
J. Eq. 291; Atkinson v. Ward, 47 Ark.
533; Allsopp v. Hendy Machine
Works, 5 Cal. App. 228; First Nat.
Bank v. Schween, 127 111. 573, 11 Am.
St. Rep. 174; Lance v. Butler, 135 N.
Car. 419.
72 Kennesaw Guano Co. v. Wappoo
971
§ 1334]
THE LAW OF AGENCY
[book IV
title derived from the principal and created by the latter's own act
subsequently to the time the agent was intrusted with the possession —
as through an assignment, sale, mort^^age or lien made or given by
the principal — the agent may compel the parties to interplead.*' In
this case, there is no denial of the original right or title ; the only dis-
pute is as to the effect of the subsequent act,
§ 1334. Agent^s duty to keep correct accounts.**As a necessary
consequence of the agent's duty to account, it is his duty to keep and
preserve and at all proper times to be ready to produce, true and cor-
rect accounts and statements of the business with which he is intrusted,
together with all such receipts, vouchers and evidences of dealing as
may be necessary to fully and fairly disclose the details of the trans-
action and not only to protect the principal from future liability, but
also to furnish the means for the complete settlement between them-
selves.**
man's Bank, 37 Id. 129; Vosburgti
V. HunUngton, 15 Abb. (N. Y.) Pr.
254; Bank v. Binlnger, 26 N. J. Eq.
346; TyuB y. Rust, 37 Ga. 574, 95 Am.
Dec. 865; Hatfield v. McWhorter, 40
6a. 269; Crane v. Bnrntrager, 1 Ind.
165.
M Gibson ▼. Goldthwaite, 7 Ala. 281,
42 Am. Dec. 592; Bechtel v. Sheafer,
117 Pa. 555; McFadden v. Si^Hnerton,
36 Ore. 336; Sammis y. L'Engle, 19
Fla. 880; Roselle v. Fanners Bank,
119 Mo. 84; Hechmer r. Ollligan, 28
W. Va. 750; Brock v. Southern R. Co.,
44 S. C. 444; Smith v. Hammond, 6
Sim. 10; Wright ▼. Ward, 4 Rnss.
215; Crawford ▼. Fisher, 1 Hare, 486;
Tanner v. European Bank, L. R. 1
Bxch. 261.
«e In Dodge v. Hatchett, 118 Go. 883,
it was said to he "the duty of the
agent to keep and render to his prin-
cipal an account of all receipts and
disbursements, and, whenever rea-
sonably requested to do so, to make
and present to his principal a full
and complete statement of his deal-
ings and the state of the account be-
tween them.**
In Chicago Title & Trust Co. v.
Ward, 118 111. App. 327, It is said
that "it is the duty of an agent to
keep and preserve true and correct
accounts between himself and his
principal, and to furnish him de-
tailed and Itemized statements of re-
ceipts and expenditures. The state-
ments must be of such a character as
to enable the principal to make some
reasonahle test of their honesty and
accuracy."
To same effect see Brigham v. New-
ton, 106 La. 280; Jn re Pierson's
Estate, 19 N. Y. App. Dlv. 478; Riley
V. Bank, 67 S. O. 98; Boyce v. Boyce,
124 Mich. 696; Keighler v. Savage
Mfg. Co.. 12 Md. 383, 71 Am. Dec 600;
Haas V. Damon, 9 Iowa, 589; Clark v.
Moody, 17 Mass. 145; Kerfoot v. Hy-
man, 52 111. 512; Matthews v. Wilson.
27 Mo. 155; Dunwldle v, Kerley, 6 J.
J. Marsh. (Ky.) 501; Schedda v. Saw-
yer, 4 McLean (U. S. C. C), 181, Fed.
Cas. No. 12,443; Ridder v. Whitlock,
12 How. (N. Y.) Pr. 208; Chinn v.
Chinn, 22 La. Ann. 599; Holmes v.
Murdock, 125 La. 916.
PrindpaVa right to inspect agent^t
looks — The agent's duty to keep and
render proper accounts "involves the
right of the principal to assure him-
self that the accounts are proper and
correct Measures taken in good
faith by the principal to secure a
proper accounting and to assure
himself of its propriety, are there-
970
CHAP. Il]
DUTIES AND UABILITIES OF AGENT
[§ I33S
Technical nicety of bookkeeping is not, of course, in general to be
expected. What is a reasonable fulfillment of the agent's duty in this
case as in others, depends upon the particular circumstances requiring
care and diligence."
So while it is thus the agent's duty to keep correct accounts yet if
the principal himself has by his own interference or looseness of
methods created, or so contributed to, such confusion as to render an
absolutely satisfactory accounting impossible, the agent ought not to
be held to the most rig^d rule ; •* and where the principal has, either
expressly or by implication, assured the agent or reasonably led him
to believe that no formal accounts woxild be required, or that a par-
ticular method of accounting would be satisfactory, he cannot com-
plain that the agent, if he has acted in good faith, has not kept the
accounts with the strictness which might otherwise have been re-
quired.**^
The duty to keep correct accounts of course includes the require-
ment that they shall be true and honest. The agent who kpowingly
renders false accounts, charging his principal with more than the true
amount or crediting him with less, is guilty of such disloyalty as to
justify his discharge and to forfeit his right to compensation.^®
§ I335- Duty to keep, principal's property and funds separate from
his own — Liability for commingling. — It is the duty of the agent to
keep the property and f vinds of his principal separate from his own. If,
without necessity, he has so commingled the goods or funds of his
principal with his own that he cannot discriminate between the two,
the whole mass so undistinguishable must be held to belong to the
principal.*'^ If, without authority, he commingles in his dealings the
goods of his principal and of himself, the principal will have the first
charge upon the proceeds.^* So if he mingles the funds of his prin-
fore not in violation of the contract,
although they may not be within its
express terms." Walker v. Hancock
Mut. L. Ins. Co., 80 N. J. U 34^,
Ann. Cas. 1912 A, 526, 35 U R. A.
(N. S.) 153.
07 Makepeace v. Rogers, 34 L. J. Ch.
367.
MRobblns V. Robbina (N. J. Eq.),
S Atl. 264; Macauley v. Elrod (Ky.),
28 S. W. 782.
«» See Carrau v. Ghapotel, 47 La.
408; Succession of Borge, 44 La. 1;
Hamilton ^ Hamilton* 16 N. T. App.
Dlv. 47.
TO See post. Book IV, Chap. IV. Lit-
tle V. Phipps, 208 Mass. 331, 34 L. R.
A. (N. S.) 1046; Boston Deep Sea
Fishing Co. v, Ansell, 39 Ch. Dlv.
339; Hutchinson v. Fleming, 40 Can.
Sup. Ct. 134.
71 Hart V. Ten Eyck, 2 Johns. (N.
Y.) Ch. 62; Jewett v. Dringer 30 N.
J. Eq. 291; Atkinson v. Ward, 47 Ark.
533; Allsopp v. Hendy Machine
Works, 5 Cal. App. 228; First Nat.
Bank v. Schween, 127 111. 573, 11 Am.
St. Rep. 174; Lance v. Butler, 135 N.
Car. 419.
72Kenne8aw Guano Co. v. Wappoo
971
§ 1336]
THE LAW OF AGENCY
[book IV
cipal with his own and the whole is lost, the loss must fall upon the
agent.'*
This rule is of frequent application in cases where the agent has
deposited money of his principal in a bank. In case it becomes neces-
sary to make such a deposit, the agent will escape personal liability
if he deposits it in the name of his principal in a bank of good credit,
or if he so distinguishes it on the books of the bank as to indicate in
some way that it is the money of his principal.'^* If on the contrary
he deposits it in his own name, or with his own funds, he will, in case
of a failure of the bank, be liable to the principal for his money.''*
This rule has been carried to the extent of holding that an attorney
who deposits his client's money in a solvent bank in his own name,
though in a separate account, but with no indication of the trust, is
liable for a loss occasioned by the subsequent failure of the bank, not-
withstanding he was prevented from transmitting the money by gar-
nishment proceedings against him.'*
§ 1336. At what time agent should account. — Where at the cre-
ation of the agency the time of accounting is expressly agreed upon,
or where, from the circumstances of the case, an agreement to account
at a particular time is to be implied, such agreement will of course
govern. In the absence of such an express or implied agreement, the
time when an accounting should be made will depend largely upon
the facts of each case. In general terms, however, it may be said that
an agent is ordinarily bound to account upon demand, and in all
events within a reasonable time."
It is the duty of an agent who has received goods to sell for his
Mills, 119 Ga. 776; Simmons v. Loo-
ney, 41 W. Va. 738.
73 7n re Hodges Estate, 66 Vt 70;
Mass. Life Ins. Co. v. Carpenter, 32
N. Y. Super. 734; Plnckney v. Dunn,
2 S. C. 314; Cartmell v. AUard, 7
Bush (Ky.), 482, and cases cited in
following notes.
In Bartlett v. Hamilton. 46 Me. 485,
it is said that at least the burden x>f
proof is on the agent to show that the
identical money of the principal was
lost.
Where an agent takes a single note
running to himself for the combined
proceeds of the sale of his own and
his principaVs goods commingled, he
is chargeable at least with a technical
conversion of his principal's goods.
Kennesaw Guano Co. y. Wappoo MlUi^
8upra.
t* Norwood V. Harness, 98 Ind. 134,
49 Am. Rep. 739; State v. Greensdale,
106 Ind. 864, 55 Am. Rep. 753.
7» Williams v. Williams, 55 Wis.
300, 42 Am. Rep. 708; Norrls v. Hero,
22 La. Ann. 605; Mason y. Whit-
thome, 2 Cold. (Tenn.) 242; Jenkins
y. Walter, 8 Gill & J. (Md.) 218, 29
Am. Dec. 589; State y. Greensdale,
106 Ind. 364, 55 Am. Rep. 753; Nalt-
ner y. Dolan, 108 Ind. 500, 58 Am.
Rep. 61; Cartmell y. Allard, 7 Bosh
(Ky.), 482.
76Naltner y. Dolan, 108 Ind. 600,
58 Am. Rep. 61.
7T Leake y. Sutherland, 25 Ark. 219.
97a
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT [§§ I337, I338
principal, to account for the proceeds within a reasonable time, and
without demand in cases where a demand Would be impracticable or
extremely inconvenient, so that factors abroad or at a distance who
have received goods to sell, without special instructions as to the mode
of remittance, are bound, it is held, according to the course of busi-
ness, to render an account of their sales or pay over the proceeds
thereof within a reasonable time, and if they neglect to do this such
negligence is a breach of contract and subjects them to an action.^'
g 133^. __ It is the duty of an agent who has collected
money for his principal to give him notice thereof within a reasonable
time after its receipt.^* This affords the principal opportunity to givr
such directions in regard to its transmission as he may desire. Such
directions are, indeed, usually given at the time of the employment
of the agent, and whenever they are given, it is the duty of the agent^
as has been seen, to observe them.
Where no such instructions are given, it has been said that good
faith on the part of the agent requires that he should, after deducting*
his commission, remit the money to his principal by some safe and ap-
propriate means within a reasonable time ; "® but where he acts for a
foreign principal, he is not bound to take the risk of the remittance by-
methods of his own selection, but having advised the principal of the
collection, the agent may await the principal's directions as to the man-
ner in which the remittance shall be made.®*
§ 1338. Upon the termination of the agency, it would be
the duty of the agent to return or otherwise properly account for all
of the property, equipment and the like, which belongs to the princi-
pal and which came into the agent's possession because of the agency.**
The same rule would apply to land which the agent or servant was
allowed to use as such, but which he did not hold as a tenant.**
78 Baton v. Welton, 82 N. H. 362; (N. Y.) 690; Henbach v. Rother, i
Clark y. Moody, 17 Mass. 146. But see
Cooley V. Betts, 24 Wend. (N. Y.)
203; Green v. Williams, 21 Kan. 64;
Lyle V. Murray, 4 Sandf. (N. Y.) 590.
ToJett V. Hempstead, 26 Ark. 463;
Whitehead v. Wells, 29 Ark. 99;
Dodge y. Perkins, 9 Pick. (Mass.)
368; Williams v. Storrs, 6 Johns. (N.
Y.) Ch. 363, 10 Am. Dec. 340.
80 Bedell v. Janney, 9 III. (4 Gilm.)
193; Llllie v. Hoyt, 6 Hill (N. Y.),
396, 40 Am. Dec. 360.
81 Ferris v. Paris, 10 John. (N. Y.)
286, 286; Lyle v. Murray, 4 Sandf.
Duer (N. Y.), 227; Clark y. Moody, XT
Mass. 146.
82 Applied to a license taken out ta
the agent's name but belonging to the
principal. Levlan v. Fabian, 28 New
Zeal. L. R. 669.
82 Principal may require servant or
agent to leaye his premises upon dis^
charge, and may use reasonable force-
to eject him If he refuses to go upon
proper demand. Noonan y. Luther,
206 N. Y. 106, 41 L. R. A. (N. S.) 761;
Foye y. Sewell, 21 Abb. N. Gas. 1&
(domestic servants).
973
§ 1339]
THE LAW OF AGENCY
[book IV
The fact that the relation was terminated without right by the prin-
cipal would ordinarily be immaterial.** Only where the agent had a
lien or a power coupled with an interest, or some right of that sort,
would the case be otherwise.
§ I339* Necessity for demand before action. — No action can, or-
dinarily, be maintained against an agent for money received by him
for his principal until after a demand has been made upon him for its
payment, with which he has refused or neglected to comply.'" The
agent is not as such a mere debtor. He ordinarily holds the property
or money for the principal and subject to his order. It may fairly be
supposed that he is ready to pay or deliver upon demand.
Such a demand and refusal or neglect to pay are therefore essential
averments in the declaration or complaint^ without which the action
cannot ordinarily be sustained.**
"As a general rule in such cases, it may be presumed," it has been
Same doctrine applies to discharged
clergyman. Conway r. Carpenter, 80
Hun (N. Y.), 428. Farm servant oc-
cupying house on farm. Bowman v.
Bradley, 151 Pa. 351, 17 L. R. A, 213;
Hayward v. Miller, 3 Hill (N. Y.), 90.
Minister occupying parsonage. Cha-
tard V. CyDonovan, 80 Ind. 20, 41 Am.
Rep. 782. Compare Bristor v. Burr,
120 N. Y. 427. 8 L. R. A. 710.
See also Hanford v. People, 7 N. Y.
Weekly Dig. 528; Kerrains v. People,
60 N. Y. 221.
«* Hayward v. Miller, «uprci; Con-
way V. Carpenter, supra; Clark v.
Vannort, 78 Md. 216.
86 Cummins v. McLain, 2 Ark. 412;
Sevier v. HolUday, 2 Ark. 612; Palmer
V. Ashley, 8 Ark. 75; Taylor v.
Spears, 6 Ark. 381, 44 Am. Dec. 519;
Warner t. Bridges, Id. 385; Rob-
erts V. Armstrong, 1 Bush (Ky.), 268,
89 Am. Dec. 624; Baird v. Walker, 12
Barb. (N. Y.) 298, 301; Colvln v. Hoi-
brook, 2 N. Y. 130; Williams v.
Storrs, 6 Johns. (N^ Y.) Ch. 363, 10
Am. Dec. 340; Haas r, Damon, 9
Iowa, 589; Burton v. Collin, 3 Mo.
315; Waring v. Richardson, 11 Ired.
(N. C.) L. 77; Cockrin ▼. Klrkpat-
rick, 9 Mo. 688; Cole t. Baker, 16
S. D. 1; Armstrong r. Smith, 3
Blackf. (Ind.) 251; Judah v. Dyott,
Id. 324, 25 Am. Dec. 112; Bnglish
▼. Devarro, 5 Id. ^88; Hannum ▼.
Curtis, 13 Ind, 206; Jones v. Gregg,
17 Ind. 84; Black v. Hersch, 18 Ind.
342, 81 Am. Dec. 362; Catterlin v.
Sommerville, 22 Ind. 482; Bougher ▼.
Scobey, 23 Ind. 583; Nutzenholster t.
State, 37 Ind. 457; Heddens v. Young-
love, 46 Ind. 212; Pierce v. Thornton,
44 Ind. 235; Terrell v. Butterfleld. 92
Ind. 1; Clay pool v. Gish, 108 Ind. 424;
State Y. Sims, 76 Ind. 328. But see
contra, Lillie v. Hoyt, 5 Hill (N. Y.),
395, 40 Am. Dec. 360.
MClaypool V. Gish, supra. This
ayerment is so essential that a motion
to arrest will be sustained on account
of its absence. Pierce v. Thornton,
supra; Bberhart ▼. Roister, 96 Ind.
478.
In King Y. Mackellar, 109 N. Y. 215,
no demand was alleged in the com-
plaint, but demand was proved with-
out objection; held^ '*that the omis-
sion of the averment was not avail-
able as an objection" in the Appellate
Court; "also that it would have been
competent for the court to admit evi-
dence of demand on the trial if ob-
jection had been raised, allowing an
amendment of the complaint."
The demand may be informal. Eg^
erton v. Logan, 81 N. Car. 172.
See also, Judith Inland Transp. Co.
y. Williams, 36 Mont. 26.
974
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§ I34O
said, "that payment has been delayed by reason of the want of safe
and convenient means of transmission or of some other good and suf-
ficient cause, and that the recipient of the money, still considering
himself entitled to no more than enough to reasonably compensate him
for his services in collecting, will pay it over on demand." " This rule,
however, presupposes that the agent has duly performed his duty of
notifying the principal of the receipt of the money.**
But where he has not given such notice, and so long a time has
elapsed since the collection of the money as to rebut the presumption
above referred to, "he may well be considered as having appropriated
it to his own use, and then neither law nor reason requires that before
he can be sued for his non-feasance, he should be requested to do what
his conduct sufficiently indicates his determination not to do." ••
§ 1340. Exceptions. — But if the rule requiring demand
be based upon the assumption that until such demand the agent does
not know the principal's pleasure, and therefore can be subject to no
duty to pay over, many circumstances may exist which would show
the existence of such a duty without an expressed demand. Thus if
it be th^ established course of business to pay over without waiting
for a demand,*® or if the agent has agreed to pay upon receipt or at a
particular time,*^ or if he has been instructed by his principal so to
pay," the agent's course is clear, his duty is independent of demand,
and no demand is necessary.
The general rule is also said to be subject to the exception that no
demand is necessary where it would be impracticable or extremely
inconvenient, as in the case above referred to, of a factor resident
abroad,** though there are cases to the contrary.**
8T Bedell v. Janney, 9 111. 193. Sturtevant, 7 Pick. (Mass.) 214;
88 Jett v. Hempstead, 25 Ark. 463; Eaton v. Welton, 82 N. H. 352.
Haas V. Damon, 9 Iowa, 589; Ferris 9i Brown v. Arrott, supra; Haebler
V. Paris, 10 Johns. (N. Y.) 285; v. Luttgen, 2 N. Y. App. Div. 390;
Cooley V. Betts, 24 Wend. (N. Y.) affirmed, 158 N. Y. 693; Mast v.
203; Drexel v. Ralmond, 23 Pa. 21. Easton, 33 Minn. 161; Campbell y.
80 Bedell v. Janney, supra. Roe, 32 Neb. 345; Stacy v. Graham,
•0 Brown v. Arrott, 6 W. & S. (Pa.) 14 N. Y. 492; Campbell v. Boggs, \%
402. So, In the case of an agent to Pa. 524.
sell goods, after the lapse of a reason- 02 Clark v. Moody, 17 Mass. 145;
able time from the receipt of goods Ferris v. Paris, 10 Johns. 285; Haas
and a neglect to account for them, v. Damon, 9 Iowa, 589.
the fair presumption is that the goods »« Clark v. Moody, 17 Mass. 145;
have been sold and the money re- Eaton v. Welton, 32 N. H. 352.
celved for them, and an action for o*See Cooley v. Betts, 24 Wend. (N.
money had and received may be main- Y.) 203; Qreen y. Williams* 21 Kan.
talned without a demand. Clark y. 64.
Moody, 17 Mass. 145; Langley t.
975
§ I34I]
THE LAW OF AGENCY
[book IV
So no demand is required where the agency is denied, or a claim
is set up exceeding the amount collected, or the agent's responsibility
is disputed.®'^
Demand is also unnecessary where the agent violates instructions
as to the disposition of the property or money, and appropriates it to
an unauthorized or wrongful use.^'
Although the death of the principal, as has been seen, ordinarily
terminates the relation, yet if after his death the agent collects money
and converts it to his own use, the personal representative of the prin-
cipal may recover it.*^ The mere fact that the agent has once ten-
dered the money will not relieve him if, upon a subsequent proper
demand, he refuses or neglects to pay it over.®*
§ 1341. When agent liable for interest. — ^An agent may become
liable to his principal for interest upon moneys in his hands by virtue
of an express or implied promise to pay such interest. But he will
also be chargeable with interest upon all moneys iii his possession
which he has neglected or refused to pay over, or to apply to the
purpose for which he received it, and such interest will be computed
from the time of such neglect or refusal. Interest in these cases is
allowed upon the ground that the agent has retained in his possession
money, of which it was his duty to make some other disposition.**
Thus, as has been seen, it is the duty of an agent who has collected
money for his principal, to give him notice of that fact within a rea-
sonable time. Failing in this duty, he is properly chargeable with in-
terest from the time when such notice should have been given, even
though he has acted in good faith.^ A fortiori is he chargeable with
interest where, having collected money, he neglects or refuses upon
proper demand to pay it over, or converts it to his own use.*
So if he has received money to be devoted to a specific purpose, as
to make an investment, and, contrary to his duty, retains and applies
»8 Waddell v. Swann, 91 N. C. 108;
Wiley V. Logan, 95 N. C. 368; Ham-
nlett Y. Brown, 60 Ala. 498; Judith
Inland Transp. Co. v. WilllamB, 36
Mont. 25.
ooBartels v. Kinnenger, 144 Mo.
^70; Haas v. Damon, 9 Iowa, 589;
Allsopp V. Hendy Mach. Works, 5
€aL App. 288.
»T Clegg Y. Bamberger, 110 Ind. 536.
•^Clegg Y. Bamberger, supra.
99 See cases following.
1 Dodge Y. Perkins, 9 Pick. (Mass.)
368; Clark y. Moody, 17 Mass. 145;
Thorp Y. Thorp, 75 Vt. 34.
2 Anderson y. State, 2 Ga. 370; Be-
dell Y. Janney, 9 111. 193; Miller y.
McCormick Co., 84 lU. App. 571; Beug-
not Y. Tremoulet, 111 La. 1; Board of
Justices Y. Fennimore, 1 N. J. L. 242;
People Y. Gasherle, 9 Johns. (N. Y.)
71, 6 Am. Dec. 263; Harrison y. Long,
4 Desau, (S. Car.) 110; Hill y. Wil-
liams, 6 Jones (N. Car.), Eq. 242.
See also, Pearse y. Green, 1 Jac. k
W. 135; Harsant Y. Blaine, 66 U J.
976
CHAP. Il] DUTIES AND LIABILITIES OF AGENT [§ I342
it to his own use, he will be charged with interest from the time of
is receipt.'
Where,, however, the agent is entitled to retain the money, as by
virtue of some lien or charge upon it, he can not be chargeable with
interest during the period of such retention.* So if the principal vol-
untarily permits the money to remain in the hands of his agent, who
holds himself in readiness to pay over upon demand, the agent will
not be chargeable with interest,*^ unless he has been able to so invest
or use the money as to make it earn interest, for which he would be
chargeable.*
§ 1342. Form of action. — ^The determination of the form of the
action which the principal may pursue against the agent for the re-
covery of the property or money to which he may be entitled, depends
upon a great variety of circumstances. In many cases, an action for
the breach of an express or an implied contract to pay or deliver will
be appropriate.^ Where the agent has received money which it is his
duty to pay or account for to the principal, an action for money had
and received may be maintained." As has been seen in an earlier sec-
tion,' an agent who applies his principal's property or funds to an end
or purpose not authorized may often be held liable for conversion.^**
In such cases, the principal will often have an option to sue either for
Q. B. 511; Bayne V. Stephens, SComw. t Walter v. Bennett, 16 N. Y. 250;
II. R. (Austral.) 1. Conaughtey y. Nichols, 42 N. Y. 83;
s Hill y. Hunt, 9 Gray (Mass.), 66; Oreentree y. Rosenstock, 61 N. Y. 5S3}
Schlsler v. Null, 91 Mich. 321. Wright y. Duffle, 23 (N. Y.) Misc.
4 Thompson y. Stewart, 3 Conn. 171, 338; Robson v. Sanders, 25 S. Car.
t Am. Dec. 168. 116.
BQunn y. Howell, 85 Ala. 144, 73 s Gordon y. Hostetter, 37 N. Y. 99;
Am. Dec. 484; Nisbet y. Lawson, 1 Kidder y. Blddle, 13 Ind. App. 658;
Ga. 875; Hackleman v. Moat, 4 Harr y. Roome, 28 App. D. C. 214.
Blackf. (Ind.) 164; Gordon y. Za- Where an agent violates his Instruo-
ehalre, 15 La. Ann. 17; Wheeler y. tions and misappropriates money an
Hasklns, 41 Me. 482; Hyman y. Gray, action for money had and received
4 Jones (N. Car.), L. 155; Rowland will lie for Its recovery. Guernsey y.
y. Martlndale, 1 Bailey (S. Car.), Ch. Dayls, 67 Kan. 378.
226; Hauxhurst v. Hoyey, 26 Yt. 544. » See ante, S 1253.
e Bassett y. Kinney, 24 Conn. 267, 10 See Wells y. Collins, 74 Wis. 341,
63 Am. Dec. 161; Williams y. Storrs, 6 L. R. A. 531; Salem, etc., Ck>. y. An-
^ Johns. (N. Y.) Ch. 358, 10 Am. Dec. son, 41 Greg. 562; Coleman y. Pearce,
340; Landls y. Scott, 32 Pa. 495. 26 Minn. 183; Chase v. Baskeryllle,
Where agent mixes principal's 93 Minn. 402; Scott y. Rogers, 31
money with his own by depositing <N. Y. 676; Greentree y. Rosenstock,
It in a general bank account, he may 61 N. Y. 588; Laverty y. Snethen, 68
be charged with Interest. Blodgett's N. Y. 522, 23 Am. Rep. 184; Comley v.
Estate y. Converse's Estate, 60 Yt. Dazian, 114 N. Y. 161; Jones v. Smith,
410. 65 Misc. 528; Bridgeport Organ Co. v.
Snyder, 147 N. C. 271.
62 977
§ 1343]
THE LAW OF AGENCY
[book IV
the breach of contract or for the conversion." In many cases the
principal may regain his goods by an action of replevin." The
relation of the parties is, also, usually such as to* bring the agent within
the operation of the ordinary statutes authorizing attachment." As
has been seen in a previous section,** an agent who has received money
for his principal, cannot ordinarily be charged with the conversion of
it, unless it was his duty to pay over the specific funds received."
Where the agent fails to restore upon reasonable demand chattels re-
ceived from his principal to be kept on his account," or to deliver to
his principal upon such demand chattels received for and belonging
to the principal," the agent may be held for conversion. The fact
that the demand involves or implies a termination of the agency is im-
material, since the principal always has the right upon reasonable no-
tice to terminate an ordinary agency and to demand an accounting for
or restoration of his property.
§ 1343. When equitable. — ^It is well settled that the mere
relation of principal and agent is not sufficient to authorize the prin-
cipal to come into a court of equity for an accounting. For very
many of the questions arising between them, the ordinary legal rem-
edies are, as has been seen in the preceding section, entirely adequate ;
and where* this is the case, resort cannot ordinarily be had to equity.**
11 See Ridder v. Whitlock, 12 How.
Pr. (N. Y.) 208; Zlndel v. Flnck, 120
N. Y. Supp. 738.
Agent held neither liable for breach
of contract or for conversion. Pneu-
matic Weigher Co. v. Burnquist, 128
Iowa, 709.
12 Thus where a principal has ter-
minated his factor's authority and
has satisfied, or the factor has for-
feited, the factor's lien, the principal
may maintain replevin for the goods.
TerwiUiger v. Beals, 6 Lans. (N. Y.)
403.
So in RobinBon ▼. Stewart, 97 Mich.
464, where plaintiff endorsed to de-
fendant a certificate of deposit to be
used to purchase refft estate for
plaintiff, and later, when the pur-
chase failed, demanded it back and
was refused* held that replevin will
lie for the certificate.
13 De Leonis v. Etchepare, 120 Cal.
407.
14 See ante, S 1254.
IB Hazelton v. Locke, 104 Me. 164, 20
L. R. A. (N. S.) 85, 15 Ann. Cas. 1009;
Walter v. Bennett, 16 N. Y. 250;
Conaughtey v. Nichols, 42 N. Y. 83;
Vandelle v. Rohan, 36 N. Y. Misc. 239;
Wright V. Duffle, 28 N. Y. Misc. 338;
Schanz v. Martin, 37 N. Y. Misc. 492;
Rothchild v. Schwarz, 28 N. Y. Misc.
521; Hartman v. Hicks, 28 N. Y.
Misc. 527.
Where it was his duty to pay over
the identical mdney received, see
Farrelly v. Hubbard, 148 N. Y. 592;
and Michigan Carbon Works v.
Schad, 1 N. Y. Supp. 490.
i« Potter V. Merchants' Bank, 28 N.
Y. 641, 86 Ain. Dec. 273; Solomon v.
Waas, 2 Hilt. (N. Y.) 179; Brown v.
Cushman, 173 Mass. 368; Bridgeport
Organ Co. v. Snyder, 147 N. Car. 271.
iTNading v. Howe, 23 Ind. App.
690.
isKnotts V. Tarver, 8 Ala. 743;
Crothers v. Lee, 29 Ala. 337; Pauld-
ing V. Lee, 20 Ala. 768; Halsted v.
978
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1343
When, however; the agency is one of a strictly fiduciary character,
involving a question of confidence between the parties,^* or, in many
Rabb, 8 Porter (Ala.), 63; Coqulllard
▼. Suydam, 8 Blackf. (Ind.) 24; Pow-
ers V. Cray, 7 Ga. 206; Moxon v.
Bright, L. R. 4 Ch. App. 292; Navul-
shaw Y. Brownrigg, 2 DeGex, M. A
G. 441; HemlngB v. Pugh, 4 Oiff. 456;
Stewart v. AuBtin, L. R. 3 Eq. 299.
For the mere failure of an agent to
remit money received upon the sale
of property, an action at law and not
in equity is the remedy. Herbert v.
Henry, 20 Hawaii, 187.
18 In Moxon v. Bright, L. R. 4 Ch.
App. 292, Lord Hatherly, L. C, said:
"There were numerous cases showing
that where the relation of principal
and agent had imposed a trust upon
the agent, the court would entertain
a bill for an account, and the only dif-
ficulty was in determining what con-
stituted this species of trust. It was
not every agent who held a fiduciary
position as between himself and his
principal. Foley v. Hill, 1 Ph. 399,
2 H. L. C. 28, showed that though a
banker was the agent of the customer
for many purposes, they were not
such as would constitute a trust. Nor
did the mere circumstances that the
principal wanted discovery empower
the court to give him assistance in
the way of relief. The case of Smith
V. Leveaux, 2 D. J. & S. 1, showed that
though you might be entitled to dis-
covery, which you could get either in
equity or at law, that did not entitle
you to relief, for all depended upon
the character of the agency. As be-
tween master and servant such an
agency did not exist, and the Vice-
Chancellor Knight Bruce, in Smith v.
Leveaux, expressed his opinion that
a Court of Equity ought not to en-
tertain a suit inf such a case."
In Underbill v. Jordan, 72 N. Y.
App. Div. 71, it is said: "While it is
true that the existence of a bare
agency is not suflScient upon which
the equitable jurisdiction of the court
can be invoked, yet where the agent's
duties are fiduciary in character and
involve a dealing with trust funds,
he is regarded in the law as a quasi
trustee and may be called to account
in a court of equity for his manage-
ment of the trust fund, and In such
action Judgment may pass determin-
ing the respective rights and liabili-
ties of the parties thereto and adjust-
ing the respective interests of the
parties in and to the trust fund."
See also, 91 App. Div. (N. Y.) 124.
In Marvin v. Brooks, 94 N. Y. 71, it
is said that where an agent has been
intrusted with his principal's money,
to be expended for a specific purpose,
the former may be required to ac*
count in equity. Followed in Kawan-
anakoa v. Puahi, 14 Hawaii, 72.
And where an executrix brought an
action in the nature of a bill in
equity, alleging that defendant, as
agent of plaintiff's intestate, received
from the latter certain moneys to
loan for him, and had not fully ac-
counted therefor, and that the plain-
tiff was not in possession of any
books, papers or memoranda, by
which the amount or the investment
thereof could be ascertained, — it was
held that, although the statute had
ab3lished action for a discovery, in
aid of another action, this did not
affect the Jurisdiction of equity in any
proper case for an accounting, and
that the petition disclosed a proper
case of that sort. Schwickerath v.
Lrohen, 48 Wis. 699. Same effect:
Rlppe V. Stogdlll, 61 Wis. 38.
To the effect that "where an agent
is intrusted with money to be dis-
bursed, his principal may sustain a
bill in equity against him for an ac-
count of his agency," see Dunn v.
Johnson, 115 N. C. 249.
An agent intrusted with the man-
agement of property, authorized to
buy and sell, receive payments and
make disbursements, occupies a fidu-
ciary relation and a court of equity
979
§ 1344]
THE LAW OF AGENCY
[book IV^
cases, where fraud is alleged ^® or a discovery sought, the equitable
jurisdiction will attach, even though some remedy at law might also-
have been found.^^ So where the account is so complicated that it:
cannot be settled at law without great difficulty, a bill in equity may
be maintained.^^
The fact that the agent has rendered numerous and, as he claims,,
full and correct accounts, will not bar the court of its jurisdiction, nor-
of itself make the action vexatious. Whether they are in fact full and'
correct is often the very matter to be determined, and as to this the-
principal's right cannot be foreclosed by the agent's statement.**
In many cases, moreover, equity will lend its aid either by way of
injunction or decree of specific performance to prevent the violation,,
or enforce the performance, of the trusts upon which the agent holds:
the property of his principal.**
§ 1344. The burden of proof. — ^The burden of showing the ex-^
istence of such a relation and such a receipt of money or property as-
has Jurisdiction to adjust and settle
the accounts between them. Thornton
v. Thornton, 31 Gratt. (Va.) 212. To
same effect: Coffin v. Craig, 89 Minn.
226 J Frethey v. Durante 24 N. Y. App.
Dlv. 58. See also, Colonial Mtg. Co.
V. Hutchinson Mtg. Co., 44 Fed. 219;
PhiUipps V. Birmingham Industrial
Co., 161 Ala. 509; Campbell v. Cook,
193 Mass. 251; Thatcher v. Hayes, 54
Mich. 184; Holthouse v. Poling, —
Ind. App. -7-, 99 N. E. 810.
Where vi agent is intrusted with
money to invest, receive payments
upon and reinvest, a trust relation ex-
ists, which entitles the principal to
an account in equity. Dillman y.
Hastings, 1^4 U. S. 136, 36 L. Ed. 378.
20 A landowner may maintain a
suit in equity against the agent and
manager of his estates, if the ob-
ject of such suit is either to obtain
an account, (and in that case allegsr
tions of fraud or special circum-
stances are unnecessary); or to ob-
tain the delivery up by the agent of
documents in his hands belonging to
the landowner. Makepeace v. Rog-
ers, 4 DeGex, J. A S. 649.
21 Warren v. Holbrook, 95 Mich«
185, 35 Am. St. Rep. 544; Robson v.
Sanders, 25 S. Car. 116; Decell v.
Oil Mill Co., 83 Miss. 346.
22 A bill for an account by a prin-
cipal against his agent is not neces-
sary where the transaction, to which
it relates is a single transaction and
fraud is not charged. Navulshaw v.
Brownrigg, 2 DeGex, M. ft G. 441.
A bill for an account, with demand
for a discovery as incidental to and
in aid of that relief, may be main-
tained by a principal against an
agent to whom he has delivered
goods for sale on commission, where
the matter is complicated or the-
principal would be embarrassed in
making out his proof in a court of
law: Taylor v. Tompkins, 49 Tfenn.
(2 Heisk.) 89. See also Walker v.
Spencer, 45 N. Y. Super. 71; Halsted
V. Rabb, 8 Port. (Ala.) 63; Hofer v.
Silberberg, 3 Vict L». R. Eq. 126.
23 Jordan v. Underbill, 91 N. Y.
App. Div. 124; Frether v. Durante.
24 N. Y. App. Div. 58.
24 See Wood v. Rowcliffe, 3 Hare».
304, 6 Hare, 183. In Phillippa v.
Birmingham Industrial Co., 161 Ala.
509, a manager of a cotton planta-
tion, in whose possession the ac>
counts and contracts with shareten-
ents were, was made to account and
to deliver over all documents belong-
ing to the proprietor of tlie planta-
tion.
980
CHAP. li]
DUTIES AND LIABILITIES OF AGENT
[§ I34S
will impose upon the agent the duty to account, is upon the principal.**
When, however, this showing has been made, or when the agent vol-
untarily admits the receipt of the property or money, the burden of
showing that he made a proper disposition of it, rests upon the agent.**
In making this showing, moreover, the agent must be ready with
vouchers and particulars ; he cannot compel the principal to be satis-
fied with the agent's general statement, even under oath, that he knows
he made a proper disposition of it, though he cannot give particulars.*^
Moreover, the agent's failure to keep correct accounts, in violation
of his obvious duty, "authorizes," it is said," "unfavorable inferences,
and subjects him when called on for an account to a heavy burthen of
suspicion as well as of proof." All the more so will this be true where
it appears that the agent has destroye*d such accounts as he had. The
maxim. Omnia presumuntur contra spoliatorem, applies in such a
case.
29
§ 1345. Proof of amount due — Special method agreed upon — Con-
clusiveness of agent's accounts.— Under ordinary circumstances,
the amount due from the agent must be shown as in any other case.
2s Anderson v. First Nat. Bank, 4
N. D. 182; Harr ▼. Roome, 28 A pp.
D. C. 214.
2e Anderson v. First Nat. Bank,
supra; Dodge v. Hatchett, 118 Ga.
883; Robson v. Sanders, 25 S. C. 116;
Farmers' Warehouse Ass'n v. Mont-
gomery, 92 Minn. 194; Laporte v. La-
porte, 109 La. 958; Llesmer v. Burg,
106 Mich. 124; Carder v. Primm, 52
Mo. App. 102; Young ▼. Powell, 87
Mo. App. 128; Little v. Phlpps, 208
Mass. 331, 34 L. R. A. (N. S.) 1046.
In New York the contrary seems to
be held. Thus in Breed v. Breed,
65 N. Y. App. Div. 121, it is said that
there is not only a presumption that
the agent has done his duty, but al-
so that he has not committed em-
bezzlement. (The mere fact however
that the agent had not paid over the
money, would not necessarily consti-
tute embezzlement.) So in Beattie v.
Seattle, 83 Hun (N. Y.), 295, aff'd in
153 N. Y. 652, the court takes the
same position for substantially the
same reason. So in Turner v. Kouw-
enhoven, 100 N. Y. 115, it is said that
there is a presumption that the serv-
ant has performed his duty.
98
" Farmers' Warehouse Ass'n v.
Montgomery, snpra; Webb v. Fordyce,
55 Iowa, 11.
In Wolf Go. V. Salem, 33 111. App.
614 it is said : "The law is settled and
Is sustained by reason that the duty
of an agent is not fulfilled in a case of
this kind, by reporting to his princi-
pal that he has spent a round sum of
money in prosecuting his employment,
and then swearing to the fact in a
suit to recover the sum. ' His duty to
keep and preserve true and correct
statements of accounts is a necessary
consequence of his duty to account.''
To like effect: Gladiator Mines Co.
V. Steele, 132 Iowa, 446; Quirk v.
Quirk, 155 Fed. 199; Webb v. Fordyce,
55 Iowa, 11. Compare also Daven-
port V. Schutt, 46 la. 510. See also,
Clayton v. Patterson, 32 Ont. 435.
28 Peterson v. Polgnard, 47 Ky. 309.
To same effect: Illinois Linen Co. v.
Hough, 91 111. 63; Armour v. Gaffey,
30 N. Y. App. Div. 121.
2« Armour v. Gafley, supra.
80 Where an insurance agent agreed
that the actual condition of his ac-
counts with the company should be as-
certained and determined by an in-
§ 1346] THE LAW OF AGENCY [bOOK IV
It IS entirely possible, however, for the parties to agree that the amount
due shall be determined in a specified manner or by a particular per-
son, and unless impeached for mistake or fraud, such a determination
would ordinarily be conclusive.'® Usually statements and accounts
rendered by tlie agent would have no greater conclusiveness than other
similar admissions, open to correction upon proof of mistake. But
where the principal, in reasonable reliance upon the statement, has
altered his situation in such wise that he will be prejudiced if the
statement be not true, the agent may be estopped from contradicting
it.'^ A fortiori would this be true where the statement was made
with the intention to deceive.
§ 1346. When liability barred by statute of limitations. — Statutes
of limitation usually begin to operate only when a right of action has
accrued. The determination therefore of the question when the stat-
ute begins to run against the principal depends usually upon the other
question of the time when his right of action accrued. As has been
seen, the general rule, subject to certain exceptions already noted
which make demand unnecessary, is that the right of action does not
accrue imtil a demand has been made with which the agent has re-
fused or neglected to comply. It is therefore the general rule that
the statute of limitations begins to operate upon a claim against an
spection of his reports, made by any Byars, 99 Ala. 484, where it was held
person authorized by the company to that If an agent represents to his prin-
make it, gave to such person full cipal that he has money In his pos-
power to compute the sum due to the session belonging to the latter, but
company as it appeared from such in- says he will not pay it over until their
spection, and agreed to ratify his com- conflicting claims have been adjudl>
putations, "waiving the production of cated in court; and the principal
any evidence other than such report thereupon brings suit for the re-
and account/' it was held, that, in the covery of the money, the agent is
absence of fraud or mistake, the re- estopped from saying, that he did not,
port of such person was conclusive in fact, have it
Metropolitan Life Ins. Co. v. Long, Where an agent to invest money
65 111. App. 295. has reported to his principal that he
To same effect: Owiter v. Metro- has made investments in certain
politan Life Ins. Co., 4 N. 7. Misu. mortgages, which were however flcti-
643. tious, and has paid to his principal
SI Where a real estate agent falsely regularly what he asserted was the
reported to his principal that he had income therefrom (really paid out of
received from a purchaser a certain the principal's money) until the
deposit on the purchase price, by agent's death, his estate is liable to
which statement the principal was the principal for the amount so re-
induced to ratify the sale, the agent ported as invested. Hartmann v.
is bound to the principal to make Schnugg, 113 App. Div. (N. T.) 254,
good his statement. Wood v. Blaney, aff'd 188 N. Y. 617.
107 Cal. 291, following Meyers v.
982
CHAP. II ]
DUTIES AND LIABILITIES OF AGENT
l§ 1346
agent for money or property received by him, only from the time when
he has rendered an account showing a balance due from him, or when
a demand has been made upon him and he has refused or neglected to
account,** or when he owes a duty to account without a demand, as
where it is the duty of a collecting agent, imposed expressly or by
implication, to remit the money to his principal upon receipt."
»2 Judah V. Dyott, 3 Blackf. (Ind.)
324, 25 Am. Dec. 112; Jett y. Hemp-
stead, 25 Ark. 463; Whitehead v.
Wells, 29 Ark. 99; Dodds v. Vannoy,
61 Tnd. 39; Lrynch v. Jennings, 43
Ind. 276; Green v. Williams, 21 Kan.
64; Perry v. Smith, 31 Kan. 423;
Guernsey v. Davis, 67 Kan. 378;
Taylor v. Spears, 8 Ark. 429; Hyman
V. Gray, 4 Jones (N. Car.) Lb 156;
Merle v. Andrews. 4 Tex. 200; Baker
V. Joseph, 16 Gal. 173; Lever v. Lever
1 Hill (S. Car.) Ch. 62: Roberts v.
Armstrong, 1 Bush (Ky.), 263, 89 Am.
Dec. 624; Voss v. Bachop, 5 Kan. 59;
Egerton v. Logan, 81 N. Car. 172;
Jayne v. Mickey, 55 Pa. 260; Baird v.
Walker, 12 Barb. (N. Y.) 298; Hal-
den V. Crafts, 4 B. D. Smith (N. Y.),
490; Sawyer v. Tappan, 14 N. H. 352;
Hutchlns V. Gllman, 9 N. H. 360;
Taylor v. Bates, 5 Cow. (N. Y.) 379;
Hays V. Stone, 7 Hill (N. Y.), 128;
Krause v. Dorrance, 10 Pa. 462, 61 Am.
Dec. 496; Staples v. Staples, 4 Me.
532; Cole v. Baker, 16 S. D. 1; Ash v.
Frank Co. (Tex. Civ. App.) 142 S. W.
42; Knowles v. Rome Tribune Co., 127
Ga. 90.
The statute will in no event begin
to run until the money has been re-
ceived. Lawrence University v.
Smith, 32 Wis. 587.
83 As has been seen In a preceding
section, an agent for collection may
be required by the course of business
or express or implied agreement, or
the instruction of his principal to re-
mit the money collected to his princi-
pal without waiting for a demand.
In such cases it Is held by many au-
thorities that the statute of limita-
tions begins to run from the time of
the receipt of the money, and that the
fact that the principal is not aware
of the collection is immaterial where
there has been no evasion or fraudu-
lent concealment on the part of the
agent Thus in Campbell v. Roe, 32
Neb. 846, the court said: "While there
are decisions sustaining both propo-
sitions, it seems to us that the rule
which is based upon the soundest
principles, is that where an agent is
appointed to collect money and remit,
after deducting his charges, no time
being stated when the remittance is
to be made, the statute commences to
run from the time of the receipt of
the money by the agent. The money
is due the principal as soon as it is
collected, and it is the duty of the
agent to pay it over or remit at once.
If he f&ils so to do, he is liable to an
action. ... As the money is due the
principal as soon as received by the
agent, we perceive no reason why the
same rule as to the beginning of the
running of the statute, should not
govern as controls actiona upon de-
mand notes. It can make no differ-
ence that the defendant failed to in-
form the plaintiff of the receipt of
the money, or that the plaintiff had
no knowledge that it had been col-
lected, until thrtee years after the note
had been paid. The Ignorance of one's
rights, when not occasioned by the
fraud of the debtor, will not have the
effect to prevent the running of the
statute. The rule is universal that
mere silence or concealment by the
defendant, without affirmative misrep-
resentation will not toll the statute."
[A marked distinction may, however,
be made here. In the case of the de-
mand note the obligation is fixed and
the holder may make it due at any
time by making a demand. In the
case of the collection, no demand can
983
§ 1347]
THE LAW OF AGENCY
[book IV
§ 1347-
The questions respecting demand before action
against the agent, and demand to set the statute of limitaticxis into
operation, are not identical. The purpose of the law in the former
case is to protect the agent against the imputations, troubles and ex-
penses of an action where the agent is in nowise at fault, and before
lawfully be made until the money has
been received. It is not within the
creditor's power to make it due by
demand until the other party has done
something, namely, collected the
money. Who knows when that event
has happened? The agent certainly is
in a better situation to know than
the principal in the ordinary case.
Why should he not therefore be re-
quired to give notice of that fact?
F. R. M.]
So in Mast v. Easton, 33 Minn. 161,
it was said: "The decisions are con-
flicting as to the conditions under
which a right of action exists in
favor of a principal against his agent
for the recovery of money collected by
the latter, and as to the time when
the statute of limitations commences
to run with respect to such an action.
But it may be stated that generally,
when the case has been such that it
has been considered that the duty
had become fixed upon an agent to re-
mit or pay money collected by him, a
neglect to perform that duty has been
held to render the agent liable to an
action, and hence that the statute
would then commence to run."
To same effect: Haebler v. Luttgen,
2 N. Y. App. Dlv. 390, affd 158 N. Y,
693; Stacey v. Graham, 14 N. Y. 492;
Campbell v. Boggs, 48 Pa. 624;
Rhines v. Evans, 66 Pa. 192; Guar-
antee Trust Co. V. Farmers' Nat
Bank, 202 Pa. 94; Jewell v. Jewell,
139 Mich. 578; Goodyear Rubber Co.
V. Baker, 81 Vt 89, 17 L. R. A. (N. S:)
667, 15 Ann. Cas. 1207.
In Hart's Appeal, 32 Conn. 520, it
is said: "Prima fade, money received
by one for the use of another is to be
paid over without delay. Circum-
stances may indeed exist warranting
the party in keeping it, either till de-
manded, as in case of deposits for safe
keeping, or till some particular time,
as in case of deposits depending on
wagers or contingencies, or until in-
structions as to the mode of remit-
tance, as in cases where the party is
expected to remit and not pay the
money in person."
Where the retention of money is a
breach of contract merely and not
fraud, failure to discover it will not
prevent the running of the statute un-
der the Iowa code. Brunson v. Bal-
lon, 70 Iowa, 34.
So where an attorney in fact in-
vested moneys in bonds instead of re-
mitting to principal, as directed, it is
not a fraudulent concealment that
will stop the statute from running.
Fleming v. Culbert 46 Pa. 498.
In Douglas v. Corry, 46 Ohio St.
349, 15 Am. St. Rep. 604, it is held
that, where there is no charge of
misrepresentation or concealment,
the statute begins to run in favor of
an attorney who has made a collec-
tion, from the time of the collection,
even though there has been no de-
mand and, apparently, though the at-
torney has not given notice of the
collection. 'The holding that the
statute does not begin to run until
the attorney has given notice to his
client of the collection of the money,
because such is his duty, would seem
to misconceive the reason and policy
of the statute of limitations. It might
with as much propriety be said that
he could have protected himself by
paying over the money, because that
was as much bis duty as to give no-
tice of its receipt. The unreasonable-
ness of the rule is not in any in-
convenience that might attend com-
pliance with it in the first Instance,
but in overlooking the difiiculty that
984
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1347
he has had opportunity to comply with an ordinary demand. The
purpose of the statute of limitations in these cases is to protect the
agent against the assertion of stale claims, but it ought not to be made
the means of screening a guilty agent, by allowing him to set it up
as a defense, where the agent's own fault furnishes the cause of action,
and the principal had no knowledge or means of knowledge that such
may be encountered, after the lapse
of a great number of years, of prov-
ing that the notice was in fact given.
This might be as difficult as to prove
payment itself, if not more so." [Ex-
cept in cases in which the principal
knew or might have known that the
money had been received, this rea-
soning does not seem conclusive. The
giving of the notice in other cases is
required so that the principal may
know that he now has a matured
claim upon the agent, and the agent
ought not to have the benefit of the
statute until his duty in that respect
has been performed. If he suffers
from loss of evidence that he has
done so. It is because of a matter
within his own control.] Goodyear
Rubber Co. v. Baker, 81 Vt. 39, 17 L.
R. A. (N. S.) 667, 15 Ann. Cas. 1207,
applies the same rule in the absence
of frauduknt concealment See also,
Lancaster v. Springer, 239 111. 472.
Fraudulent concealment immate-
rial. Ott V. Hood, 152 Wis. 97.
That agent, and particularly attor*
ney, who has received claims for
collection, is not liable to an action,
and the statute does not begin to run
until a demand and refusal: Taylor
V. Spears, 6 Ark. 381, 44 Am. Dec.
519. 8. c. 8 Ark. 429; Whitehead v.
Wells, 29 Ark. 99; Jett v. Hempstead,
25 Ark. 462; Voss v. Bachop, 5 Kan.
59; Perry v. Smith, 31 Kan. 423; Rob-
era V. Armstrong, 64 Ky. (1 Bush)
263; Merle v. Andrews, 4 Tex. 200;
Dodds V. Van Noy, 61 Ind. 89; Staples
V. Staples, 4 Me. 532; Judah v. Dyott,
3 Blackf. (Ind.) 324, 25 Am. Dec. 112.
In Wilder v. Secor, 72 Iowa, 161, 2
Am. St Rep. 236, an attorney having
a claim against an estate for collec-
tion, availed himself of it in the set-
tlement of his own accounts with the
administrator. Held, that the statute
does not begin to run against the
client until he discovers the cause of
action, or by the exercise of reason*
able diligence, might have done so.
In Guernsey v. Davis, 67 Kan. 378,
it was held that where an agent mis-
appropriates money sent him for the
purpose of making a loan, the stat-
ute does not begin to run until the
principal has knowledge of the
agent's wrong.
In McCoon v. Galbraith, 29 Pa. St.
293, defendant's law partner collected
a claim given to the firm for col-
lection, and kept the money. After
the dissolution of the firm plaintiff
inquired of defendant respecting his
claim. He was told by Galbraith that
he knew nothing of the matter but
would investigate and report to the
plaintiff. "Long before that his part-
ner had collected the most of the
claim and Galbraith is in law charge-
able with a knowledge of this, and
therefore he must be treated as not
revealing it when called upon, but
promising to do so, and not until
then, at least, could the statute of
limitations begin to run."
Aultman v. Adams, 35 Mo. App. 503,
is similar in facts and holding.
In King v. Mackellar, 109 N. Y.
215, where an agent entrusted with
funds to invest misappropriated them
and concealed the fact from the prin-
cipal, it was said: "Where a right of
action exists but a demand is neces-
sary to entitle a person to maintain
an action, the time within which the
action must be commenced must be
computed from the time when the
right to make the demand is com-
plete* except . . . where the right
985
§ 1348]
THE LAW OF AGENCY
[book IV
a default had occurred. Where the agent has failed to give nbtice to
the principal as was his duty, or where the agent has been guilty of
some misapplication or misappropriation of money or property which
the principal had no reason to anticipate or suspect, it sounds very ill
in the agent's mouth to plead the statute of limitations against the
principal, until after the principal has learned of the wrong. To allow
this is to sacrifice the principal to the guilty agent. The agent does
not stand upon the same footing as a stranger. He is a person relied
upon. He owes a duty. He is ndt dealing at arm's length. He dis-
arms the ordinary diligence and watchfulness of the principal by un-
dertaking to protect his interests. Some distinctions might therefore
be made where the statute will permit it.
Where the principal knows, or in the ordinary course of business
might have known (as where there is payment or performance due
at a particular time), there is no particular hardship; but where the
agent misleads the principal, or conceals facts which it was his duty
to disclose, or fails to give required information, the case is diflferent'*
So if a collecting agent has neglected to give his principal notice of
the fact of the collection where notice is necessary in order that the
latter may give him instructions as to the disposition of the money,
he can not complain if the statute does not begin to run, unless he
can show affirmatively that by the exercise of reasonable diligence
the principal could have ascertained the fact of collection and made
a demand accordingly.**
§ 1348. But while the law will protect the principal un-
til knowledge, he cannot afterwards lie by and allow the matter to
run on against the agent indefinitely. Hence upon receiving notice
of the receipt of the money, it ts the duty of the principal to demand
grows out of the receipt or detention
of money by a person acting In a
fiduciary capacity, the time must be
computed from the time when the
person having the right to make the
demand has actual knowledge of the
facts upon which that right depends."
«4 In Perry v. Smith, 81 Kan. 423,
an agent to sell property remitted
less than he actually received as the
proceeds. Held, that the statute of
limitations did not begin to run until
discovery by the principal of the
agent's default.
In Morgan v. Tener, 83 Pa. 305, a
claim which had been collected was
reported by the agent as "uncollect-
ible." Held, that the statute did not
begin to run until the principal had
discovered the fraud.
In Shuttleworth v. McGee, 47 Tex.
Civ. App. 604, an agent to collect neg-
ligently allowed the claim to become
barred by the statute and reported
that suit was pending. In an action
by principal against agent for dam-
ages, held, that the statute did not
commence to run until the principal
learned of the loss.
SB Jett V. Hempstead, 26 Ark. 463;
Whitehead v. Wells, 29 Ark. 99;
Drexel v. Raimond, 23 Pa. 21. See
Rhines v. Evans, 66 Pa. 192; Camp-
bell V. Boggs, 48 Pa. 524.
986
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ 1349
it, or give instructions as to the disposition of it, within a reasonable
time; and if he omits to do so, he will put the statute in motion, from
the time of such receipt."
While there is a nmning account of continuous transactions, the
statute will usually not begin to run until the matter is completed or
the relation of principal and agent terminated.*^
§ 1349. Of the agent's right of 8et*ofF. — ^Where the principal pro-
ceeds in equity, allowances will usually be made in the same action
for such compensation and reimbursement as the agent may be entitled
to. When necessary the agent may resort to a cross-bill."
The right of set-ofJ, recoupment and counter-claim in actions at law
between principal and agent is governed ordinarily by the same rules
that apply in other cases.'* This right, however, may be waived by
contract, express or implied, and it cannot be insisted upon where its
enforcement would result in a violation of the agent's duty to his
principal.*^ The receipt of money by an agent to be applied to a
specific purpose, imposes upon him the duty not to apply it to another
and different purpose. He cannot therefore apply it to his own use,
by using as a set-off against it, a demand due him from his principal.^^
Thus where the principal authorized his agent to collect certain
rents, and apply them first to the payment of debts due to third per-
sons and then to the payment of a debt due the agent, but the agent
applied the whole amount upon his own debt, it was held, in an action
by the principal to recover the amount collected, that the agent could
«« Jett v. Hempstead, supra; Camp-
bell V. BoggB, 48 Pa. 524; Schofield v.
WooHey, 98 Ga. 548, 58 Am. St. Rep.
815.
In Ash Y. Frank Co. (Tex. Civ.
App.) 142 S. W. 42, the agent was
authorized to coUect certain claims
and to apply the proceeds to the pay-
ment of the principal's creditors. The
agent effected a settlement with the
creditors; of this the principal was
informed by a creditor, whereupon
principal immediately demanded an
accounting; the agent's reply was
sent in March, 1904, but was not re-
ceived until May; in April, 1906, prin-
cipal sued. Held, that principal had
been reasonably diligent in discover-
ing the agent's default so that the
statute was not a bar.
sTBstate of Ritchey, 8 Pa. Super.
Ct. 527 (citing Campbell v. Boggs, 48
Pa. 524, Norris's Appeal 71 Pa. 106;
McCain v. Peart, 145 Pa. 516; John-
ston V. McCain, 145 Pa. 581);
Knowles v. Rome Tribune Co., 127
Qa. 93; Teasley y. Bradley, 110 Ga.
497, 78 Am. St. Rep. 113.
88 Hutchinson v. Van Voorhis, 54
N. J. Eq. 439.
«» See Brown v. Gallandet, 80 N. Y.
413.
*oTagg V. Bowman, 108 Pa. 273,
56 Am. Rep. 204.
*i Tagg V. Bowman, supra; Tagg v.
Bowman, 99 Pa. 376; Smuller v. Un-
ion Canal Co., 37 Pa. 68; Bank v.
Macalcster, 9 Pa. 475; Ardesco Oil
Co. v. North American Co., 66 Pa.
375;- Middletown, etc., Road v. Wat>
son, 1 Rawle (Pa.), 330.
987
§ 1350]
THE LAW OF AGENCY
[book IV
not set off the debt due to himself. The money collected by the agent,
said the court, belonged to the principal, and as it came into the agent's
hands, it was impressed with a trust in favor of the principal which
required its application to the objects specified in their order. So
long as there was anything due upon the preferred objects, the agent
had no right to appropriate any of the money to the payment of his
own claim. If he did so, it was a manifest breach of the trust under
which it was received.*^
And the same principle applies wherever the agent has received
money of his principal by virtue of any special authority. Thus an
agent employed to collect a claim, when he has received the money,
has no right to set off against it an antecedent debt or claim owing to
him by the principal, without first showing that the latter has agreed
that he might so apply it.**
§ 1350. How far principal may follow trust funds. — It may be
stated as a general principle that, wherever property or funds have
come into the hands of the agent impressed with a trust in favor of
the principal, such property or funds may be followed by the principal
as long as they can be identified until they come into the possession of
a bona fide purchaser for value without notice of the trust.** So if
the property or funds have been disposed of or reinvested by the
agent, the trust will in equity adhere to the proceeds in his hands in
the same manner and to the same extent as to the original estate, —
*2 Tagg V. Bowman, supra.
43 SimpBon y. Pinkerton, Penn. 10
W. N. C. 423; Middleton, etc., Road v.
Watson, supra.
*4 PhelpB V. Jackson, 31 Ark. 272;
Atkinson v- Ward, 4T Ark. 533;
Griffln v. Blanchar, 17 Cal. 70; Price
V. Reeves, 38 Cal. 457; Scott v. Um-
barger, 41 Cal. 410; Mercler v. Hem-
me, 50 Cal. 606; Sharp v. Goodwin,
51 Cal. 219; Boyd v. Brlnckln, 55 Cal.
427; Dotterer v. Pike, 60 Ga. 29; Plan-
ters' Bank v. Prater, 64 Ga. 609;
Pugh V. Pugh, 9 Ind. 132; Rlehl v.
£3yansville Foundry Ass'n, 104 Ind.
70; Burnett v. Gustafson, 54 Iowa,
86; Peak v. Elllcott, 30 Kan. 158, 46
Am. Rep. 90; Third Nat. Bank v.
Stillwater, 36 Minn. 75; Swinburne
V. Swinburne, 28 N. Y. 568; Siemon r.
Schurck, 29 N. Y. 598; Van Alen v.
American National Bank, 52 N. Y. 1;
Newton y. Porter, 69 N. Y. 183; Hol-
den V. Bank, 72 N. Y. 286; Stephens
V. Board of Education, 79 N. Y. 183;
Baker v. New York Nat. Bank, 100
N. Y. 31, 53 Am. Rep. 150; Roca ▼.
Byrne, 68 Hun (N. Y.), 502; s. c, 146
N. Y. 182. 45 Am. St. Rep. 599; War-
ren V. Union Bank, 157 N. Y. 259, 68
Am. St. Rep. 777, 43 L. R. A. 256;
Farmers' ft Mechanics' Bank ▼. King,
57 Pa. 202, 98 Am. Dec. 215; Farm-
ers' ft Traders' Bank v. Kimball, 1 S.
D. 388, 36 Am. St. Rep. 739; Veile ▼.
Blodgett, 49 Vt. 270; McLeod v.
Evans, 66 Wis. 401, 57 Am. Rep. 287;
Oliver V Piatt, 44 U. S. (3 How.) 332,
11 L. Ed. 622; May v. Le Claire, 78
U. S. (11 Wall.) 217, 20 L. Ed. 50;
Nat. Bank v. Ins. Co., 104 U. S. 54,
26 L. Ed. 693; Central Stock Ex-
change V. Bendinger, 48 C. C, A. 726,
109 Fed. 926, 56 L. R. A. 875.
In re District Bank, 11 Ch. D. 772;
Knatchbull v. Hallett, 13 Ch. D. 696;
988
<:hap. u]
DUTIES AND LIABILITIES OF AGENT
[§ 1350
that is as long as they can be traced and until they arc acquired by a
bona fide purchaser without notice.** It does not matter that the
legal title to the fund may have changed. Equity will follow it through
any number of transmutations and preserve it for the owner so long
as it can be identified/® And if it can not be identified by reason of
being mingled with the funds or property of the agent, then the prin-
cipal, though he may not be able to identify his fund specifically, will
be entitled to a charge upon the whole mass to the extent that the
trust fund is traceable into it, and has operated to enhance it. It is
not necessary in such a case to trace the trust fund into any specific
-property. If it can be traced into the estate of the defaulting agent,
and still remains there in whole or in part, it is sufficient to found a
charge upon the whole to the extent of such enhancement.*^ Some
Rolfe V. Gregory, 4 DeG. J. A S.
576; Leigh v. Macaulay, 1 T. ft C.
Ex. 260; Smith v. Barnts, L. R. 1 Eq.
-65; Boursot v. Savage, L. R. 2 Eq.
134; Newton v. Newton, L. R. 6 Eq.
135; Heath v. Crealock, L. R. 18 Eq.
215. Many other cases are cited in
following notes.
4s National Bank v. Insurance Co.,
104 U. a 54, 26 L. Ed. 693: Pennell
V. Deffell, 4 DeG. M. ft G. 372; Frtth
V. Cartland, 2 Hem. ft M. 417; Taylor
^. Plumer, 3 M. ft S. 562; Knatchbull
T. HalleU, 13 Ch. Div. 696, 36 Eng.
Rep. 779; Atkinson v. Ward, 47 Ark.
•533; Oliver v. Piatt, 44 U. S. (3
How.) 332, 11 L. Ed. 622; May v. Le
Claire, 78 U. S. (11 Wall.) 217, 20 U
Ed. 50; Twohy Mercantile Co. v. Mel-
bye, 78 Minn. 357.
*• Farmers', etc, Bank v. King, 57
Pa. 202, 98 Am. Dec. 215; Atkinson
V. Ward, supra; Third Nat. Bank v.
Stillwater, 36 Minn. 75. Twohy Mer-
cantile Co. V. Melbye, supra.
*7 See St. Louis Brew. Ass'n v. Aus-
tin, 100 Ala. 813: Bank of Florence
^. U. S. Savings ft Loan Co., 104 Ala.
297; Winston v. MHler, 139 Ala. 259;
McClure v. LaPlata County, 19 Cal.
122; Holden v. Piper, 5 Cal. App. 71;
but see following note; Ober v. Coch-
ran, 118 Ga. 397; Woodhouse v. Cran-
dall, 197 111. 104, 58 L. R. A. 385;
Seiter v. Mowe, 182 111. 351; Lanter-
man v. Travous, 174 III. 459; Acci-
dent ABs*n ▼. Jacobs, 141 111. 261;
Wlndstanley v. Second Nat Bank, 13
Ind. App. 544; Independent District
of Boyer v. King, 80 Iowa, 497; Jones
T. Chesebrough, 105 Iowa, 303; Brad-
ley v. Chesebrou^, 111 Iowa, 126;
Sioux City Stock Yards Co. v. Fri-
bourg, 121 Iowa, 230, but see follow-
ing note; Burrow v. Johntz, 57 Kan.
778; Travelers Ins. Co. v. Caldwell,
69 Kan. 156; Kansas Bank v. State
Bank, 62 Kan. 788; Reeves v. Pierce,
64 Kan. 502, but see following note;
Drovers' Bank v. Roller, 85 Md. 495,
60 Am. St. Rep. 344. 36 L. R. A. 767;
Englar v. Offut. 70 Md. 78, 14 Am. St.
Rep. 332; Little v. Chadwick, 151
Mass. 109, 7 L. R. A. 570; (compare
Lowe V. Jones, 192 Mass. 94, 116 Am.
St. R. 225, 6 L. R. A. (N. S.) 487, 7
Ann. Cas. 551; Hewitt v. Hayes, 205
Mass. 856, 137 Am. St R. 448); Board
of Commissioners v. Wilkinson, 119
Mich. 655. 44 L. R. A. 493; Sunder-
land y. Mescota Bank, 116 Mich. 281,
but see following note; Bishop v.
Mahoney, 70 Minn. 238; Shields v.
Thomas, 71 Miss. 260, 42 Am. St. 458;
Burcher v. WaUher, 163 Mo. 461, but
see following note; State v. Bank of
Commerce, 54 Neb. 725, same case 61
Neb. 181, 52 L. R. A. 858; Morrison v.
Lincoln Bank, 57 Neb. 225; Lincoln v.
Morrison, 64 Neb. 822, but see note
following; Bllicott v. Kuhl, 60 N. J.
Eq. 333; Cavin v. Gleason, 105 N. Y.
989
§ I3501
THE LAW OF AGENCY
[book IV
cases have gone further and held that it is sufficient to trace the fund
into the estate,** but the weight of modern authority is against them,
and many of them have been overruled or limited in later cases in the
same states.
In case of the bankruptcy of the agent, neither the property nor the
money would pass to his assignees for general administration, but
would be subject to the paramount claim of the principal.**
The fact that the agent may be prosecuted criminally does not pre-
vent the principal from following and recovering his money.'*^ The
256; Matter of Hicks. 170 N. Y. 195;
Elevator Co. v. Clark, 3 N. D. 26;
Ferchen v. Arndt, 26 Ore. 121^ 29 L.
R. A. 664, 46 Am. St. 608; Muhlen-
berg V. Loan & Tniat Co., 26 Ore.
182, 29 L. R. A. 667; Freiberg v. Stod-
dard, 161 Pa. 259; Lebanon v. Bank,
166 Pa. 622; Slater v. Oriental Mills,
18 R. I. 352; Continental Nat. Bank
v. Weems, 69 Tex. 489, 6 Am. St.
85; Nonotuck Silk Co. v. Flan-
ders, 87 Wis. 237, but see note fol-
lowing. State T. Foster, 5 Wyo. 199
at 215, 63 Am. St. Rep. 47, 29 L. R.
A. 226; Metropolitan Nat. Bank v.
Campbell, 77 Fed. 705; Spokane
County V. First Nat Bank, 68 Fed.
979.
48 McLeod V. BTans, 66 Wis. 401, 67
Am. Rep. 287; Francis v. Evans, 69
Wis. 115; Bowers v. Evans, 71 Wis.
133 (all overruled in Nonotuck Silk
Co. T. Flanders, 87 Wis. 237); Peak v.
Ellicott, 80 Kan. 158, 46 Am. Rep.
90; Myers v. Board of Education, 61
Kan. 87, 37 Am. St. Rep. 263; Hub-
bard V. Irrigating Co., 53 Kan. 637.
But see Burrows v. Johntz, 57 Kan.
778; Travelers' Insurance Co. v. Cald-
well, 59 Kan. 156; Kansas Bank v.
State Bank, 62 Kan. 788; Reeves v.
Pierce, 64 Kan. 502; Davenport Plow
Co. V. Lamp, 80 Iowa, 722, 20 Am. St.
442; (but see Independent District of
Boyer v. King, 80 Iowa, 497; Jones v.
Chesebrongh, 105 Iowa, 303; Bradley
V. Chesobrough, 111 Iowa, 126; Sioux
City Stock Yards Co. v. Frlbourg, 121
Iowa, 230); Wallace v. Stone, 107
Mich. 190. (But see Board of Com-
missioners T. Wilkinson, 119 Mich.
665, 44 L. R. A. 493); Harrison t.
Smith, 83 Mo. 210, 53 Am. Rep. 571;
StoUer V. Coates, 88 Mo. 514; Evan-
gelical Synod v. Schoenlch, 143 Mo.
652; Pundmann v. Schoenlch, 144 Mo.
.149; (but see Bircher v. Walther, 163
Mo. 461). In (Colorado, Peak v. EUicott,
Bupra, and McLeod ▼. Evans, supra,
have been cited with approval. First
Nat. Bank v. Hummel, 14 Col. 259, 20
Am. St Rep. 257, 8 L. R A. 788. See
also Hopkins v. Burr, 84 Col. 602» 65
Am. St. Rep. 238; Banks ▼. Rice, 8
Col. App. 217; (but compare McClure
V. La Plata, 19 Col. 122; Holden v.
Piper, 5 Col. App. 71); Griffin ▼.
Chase, 36 Neb. 828; Capital Nat.
Bank ▼. Coldwater Nat. Bank, 49
Neb. 786, 59 Am. St Rep. 572; State
V. Midland Bank, 52 Neb. 1. But see
State ▼. Bank of Commerce, 54 Neb.
725; 8. c, 61 Neb. 181, 52 L. R.
A. 858; Morrison v. Lincoln Bank, 57
Neb. 225; Lincoln v. Morrison, 64
Neb. 822.
M Baker t New York National
Bank, 100 N. Y. 31, 53 Am. Rep. 150;
McLeod V. Evans, 66 Wis. 401, 67 Am.
Rep. 287; Peak ▼. Ellicott, 80 Kan.
158, 46 Am. Rep. 90; Chesterfield
Mfg. (^. V. Dehon, 6 Pick. (Mass.)
7, 16 Am. Dec. 367; Merrill v. Bank
of Norfolk, 19 Pick. (Mass.) 32;
Thompson v. Perkins, 3 Mason (IT. S.
C. 0, 232; Duguid ▼. Edwards, 50
Barb. (N. Y.) 388; Harrison v.
Smith, 83 Mo. 210; Stoller v. (Coates,
88 Mo. 514; Thompson v. Gloucester
City Sav. Inst (N. J.) 8 Ati. Rep.
97, and cases in preceding notes.
MRiehl T. EvansviUe Foundry
990
CHAP. Il]
DUTIES AND LIABILITIES OF AGENT
[§ I35I
principal cannot, of course, both compel payment from the agent of
the amount misappropriated, and also have a decree investing him
with the title to the property acquired with it by the agent, but he
may have a judgment against the agent for the amount of the trust
money, less the sum so recovered."*^
It is obvious, of course, as has been pointed out in many of the cases
cited in this section, that the rights herein considered, can arise only
when a trust relation existed between the parties; if the relation was
merely that of debtor and creditor, no such considerations are in-
volved.*^*
§ X351. Conclusiveness of account — ^Failure to object — ^Account
stated. — When the agent has rendered an account to his principal,
it is open to the latter to object either to the fullness or the accuracy
of the account ; or, on the other hand, to agree to it as a full and ac-
curate account of the agent's transactions. If he expressly agrees to
it, the account will then have ordinarily all the characteristics of an
account stated. But it is not necessary that the principal's acquies-
cence shall be express ; it may be implied from the facts and circum-
stances as in other cases. The essential thing is, that the facts and
circumstances relied upon, as constituting acquiescence, must be such
as reasonably lead to the inference that the principal assents to the
account as correct.***
Ass'n, 104 Ind. 70, disapproving
Campbell v. Drake, 4 Ired. (N. C)
Eq. 94, and Pascoag Bank v. Hunt»
3 Edw. (N. Y.) Ch. 583.
BiRiehl V. Evansville Foundry
ABfl'n, supra; Barker v. Barker, 14
Wis. 131; Murray v. Lydburn, 2
Johns. (N. y.) Ch. 441; Chapman v.
Hughes, 134 Cal. 641.
52 See Aetna Powder Co. v. Hilde-
brand, 137 Ind. 462, 45 Am. St. Rep.
194; Ex parte White, 6 Ch. App. 397;
Nutter V. Wheeler, 2 Low. 346, Fed.
Cas. No. 10,384; In re Linforth, 4
Saw. 370, Fed. Cas. No. 8.369.
In New Zealand Land Co. v. Wat-
son, 7 Q. B. Dlv. 374, the doctrine of
following trust funds was held not
applicable in an action by the prin-
cipal against subagents who stood in
no privity to him, and who had re-
ceived the goods for sale from the
agent, against whom the sub-agents
had a balance of account on dealings
which involved the principars goods
as well as those of other persons.
In La Marchant v. Moore, 150 N. Y.
209, plaintiffs ordered their agents,
(with whom they had a sufficient
credit) to buy certain stock for them.
The agents ordered defendants who
were their correspondents, and with
whom they had some but not suffix
cient credit, to buy the stock on the
agents' account not disclosing plain-
tiffs' Interest. Defendants bought and
paid for the stock, but retained pos-
session to secure them for the balance
due from the agents. The agents
notified the plaintiffs that they had
bought the stock as directed and
charged it to their account. Later
the agents failed. Held, that plain-
tiffs' claim to the stock is subject to
defendants' claim for the unpaid bal-
ance.
B»In Quincey v. White, 63 N. Y.
370, It was said that to give an ao-
991
§ 1352]
THE LAW OF AGENCY
[book IV'
If an agent, as for example, a factor or commission merchant, ren-
ders to his principal an account of his transactions, the principal must,
in general, if he would object to it, do so within a reasonable time,,
and if he does not, the agent is justified in treating the principal's-
silence as an admission by the principal "that the account as rendered
was just and true and that he was willing to be bound by it." ** The
question of what is a reasonable time, in this case as in others, is
usually a question of fact, to be determined by the jury," but where
only one inference could be drawn from the facts, it may be deter-
mined by the court.*'
§ 1352. Reopening account — ^Impeachment for fraud or
mistake. — ^When once an account has taken on the form of an ac-
count stated, courts are very reluctant, especially in cases between or-
dinary debtor and creditor, to allow it to be reopened;" and this
reluctance increases rapidly with the lapse of time.** Nevertheless
count delivered the force of an Re-
count stated, because of the silence
of the party receiving it, the circum-
stances must he such as to justify an
inference of assent to it. If he has
disclaimed, all liability on the ac-
count, his silence will not be deemed
prima facie proof of acquiescence,
and he is not bound to examine its
items. Woodward v. Suydam, 11
Ohio, 361.
64 Austin V. Rlcker, 61 N. H. 97;
Knickerbocker v. Gould, 115 N. Y.
533; Langdon v. Roane, 6 Ala. 518,
41 Am. Dec. 60; Burns v. Campbell, 71
Ala. 271; Mayberry v. Cook, 121 Cal.
588; Flower v. O'Bannon, 43 La. Ann.
1042; Allen v. Nettles, 39 La. Ann.
788; McCord v. Manson, 17 111. App.
118; Hall v. Sloan. 9 Phlla. (Pa.) 138;
Bveringham v. Halsey, 108 Iowa, 709;
Allen-Wist Commission Co. v. Pat-
lllo, 90 Fed. 628, 33 C. C. A. 194;
Eichel V. Sawyer, 44 Fed. 845; Wlg>
gins V. Burkham, 10 Wall. (U. S.)
129, 19 L. Ed. 884; Powell v. Pacific
Railroad, 65 Mo. 658; Darley v. Last-
rapes, 28 La. Ann. 605; Lockwood v.
Thome. 11 N. Y. 170, 62 Am. Dec. 81;
B. C, 18 N. Y. 285; Woodward v.
Suydam, 11 Ohio, 361; Benan v.
Cullen, 7 Pa. St. 281.
Where a factor has sent to his
principal accoants of two differenjt
sales of the same goods, and the
principal approves the first account,,
he is not bound to object to second
account at the peril of its being taken,
as a stated account, binding on him.
Cartwright v. Greene, 47 Barbour
(N. Y.) 9.
"Austin V. Rlcker, 61 N. H. 97;
Wiggins V. Burkham. 10 Wall. (U. 8.)
129, 19 L. Ed. 884; Darby v. Last*
rapes, 28 La. Ann. 605; Lockwood v^
Thome, 18 N. Y. 285, 62 Am. Dec. 81.
8« Allen- West Commission Co. v.
Patillo, 90 Fed. 628, 33 C. C. A. 194;
Hall V. Sloan, 9 Phila. (Pa.) 188;
Knickerbocker v. Gould, 115 N. Y.
533; Langdon v. Roane, 6 Ala. 518, 41
Am. Dec. 60; Eichel v. Sawyer, 44
Fed. 845; Freedland v. Heron, 7
Cranch (U. S. Sup. Ct.) 146, 3 L. Bd.
297; Wiggins v. Burkham, 10 Wall.
(U. S.) 129, 19 L. Ed. 884; Rich v.
Eldredge, 42 N. H. 153; Lockwood v.
Thorne, 11 N. Y. 170, 62 Am. Dec. 81.
K7 Cbappedelaine v. Dechenaux, 9-
V. S. (4 Cranch) 805, 2 L. Ed. 629;
Kilpatrick v. Henson. 81 Ala. 464;
Stevens v. Board of Supervisors, 62
Mich. 579; Hart v. Gould, 62 Mich.
262.
Bs Chappedelaine v. Dechenaux, tu^
pra; Koran ▼• Long, 11 TeoL 280;
993
CHAP. Il] DUTIES AND LIABILITIES Ot AGENT [§ I353
even as between such parties an accoant may often be impeached for
mistake or fraud ; *• thoug^h the party seeking to do so must come with
dear and definite allegations and not rely merely on vague and gen-
eral charges/^
These rules in general apply to the principal and his agent, though
where the parties thus occupy a fiduciary relation somewhat more lib-
eral rules apply as to the amount of proof required. Thus it was said
by Jessel, M. R., "when the account is between persons in a fiduciary
relation, and the person who occupies the position of accounting party
— ^that is, the trustee or agent — ^is the defendant, it is easier to open
the account than it is in cases where persons do not occupy that posi-
ti<Mi — ^that is to say, that a less amount of error will justify the court
in opening the account." '^
Moreover, the presumption of acquiescence, based upon the princi-
pal's failure to object to the account, presupposes that the principal
has not been kept in ignorance of material facts through the acts or
default of the agent As stated in one case, that presumption "can
have no application to dealings between principal and agent, where
the agent misstntes an account in a respect peculiarly within his own
knowledge, and which misstaitement cannot be discovered by an in-
spection of the account or by any other means possessed by the prin-
cipal." «
VI.
TO GIVE NOTICE TO PRINCIPAL OF MATERIAL FACTS.
§ 1353* Duty of agent to give principal notice of facts material to
agency.r— It is the duty of the agent to give to his principal reason-
able and timely notice of every fact relating to the subject-matter of
the agency, coming to the knowledge of the agent while acting as
Pratt V. Weyman, 1 S. C. Ba. (Mc- Pick. (Mass.) 212; Hopklnson v.
Cord) 89.. Jone0» 28 iU. App. 4€9; Steams ▼.
50 Chappedelaine v. Dechenaux, su- Page, 48 U. S. 818.
pra; Kilpatrlck y. Hensoa, supra; The case for re-opening is much
Stevens v. Board of Supervisors/ 62 stronger when to confidential rela-
Mich. 579; Vanderveer v. Stateslr, 39 tlons there are added charges of
N. J. Li. 593. fraud or undue Influence exercised by
so Chappedelaine v. Decheneaux, su- the agent. Rembert v. Brown, 17 Ala.
pra; Kilpatrlck v. Henson, supra; 067.
Pratt V. Weyman, 1 S. C. Eq. (Mc- tfsQale t. New York Hay Co., 64
Cord) 89; Conlln v. Carter, 93 111. N. T. App. I>1t. 72. See also Mlchoud
536; Langdon v. Roane, 6 Ala. 518, 41 v. Girod, 45 U. S. (4 How.) 503, 11
Am. Dec. 60. L. Ed. 1076; Raht ▼. Union Mining
•1 Williamson v. Barbour, 9 Ch. Co., 5 Lea (Tenn.) 1.
Dlv. 529. See also Gruby v. Smith, Where the principal in Ignorance
13 111. App. 43; Farnam v. Brook&, 9 of the fraud makes a settlement, and
63 993
§ 1353]
THE LAW OF AGENCY
[BObK IV
such, and which it may fairly be deemed material for the principal to
know for the protection or preservation of his interests.**
This duty may take on a variety of forms. As has been already
seen, the duty of loyalty to his principal may require that the agent
shall disclose to his principal the existence of adverse interests, either
in the agent or in others whom he represents, which are inconsistent
with the full and fair performance by the agent of his duty to his
principal.'*
So a duty to exercise care, or to obey instructions, may require that
the agent shall notify the principal of dangers affecting his interests,
or of the inability of the agent to accomplish the results, take the pre-
cautions, or pursue the methods contemplated by the principal at the
time the service was undertaken, so that the principal may take
steps for the protection of his interests, or give new directions in view
of the new conditions,*'^
Thus, if property of the principal in the agent's possession is at-
tached •• or seized *^ as the property of another, or if it is exposed to
danger, or if, having undertaken to insure it, he finds himself unable
to do so,** or if claims and demands in his hands to receive pa)mient
are not paid when due ; •• in these and other similar cases, which will
readily suggest themselves, it is the duty of the agent to give his
principal notice that he may take such steps as he deems desirable for
his protection, and if the agent fails in the performance of this duty to
the injury of the principal, he must respond to the latter in damages
for the loss naturally and proximately resulting from such failureJ*^
As will be seen hereafter, the existence of this duty, coupled with
a conclusive presumption that it has been duly performed, is often
made the bases of the rule that notice to the agent of facts material
to his agency shall be deemed to be constructive notice to the prin-
cipal."
enters into a new contract with the
agent the settlement is void and the
principal may recover the money
paid without obtaining a formal re-
BciBsion of the settlement. H indie v.
Holcomb, 34 Wash. 336.
«3Arrott v. Brown, 6 Whart.
(Penn.) 9; Harvey v. Turner, 4
Rawle (Pei^n.), 223; Moore v. Thomp-
son, 9 Phila. 164; Derail v. Bur-
bridge, 4 Watts A Serg. (Penn.) 305;
Hegenmyer v. ACarks, 37 Minn. 6» 5
Am. St. Rep. SOS; Elmerson v. Turner,
95 Ark. 597; Dorr v. Camden, 65 W.
Va. 226, 65 L. R. A. 348.
«« See ante, § 1207.
OS See ante, §§ 1264, 129S, 1807.
«« Moore v. Thompson, supra,
«7.!>evan V. Burbridge, supra.
"8 Callander r. Oelrichs, 5 Bing.
N. C. 58.
«« HarTey v. Turner, supra; Arrott
V. Brown, supra.
70 But the principal cannot re-
cover substantial damages without
proof of such a loss. Emerson v.
Turner, supra.
Ti See post, Book IV, Chap. V, No-
tice to an Aoent.
994
CHAPTER III
THE DUTIES AND LIABILITIES OP THE AGENT TO THIRD PERSONS
S 1354. Purpose of this chapter.
A. PRIVATE AGENTS.
1355. How subject divided.
I. IN G029TBACT.
1356. In general.
1367. Agent not personally liable
upon authorized contract
made in principal's name.
1358. Liability of agent as here
discussed assumes that
agent is of normal legal
capacity.
1. Where he acta without authority.
1359-1361. In general.
A. Assuming to act for a disclosed
principal.
1362. Theories of liability.
1863. Deceit— Warranty of author-
ity.
1364. Agreement to indemnify.
1865. Objections-*A fiictlon— Con-
flict -with Derry v. Peek.
1366. Liability not based on theory
of agent's actual wrong.
1367. Liability based on represen-
tations of matters of fact
only.
1368. Doctrine not confined to the
making of contracts.
1369. How where other party
knows or agent discloses
all the facts relating to his
authority.
1370. Where agent disclaims pres-
ent authority.
1871. How in case of public agent.
1372. To whom the liability ex-
tends.
995
1373.
1374.
1875.
1376,
1378,
1880.
1881.
1382.
1383.
1384.
1885.
1886.
Application of these rules.
I. Where authority never
conferred.
II. Where authority once ex-
isting has terminated.
1377. Authority termin-
ated by act of principal
1379. Authority termin-
ated by death of principal.
Authority terminated
1887.
1388.
1389.
1890.
1891.
1892.
1398.
by principal's insanity.
Authority terminated
by other eyents.
Authority terminated
by act of agent.
III. Where no principal in
existence — Inchoate corpo-
ratkons-^Promoters.
Provisional arrange*
ments with promoters.
Principal dead at time
authority supposed to be
conferred.
IV. Where principal in ex-
istence but principal had
not the authority to con-
fer— Ultra vire$ acts —
Liability of corporate di-
rectors and agents.
Where principal tempo-
rarily forbidden to act
Where principars insol-
vency destroys his legal
status.
When no legally re-
sponsible principal — ^Unln-
corporatsed associations.
Meetings, committees,
etc.
Legal competency of an ex-
isting principal.
Infant principals.
— Married woman.
THE LAW OF AGENCY
I BOOK IV
1394.
1395,
1397.
1398.
1399.
1400.
1401.
Where principal insane 1415.
1402.
1403.
at time authority was sup-
posed to be conferred.
1396. When agent liable on
the contract itself.
Agent not liable merely
because principal is not.
In what form of action is
agent liable.
Burden of proof.
The measure of damages.
To give damages for
loss of a particular eon-
tract, it must have been
one of value against prin-
cipal if authorised.
Eiffect of ratification.
Where a nominal agent is
the real principal.
B. Assuming to act for an undis-
closed princlpi^l.
1404. Liability of pretended agent.
2. Where, though authorized to bind
his principal, he hinds himself
or no one.
1405. In general.
1406. Authorized mseot contracting
in name of principal in-
curs no personal liability.
1407. Where agent intending to
bind principal, binds no
one.
1408. Where agent Intending to
bind principal, inadver-
tently uses apt words to
bind himself.
— Reformation of contract
1409.
1416.
1411.
1412.
to release agent.
Where agent conceals fact of
agency or name of princi-
pal.
Diflcloeing fact of
agency, but concealing
Identity of principal.
Identity of principal
1413.
1414.
sufficiently disclosed — What
terms sufficiently exdade
personal liability — Liabil-
ity by custom.
— Burden on agent to dis-
close principal.
— Disclose when.
1416.
1417.
1418.
1419-
1422.
1423.
1424.
1425.
1426.
1427.
1428.
1429.
— Agent liable although
principal might also be
held.
— Dealing with agent
must have resulted in con-
tract, etc.
Where agent acts for a for-
eign principal.
Where there- is no reBponsl-
ble principal.
1421. Where agent pledges
his own responsibility.
— How determined.
— What facts not conclu-
sive.
— Principal also may be
bound — Election.
— Agent alone liable on
neifotiable and aealed in-
strunents.
Agent may be Jointly liable
with principal.
Agent ma^ bind himself by
collateral contract.
How in case* of public agent.
Agent's right of set off and
reotwpnieiit.
tk
S. Where the agent has received
money,
1430. In general.
Where money has been paid to
agent for principal.
14^1. No liability where money
properly paid to which
principal was entitled.
14^2*1438. Liability for money
paid to him by mistake.
1434. Liability for money received
by him thrpugh wrongful
act ol principal alone.
1435. Change in agent's situ-
ation as equivalent of pay-
ment.
1436-1438. Liability where princi-
pal's right terminated af-
ter payment.
1439. Agent liable for money mis-
paid though paid over, if
agency w^ui not topwn.
996
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
1440. Agent liajble wltbovt nolice
for money iUesally ob-
tained.
144L Agent liable without notice
lor moaej obtained
through his misconduct.
1442. Agent liable where mime; is
proceeds of act which p.-in-
cipal could not lawfully au-
thorize.
1448. Agent liable for money re-
ceived without authority
and not paid over to the
principal.
1444. Agent personally liable for
return of deposits where
he has pledged his own re-
spon^>blUty.
1445. Where agent is a mere stake-
holder.
1446. Agent for undisclosed princi-
pal liable for returnable de-
posit.
h. Where money has been paid to
agent for third person.
1447. Where agent's liability tb
such third person iTttaches
— Revocation by principal.
1448. - — ' What constitutes assent
— Constderatlon.
1449. Action at law by beneficiary
against agent.
1460. TruaU tor the {)eneQt
of third persons.
S. IN TOKt.
1451. In general.
1452. Agency usually no defense In
tort cases.
1463. Agent liable for negligent
acts outside the scope of
his agency.
1454. When agent ostensible prin-
cipal.
1455. Liability of agent for tres-
pass.
1456. Principars knowl^geor
direction no defeDBS.
1457. Liability of agent for con-
version.
1458. Agent's liability for fraud,
misrepresentation or de-
ceft.
14i$9. Agent's liability for hli^ yil-
^ul or malicious acts.
1460, 14«1. Agent Uabie to third
persons for ne^Ugeiit in-
juries committed by him
while acting In perform-
ance of agency.
1462. Agent must have been an
actor, not a mere automa-
ton.
1463. Mere intermediate agent
not liable.
1464. Agent's liability for negli-
gent omissions — Misfeas-
ance— Nonfeasance.
1465. — Certain rules quoted.
1466,1407. Attempted distinction
between misfeasance and
nonfeasance.
146^-1470. Further of ^his
distinction.
1471-1473. Effect of heglnnlnfe
performance.
1474. Agent liable for condition of
premises over which he
has oontrol.
1475. Agent must be respon-
sible,
1476. Duration of liability.
1477, 1478. Other cases involv-
ing the same principal.
1479^1491. OaBOB in- wbAeh agent
held not liable.
1482. Agent not liable in tort to
third persons for breach of
principal's contract with
Uiemb.
1493. Liability of servaixt or agent
to fellow servant or agent.
1484. No liability for n^igence
of fellow agent or servant.
1485. Liability in respect to sub-
' agents.
1486. Agent who conceals
principal liable as princi-
pal to stUrftgent.
1487. Josder of agient and principal
in same action.
997
§§ 1354, I3SS]
THE LAW OF AGENCY
[book IV
B. PUBLIC AGENTS.
S 1488. What here included.
I. LIABILITY' FOB THEIB CONTRACTS.
1489. Already conBldered.
LIABILITY FOB THEIB OWK TOBTS.
1490. In general — Classification.
1491. No action by individual for
breach of duty owing
solely to the public
1492. Liability for wrongs committ-
ed in private capacity.
1. Buperior Governmental Officers,
1493. Not usually subject to pri-
vate action.
2, Judicial Officers.
1494. Judicial officers not liable
when acting within their
Jurisdiction.
1495. Liability not afTected by mo>
, tive.
1496. This immunity extends to
Judicial officers of all
grades.
9, Quasi-iudioita Officers.
1497. Quasi-Judicial officer exempt
from civil liability for his
official actions.
1498. Illustration.
1499. Liability not affected by mo-
tive.
4. Legislative Officers.
1600. Same immunity extends to
legislative action.
6. Ministerial Officers.
1501. In general— Liable to party
specially injured.
m. LIABILITY FOB THE TORTS OF THEIX
OFFICIAL SUBORDINATES.
1502. Public officer of govern-
ment not liable for acts of
his official subordinate.
1503. To what officers this rule
applies — Post officers.
— Public trustees and
1504.
1505.
commissioners.
— Not to ministerial of-
ficers.
ZV. LIABILITY FOB TOBTS OF THEIB PRI-
VATE SEBVAKTS OB AGENTS.
1506. Liable for torts of private
servant or agent.
§ 1354. Purpose of this chapter. — Attention may next be directed
to the question, what, if any, are the duties and liabilities of the agent
to third persons. In some respects, as will be seen, the problem may
depend upon whether the agent in question was a public or a private
one. This work, in general, deals only with the latter, though oc-
casional references are made to the former. By reason of this fact, the
case of the private agent will be considered firsts
A. Private Agents.
§ 1355- How subject divided. — ^In accordance with a familiar
classification, the question of the liability of the private agent to third
persons will be considered: I. In Contract. II. In Tort.
998
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I356, 1357
I.
IN CONTRACT.
§ 1356. In general — ^When the matter of the personal liability of
an agent upon or growing out of contracts made by him for his prin-
cipal is suggested, the question not infrequently arises, Why should
he be liable at all ? Naturally and normally it would seem that there
is no room for such a liability. And if a person, who so assumes to
act, does so only when he has adequate authority, and if, in acting, he
confines himself within the scope of that authority, and makes the con-
tract or does the act, — ^as is ordinarily his duty, — only in the name and
on the account of his principal, he would incur no personal liability.
As matter of fact, however, cases eonstantly arise wherein some or
all of these qualifications have been ignored. Thus it may happen
that one person may assume to act as agent for another, when he has
in fact no authority from that other so to act. Or it may happen, that,
though having adequate authority to act, he yet intentionally or tm-
intentionally so acts as not to bind his principal at all, but to pledge
his own personal responsibility.
§ 1357. Agent not personally liable upon authorized contract
made in principal's name. — Before proceeding to c(xisider the cases
in which the agent may be liable, it is worth while to recall to mind the
general rule of normal agency, which is that, where a contract is made
by an authorized agent in the name and on the account of a competent
principal, the agent incurs no liability upon or with reference to the
contract.^ The agent does not guarantee that his principal will per-
form the contract or that he can perform it. Neither does he guaran*-
tee the honesty, solvency or good faith of his principal, nor the legal
sufficiency or validity of the contract. The agent is merely the means
of making for his principal the contract itself. All matters respecting
its validity or effect, and all questions respecting its performance lie
ordinarily beyond the range of the agent's undertaking. If the agent
is liable, it must be because of the abnormality of the situation, or of
some personal undertaking which the agent assumes. The same rule
applies, of course, to the collateral promises, representations, under-
takings and other acts of the agent made in good faith, in the name of
his principal, and within the scope of the agent's authority. They bind
the principal and not the agent personalfy;
1 Pyle V. Booz, 10 Ga, App. 760; Slier v. Perkins, — Tenn. — , 149
S. W. lOCO.
999
§§ 1358-13^] T^I^ LAW OF AGENCY . [BCX)K XV
«
§ 1358. Liability of agent as here discussed assumes that agent
is of normal legal capacity. — It is also to be kept in mind that the
discussion which follows, respecting the liability of the agent to third
persons in contract, presupposes that the agent is of normal legal
capacity and competent to assume contractual obligattctos. If the
agent be an infant, an insane person, a married woman under common
law disabilities, a corporation acting ultra vires, and the like, that fact
might furnish a complete answer to a liability which the law would
otherwise attach.*
1. Where he Acts without Authority,
§ 1359* In general.^*— The question of the liabality of the agent to
third persons in contract for acts done or c<Hitracts made or attempted
to be made by him as agent, but without authority, presents many
phases.
Thus this absence or want of authority in any given case may result
either, i. Because the agent never possessed it; 2. Because once hav-
ing it, it has since expired, or 3. Because while haviog some authority,
or authority to perform this act in another way, he has exceeded his
authority, or failed to observe- dac methods prescribed for him.
The reason why tine agent never possessed the authof ity he assumed
to exercise, may be simply and sdely that the assumed principal never
conferred or intended to confer it ; or though he intended to confer it,
he failed to do so in a legal and effective manner. It may be because
there never was such a principal, or though once existent, he had
ceased to exist at the time the authority was supposed to have been
conferred. It may be because he never had legal capacity, or because
though once having capacity, that capacity had ceased to exist at the
time the authority was supposed to have been conferred.
The reason why, though once having had authority, it has ceased to
exist, may be the happening of one of the many events or changes in
the character, condition or status of the parties, such as war, death,
insanity, bankruptcy, marriage and the like, which may operate to
terminate, modify, or suspend an existing authority, or that the prin-
cipal has expressly revoked, or the agent has renounced, the authority.
§ 1360. So the question of the agent's knowledge of the
existence of bis authority and his manner of representing its existence,
may present a variety of phases.
2 Thus in Jemlson v. Citizens' Sav- a bank could not be liable as agent
ings Bank, 122 N. Y. 135, 19 Am. St. of an undisclosed principal upon an
4S2 9 L. R. A. 708, it was held that act ultra vires of the bank.
1000
CHAP, ni] DUTIES AND LIABILITIES OT AGENT [§§ I361, I362
Thus an agent in dealing with third persons may make an express
assertion of his authority to perform the act in question, (a) knowing
at the time that he has nO such authority; or (b) believing in good
faith, though erroneously, that he has »uch authority. So under 'the
same circunistances, he« may deal with third persons making no express
assertion of authority, but that only, if any, which arises froin his as-
suming to act as agent, and as before, either knowing that he has not
the requisite authority, or believing in good faith, but erroneously, that
he is competent
Or, again, believing himself to be or not to be authorized, but the
question not being free from doubt, he may fully and fairly disclose to
the other party the facts in regard to his authority and leave the other
party to determine for himself whether he will rely upon it or not.
§ 1361. ■ Still further with respect of the principal for
whom the agent purports to act ; that principal may be eit^ier disclosed
or undisclosed. That is to say, the pretended agent may assume to
act for a certain principal, naming him, or he may assume to act for a
, principal without disclosing who he is^ The former case is much the
more common ; it presents questions \yhieh do not arise in the other and
will be first considered.
A. Assuming to Act for a Disclosed Principal.
§ Z362. Thepries of liability.— Where a person has assumed as
agent to make a contract with another on behalf of a certain principal,
but without authority, or has induced the other to do some act or
change bis position so that he will be prejudiced if authority did not
exist, the question at once arises. Upon whom should responsibility
for the loss of the contract, or for the consequences of the unauthor-
ized change of position, fall? The assumed principal is, by the hy~
pothesis, not bound, and the loss must fall either upon the third person
who has dealt with the agent, or upon the agent who has induced him
to act. As between these parties, it might be urgied that it was the
duty of the other party before dealing with the agent to ascertain his
authority, and that if he failed to do so, he should be deemed, even as
between himself and the pretended agent, to have assumed the risk.
However true this might be as between the principal and. third persons,
it is ordinarily mort consistent with legal principles to hold as between
the agent and the other party, thajt, where the agent has induced
action, in reliance upon express or implied representations of author-
ity, the agent and not the other party should assume the risk. Of
these two, the agent is the one who takes the initiative; he is usually
in the better situation to know pf the existence of the authority, .and
looi
§ 1363] THE LAW OF AGENCY IbOOK IV
where he undertakes, either expressly or by implication, to induce ac-
tion, in reliance upon its existence, he would seem to be the party upon
whom the risk of its non-existence should fall.
§ 1363. Deceit — ^Warranty of authority. — Where at the time of
making such a representation of authority, the agent knows that it
does not exist, but nevertheless misleads the other to his detriment,
the case presents the ordinary aspects of deceit.
Where, however, the assumed agent has acted in good faith, be-
lieving that the authority which he assumed to exercise in fact existed,
the case is not so clear. The case does not now — at least where the
doctrine of Derry v. Peek prevails — ^present the necessary aspects of
deceit. Nevertheless, in this case also, it is thought that the agent
should bear the risk. Thus in the leading case of CoUen v. Wright,'
it was said by Willes, J. : "I am of opinion that a person, who induces
another to contract with him as the agent of a third party by an- un-
qualified assertion of his being authorized to act as such agent, is
answerable to the person who so contracts for any damages which he
may sustain by reason of the assertion of authority being untrue.
This is not the case of a bare misstatement by a person not bound by
any duty to give information. The fact that the professed agent hon-
estly thinks that he has authority affects the moral character of his act ;
but his moral innocence, so far as the person whom he has induced to
contract is concerned, in no way aids such person or alleviates the
inconvenience and damage which he sustains. The obligfation arising
in such a case is well expressed by saying that a person, professing to
contract as agent for another, impliedly, if not expressly, undertakes
to or promises the person who enters into such contract, upon the faidi
of the professed agent being duly authorized, that the authority whidi
he professes to have does in point of fact exist. The fact of entering
into the transaction with the professed agent, as such, is good consid-
eration for the promise."
The same rule has subsequently been stated in many different ways,
and among others, by Brett, L. J., as follows : "That where a person
either expressly or by his conduct invites another to negotiate with him
upon the assertion that he is Ailing a certain character, and a contract
is entered into upon that footing, he is liable to an action if he does
not fill that character; but the liability arises not from the misrepre-
sentation alone, but from the invitation to act and from the acting in
consequence of that invitation.'* *
8 CoUen V. Wright. 8 El. ft Bl. 647. Noorden, [1909] Transv. L. R. (S. C.)
* Oliver V. Bank of England, [1902] 890; Rederl Aktlebolaget Nordstjer-
21 Ch. $10. See also Blower v. Van nan v. Salvesen, 6 Ot. Sees. Cas. (5th
1002
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I364, I365
§ 1364. Agreement to indemnify. — It is usually said, in cases of
this nature, as is seen in the preceding sections that the undertaking
imputed to the assumed agent is one of warranty of the existence of
his authority ; but it may well take the form of an undertaking to in-
demnify the other party against the consequences of the lack of author-
ity. Thus in one of the most recent and important of these cases,* a
case wherein it was sought to hold the defendant responsible for in-
ducing the plaintiff corporation to transfer shares in reliance upon a
forged deed of transfer, it was said by Lord Davey in the English
House of Lords, "Lastly * ♦ * it was said * * * that this is
not an action on a warranty, and that a warranty and a contract of
indemnity are distinct, one important difference being the period from
which the statute of limitations would run. That, of course, is so, and
the appellants admit that if they were suing on the warranty their ac-
tion would be out of time. But I can see no legal reason why, in cir-
cumstances like those of the present case, it should not be held, if
necessary, that the true contract to be implied from those circumstances
is not only a warranty of the title, but also an agreement to keep the
person in the position of the appellants indemnified against any loss
resulting to them from the transaction. And I think that justice re-
quires that we should so hold. I agree with the Lord Chief Justice
tliat, as between these two innocent parties, the loss should be borne
by the respondents who caused the appellants to act upon an instru-
ment which turned out to be invalid."
§ I365, Objections — ^A fiction — ^Conflict with Deny v. Peek. — This
doctrine of an implied warranty of authority did not become estab-
lished without dissent. Thus Cockburn, C. J., in CoUen. v. Wright,*
protested against it as a remedy introduced "by the mere fiat of a ju-
dicial decree." It has been urged also that it is in conflict with the
rule that no action at law lies for an innocent misrepresentation. To
this objection Lord Bramwell in one case^ replied as follows: "The
general rule of law is clear that no action is maintainable for a mere
statement, although tintrue, and although acted on to the damage of
the person to whom it is made, unless that statement is false to the
knowledge of the person making it. This general rule is admitted by
ser.) 64; Maneer y. Sanford, 15 Mani* eCoUen y. Wrigbt, 7 E. ft B. 801;
toba, 181; Russell v. Koonce, 104 N, 26 L. J. (Q. B.) 147; in Exch. Ch.
C. 237. 8 B. ft B. 647, 27 L. J. (Q. B.) 215.
9 Sh6£9eld Corporation v. Barclay, See also 18 Law Quarterly Review,
[1905] App. Cas. 392. Same effect, 864«
Bank of England v. Cutler, [190S] 2
K. B. 208.
1003
§ 1366] THE LAW OF AGENCY [BOOK IV
the plaintif5f's cotinsel, and primtt facie includes the present case* But
then it is urged that the decision in Collen v. Wright has shown that
there is an exception to that general rule, and it is contended that this
case comes within the principle of that exception. I do not think that
Collen V, Wright, properly understood, shows that there is an excep-
tion to that general rule. Collen v. Wright establishes a separate and
independent rule, which, wrthout using language rigorously accurate,
may be thus stated : if a person reqAiests and, by asserting that he is
clothed with the necessary authority, induces another to enter into a
negotiation with himself and a transaction with the person whose au-
thority he represents that he has, in that case there is a contract by
him that he lias the authority of the person with whom he requests the
other to enter into the transaction."
The doctrine of Collen v. Wright has also been alleged to be in con-
flict with that of Derry v. Peek.* To this objection, Lord Halsbury
in a recent case • replied as follows : "I have not the least notion how
that state of the law is supposed to have been shaken by the decision
in Derry v. Peek. We have more than once been informed that Derry
V. Peek is supposed to have altered the law. I do not think Derry v.
Peek has anything to do with it. Derry v. Peek was an action for
deceit, and this house held that where it was an action for deceit vou
must prove deceit, and you mast prove mah fides on the part of the
person who deceived the other. I suppose that was no new law."
§ 1366. Liability not based on theory of agtntls actual wrong. —
In Smout V. libery" it was said to be "the true principle derivable
from the cases, that there must be some wrong or omission of right on
the part of tjbe agent in order to make him personally liable on a con-
tract made in the name of his principal.'' But as is pointed out by
Kekewich, J., in a recent case,^* the present doctrine "does not proceed
on the footing of there having been any wrong, or (xnission of right,
on the part of the agent in order to make him personally liable in re-
spect of a contract made in the name of his principal, and the conclu-
sion in Smout v. Ilbcry, that such wrong or omission of right, on the
f Dickson v. Rewler'a Telesram Oo., « Derry ▼. Peek, 14 App. Cas. 387.
L. R. 3 C. P. Div. 1. See also, per » Starkey v. Bank of Ehigland,
Lord Davey, in Starkey v. Bank of [1903] App. Cas. 114. See also
England, [1993] App. Cas. 114, at 118. Blower v. Van Noorden, [1909]
Compare Sir Frederick Pollock in 6 Transv. L. R. (S. C.) 890.
Law Quarterly Review at p. 415. w Smout v. Ilbery, 10 M. A W. 1, at
Also, F. R. Y. Radcllffe in 18 Law p. 11.
Quarterly Review at p. 364. " Halbot ▼. Lens, [1901] 1 Oh. 344,
at p. 349.
1004
CHAP. Ill J
DUTIES AND LIABILITIES OF AGENT
l^ n^7
part of the agent is necessary, must be taken to have been negatived
by Collen v. Wright, which was decided fifteen years later. The con-
clusion, therefore, is that, in order to enabJe a plaintiff to maintain ans
action on such a contract, he must prove a misrepresentation in fact, —
that is to say, a representation by the defendant that he was author-
ized to sign on behalf of an alleged principal when in fact he was not
so authorized, — but he need not prove that this misrepresentation was
due to an omission or wrong of the party signing."
§ 1367. Liability based on repnresentations of matters of fact only.
This implied warranty by the agent of his authority must ordinarily
be limited to its existence as a matter of fact, and not be held to include
a warranty either of its existence or of its adequacy or sufficiency, in
point of law.**
Thus in a case often referred to,*' Jt was said by Mellish, L. J.,
"though I have not found any case in the courts of law on the ques-
tion, I have no doubt myself that it would be held that if there is no
misrepresentation in point of fact, but merely a mistake or misrepre-
sentation in paimt of law, thalt is to say, if the person who deals with
the agent is fully aware in point of fact what the extent of the author-
ity of the agent is to bind his principal, but makes a mistake as to
whether that authority is sufficient in point of law or not, under those
circumstances I have no doubt that the agent would not be liable.
For instance, supposing when an agent comes and professes* to make a
contract on behalf of his principal, instead of trusting his representa-
i2Beattie v. Lord Bbury, L. R. 7
Ch. App. 777; Thilmany v. Iowa Pa-
per Bag Co., 108 Iowa, 357, 75 Am. St.
Rep. 259; Kansas Natl Bank T. Bay,
62 Kan. 692, 54 h. R. A. 408, 84 Am.
St. Rep. 417; Abeles v. Cochran, 22
Kan. 406, 31 Am. Rep. 194; Holt v.
Wlnfleld Bank, 25 Fed. 812.
In Walker v. Bank of New York, 9
N. T. 582, it is said the doctrine
"clearly does not extend to cases
where there is no mistake, misrep-
resentation or deception as to any
matter of fact, although for some
legal reason the principal miCy not be
bound. One party is presumed to
know the law as well as the other,
and each contracts at his peril as to
the legal effect of what is done."
In Michael v. Jones, 84 Mo. 578, it
is said: "Where all the facts are
known to both parties, and the mis-
take is one of law as to the liability
of the principal, the fact that the
principal can not be bound is no
ground for charging the agent." To
same effect are Western Cement Co.
V. Jones, 8 Mo. App. 373; Humphrey
V. Jones, 71 Mo. 62; Ware v. Morgan,
67 Ala. 461; Hall v. Lauderdale, 46
N. y. 70.
Where the other party knows that
the agent purports to act only by vir-
tue of an oral authority, he can not
hold the agent liable for the failure
of a contract for which the law — as
both are bresumed to know — requires
a written authority. McReavy v.
Eshelman, 4 Wash. 757.
13 Beattie v. Lord Ebury, L. R. T
Ch. App. 777, at 800.
1005
§ 1368] THE LAW OF AGENCY [bOOK IV
tion that he has power to bind his principal, the person dealing with
the agent were to ask to see his authority, and a power of attorney
executed by the principal was shown to him, and he took the opinion
of his lawyer as to whether the power of attorney was sufficient to
bind the principal, and was advised that it was sufficient to bind the
principal, and then after that a contract was made, and it turned out
when the point was raised in a court of law that the power of attorney
was insufficient — under such circumstances J I am clearly of opinion
that there would be no warranty on the part of the agent that the
power of attorney was good in point of law."
§ 1368. Doctrine not confined to the making of contracts. — The
act which the agent assumes to do need not be the making of a con-
tract, although in fact it most frequently is so. "As a separate and
independent rule of law," said Lord Davey is a recent case," the doc-
trine of Collen V. Wright, "is not confined to the bare case where the
transaction is simply one of contract, but it extends to every transac-
tion of business into which a third party is induced to enter by a rep-
resentation that the person with whom he is doing business, has the
authority of some other person." It may therefore consist in inducing
the other party to do or refrain from doing some act, which the as-
sumed principal might call upon him to do or refrain from doing.
Thus, for example, the agent by an assumption of authority to demand
it, may induce the payment of money, the delivery of goods, the sur-
render of securities, the discharge of liens, the alteration of records, the
transfer of stocks, and many other similar acts which will readily
suggest themselves. As to many of these cases, the rules already sug-
gested would be adequate, but a broader statement of the principle has
been made, which is undoubtedly sound and which would be raore ap-
propriate to many of the cases here suggested. Thus in a recent case
before the English House of Lords,*' where the question was as to
the liability to the plaintiff of one who had induced the plaintiff to
transfer stocks in reliance upon an instrument of transfer which
proved to have been forged, it was said by Lord Davey: "I am of
opinion that where a person invested with a statutory or common law
duty of a ministerial character is called upon to exercise that duty on
the request, direction, or demand of another (it does not seem to me
to matter which word ypu use) and without any default on his own
part acts in a manner which is apparently legal but is, in fact, illegal
and a breach of that duty, and thereby incurs liability to third parties,
14 Starkey v. Bank of England. " Sheffield v. Barclay, [1905] Api*.
[1903] App. Cas. 114. Caa. 892, at 399.
1006
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1369
there is implied by law a contract by the person making the request to
keep indemnified the person having the duty against any liability
which may result from such exercise of the supposed duty. And it
makes no difference that the person making the request is not aware
of the invalidity in his title to make the request, or could not with rea-
sonable diligence have discovered it."
§ 1369. How where other party knows or agent discloses all the
facts relating to his authority. — If the true principle be, as has been
pointed out, that the liability of the agent is based on his untrue rep-
resentation or warranty, however innocent, of a material fact, namely
the fact of his authorization, the other party must, in this case, as in
other similar ones, show that he relied upon the representation and
was misled by it to his detriment. If, on the contrary, he did not rely
upon the representation but on his own knowledge or upon other evi-
dence, or if, because he knew the facts, or was charged with notice of
them, he was not misled by the agent's representation, he cannot re-
cover.
So where the agent, acting in good faith, fully discloses to the other
party, at the time, all the facts and circumstances touching the author-
ity under which the agent assumes to act, so that the other party from
such information or otherwise, is fully informed and may decide for
himself as to the existence and extent of the authority, the agent can-
not be held liable,^® unless he has, in some way, expressly assumed the
responsibility. It is of course essential to this immunity that there
shall have been a full and fair disclosure, and if the agent conceals or
misrepresents material facts to the detriment of the other party, he
cannot claim exemption.^^
i« Newport v. Smith, 61 Minn. 277;
LeRoy v. Jacobosky, 136 N. G. 443, 67
L. R. A. 977; Thllmany v. Iowa Paper
Bag Co., 108 Iowa, 357, 75 Am. St.
Rep. 259; Kansas Nat'l Bank v. Bay,
62 Kan. 692, 84 Am. St. Rep. 417, 54
L. R. A. 408; Dillon v. Macdonald, 21
New Zeal. L. R. 45; Blower v. Van
Noorden, [1909] Transv. L. R. (S. C.)
890.
Where the agent, in signing, re-
cites that he signs as agent, "by tele-
graphic authority of" a named princi-
pal, and there was also testimony
that this form of signing was adopted
In the trade to negative the impli-
cation of a warranty, the agent was
held not bound. Lrilly v. Smales,
[1892] 1 Q. B. 456.
Where the assumed agent is also
a principal in the transaction he may
be personally liable on his own prom-
ise although the other party knew
that he was unauthorized to bind the
others associated with him. Guther-
less V. Ripley, 98 Iowa, 290.
17 Newman v. Sylvester, 42 Ind.
112; Ogden v. Raymond, 22 Conn.
379. 58 Am. Dec. 429; Walker v.
Bank, 9 N. Y. 582; Jefts v. York, 10
Cash. (Mass.) 392.
1007
§§ 137^^^373] THE LAW OF AGENCY . [bOOK IV
§ Z370. Where agent disclaims present authority.^—If the doctrine
of the preceding section be sound, as it unquestionably is, then a for-
tiori will the agent not be liable where he expressly disclaims any pres-
ent authority, and leaves the other party to take the chances. He may,
of course, expressly undertake to procure authority or ratification, but
such an undertaking would not be lightly inferred. As was said in a
recent case : ^* "A man, of course, might say, 'I have no authority and
probably cannot obtain such authority, but yet I wiU contract to ob-
tain it, and run the risk of damages.' Such a contract is conceivable,
and would be good in law, but ought not, I think, to be inferred except
from facts leading directly to that conclusion."
§ 1371- How in case of public agent. — Where the agent is a pub-
lic agent who derives his authority from some public act or law rather
than by appointment in fact of some superior officer, and that fact is
known to the other party, the latter will be presumed to have knowl-
edge of the nature and extent of the agent's authority, it being deter-
mined by law of which every person is bound to take notice. Where
such an agent, therefore, disK:loses the source of the authority under
which he assumes to act, and practices no fraud or misrepresentation,
he will not be held liable upon the ground of an implied warranty of
authority.^®
There may, however, easily be cases of public agents whose author-
ity depends upon the same sort of considerations as private agents,
and there is then no reason for distinction.
§ 1373. To whom the liability extends. — So far as the liability of
the agent is deemed to rest upon any theory of contracts, it could in
general extend only to the party to the contract or to tliose who stand
in a situation to enforce contracts made with him. So far as it is
based upon theories of misrepresentation it would extend only to. those
to whom the representation was made and who were entitled to rely
upon it.
§ 1373. Application of these rules. — An attempt may now be
made to apply these rules to the various cases in which, for any rea-
son, there is an absence of authority to do the act assumed to be done.
For this purpose, the cases may be more or less roughly distributed
under four general heads: I. Where the authority might have been
isHalbot V. Lena, [1901] 1 Ch. 344, there, 1 Mete. (Ky.) 71. Sec also
at p. 351. Sanborn v. Neal, 4 Minn. 126, 77 Am.
i» McCurdy v. Rogers, 21 Wis. 197, Dec. 502; Sandford v. McArthur, 18
91 Am. Dec. 468; New York, etc., Oo. B. Monroe (Ky.), 411; Newman t.
V. Harbison, 16 Fed. 688; Perry v. Sylveeter, 42 Ind. 106; Dunn v. Mae-
Hyde, 10 Conn. 329; Murray ▼. Caro- donald, [1897] 1 Q. B. 555.
1008
CHAP. Ill] DUTIES AND LIABIUTIES OF AGENT [§ 1374
conferred but was not. II. Where it had once exi&ted but had for
some reason expired. III. Where, though there may have been a
pretence of authority, none could in fact be conferred because the al-
leged principal was not in existence. IV. Where the authority could
not be conferred because of the lack of capacity or legal status of the
supposed principal.
§ 1374* I. Where authority never cao£erFe(L**The simplest and
most frequent case in which the lack of authority presents itself is that
wherein an existing and competent principal who might have con*
ferred authority for the act in question, has never conferred any au-
thority at all, or, while conferring authority to do some other act,
or to do this act at some time or under some conditions, has never con-
ferred authority for the doing of this act, or for the doing of it at the
time or under the conditions existing in the present case. These cases
are not complicated by any question of the existence of a principal or
of his cott^etence to act. He simply has not conferred the authority
which the agent has assumed to exercise. In these cases the rules
above referred to have free exercise, and the agent who has either ex-'
pressly or by implication asserted an authority which as a matter of
fact he does not possess, is liable to the other party with whom he deals.
Illustrations of this liability are very numerous, and some of them will
be found exhibited in the notes.*®
20 In Collen v. Wright, [1857] 8 E. made upon defendant's application
ft B. 647, an agent to lease lands upon a forged transfer which both
noade an agreennent to leaae for a parties supposed to be genuine. Beld,
term of unauthorized length, where- that defendant must Indemnify the
by the tenant lost the benefit of the corporation.
lease. Held, that the agent was lia- In Kroeger v. Pitcairn (1882), 101
ble to the tenant. Pa. 311, 47 Am. Rep. 718, an insur-
^ In Firtank'a Executors v. Hum- ance agent issued a policy with un-
^hreys, [1886] IS Q. B. D. 54, the authorized oral waivein. After a
directors of a corporation undertook loss, the company made a successful
to pay a creditor in securities of the defence because of breaches of con-
corporation. The ppwer of the cor* ditions. Held, that the agent hiust
poration to issue oecurities of that indemnify the insured,
sort had been exhausted. Held, that In Farmers' Trust Co. v. Floyd
the directors were liable to the (1&90), 47 Ohio 6t 625, 21 Am. St«
creditor for the loss. Rep. 846, directors of a corporation
In Starkey v. Bank of England, acting in good faith but before the
[1903] App. Cases, 114, a broker act- corporation was legally authorized
Ing in good faith procured the trans- to do business, made a contract with
fer of registered securities upon a plaintiff. Held, that they were per-
forged power of attorney. Beld, that sonally liable.
he was liable to the bank. . In Kenned^ v. Stonehouse (1904),
In Sheffield v. Barclay, [1905] App. 18 N. D. 232, an agent who knew he
Cases, 392, a transfer of stock was was not authorized made a contract
64 JE009
S§ I375> 1376]
THE LAW OF AGENCY
[book IV
§ 1375. II. Where authority once existing has terminated. — ^The
questions thus far considered have been those dealing with the pos-
sibility and the fact of the actual creation of the authority in the first
instance, but as has been pointed out, the lack of authority in a partic-
ular case may arise, not because it was never conferred, but because
an authority once existing has since been in some wise terminated, and
the question now is as to the liability of the agent under such circum-
stances. The question may present itself in a variety of forms. It
may be simply as to the liability of the agent for continuing to exercise
an authority actually terminated which all the parties in question knew
to have been actually conferred by the principal. Or it may take the
form of an agent, whose authority has in fact terminated, appearing
and proposing to deal for the first time with a person who knows
neither whether the authority was ever conferred, nor, if so, whether
it still continues. A very marked distinction may exist between the
two cases, as may be seen by a comparison of the question whether the
agent is responsible to third persons fbr continuing to exercise an
expired authority which the principal le<f them to believe to exist, and
the question whether the agent is liable to third persons for continuing
to exercise a terminated authority which he alone caused them to
believe to exist.
§ 1376. Authority terminated by act of principal. — ^Where
the authority is terminated by the act of the principal, such termina-
tion, as has been already seen, usually becomes effective as to the
agent from the time that he is notified of it. As to third persons, in
the case of the so-called general agent, the termination becomes opera-
te sell land and put the buyer Into
possession. After buyer had paid the
price, he was evicted. Held, that the
agent was liable to him.
And so the agent was held liable
where he professed to be authorized
to agree to pay the plaintiff a com-
mission for securing a purchaser for
lands of a third person, when in fact
no such authority existed. Oliver v.
Morawetz (1897), 97 Wis. 332. And
so where the owner of the land was
a corporation. Oroelta v. Armstrong
(1904), 125 Iowa, 39.
In Cochran v. Baker (1899), 84
Ore. 555, an agent who had under-
taken to sign a bond of indemnity
without authority was held liable to
the plaintiff who had relied upon it.
In Anderson t. Adams (1908), 43
Ore. 621, an agent made a lease to
the plaintiff of certain land. an4^
without authority agreed to furnish
water for irrigating. The plaintiff
entered into possession and planted
a crop, which was lost for lack of
water. Held, that the .agent was
liable.
See also Argerslnger v. Macnaugh*
ton, 114 N. Y. 586, 11 Am. St. Rep.
687; Lane v. Corr, 156 Pa. 250; West
London Comm. Bank y. Kltson, L.
R. 13 Q. B. D. 360; Duffy ▼. Mallln-
krodt, 81 Mo. App. 449; Campbell T.
Muller, 19 N. Y. Misc. 189; Taylor v.
Nostrand, 134 N. Y. 108; Brawning t.
Marvin, 100 N. Y. 144; Bush v. Cole,
28 N. Y. 261, 84 Am. Dec. 343.
lOIO
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ 1377, ^37^
tive when they are notified. When the agent is employed to act on
a particular occasion or for a given transaction only, no presumption
can ordinarily arise that the authority will continue upon other oc-
casions or for other acts, and no notice of its termination by its own
limitation is usually required. But if the principal terminates such an
authority before its execution, he must ordinarily give notice as in
other cases.
Where notice to third persons is required, a third person, ignorant
of the termination, may often hold the principal even though the agent
knew that his authority was terminated. If both the agent and the
other party were ignorant of the termination, the principal and not the
agent would be liable. If the agent but not the other party knew of
the termination, the other party, being still able to recover of the prin-
cipal, would ordinarily have no substantial claim against the agent,
although the agent's warranty of authority might in fact be broken.
Where notice to the agent but not to third persons is required, the
principal would be liable to the other party usually until the agent had
been notified of the termination. If the agent assumed to act after
notice to him, in such a case, he would undoubtedly be liable to the
other party.
§ 1377. — — But, as has been seen, there are many cases in
which the authority of the agent is really a conditional one, that is to
say, it is not to be exercised if before its execution the desired end
has been attained in some other way. Thus where brokers are em-
ployed to sell land, for example, it is ordinarily said that the authority
of each broker is conditioned upcm the fact that the land is not pre-
viously sold by the principal in person or by some other broker. In
such a case, the broker himself may not be entitled to notice before
such a revocation ; and in any case in which third persons may fairly
be charged with notice of the same condition, they would not be en-
titled to notice, and would have no action against the agent for a
loss of authority resulting from the exercise of the reserved power.
§ 1378. Authority terminated by death of principal — As
has been seen in an earlier chapter,-^ the death of the principal op-
erates usually, ipso facto, to terminate the authority of the agent,
even though both he and the person with whom he deals are ignorant
of the death. Where the authority has thus been terminated by death,
and the agent knows it but the other party does not, the agent who
continues to act should be held responsible. If the other party knew
of the death but the agent did not, the agent would not be responsible
iiAnte, § 652.
lOIX
§ 1378]
THE LAW OF AGENCY
[book IV
because the other party has not relied upon any implied representation
of the agent. If both parties are ignorant of the death, more difficulty
arises. Comparatively few cases in this field have arisen. In the
leading case of Smout v. Ilbery,** the defendailt was the widow of an
Englishman who had sailed for China leaving his family at home in
defendant's charge, and who had died on the outward voyage, but
whose death was not known at home until five months after it had
occurred. The plaintiflF was a dealer who had supplied goods to the
family before the husband sailed, during his voyage and down to the
time of the news of his death, and even afterwards. The action was
against the widow to recover the price of goods supplied after the
date of her husband's death atid before it was known. It was held
that the defendant was not liable. The case was decided in 1842, fif-
teen years before CoUen v. Wright, and of course long before the re-
cent extensions of the doctrine of the latter case. After reviewing
the authorities then existing upon the subject of the liability of the
agent for misrepresentations as to his authority, it was said by Alder-
son, B. : "The present case seems to us to be distinguishable from all
these authorities. Here the agent had in fact full authority origi-
nally to contract, and did contract in the name of the principal. There
is no ground for saying, that in representing her authority as continu-
ing, she did any wrong whatever. There was no mala fides on her
part ; no want of due diligence in acquiring knowledge of the revoca-
tion ; no omission to state any fact within her knowledge relating to it,
and the revocation itself was by the act of God. The continuance of
the life of the principal was, under these circumstances, a fact equally
within the knowledge of both contracting parties. If, then, the true
principle derivable from the cases is, that there must be some wrong or
omission of right on the part of the agent, in order to make him per-
sonally liable on a contract made in the name of his principal, it will
follow that the agent is not responsible m such a case as the present.
And to this conclusion we have come."
«« l&mout ▼. Iftery, 10 M. & W. 1.
To same effect, Oinochio v. Porcella»
3 Bradford (N. Y.), 277.
See also, Carriger v. Whlttington,
26 Mo. 311, 72 Am. Dec. 212; Jen-
kins T. Atkins, 1 Humph. (Tean.)
294, 34 Am. Dec. 648.
In Salton v. New Beeston Cycle Co.,
[1900] 1 Ch. 4S, it was held that the
principal of Smout v. Ilbery applies
to a solicitor representing a party in
an acthm, and it applies to a revo-
cation of authority by the dtssolu-
tion of a company as well aa by the
death of an individual.
But in Yonge v. Toynbee, [1910] 1
K. B. 215, Salton v. New Beeeton
Cycle Co., supra, la repudiated, and
the majority of the Judges were of
opinion that Smout ▼. Ilbery was no
longer law.
IOI2
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I379, I38O
§ 137I). i As pointed out in this case^ the result of the de-
tennidation is tiftat no one is liable on the contract, wnereas, by the
rule fotind applicable in the cases prcviottsly considered, the agent is
usually liable in some iorm when the principal is not. It has more-
over been already observed, with reference to this case, that it has
been tibooght in later cases,** to have been negatived by Collen v.
Wright, so far as the liability of the a^ent is made to depend upon
some wrong or omission of right upon the part of the agent. If that
conclusion be sound, the case is left to stand, if at all, upon the ground
that, the principal having personally held the agent out to the plaintiff
as one having* authority, the agent was not liable for continuing to
exercise it, after it had in fact been revoked by death, an event not
actually known to either party, and of which both had equal means of
knowledge. The case may be thought to be analogous to the dissolu-
tion of a partnership by death, where no notice is rcjquired to be given
because, it is said, among other reasons, that death itself is an event so
likely to be attended by publicity that no notice of it need be given.
The case doe^ not diecide the other question suggested as to the liabil-
ity to the agent not previously known or dealt with as such, but who,
for the &rst time, appears and proposes to deal as agent by virtue of
an authority which has then in fact been terminated. If the liability
of an assumed anient depends, as is painted out in the more recent
cases, upon bi^ express or implied represemtalion of the existence of
an authority when none in fact exists, it would seem that this repre-
sentation may ariie from his conduct as well where it has been termi-
nated as where it never existed. The only escape from this conclu-
sion would be to say that the effect of his representation is that the
authority once existed and has not to his knowledge been terminated.
But this is to narrow the effect of the representation to a greater
degree than seems warranted by the later cases.**
§ 1380. — — Authority terminated by principal's insanity. —
The distinction suggested in the preceding section, that where the prin-
cipal himself has held tl^e agent out as such, the agent will not be
responsible for continuing to exercise the authority until he has had
notice of its termination, has been appH^ in the case of the principal
becoming insane. In tfee leading case of Drew v. Nunn,*** where a
wife had been acting as agent for her husband luntil he became insane,
23 See Halbot v. Lens, [1901] 1 Ch, as Drew v. Nubh. U R. 4 Q. B. D.
344. 661.
2* See Yonge v. Toynbee, [1910] 1
K. B. 215, supra.
I0I3
§§ I381-I383] THE LAW OF AGENCY [BOOK IV
It was said by Brett, L. J. : "It seems to me that an ag^nt is liable to
be sued by a third person, if he assumes to act on his principal's behalf
after he had knowledge of his principal's incompetency to act. In a
case of that kind he is acting wrongfully. The defendant's wife must
be taken to have been aware of her husband's lunacy ; and if she had
assumed to act on his behalf with any one to whom he himself had not
held her out as his agent, she would have been acting wrongfully, and>
but for the circumstance tliat she is married, would have been liable
in an action to compensate the person with whom she assumed to act
on her husband's behalf. In my opinion, if a person who has not been
held out as agent assumes to act on behalf of a lunatic, the contract is
void against the supposed principal, and the pretended agent is liable
to an action for misleading an innocent person."
But in a very recent case *• in which solicitors, who had had author-
ity to act for a client, instituted an action in his name after he had,
without their knowledge, become insane, it was held that the solicitors
were personally liable to the other party for the costs, and the doctrine
of a warranty of authority was affirmed and applied. A majority of
the judges were of the opinion that Smout v. Ilbery was no longer law.
§ 1381. ' Authority terminated by other eveats. — More or
less similar rules would doubtless be held to apply where the authority
was terminated by such events as war, bankruptcy or marriage, as to
the two former of which at least it would doubtless be held that there
were such ordinary elements of publicity that both the agent and the
other party might be deemed equally conversant with the facts.
§ 1382. Authority terminated by act of agent— Where
after termination by the agent's own act, the agent still continues to
act as agent, the principal might be liable if he had failed to g^ve proper
notice of that fact. The basis of the agent's liability, where the prin-
cipal could not be held, at least, would be clear.
§ 1383. III. Where no principal in. existence — Inchoate corpora-
tiona— -Promoters^— As has already been pointed out, one reason for
the lack of authority may be the non-existence of the principal, who
may either never have existed at all, or, though once in existence, had
yet ceased to exist at the time when the authority was supposed to be
conveyed. The most common case of one assuming to act in behalf of
a principal not yet in existence, is that of a person, often called a
^'promoter," who undertakes to act in behalf of a corporation not yet
formed. Such a person obviously cannot now be the agent of a cor-
««Yonge V. Toynbee, [1910] 1 K. B. 215.
roT4
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1384
poration hereafter to be created, and as has often been pointed out, his
acts and contracts, without something more, cannot impose any lia-
bility on the corporation when created.*' If the person who deals
with him, knows that the corporation is not yet organized, as is the
fact in the majority of cases, there is no room for the doctrine of the
warranty of .authority. The question in such a case becomes simply,
to whom was credit extended? It is of course true that the other
party dealing in anticipation of the creation of the corporation, may
be willing to take his chances that the corporation when created will
adopt the act, or he may be willing to rely upon funds raised or to be
raised. But if on the other hand he relies upon any present personal
responsibility, it must usually be the responsibility of the person who
so assumes to act.^*
If, on the contrary, the other person does not know that the cor-
poration has not come into existence and the person who assumes to
act, assumes to act for it as an existing principal, without a disclosure
of the facts, he would doubtless be held to warrant that there was at
least such a corporation existing in fact.**
The same rules would also undoubtedly be held to apply to the case
wherein the corporation, although actually in existence, had not yet
reached the stage or complied with the conditions which entitled it to
begin business.*^
§ 1384, — — — Provisional arrangements with promoters. — In
cases in which it is known that the corporation is not yet organized,
zTBufflngton v. Bardon, 80 Wig.
635; Long v. Citizens' Bank, 8 Utah.
104.
28Kelner v. Baxter, L. R. 2 C. P.
174; 0' Rorke v. Geary, 207 Pa. 240;
Hurt y. Salisbury, 55 Mo. 810; Glenn
V. Bergmann, 20 Mo. App. 343; Booth
V. Wonder ly, 36 N. J. L. 250; Allen v.
Pegram, 16 Iowa, 163; Hub Publish-
ing Co. V. Richardson, 13 N. Y. Supp.
665; also in 59 Hun (N. Y.), 626 (no
opinion). See also, Chronicle Co. v.
Pranlclin, 119 111. App. 384.
«d See Lagrone v. Timmennan, 46
S. C. 372.
30 Where one leased an office to the
directors of a new national bank In
ignorance of the fact that the bank,
although otherwise completely organ-
ized, had no certificate from the
comptroller authorizing it to trans-
act business, and the enterprise was
subse^iuently abandoned and the of-
fice surrendered. Held, that the di-
rectors were liable in an action ex
contractu upon their Implied war-
ranty of authority to make the lease.
Seeberger v. McCormick, 178 111. 404.
Where the directors of a corpora-
tion, otherwise duly organized, but
which had no authority to make con-
tracts until ten per cent of the capital
stock had been subscribed, did make
contracts as such directors knowing
that the requisite amount had not
been subscribed, they were held per-
sonally liable, even though they be-
lieved in good faith that they were
contracting on behalf of a legally
constituted corporation. Farmers'
Trust Company v. Floyd, 47 Ohio St.
525, 21 Am. St Rep. 846, 12 L. R. A.
346.
1015
§ I385J
THE LAW OF AGENCY
[book IV
it may easily be found that informal negotiations and arrangements
with the promoter were not intended to bind him personally, but to be
at most in the nature of offers or authorities to make offers to the
corporation which it may accept, either formally or informally, when
it comes into existence and thus bend itself, tlw promoter not being
bound at all.
If there be a present contract with the promoter, it may be found
to have been upon condition that it should cease when the corporation
came into existence, or when the corporation bound itself by similar
or other satisfactory terms.
If there be a present contract with the promoter, there may also be
a novation, with the consent of all parties, "when the corporation comes
into existence by which the corporation is substituted for the promoter
in the contract
There is even authority for saying, what seems more questionable,
that though there is in form or in terms a present contract with the
promoter, he may be regarded as a mere depositary or conduit to hold
matters in suspense until the corporation, which is to be the real party,
is organized, and that then, upon assignment or transfer to it and ac-
ceptance by it of the oUigations, the promoter shall be deemed to be
released."
§ 1385- Principal dead at time authority supposed to be
conferred. — ^Whete, at the time the authority is supposed to be con-
ferred, the principal is in fact dead, as might be the case where the
principal died after mailing a power of attorney and before its re-
ceipt, or where one agent is appointed by another agent, as, for ex-
ample, by a superior agent or a general manager, the latter and the
agent he appoints both being ignorant of the death, the rules already
given would seem to impose liability in case the agent so appointed
31 The case which probably goee
furthest in this direction is that of
Heckman's Estate, 172 Pa. 185, where
a lease was made, with knowledge of
all the facts, to the contemplated
president of a proposed corporation.
It was found that it was the inteii-
tion of all parties that he should hold
it only for the corporation and until
it was in readiness to accept It.
When the corporation was organized,
he assigned the lease to the corpora-
tion which took possession and paid
the rent for a period, the bills being
made out in the name of, and being
presented to, the corporation. No
formal consent to the assignment or
release of the first leasee was ever
given. In an action against his es-
tate for rent unpaid, heldy that he
had been released. (Mr. lylachen,
Corporations, § 336, thinks the case
wrong.)
Compare Case Mfg. Co. v. Soxman.
138 U. S. 431, 34 U Ed. 1019: Shields
V. Clifton Hill Land Co., 94 Tenn. 123,
45 Am. St Kep. 700, 26 L. R. A, 509;
Van Vlieden v. Welles, 6 Johns. (N.
Y.) 85; Chicago, etc., Mfg. Co. v
Talbotton Creamery Co., 106 Ga. 84.
I0j6
CHAP, in] DUTIES AND U ABILITIES OF AGENT [§ 1 386
assiioies to act. If he acted after the knowledge of the death of his
supposed principal came to him, and the otiier party wais ignorant of
the death, the agent's liability would be ckar. Bnt even though both
the agent and the other party were ignorant, and the agent acted in
good faith, his assumption to act as agent would still appear to be
equivalent to a reiMresentation of the existence of a principal, upon
which he would be liable, unless the case of the noQ-existent principal
under these circumstances is put upon a different footing from that of
other cases of non-existing principals. It might indeed be argued that
since death is, in many cases, held to be an event of such ordinarily
inherent publicity that all persons may be charged with notice of it,
both parties here either actually knew of it in contemplation of law or
were equally in a situation to know, and tliat therefore there was no
reliance upon the agent's implied representation; but this conclusion
is at least doubtful. ^
§ 1386. IV. Where principal in existence but principal had not
the authority to confer — ^Ultra vires acts — ^Liability of corporate di*
rectors and agents. — ^Where the difficulty is that, though there is a
principal in existence, that principal does not possess the power which
has been attempted to be conferred upon the agent, a different question
arises. The typical case is that of acts done by corporate officers or
agents in behalf of the corporation but which are really ultra vires of
the corporation. Where the corporation derives its power from some
public act or law with which everybody is presumably familiar, and
the agent has done no more than to attempt to exercise in a corporate
capacity a power supposed to be conferred by the act or law, no per-
sonal liability should ensue. He ought not to be held to warrant by
implication that which is mere matter of law and as much within the
knowledge of one party as the other.*^
Where however the question turns upon a question of fact of which
the other party cannot be charged with knowledge, as whether an
otherwise duly organized corporation has yet received a necessary
certificate,^'* or the prescribed percentage of capital,** to authorize the
commencement of business, or has in fact exceeded its borrowing power
82 Thllmany v. Iowa Paper Bag Co., being ultra iHrea to do bo. Mer-
108 Iowa, 357, 75 Am. St. Rep. 259: chants* Packet Co. v. Streuby, 91
Sanford v. McArthur, 57 Ky. (18 B. Miss. 211, 124 Am. St. Rep. 651.
Mon.) 411; Abeles v. Cochran, 22 Kan. 33 Seeberger v. McCormick, 178 111.
405, 31 Am. Rep. 194. 404.
Agent not liable on contract signed 34 Farmers' Trust Co. v. Floyd, 47
by him in behalf of a corporation to Ohio St. 525, 21 Am. St. Rep. 846, 12
take stock in another corporation, it L. R. A. 346.
I017
§ 1387]
THE LAW OF AGENCY
[book IV
or its power to issue stock:,** or whether its rules do or do not give it
authority to borrow money ,*• and the like, a different rule should ap-
ply. These are matters of fact, belonging to the internal management
of the corporation, of which third parties have ordinarily no means of
knowledge and of which the officers and directors, at least, are in
position to know or inform themselves, and of the existence of which
their assumption to act may fairly be regarded as a representation.
Whether the same rule should apply to tlie ordinary agent of the cor-
poration may be open to more question, but the theory of the rule would
apply to him also, unless he has made such disclosures or disclaimers
as to bring himself within the exceptions.
§ 1 387, Where principal temporarily forbidden to act. —
Where the principal, though fully existent and in general authorized
to act, is temporarily disabled to act in a given instance or locality, —
as, for examf)le, where a foreign insurance company which has not
complied with state regulations is forbidden to do business until it
does comply, and its agents are forbidden under penalty from acting
for it, — an agent, who assumes to act for the principal during such dis-
ability with a person ignorant of it, is held personally liable if the con-
tract fails for that reason.*'
85 Flrbank'8 Bx'r v. Humphreys, 18
Q. B. Div. 54.
36 Richardson v. Williamson^ L. R.
6 Q. B. 276; Chaples v. Brunswick
Bldg. Society, 6 Q. B. Div. 696. See
also, Booth V. Wonderly, 36 N. J. L.
250; Small v. Elliott, 12 S. D. 570, 76
Am. St. Rep. 630.
87 See Vertrees v. Head, 138 Ky. 83;
Lasher v. Stimson, 145 Pa. 30; Raff
V. Isman, 235 Pa. 347.
The theory of these cases is not
entirely clear. Vertrees v. Head was
the case of a purported insurance in
a company not authorized to do busi-
ness in the state and also alleged to
be insolvent The court assumes
that the contract of insurance was
valid, though the agent may have
been liable to a penalty. The agent's
liability was placed upon the ground
"that any person who undertakes to
act as agent for a comoany not au-
thorized to do business in this state
thereby personally assumes that the
company for which he acts is solvent
and able to perform its agreements."
Lasher v. Stimson, supra, was the
case of a foreign manufacturing com-
pany not authorized to do business
in the state. The court said the
business was unlawful, that the cor-
poration had no legal existence in
Pennsylvania, where the agent as-
sumed to act, that the agent could
have no authority and was, therefore,
personally liable. The statutory pen-
alty was held to be a cumulative and
not exclusive remedy.
Raff V. Isman, supra, was a similar
case, proceeding upon the theory that
the foreign corporation had no legal
existence in the state and could not
authorize the defendant to act for it.
He was therefore held to be within
the rule of Lasher v. Stimson. In
all of these cases It was said that the
agent was presumed to know whether
the corporation for which he assumed
to act had complied with the provi-
sions of the statute and that the per-
son dealing with him might rely
I018
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I388, I389
§ 1388.
Where principal's insolvency destroys his legal
status. — Ordinarily an agent does not impliedly warrant the sol-
vency of his principal ; neither is he liable for innocent misrepresenta-
tions concerning his principal's solvency, standing, and the like, which
purport to be made and are in fact made by the principal's author-
ity. But where under the law he can have no principal other than a
solvent one, as, for example where none but solvent insurance com-
panies can do business within the state owing to the regulations pre-
scribed concerning examinations, or deposits and licenses, an agent who
assumes to have a principal may fairly be held to represent to a third
party who is ignorant of the facts that his principal is of the sort
which can only lawfully do business in the state."
§ 1389. When no legally responsible principal — Unincor-
porated associations. — Somewhat similar questions arise where a
person assumes to act for a group of persons unincorporated or other-
wise having no definite legal organization, as in the case of voluntary
unincorporated societies or associations, like unincorporated churches,
lodges, and the like. It is, of course, possible in such a case that the
assumed agent may have expressly excluded personal responsibility ,*•
or that the person extending the credit may have done so in reliance
upon voluntary payments, subscriptions or funds to be raised, but where
it does not appear that he has done so, the person who assumes to act
will usually be personally responsible.*^ In such cases usually the
upon his implied representation and
was not obliged to Investigate the
matter for himself.
In Landusky, v. Belme, 80 N. Y.
App. Dlv. 272 (affirmed without opin-
ion, 178 N. Y. 651), It was held that,
where an insurance agent- undertook
In New York to procure for the
plalntifT "a good policy In a very good
company" upon property in Pennsyl-
vania, the agent's promise imported
an undertaking upon his part to pro-
cure a contract of Insurance which
should be enforceable both in New
York where the contract was made,
and in PennsylTania where the prop-
erty was situated. The court said
that the proof showed that the policy
was not valid in either state. On the
other hand, in Jones v. Horn, 104 Mo.
App. 705, the opposite conclusion was
reached. The court said that the con-
tract was not invalid, and that the
only liability of the agent was the
statutory penalty for assuming to in-
sure property for a company not au-
thorized to do business in the state.
88 Vertrees v. Head, 138 Ky. 83.
88 Thus in Shoe ft Leather Nat.
Bank v. Dix, 123 Mass. 148, 25 Am.
Rep. 49, where persons who were act-
ing as trustees of a number of unin-
corporated associates made a contract
beginning "We as trustees but not
individually promise to pay," etc.,
and signed it in their own names
with the word "trustees" added, it
was held that they could not be held
personally liable.
M In a number of cases, committees
and others acting for unincorporated
societies, churches, lodges, and the
like, have been held personally liable
for services, materials, etc., ordered
IOI9
§ 1389]
THE LAW OF AGENCY
[book IV
fact that there is no leg^ly responsible principal will be equally within
the knowledge of both parties, and in that event, as in the similar case
referred to in a preceding section, there will be no occasion for re-
sorting to an implied warranty of authority. The question here is,
rather, to whom was the credit extended. The rule in such cases,
it is said, "is founded upon a presumption of fact, and is not the ex-
pression of any positive or rigid legal principle. The presumption re-
ferred to is that the parties to a contract contemplate the creation of a
legal obligation capable of enforcement, and that, therefore, it is under-
stood that the obligation shall rest on the individuals who actively par-
ticipate in the making of die contract, because of the difficulty in all
cases, the impossibility in many, of fixing it upon the. persons taking
part in or submitting to the action of the evanescent assemblage. If,
however, the person with whom the contract is .made, exjwessly agrees
to look to another source for the performance of its obligations, or if
the circumstances be such as to disclose an intention not to charge the
agent, as where the other agrees to accept the proceeds of a particular
fund, there is no Icmger reason to indulge tbie presumption, SAxd it may
be rebutted by proof of such facts." *^ Ther^ may of course be cases,
even in this field, where the lack of le^l responsibility may not be ap-
parent, and in which express or implied representations of matters of
fact will make the assumed agent liable.
by them. Fredendall t. Taylor, 23
Wis. 538, 99 Am. Dec. 203; Winona
Lumber Co. v. Church, 6 S, D. 498;
Clark v. O'Rourke, 111 Mich. 108, 66
Am. St. Rep. 389; Comfort v. Graham,
87 Iowa, 295; McCartee v. Chambers,
6 Wend. (N. Y.) 649, 22 Am. Dec.
556; Learn v. UpsUll, 52 Neb. 271;
Codding V. Munson, 52 Neb. 580, 66
Am. St. Rep. 524; Ash y. Ckiie. 97 Pa.
493, 39 Am. Rep. 818; Lewis v. Tilton,
64 Iowa, 220, 52 Am. Rep. 436; John-
son y. Corser, 34 >liim. 355.
Other cases are Burton v. Grand
Rapidfl Furn. Co., 10 Tex. Civ. App.
270; SummerhlU v. Wilkes, — Tex.
Civ. App. , 133 S. W. 492, in the
latter of which the rule was applied
to make personally liable the chair-
man of a building committee who
had signed a note- in the name of an
unincorporated religious society.
Some of the cases have undoubt-
edly carried the presumption very
far, and treated it more as a pre-
sumption of law than merely one of
fact.
See alsQ, ca«ea cited ante, § 187.
4>i Codding v. Munson, 52 Neb. 580,
66 Adl St. Rep. 624. See also, to Uke
effect, fiichbaum v. Irons, 6 W. 4k 8.
(Pa.) 67, 40 Am. Dec. 540, and caseB
cited in the folk)wiag aeoticMi. Where
it clearly appears that the plaintiff
agreed to look to funds to be raised
in a certain way, ther« is no personal
liability. Landman v. Eatwistle, 7
Exch. 632.
So where it was shown that a loan
made to a church was made in spe-
cific reliance upon the security of
certain lands belonging to the church,
after a personal investigation, and
without reference to the names of the
church trustees, their finasnclal stand-
ing, or ability to pay, it was held that
the trustees who had signed the ob-
ligations were not personally liable
1020
CHAP, ml
DUTIES AND LIABILITIES OF AGENT [§§ I39O, I39I
8 1390-
Meetings, coaunittees^ etc* — ^The same considera*
tions apply, and perhaps still more strongly where the only principal
disclosed is such an evanescent and. ephemeral body as a public meet*
ing.
Thus where a committee, appointed by a political meeting for that
purpose, ordered a public dinner for the party, it was held that the
members were personally liable. There was here no legal body to be
bound. It did not rise to the dignity of a voluntary society or a club,
for, said the court, /'a club is a definite association organized for in-
definite existence ; not an ephemeral meeting for a particular occasion,
to be lost in the crowd at its dissolution. It would be unreasonable to
presume that the plaintiff agreed to trust to a responsibility so des-
perate, or furnish a dinner on the credit of a meeting which had van-
ished into nothing. It was already defunct ; and we are not to imagine
that the plaintiff consented, to look to a body which had lost its indi-
viduality by the dispersion of its members in the general mass.'' *'
Here also, as in the cases in the preceding section, there would ordi-
narily be no room for a warranty of authority, and the liability would
be directly upon the contract itself.
§ 1391. Legal competency of an existing princi^aL — ^As has been
already seen,*' the implied warranty of authority upon the part of an
agent does not ordinarily arise where the question is merely one of
law. Both parties harve usually eq^ual knowledge of the law and equal
knowledge or opportunity to acquire knowledge as to its effect. Btot
in many cases legal capacity d^>ends wholly upon matters of fact, and
the agent who assumes to act as though capacity existed, must be held
to represent the existence of the facts upon which the capacity de-
pends.** In the case of a corporation organized under a public act,
although the church was not Incor- meeting to open and improve a pub-
porated. BlweH r. Taeom, 6 Tei:. Civ.
App. 397.
^sEichbaum y. Irons, 6 Watts ft
Serg. (Penn.) 67, 40 Am. Dec. 540.
See also, Blakely v. Bennecke, 59 Mo.
193 (an action upon an instrument
signed by one as captain of a mili-
tary company); Edings v. Brown, 1
Rich. (S. C.) 255; Steele v. McBlroy,
1 Sneed (Tenn.), 341 (where the
committee of an unincorporated Ma-
sonic lodge were held personally lia-
ble).
In Learn v. UpstlU, 52 Neb. 271,
the agents, who represented a public
He road, were held liable personally.
In Codding v. Munson, 52 Neb. 680,
66 Am. St. Rep. 524, the agent, actr
ing for a public meeting to secure the
location of an asylum in their town,
was held personally liable.
So where an agent acted for a
party of excursionists, he was held
personally liable. N. Y., eta, Steam-
ship Co. V. Harbison, 16 Fed. 688.
«iinfe, § 1367.
44 Thus where a corporation has no
authority to make coatraicts until a
certain percentage of its capital has
been paid in, and this had not been
102 1
§§ 1392, 1393] THE LAW OF AGENCY • [bCX)K IV
there would ordinarily, as has been seen, be deemed to be no implied
representation concerning its legal capacity.*" But where the corpora-
tion is organized under a private act, there is said to be a warranty that
there is a corporation in fact having the capacity to authorize the act.**
§ 1392. Infant principals. — With respect of the infant
principal, the question would seem to be whether assuming to act as
agent is equivalent to a representation that the agent has in fact a
principal who can not only confer authority and has done so, but who
can make binding contracts. By the weight of modern authority, the
infant's appointment of an agent is not void, and his act in many cases
through an agent, as for example in the case of the purchase of neces-
saries, would be binding and not even voidable. Even in the case
where the transaction would be voidable, it is valid until avoided and
can be avoided by the infant only. Such authority as there is upon
the question is to the effect that the mere infancy of the principal is
not a breach of the agent's implied warranty of authority.'*^ But it
may well be open to question whether a third person dealing with an
agent has not the right to assume that the agent undertakes to deal for
a principal having normal legal capacity. The third person, however,
would ordinarily suffer no appreciable loss until the act had been re-
pudiated.
§ 1393. Married woman. — ^The case of the married woman
as a reputed principal at common law is obviously different from that
of the infant, unless it be agreed that the latter 's appointment of an
agent in any case would be void. Cases involving reputed agency for
a principal who was a married woman are very rare. In the only one
discovered, wherein a man purported to act, though without any author-
ity, for a person who was really his wife, though that did not appear
on the face of the contract, it was held that he was personally liable
upon the contract, as one purporting to act for an irresponsible prin-
cipal.**
done, directors who make a contract In Continental Nat. Bank v.
for it with knowledge of the facts are Strauss, 137 N. Y. 148 (the case of an
held to impliedly represent that this infant partner), it is said that there
condition has heen complied with, is no presumption that the minor
and they are liable if it has not will set up his incapacity. "To the
Farmers' Trust Co. v. Floyd, 47 Ohio contrary is the presumption. It
St. 525, 21 Am. St. Rep. 846, 12 L. R. would be an Immoral presumption to
A. 346. entertain that a person, who enters
" See ante, § 1385. into engagements with others, will
*« West London Commercial Bank resort to the plea of infancy to avoid
r. Kitson, 13 Q. B. Div. 360. them thereafter."
*T Patterson v. Lipplncott, 47 N. J. 48 Edings v. Brown, (1845) 1 Rich*
L. 457, 54 Am. Rep. 178. (S. Car.) 255.
1022
CHAP, III]
DUTIES AND LIABILITIES OF AGENT [§§ I394, 139$
§ 13^4-
Where principal insane at time authority was sup«
posed to be conferred. — Where, at the time the authority was sup-
posed to be conferred, the principal was so far insane that he had no
capacity to do or authorize the doing of the act contemplated, difficult
questions arise. If the agent knew of the insanity, or if by reason of
adjudication and the like, he was charged with notice, while the other
party did not know of it, he would be liable. If the insanity was not
obvious and there had been no adjudication, the assumption by the agent
of authority to act would still seem to be a representation upon which he
would be liable, at least so far as it could be deemed that the question
of sanity or insanity was a matter of fact.**
§ 1395. When agent liable on contract itself. — Whether the agent
can be held liable upon the contract itself which he has, without author-
ity, assumed to make, is a question which has been much discussed,
and upon which the cases cannot be entirely reconciled. It would
seem, however, that this question is one which must be determined
largely IfPfhe circumstances of each case. Where the promise is made
in the name of a principal who might have authorized it and as his
contract, the better opinion is that the agent can not be held liable upon
it, but only in an action based upon the deceit, or upon the contract of
warranty or indemnity, even in the case of a written contract, where
the assumed relation of agency appears upon the face of it.'® Some
*»See per Brett, L. J., In Drew v.
Nunn, 4 Q. B. Dlv. 661.
»ojeft8 T. York, 4 Cush. (Mass.)
871, 50 Am. Dec. 791: Long v. Col-
bnrn, 11 Mass. 97, 6 Am. Dec. 160;
BaUou v. Talbot, 16 Mass. 461, 8 Am.
Dec. 146: Jeftfl v. York, 10 Cush.
(MasB.) 395; Trowbridge v. Scudder,
11 Cush. (Mass.) 83, 87; Draper v.
Massachusetts, etc., Co., 5 AUeu
(Mass.), 339; Sherman v. Fitch, 98
Mass. 63; Bartlett v. Tucker, 104
Mass. 336, 6 Am. Rep. 240; Tucker
Mfg. Co. v. Fairbanks, 98 Mass. 105;
Simmons v. More, 100 N. Y. 140; Balt^
zen V. Nicolay, 53 N. Y. 467; White v.
Madison, 26 N. Y. 117; Taylor ▼.
Nostrand, 134 N. Y. 108; McCurdy ▼.
Rogers, 21 Wis. 197, 91 Am. Dec. 468;
Noyes v. Loring, 65 Me. 408; Johnson
V. Smith, 21 Conn. 627; Patterson v.
Uppincott, 47 N. J. L. 457, 54 Am.
Rep. 178; Taylor v. Shelton, 30 Conn.
122; Brong v. Spence, 66 Neb. 638;
Cole V. O'Brien, 34 Neb. ^8, 33 Am.
St. Rep. 616; Duncan v. Niles, 32 111.
532, 534, 83 Am. Dec. 293; Hancock
V. Yunker, 83 111. 208; Anderson v.
Adams, 43 Ore. 621; Neufeld v. Beld-
ler, 37 111. App. 34; American Surety
Co. V. Morton, 32 Okla. 687, 39 L. R.
A. (N. S.) 702; Heard V. Clegg, —
Tex. Civ. App. , 144 S. W. 1145.
"That an agent may bind himself
personally," said Church, Ch. J., in
Johnson v. Smith, 21 Conn. 627, "even
when acting really or professedly as
agent, is not denied; and in the exe-
cution of a simple contract as well as
a specialty; and this win be so, in all
cases, where, by language already ex-
pressive of such an intent, he has
substituted his own responsibility for
that of his principal. So, also, if he
use language of personal obligation
in the body of the contract, although
he may sign as agent, he will bind
himself if he had no authority to
1023
§ 1395]
THE LAW OF AGENCY
[book IV
courts have, indeed, manifested a disposition in this latter case to re-
ject the words referring to the alleged principal as mere surplusage,
and to hold the agent liable upon the remainder as upon his own con-
tract."^ This, however, as has been well said,"' is rather to make a new
bind, aad has not bound, his princi-
pal by his act. But in case of a
defective power to bind the principal,
if the agent speaks only in the lan-
guage of the principal and does no't
use apt language to bind himself, he
will not be liable on the contract thUB
made, but collaterally only for a false
assumption of authority to act for an-
other," citing Jones v. Downman, 4
Ad. ft El. (N. S.) 235. See also the
interesting discussion to same effect
in Blower v. Van Noorden, [19091
Transv. L. R. S. C. 890.
The Negotiable InetruTtients Act^-^
It is said that the Negotiable In;
struments Law has not changed the
common law as to the form of reihedy
available against an agent who signa
without authority. Haupt v, Vint, 68
W. Va. 657, 34 L. R. A. (N. S.) 518.
See also, 10 Law Notes, 104; 20 Harv.
L. Rev. 159; Bunker Neg. Inst. Law
9 22.
The statute (S 20) provides that
"Where the instrument contains or a
person adds to his signature words
indicating that he signs for or on
behalf of a principal, or in a repre-
sentative capacity, he is not liable on
the instrument if he toa8 duly au-
thorized" etc. The words italicized
ar6 not in the English Act. Profes-
sor Ames was of the opinion that, by
necessary inference, the agent was
liable on the instrument if he was
not duly authorized. See Brannan's
Neg. Inst. Law. (2d ed.), pp. 26, 242.
Judge Brewster and the draftsman
apparently concurred.
61 See Weare v. Gove, 44 N. H. 196;
Richie v. Bass, 15 La. Ann. 668;
Keener v. Harrod, 2 Md. 63, 56 Am.
Dec. 706; Meech v. Ssn\th, 7 Wend.
(N. Y.) 315; Palmer v. Stephens, 1
Den. (N. Y.) 471; Dusenberry v. Ellis,
8 Johns. Oas. (N. Y.) 70, 2 Am. Dec.
144; Feeter v. Heath, 11 Wend. (N.
Y.) 479; White v. Skinner, 13 Johns.
(N. Y.) 307, 7 Am. Dec. 381 (the rule
is now otherwise in New York, as
seen in cases cited in preceding
note); Dale v. Donaldaon Lumber Co.
48 Ark. 188, 3 Am. St. Rep. 224 {Sem-
hie); Byars v. Doore, 20 Mo. 284;
Coffman v. Harrison, 24 Mo. 524;
Clark V. Foster, 8 Vt. 98.
In Weare v. Gore, tupra, it la said
that if after striking oat the words
which show representative character,
and which the assumed aaent had no
right to put there, the words' then re-
maining are sufficient to make a per*
sonal promise, the agent will be indi-
vidually bound.
In applying such a rule, two forms
of contract must be diatinguished.
Thus, assuming John Jones to be the
reputed principal and Richard Roe
the assumed agent, let one promis-
sory note read: "John Jones promi-
ses to pay" etc., and he signed "Rich-
ard Roe, agent of John Jones;" and
let another promiflfiory note, reading:
I promise to pay" etc., he signed
Richard Roe, agent ftf John Jones."
If now in the two cases, the words
agent of John Jones" be rejected a»
unauthorised, the first note will still
upon its face contain no promise by
Richard Roe to pay, but the second
note now consists clearly of his in-
dividual promise. There are cases
holding that even in the first form
Richard Roe can be held liable upon
the contract, though It Is diflicult to
see how this can be thought to be his
promise, unless the words "John
Jones" in the body of the note be
deemed to be stricken out and the
word "I" or "Richard Roe" subati-
tuted in their place, a process which
seems clearly to result In the making
of a new contract.
«<
«
«
1024
CHAP. Ill]
DUTIES AND LIABIUTIES QW AGENT
[§ 1396
contract for the parties than to construe the one which they have made
for themselves,
§ 1396. ■■ Where the agent speaks in what would othervfise
be terms of personal responsibility, but adds recitals of agency indicat--
ing that he is acting for a principal (even though in such a manp^r as
would charge that principal if there had been one), but there was no
such principal, or at most only a fictitious or legally non-existent one,
there, according to a number of authorities, the agent may be held upon
the contract itself.**
Such a case, for example. Is Ken-
nedy V. 8tonehou8e» 13 N. D. 233, 8
Ann. Cas. 217, where the court felt
bound hy the language of the North
Dakota Code, a substantial enactment
of the Field Code, proposed but never
adopted in New York, and based upon
the doctrine of the early eases in that
state, now no longer followed. The
conrt, however, recognised that the
rule is contrary to the overwhelming
weight of authority, saying: "Few, if
any, courts have in recent years,
when not controlled by statute, fol*
lowed this rule. Indeed, it seems to
have been utterly repudiated both in
ESngland and in this country, includ-
ing New Torl^ where it had its ori-
gin."
So in Frankland v. Johnson, 147 111.
520, 37 Am. St Rep. 234, where a note
reading, "The Western Seaman's
Friend Society agrees to pay" ete.,
vmB signed "B. Frankland, Qeu,
Sup't," a recovery against Frankland
personally was sustained, upon alle*
gations that he had no authority to
bind the society, and that the de-
fendant "by the name, style and de»>
criptlon of 'The Western Seaman's
Friend Society' promised to pay the
said platntttC.** The only authorities
relief upon are a loose and generar
statement in Angell ft Ames on Cor-
porations, § 803, and an early case in
New York, where, as has been seen,
that doctrine has been long repudi-
ated.
The second class of cases presents
fewer difficulties, though even here
the clear weight of authority is to
the effect that If the contract on its
face purports to be the contract of
tho principal, no action on the eon-
tract can be mainti^ined against the
pretended agent. See the discussion
in Bartlett v. Tucker, 104 Mass. 388,
6 Am. Rep. 240.
It ts proper to observe, however. In
this connection, that. In many cases
as has been already seen, the words
"agent," "agent of John Jon^s/' and
the like, may without teferenoe to'
the question of authority be rejected
as mere descHpUo pereanae,
» Hall V. OrandaU, 29 Cah 567, 89
Am. Dee; 64; TMImany v. loWa Paper'
Bag Co., 108 Iowa, 8^7, 75 Am. St
Rep. 359; Abeles v. Codiran, 22 Kan.
410, 31 Am. Rep. 194; Holt v. Win^
field Bank (C. C), 25 Fed. 812.
In Shoe ft Leather Nan Bank r.
Dix, 123 Mass. 148, 25 Am. Rep. 49, it
is said: "It is contended that if these
defendants are not Uable upon the
contract as a note» then nobody is
liable. lDv«n if such w^re the fact,
it would not be in th« power of the
oourt, as we have alreacTy seen, to al-
ter the contract for the purpose of
giving it validity. In deciding
whether the defendants have or have
not bound themselves, we need not
decide whether they have op have not
bound their principals. Abbey v.
Chase, 6 Cush. 64.*'
Compare Knickerbocker v. Wilcox,
88 Mich. 200, 21 Am. St. Rep. 596.
ra See Woodbury v. BMr, 18 Iowa,
572 (note signed "J. J. B., President
I. R. C. Co.," binds agent until it ap>
pears that the company is capable of
6s
1025
§ 1396]
THE LAW OF AGENCY
[book IV
Clearly, if the agent who acts without authority makes the contract
in his own name only, or merely with such appendages as would in any
event be simply descriptio personae if he had been authorized, he will
be personally liable upon the contract. Here, as the expression goes,
he has used apt words to bind himself personally.***
So if, notwithistanding the fact of his assumed agency, the credit was
given to him personally, or if he has expressly pledged his own re-
sponsibility,— ^and as bearing upon this, the fact that he pretended to
act for a non-existent or legally incompetent principal, may be taken
into account, — he may be held upon the contract itself.*^*
The agent may, of course, as has been pointed out, exclude personal
responsibility by the express terms of the contract,'* or by showing
that the other party had agreed to look to particular funds, subscrip-
tions to be raised, and the like.*^^
contracting); Hurt v. Salisbury, 55
Mo. 310 (directors liable on notd
signed by them as officers of corpora-
tion before incoriK)ration articles
filed); Comfort v. Graham, 87 Iowa,
295 (officer of unincorporated associ-
ation liable to attorney he engages by
letter to do work for the associ-
ation); Allen V. Pegram, 16 Iowa, 163
(officers of a bank whose charter had
never been approved, signed a con<
veyance in the name of the bank
reading, "and we do hereby covenant,
etc."); Cane v. Sinclair, 10 Victor.
L. R. (L.) 60 (contract to sell land
to S., agent of Co.).
The following cases differ in that
the promise was in form that of the
principal and the agent signed only
on behalf of the principal but added
his own name^ Booth v. Wonderly,
36 N. J. L. 250 (directors fraudu-
lently issued policy in the name of a
company they knew had no legal ex-
istence); Lagrone v. Timmerman, 46
9. Car. 372 (insurance policy binds
officers where so-called company not
incorporated); Lewis v, Tilton, 64
Iowa, 220, 52 Am. Rep. 486 (commit-
tee bound on lease wherein club was
party of second part which they
signed "Bxecutive Committee of Clvb,
R. Tilton, S. Thrall, etc."). As to
this point they seem qnestionable.
See note 51, supra.
Where tke principal was 'entirely
fictitious and the name of the agent
nowhere appeared, the agent was not
held. Bartlett v. Tackier, 104 Maes.
386, 6 Am. Rep. 240 (negotiable note).
Where the a>ntract itself shows the
nonexistence of the principal, it must
be deemed the contract of the agent
only. O'Rorke v. Cteary, 207 Pa. 240
< where the contract read, throughout,
"D. J. G., for a bridge company to be
incorporated").
M Hall V. Crandall, 29 Cal. 567, 89
Am. Dec. 64; Knoch T. Haislip, —
Gal. — , 124 Pac. 998; McKown v.
CtettyS (Ky.), 25 Ky. L. Rep. 2070, 80
S. W. 169.
Bft See poit, § 1419.
In Raff V. Isman, 285 Pa. 847, an
agent who had made a contract for
a foreign corporation not authorized
to do business in the state, and there-
fore as the court held a ncn-ezlBtent
principal, was said to be liable oi^ the
contract.
80 See for example. Shoe & Leather
Nat Bank v. Dix, 128 Mass. 148, 25
Am. Rep. 49.
BTSee for example. Landman v.
Bntwistle, 7 Bxch. 632; Blwell v. Tar
tum, 6 Tex. Civ. App. 397.
1026
CHAP, III]
DUTIES AND LIABIUTIES OF AGENT
[§ 1397
§ 1397-
Agent not liable merely because principal is not. —
The doctrine sometimes asserted that wherever the agent, because of
his lack of authority, fails to create a right of action against his prin-
cipal upon the contract, he makes himself liable thereon, cannot there-
fore be sustained as a general rule.^^ The agent is only liable on the
contract in those cases in which references to a .principal fail to re-
lieve otherwise personal promises because no such principal exists, or
in which he has used apt words to bind himself, or has expressly
pledged his personal responsibility, or in which tl%e credit was givoi to
him personally .*•
B8 Dusenbury y. Ellis, 8 Jolins. Cas.
(N, Y.) 70, 2 Am. Dec. 144; White v.
Skinner, 13 Johns. (N. Y.) 307, 7 Am.
Dec. 381; Rosslter v. Rossi ter, 8
Wend. (N. Y.) 494, 24 Am. Dec. «2;
ColUns v. Allen, 12 Wend. (N. Y.)
356, 27 Am. Dec. 130; Mott v. Hicks,
1 Cow. (N. Y.) 513, 13 Am. Dec. 550.
These early Mev York cases whieh
are the foundation of most of the
similar rulings in other states have
been very much modified if not en-
tirely ov«TU]ed by the later cases in
the Court of Appeals. Dung v.
Parker, 52 N. Y. 494; Baltzen v. Nico-
lay, 63 N. Y. 467; White v. Madison,
26 N. Y. 117. Thus Gillasple v. Wes-
son, 7 Port. (Ala.) 454, 31 Am. Dec.
715, is based upon the early New
York cases. See also Clark v. Foster,
8 Vt. 98; Savage v. Rix, 9 N. H. 263;
Hatch V. Smith, 5 Mass. 42; Byars v.
Doores, 20 Mo. 284; Coffman v. Har-
rison, 24 Mo. 524.
»» Ogden V. Raymond, 22 Conn. 379,
58 Am. Dec. 429. "We are aware,"
said Ellsworth, J., in this case, "that
it is not unfrequently laid down as a
rule of law that if an agent does not
bind his principal he binds himself;
but this rule needs qualification and
can not be said to be universally
true or correct. ... If the form of
the contract is such that the agent
personally covenants and then adds
If the form of the contract is other-
wise, and the language when fairly
interpreted, does not contain a per-
sonal undertaking or promise, he is
not personally liable, for it Is not hJs
contract, and the law will not force It
upon him. He may be liable, it is
true, for tortious conduct if he has
knowingly or eareleslly assumed to
bind another without authority; or,
when making the contract, has con-
cealed the true state of his authority,
and falsely led others to repose in his
authority; but as we have said, he is
not of course liable on the contract
itself nor in any form of action what-
ever."
So in a leading case in California,
the rule is stated thus: "If an agent,
in executing a contract, employ terms
which, in legal effect, charge himself
he may be sued upon the instrument
itself as a contracting party. This is
so because, by the use of such terms,
he has made the contract bis own.
But if the instrument does not con-
tain such terms, or, in other words,
contains language which in legal ef-
fect binds the principal only, the
agent can not be sued on the instru-
ment itself, for the obvious reason
that the contract is not his. If, then,
the contract is not binding upon the
principal because the agent had no
authority to make it, and is not bind-
his representative character, which^ ing on the agent because it does not
he does not in truth sustain, his cov- contain apt words to charge him per-
enant remains personal and in force, sonally, it is wholly void." Sander-
and binds him as an individual; but son, J., in Hall v. Crandall, 29 Cal.
1027
§ 1398] THE LAW OF AGENCY [bOOK IV
It may be said that this rule will residt in many cases in binding
neither the assumed agent nor his alleged principal upon the contract ••
But if the other party fails to have a remedy either upon the omtract
itself, or upon the express or implied undertaking for Authority, it will
be in those cases in which he was fully informed by the agent of the
source and nature of the authority under which he assumed to act, and
was put in a situation to determine for himself whether to rely upon
it or not ; or in which it was clearly stipulated that the agent was, in
no event, to assume responsibility.
§ Z398. In what form of action is agent liable. — ^Much question
formerly existed as to the form of action in which the agent who acts
in the name of his principal, but without auth6r5ty, is' to be held liable.
The more recent cases, howevtjr, are in substantial accord as to the
form of action which may be maintained.
*- Where an agent who knows that he has no authority, makes express
assertions that he possesses it, or so acts as to amount to an assertion
of authority, and by so doing deceives and injures the other party who
has relied thereon, it can not be doubted that an action on the case for
the deceit is an appropriate remedy.®^ At the same time, even in such
a case it is also clear that the tortious aspects of the case may be ig-
nored or waived, and an action of assumpsit upon the express or int*
plied warranty of authority be maintained instead of the action of
deceit.**
567, 89 Am. Dec. 64. To same effect, Streuby, 91 Miss. 211, 124 Am. St
see Neufeld v. Beidler, 37 111. App. Rep. 651; Abeles v. Cochran, 22 Kan,
84; Hancock r. Yunker, 83 lU. 208; 405, 31 Am. Rep. 194; Shoe & Leather
Holt V. Wlnfleld Bank,' 25 Fed. 812; Nat. Bank v. Dlx, 123 Mass. 148, 25
Abeles v. Cochran, 22 Kan. 405, 31 Am. Rep. 49.
Am. Rep. 194; Thllmany v. Iowa Pa- «i"The remedy against one who
per Bag Co., 108 Iowa, 357, 75 Am. St. fraudulently representa himself as the
Rep. 259; Cole v. O'Brien, 84 Neb. 68, agent of another, and In that capacity
83 Am. St. Rep. 616; Newman v. Syl- undertakes to make a contract blnd-
vester, 42 Tnd. 106; Duncan v. Nlles, ing^upon hla principal, Is an action
82 111. 532, 83 Am. Dec. 293; Abbey v. on the case for the deceit." Walton,
Chase, 6 Cush. (Mass.) 54; Harper v. jf., In Noyes v. Loring, 55 Me. 408,
Little, 2 Me. 14, 11 Am. Dec. 25; Stet- citing Long v. Colburn, 11 Mass. 97,
son V. Patten, 2 Me. 358, 11 Am. Dec. 6 Am. Dec. 160; BaUou v. Talbot, 16
111; McHenry v. Duffleld, 7 Blackf. Mass. 461, 8 Am. Dec. 146; Jefts v.
(Ind.) 41. Tork, 4 Cush. (Mass.) 371, 50 Am.
«o Whether the fact that the princl- Dec. 791, s. c. 10 Cush. (Mass.) 392;
pal can not be bound is any evidence Abbey v. Chase, 6 Cush. (Mass.) 54;
from which It may be inferred that ^Smout v. Ilbery, 10 Mees. & Wels. 1;
the agent intended to bind himself, Jenkins v. Hutchinson, 13 Ad. ft EL
see post, i 1422; Knickerbocker v. N. S. 744.
Wilcox, 83 Mich. 200, 21 Am. St. Rep. ea In Lewis v. Nicholson, 18 Q. B.
695; Merchants', etc.. Packet Co. v. N. S. 603, Campbell, C. J., said:
1028
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1398
Where, however, the agent acting in good faith and supposing him-
self authorized, has made express or implied assertions of authorityi
an action based upon the implied contract of warranty or indemnity
is the appropriate remedy .••
*'He is liable, if there was any the modern view. Thus In Boston ft
fraud, in an action for deceit, and,
In my opinion, as at present ad«
vised, on an Implied contract that he
had authority, whether there was
fraud or not."
And BO Starkey y. Bank of Eng-
land, [1903] App. Cas. 114.
In White v. Madison, 26 N. T. 117,
in deciding that an action on the
warranty of authority was a proper
one, Selden, J., said: "If the act of
the agent were fraudulent, an action
for the deceit would He, but It would
be a concurrent remedy with an ac-
tion on the warranty."
See Seeberger ▼. McCormlek, 178
111. 404.
It is often said. In the older cases,
that the only remedy Is an action of
deceit, whether the agent acted in
good or In bad faith. It was so held,
for example, In numerous cases, both
in Maine and Massachusetts. All of
these earner cases were decided be-
fore the present doctrine of implied
warranty of authority had been so
fully developed. Maine apparently
still adheres to the older rule, and as
late as 1890, In Gllmore v. Bradford,
82 Me. 547, the court says: "It Is set-
tled In this state and Massachusetts,
by a series of decisions commencing
as far back as 1814, that the only
remedy against one who undertakes
to act as agent without authority, or
In excess of his authority, is an ac-
tion on the case for deceit. Noyes t.
Loring, 55 Me. 408; affirmed in Teele
V. Otis, 66 Me. 829; Abbey v. Chase,
6 Cusb. 54; Jefts v. York, 10 Cush.
892; Ballon y. Talbot, 16 Mass. 461, 8
Am. Dec. 146; Long ▼. Colburn, 11
Mass. 97, .6 Am. Dec. 160."
The court In Massachusetts, on the
other hand, shows a disposition to de-
part from Its early cases, upon which
the Maine court relied, and to adopt
Albany R. R. Co. v. Richardson, 135
Mass. 473, the courts say that they do
not understand that the word "de-
celt" in the earlier cases was used In
its technical sense, and they add, "We
can see no good reason why an action
of contract upon the Implied war-
ranty should not be maintained In the
same manner as It may be upon the
implied warranty In the sale of chat-
tels." It was not necessary to deter-
mine the question In that case, be-
cause the plaintiff's pleading con-
tained- counts both In contract and in
tort.
''Later cases," says Scudder, J., In
Patterson v. Llpplncott, 47 N. J. L.
457, 54 Am. Rep. 178, "have held
. . . that he may be sued either for
breach of warranty or for deceit, ac-
cording to the facts of each case,"
citing Jenkins v. Hutchinson, 13 Ad.
ft EI. (Q. B.) N. S. 744: Lewis v.
Nicholson, 18 Ad. ft El. (Q. B.) N. S.
503.
«3 CoUen V. Wright. 8 El. ft Bl. 647;
Oliver V. Bank of England, [1901] 1
Ch. 652, [1902] 1 Ch. 610: affirmed
as Starkey v. Bank of England,
[1903] App. Cas. 114; Sheffield Cor-
poration V. Barclay, [1903] 1 K. B.
1, [1905] App. Cas. 392; Godwin
V. Francis, 5 C. P. 295; Simons v.
Patchett, 7 Bl. ft Bl. 568; Meek v.
Wendt, 21 Q. B. 126: In re National
Coffee Palace Co., 24 Ch. 367; Fir-
bank's Executors v. Humphreys, 18 Q.
B. Dlv. 54; Spedding v. Nevell, 4 C.
P. 212; Hughes v. Graeme, 33 L. J. Q.
B. 335; West London Commercial
Bank v. Kitson, 13 Q. B. Div. 360;
Farmers' Trust Co. v. Floyd, 47 Ohio
St. 525, 12 L. R. A. 346, 21 Am. St.
Rep. 846; Groeltz v. Armstrong, 125
Iowa, 89; White v. Madison, 26 N. T.
117; Taylor v. Nostrand, 134 N. T.
108; Campbell v. Muller, 19 Mifec. (N.
1029
§§ 1399* moo]
THE LAW OF AGENCY
[book IV
It would be rarely if ever true that an action for the specific perform-
ance of the contract could be maintained against the agent ; to justify
it he must be something more than an agent.**
§ 1399. Burden of proof. — The burden of proof is' upon the plain-
tiff to show the fact of the agent's warranty or undertaking, its breach,
and the resulting damages.*'
§ 1400. The measure of damages.^-The damages to be recovered
against the agent for acting without authority must, in general, be
compensation for the loss which the other party has naturally and prox-
imately sustained by reason of the false assertion of autliority.** In
Y.) 189; Seeberger v. McCk)rmick, 178
111. 404; Le Roy v. Jacobo&ky, 136 N.
C, 443, 67 L. R. A. 977; Oliver v.
Morawetz. 97 Wis. 332; Anderson v.
Adams, 43 Ore. 621; Cochran v. Baker,
34 Ore. 555; Lane v. Corr, 156 Pa. St.
250.
64 In Doolittle v. Murray, 134 Iowa,
536, the lower court granted speci-
fic performance against the agent up-
on the theory that he was really the
principal though ostensibly agent.
OS In an action for breach of an Im-
plied warranty of authority to make
a contract, the plalntlft launches his
case by showing that he entered into
the contract with the defendant as
agent, who so described himself and
that the defendant had not the au-
thority he professed to have. The
onus of proving a defence that the
plaintiff was aware, at the time, of
the want of authority, will lie upon
the defendant. A damson v. Morton,
7 Vict. L. R. (L.) 307.
ec Simons v. Patchett, 7 El. & Bl.
568; "^eek v. Wendt, 21 Q. B. Div.
126; In re National Coffee Palace Co.,
24 Ch. Div. 367; Oliver v. Bank of
England, [1901] 1 Ch. 652, [1902] 1
Ch. 610; aff'd as Starkey v. Bank of
England, [1903] App. Cas. 114; Shef-
field Corporation v. Barclay, [1903]
1 K. B. 1, [1905] App. Cas. 392; White
V. Madison, 26 N. Y. 117; Bush v. Cole,
28 N. Y. 261, 84 Am. Dec. 343; Taylor
V. Nostrand, 134 N. Y. 108: Camp-
bell V. MuUer, 19 Misc. (N. Y.) 189;
Le Roy v. Jacobosky, 136 N. C. 443,
67 L. R. A. 997; Anderson v. Adams,
43 Ore. 621; Groeltz y. Armstrong,
125 Iowa, 89; Maneer v. Sanford, 15
Manitoba, 181.
In Oliver v. Bank of England,
[1901] 1 Oh. 6^2, [1902] 1 Ch. 610,
[1903] App. Cas. 114, where stock had
been transferred in reliance upon a
forged transfer, the measure of dam-
ages allowed was the value of the
stock with all dividends and coats.
•" In Meek v. Wendt. 21 Q. B. Div. 126,
where there had been an unauthor-
ised settlement of a claim for insur-
ance, the plaintiff was held to be en-
titled to recover not only the amount
agreed upon to be paid upon the set-
tlement, but also expenses incurred
in getting ready to consummate it
•^In Kroeger v. Pitcairn, 101 Pa. 311,
47 Am. Rep. 718, where there had
been an unauthorized representation
that the defendant, as agent of an in-
surance company, was authorized to
Issue a policy covering a certain risk,
the plaintiff was held to be entitled
to recover the amount of the policy,
with interest from the time when it
should have been payable.
In Farmers' Trust Co. v. Floyd, 47
Ohio St. 525, 12 L. R. A. 346, 21 Am.
St. Rep. 846, where goods had been
sold in reliance upon the defendant's
representation of the existence of a
corporation as buyer, the plaintiff was
held to be entitled to recover the full
amount of the contract price.
In Campbell v. Muller, 19 Misc. (N.
Y.) 189, where the defendant, without
authority, had represented himself as
agent to buy a horse for his principal,
1030
CHAP. lu]
DUTIES AND LIABIUTIES OF AGENT
[§ 1400
the case of contracts, it must usually be compensation for the loss sus-
tained by not obtaining a binding contract. In the case of other acts,
it must usually be compensation for the loss caused by the doing, at
the assumed agent's request, of that which, if the agent had been au-
thorized, would have bound the principal and justified the other party,
but which, because of the lack of authority, does not bind the pre-
tended principal and subjects the other party to loss or hazard. In
the case of contracts, the damages will, in many instances, be the same
that could be recovered against the principal for his breach of the con-
tract if it had been authorized ; *^ but they are not necessarily the same.
and having received It Into his posses- terest, the value of improvements
sion, the plaintiff was held to be en-
titled to recover damages for the de-
tention of the horse, for depreciation
caused by a physical injury while the
defendant had possession, and for the
charges of a veterinary surgeon for
treatment of the injury. No damages
apparently were sought for the loss
of the profit of the bargain.
In Taylor v. Nostrand, 184 N. Y.
108, where the defendant had em-
ployed the plaintiff to render serv-
ices for a corporation, but had caused
them to be so rendered that plaintiff
could not recover of the corporation,
plaintiff was held entitled to recover,
for his services and disbursements,
from the defendant.
In Anderson v. Adams, 48 Ore. 621,
the defendant, an agent to lease land,
in making a lease to plaintiff, agreed
without authority to furnish plaintiff
water for the irrigation of the land
leased. The measure of damages was
held to be the value which the crop
would have had at maturity if water
had been furnished, less the cost of
labor, care and attention necessary to
put it in condition for the nearest
market.
In Roberts v. Tuttle, 86 ITtah, 614,
an agent without authority had pur-
ported to sell land, had put the pur-
chasers in possession, and had re-
ceived a part payment of purchase
price. Upon eviction by the owner,
the buyer was permitted to recover
of the agent as damages the amount
paid upon the purchase price with in-
made, the costs of defending the ac-
tion of ejectment brofight by the
owner, the value of the bargain as it
is usually estimated, and the cost of
getting a loan to make up the unpaid
portion of the price— an action taken
by the purchasers on the advice of the
agent that if such balance were ten-
dered to the owner title would be
passed — ^but not a sum equal to the
amount recovered by the owner from
the purchasers in the ejectment suit
for use of the premises during the
puprhasers* occupation.
•"^ Plrbank's Executors v. Hum-
phreys, 18 Q. B. Div. 54, the defend-
ants, as directors of a corporation,
issued to plaintiff debenture stock in
payment for work done for the corpo-
ration. The corporation had power
to issue stock only to a certain
amount, and this amount, unknown to
the defendants, had been issued, and
the stock issued to plaintiff was an
over-issue and valueless. The corpo-
ration became insolvent, but its valid
outstanding debenture stock was
worth face-value. Held, that the de-
fendants were liable for the value of
valid debenture stock of the same
amount as plaintiff held of the over-
issue.
See also, Simons v. Patchett, 7 El.
& Bl. 568; Speddlng v. Nevell, L. R.
4 C. P. 212;' Godwin v. Francis, L. R.
5 C. P. 295.
er Thus in Simons v. Patchett, 7 El.
ft Bl. 568, it was said by Crompton,
J., arguendo, "It is not the same thing
103 1
§ I400]
THE LAW OF AGENCY
[90aK IV
It must be kept in mind as was pointed out by Lord Bowen in one
case/* "that an agent does not promise that his principal shall carry
out the contract, but only that he shall be bound by it" It is entirely
conceivable that many things may subsequently arise, like the other
party's own default, affecting the extent of the principal's liability upon
an authorized contract, which would not affect the value of it at the
time it was made. So if the contract had actually been authorized, a
number of things might then affect its value, as for example, the sol*
vency of the principal. In such a case the amount assessed as dam-*
ages for breach of the contract, might be one sum, while the amount
which could be collected would be a different sum, and this fact must
be taken into consideration in assessing damages against the agent.**
If this were not so, then as was also pointed out by Lord Bowen,^^
"the plaintiff would be getting as much damages against the agent for
an insolvent, as against the agent for a millionaire.'* The burden of
making this showing rests ordinarily upon the agent ^^
The costs and expenses of judicially determining whether the con-
tract is binding upon the principal, may also in many cases, after no-
tice at least, be a proper subject for compensation in an action against
to warrant to a man that a supposed amount required by the statute aa a
condition precedent to their or the
company's right to do business. The
plaintiff had sold and deUvered goods
to them as such agents, for whlcli he
could not recover payment against
the corporation. Upon the trial, no
showing was made as to whether
there were other creditors of the cor-
poration, or whether their claims
stood upon the same footing as that
of the plaintiff, or whether the plain*
tiff, if the contract had been author-
ized, could in fact have secured his
pay in full. It was held that prima
facie the measure of the plaintiff's
damages was the amount of his claim,
and that as the defendants had made
no such claim in the court below, or
in the supreme court it was imneces-
sary to determine whether the de-
fendants could have had the plaln-
tifTs claim reduced to a pro rata
footing with the other claims.
72 White V. Madison. 26 N. Y. 117;
Duffy V. Mallinkrodt, 81 Mo. App. 449;
Kennedy v. Stonehouse, 13 N. D. 232,
3 Ann. Cas. 217; Cooper v. Gardiner*
principal is bound to fulfil a bargain,
and to contract to fulfil it one's self.
Though the principal was bound, the
vendor might be no better off, as in
the possible case that be was insol-
vent But, when the principal would
be able to pay if he were bound to do
so, I do not see the difference in the
damages."
08 In re National Coffee Palace Co.,
24 Ch. Div. 367.
«• See for example, Simons v. Patch-
ett, 7 El. & Bl. 568: In re National
Coffee Palace Co., 24 Ch. Div. 367;
Meek v. Wendt, 21 Q. B. Div. 126.
70 In In re National Coffee Palace
Co., supra,
71 See In re National. Coffee Palace
Co., 24 Ch. Div. 867; Meek v. Wendt,
21 Q. B. Div. 126; Farmers' Trust Co.
V. Floyd, 47 Ohio St. 525, 21 Am. St.
Rep. 846, 12 L. R. A. 346.
In Farmers' Trust Co. v. Floyd, «u-
pra, the action was against persons
who had assumed to act as officers
and agents of a corporation before
there had been actually paid in the
103a
CHAP, in]
DUTIES AND LIABILITIES OF AGENT
[§ I4OI
the agent They would undoubtedly be so wherever the action can be
deemed to have been fairly and reasonably brought.''*
Where the agent is liable directly upon the contract, the measure of
damages would be the same as in any other similar case.
§ 1401. ■■ • To give daitiages for loss of a particubir contract,
it must have been one of vahie against principal if aatliorized.— 'In
order, however, to make an agent liable for the loss of a particular
contract which he has assumed, without authority, to make in the name
of his principal, the unauthorized contract must have been, in general
legality, form of execution and the like, one which would have been
of some legal value against the principal if it had been authorized by
him. Otherwise, the anomaly would exist of giving a right of action
against an assumed agent for an unauthorized representation of his
authority to make the contract, when the contract itself, in the form
in which the other party was content to make it, would, even if it had
been authorized, have been of no value against the principal. '•
T1902] 2 State R^. N. S. Wales 67;
Maneer v. Sanford, 15 Manitoba, 181;
Oliver v. Bank of England, [1901] 1
<Jh. 652, [1902] 1 Ch. 610; affirmed un-
•der title of Starkey v. Bank of Eng-
land, [1903] App. Gas. 114; RandeU
T. Trimen, 18 C. B. 786, 25 L. J. C. P,
^07; Godwin v. Prancia, L. R. 5 C. P.
295, 806, 39 U J. C. P. 121, 126;
Hughes v. Graeme, 33 L. J. Q. B. 335.
In Oliver v. Bank of England, su-
pra, the following extract from Mayne
on Damages (6th ed.), pp. 98, 99, was
quoted with approval: "One who pro-
fesses to contract as agent for an-
other must, unless there be some-
thing in the transaction to rebut the
Implication, be taken to warrant that
the authority, which he professes to
have, does in fact exist; and if he has
no such authority, he is liable to
make good to the person who enters
Into the contract upon the faith of
his being duly authorized, all the dam-
age which is the natural and proxi-
mate consequence of the false aseer-
tion of authority. This will include
the costs of unsuccessful legal pro-
ceedings taken by such person against
the supposed principal for the purpose
of enforcing performance of the con-
tract, or recovering damages for Its
breach; if, at least, it was reasonable
under the circumstances of the case
that such proceedings should be taken,
or if the professed agent was made
aware of the litigation and sanctioned
it, either expressly, or by allowing it
to be continued without avowing his
want of authority."
In Maneer. v. Sanford, 15 Manitoba,
181, where an agent without authority
made a contract for the sale of land,
the damages were held to be not only
the lofls of the bargain — ^profits — but
also expenses reasonably incurred.
78 Dung V. Parker, 52 N. Y. 494
(where the contract If authorized
could not have been enforced because
of the statute of frauds which made it
void for all purposes); Baltzen v.
Nicolay, 53 N. Y. 467 (same). See
also, Pow V. Davis, 1 B. ft S. 220 (lack
of seal).
(See comments on Dung v. Parker,
and Baltzen v. Nicolay, in Browne
on the Statute of Frauds (5th ed.),
fi 135a).
Illeffal contract — The same rule ap-
plies where the contract was illegal.
Merchants' Packet Co. v. Streuby, 91
Miss. 211.
No damages can be recovered of an
insurance agent for not issuing a
1033
§§ 1402, 1403] THE LAW OF AGENCY [BOOK IV
And not only that, but so far as the enforcement of the contract
against the principal depends upon the other party's performance or
ability to perform, he must also show that the contract would have
been, from his side, enforceable ; "for, if he is not in shape to ask or
compel a performance from the supposed principal, he has lost noth-
ing by not having a valid contract with him, and so can demand nothing
by way of damages from the agent on its account." '*
The mere fact that the contract was not in such form as to be leg^ly
enforceable against the principal, if it be not void, seems not to be con-
clusive that it would have been of no value. Contract^ not legally
enforceable, because of the Statute of Frauds for example, are con-
stantly performed, and until it appears that such a contract will not be
performed, such a result is not to be assumed. Such a defect seems
to go rather to the question of damages than to the existence of a
cause of action.'^'
§ 140a. Effect of ratification.— It must be kept in mind, in dealing
with this question of the liability of the agent to third persons for mak-
ing a contract without authority, that, as has been seen in an earlier
chapter,'* the liability of the agent will be terminated if the principal
ratifies the contract in such form and under such conditions as to make
the contract binding upon himself. What the cases are wherein there
may be such ratification has been so fully considered in the chapter upon
ratification as to need no further discussion here. In many of the
cases referred to in the present chapter, however, there could be no
ratification because of the lack of the necessary conditions ; '^ and in
such cases, of course, the rule above referred to could have no operation.
§ 1403. Where a nominal agent is the real principaL — ^Where, al-
though there was nominally an agency, there was no agency in fact,
and the nominal agent was the real principal, such principal may usu-
ally be held liable. Many cases of this sort have already been con-
sidered, at least in substance. Thus, if he pretends to act for a fic-
titious principal, he is really acting with no principal.''* If he purports
to act for an undisclosed principal, but that principal is nonexistent,
the ordinary rule respecting agents of undisclosed principals would
valid policy, if, because of double in- ?» See the excellent discussion in
fiurance, the policy could not have McCarthy v. Toung, 19 Aostral. Ii.
been enforced If valid. Lim-Juco v. Times, 231.
Lim-Yap, 3 PhlUpp. 130. t« See ante, 8S 542, 648.
Insolvency of Principal goes to the t^ See ante, §S 376, 416.
measure of damages. ts See ante, § 1883.
74 Kent V. Addicka, 126 Fed. 112, iSO See also Schenkberg T. Treadwell,.
C. C. A. 660. 94 N. Y. Supp. 418.
1034
CHAP. Ill]
DUTIES AND UABILITIES OF AGENT
[§ 1404
make the agent liable, and no further remedy would ordinarily be
necessary.^* If he pretended to act as agent for a described but not
named principal, as where he acts as "agent for the owner," etc., he
could doubtless be shown to be the person described.*® Where the
real agent poses as the principal and the real principal is described as
the agent in a written contract, it is held that the so-called parol evi-
dence rule forbids a showing that the nominal agent was the real
principal.*^ In a case not hampered by the parol evidence rule, the
nominal agent could be shown to be the real undisclosed principal,
unless the doctrine of election at the time of making the contract should
be deemed to prevent it. It is thought that that doctrine ought not
to prevent it, because the real principal, by concealing the true state
of the facts, has prevented an intelligent election.
There would also be many cases in which the real principal would
be liable where he had used some name suggesting agency as his trade
or business name.
B. Assuming to Act for an Undisclosed Principal.
§ 1404. Liability of pretended agent. — ^The cases thus far consid-
ered have been cases wherein the pretended agent assumed to act for
a certain and disclosed principal, but, as has already been pointed out.
7» See post, § 1410.
«o See Carr v. Jackson, 7 Exch. Rep.
^82; Schmaltz v. Avery, 16 Q. B. Rep.
^55; Sharman v. Brandt, L. R. 6 Q. B.
Cas. 720; Harper v. Vlgers, [1909] 2
K. B. 549. See also Spurr v. Cass,
L. R. 6 Q. B. Cas. 656.
SI In Heffron v. Pollard, 78 Tex. 96,
15 Am. St. Rep. 764, the defendant H
made a contract to purchase certain
pipe from P by a writing made on Its
lace between F the buyer and P the
seller, and signed "John W. Fry, per
Heffron." H was the real principal
In the matter, and P, at the time of
making the contract, knew that H
was buying for himself." H had
some sort of authority from F, so
that it was conceded that H was not
liable on a warranty. P sought to
hold H on the contract by proving by
parol that H was the one intended to
be bound. Heldt that the parol evi-
dence rule prevented P from charg-
ing H. The court construed the
writing as if it expressly excluded the
liability of H, and distinguished the
case from those wherein an agent is
the undisclosed principal and bound
as such, since here the relation of the
parties appeared on the face of the
writing and was known to the seller
at the time.
But in Isham v. Burgett, 157 Mass.
546, where the nominal agent was the
promoter of a corporation duly
formed, but was In fact using the cor-
poration as an agent of himself, and
gave an order to the plaintiffs for elec-
tric light poles in this form: "D. B.
Isham . . . Please furnish poles as
follows . . . H. W. Burgett, Mark.
The Dover Electric Light Company,"
he was held liable on the contract,
not only on the grounds that the form
of it was sufficient to bind him as
agent personally, but on the ground
that he was the true princlpaL
1035
§ 1405] THE LAW OF AGENCY [bOOK IV
there may be cases in which he assumes to act for a certain but un-
disclosed principal. Such cases are rare, but they are nevertheless
possible. Thus the assumed agent may say, ''I have a principal; I
act for him, but I decline or omit to disclose his name or identity."
It is possible that the other party may prefer to deal with any princi-
pal rather than the agent. It is certainly possible that he may prefer
the credit of a principal of a certain description rather than of the
agent, as where the pretended agent says, "I act for a manufacturer;
he is as good as X and in good standing and credit with you, but I
will not disclose his name." If, then, negotiations are had upon that
basis, but the pretended agent had no authority of any such principal,
what is the result ? First, there is no contract between the other party
and the principal, because there was no principal ; second, there is no
contract in the terms proposed, with the agent, because the form of
dealing has excluded him as a party to it.*' But there is no reason
why the assumed agent should not be liable in deceit or upon an ex-
press or implied warranty of authority, as in the cases already con-
sidered. There might in many cases of this sort be difficulty about
the measure of damages, but no reason is apparent why they should
not be based upon the loss of a contract with a person as good as the
principal described.
2. Where, though authorized to bind his Principal, he binds Him-
self or no one^
§ 1405. In generaL — But it is not alone in those cases in which
he acts without authority^ tliat the agent makes himself liable to third
persons. This result may ensue, under a variety of circumstances,
even though the agent were fully authorized to bind his principal.
Thus the agent intending to bind his principal may, from the failure
to use apt words for that purpose, not only not bind his principal, but
may pledge his personal responsibility. So he may conceal the fact
of his agency and contract as the ostensible principal.
So, though disclosing the fact of his agency, he may voluntarily
enter into personal obligations.
Each of these several situations requires separate consideration.
ss See Rodllfl ▼. Dalllnger, 141 agent but who had no authority and
Mass. 1, 55 Am. Rep. 43S. In Mao- did not disclose his principal, waa
donald v. Bond, 195 111. 122, a person held pexionalljr liable upon the eon-
who purported to sign a contract as tract.
1036
CHAP. lU]
DUTIES AND LIABILITIES OF AGENT [§§ 1406^ I407
. § 1406^ Authorized agent contracting in name of principal incurs
no personal liability. — As has often been pointed out, it is ordinarily
the duty as well as the interest of the agent to confine himself within
the limits of his authority and to act only in the name and for the
account of his principal. This is so far the normal and expected
course that any discussion of the agent's liability should start with this
situation. And here the rule of law is clear and certain. If the agent
makes a full disclosure of the fact of his agency and of the name of
his principal, and contracts only as the agent of the named principal^
he incurs no personal responsibility.'* The insolvency of the princi*
pal or his inability or refusal to perform the contract does not affect
this result.**
And where the agent with full authority makes a contract in proper
form to bind the principal, it is held that the agent cannot be made
liable upon the contract by offering to prove that it was not iiitende4
to bind the principal at all but to bind the agent only.**
If, therefore, the authorized agent is to incur a personal liability, it
must be because he has in some respect depjarted from the normal and
expected course, and a discussion of these .departures is essential.
5 1407. Where agent intending to bind principal, binds no one. —
Where the agent intending to bind his principal uses such language
that neither the principal nor the agent is bound upon the contract,
there has been said, in many cases, to be no liability attaching to the
agent He can not be held liable upon tlie contract itself, because he
«B Whitney v. Wynaaii. 101 U. S. 392,
25 L. Ed. 1050; Dunton ▼. Chamber-
lain, 1 lU. App. 361; Barry v. Pike, 21
La. Ann. 221; AspinwaJl y. Torrance,
1 Lans. (N. Y.) 381; Kean v. Davis,
20 N. J. L. 425; Klay v. Bank of Dal-
las Center, 122 Iowa, 606; Imhoff r.
House, 36 Ne^. £8; Largey v. Leggat,
30 Mont. 1^8; Hewes v. Andrews, 12
Colo. 161; Bleau v. Wright, 110 Mich.
183; Durham v. Stubblngs, 111 111.
App. 10; Thompson r. Irwin, 76 Mo.
App. 418; Lehman v. Feld, 37 Fed.
852; Whiting v. Saunders, 23 N. Y.
Misc. 332; Ernst v. Thom, 65 N. Y.
Misc. 206; Homan r. Payne, 127
N. Y. Supp. ilS; Baer y. Bopyage,
72 Hun (N. Y.), 33; Falk v. Wolf-
sohn, 7 N. Y. Misc. 313; Lake
Shore Nat. Bank v. Butler Colliery
Co., 51 Hun, 63; Crandall v. Rol-
lins, 83 N. Y. App. Dlv. 618; Holmes
y. GrifQth, 1 Colo. App. 423; Scaling
y. Knollin, H 111. App. 443; Huston
y. Tyler, 140 Mo. 252; Moody y. Trus-
tees, 99 Wis. 49; McCauley v. Trust
Co., 81 N. J. L. 86; Boyd Grain Co. v.
Thomas (Ark.). 142 S. W. 1160.
See also Smith y. Bond, 25 W. Ta.
a87; Johnson y. Welch, 42 W. Va. 18.
«4 Davis V. Lee, 52 Wash. 330, 132
Am. St. Rep. 973.
w Heffron y. Bollard, 78 Tex. 96. 15
Am. St Bep. 764. A person who sella
goods to an authorized agent, intend-
ing to sell to the principal and de-
livering tke goods to the principal,
cannot recover of the agent because
he thought the agent was the princi-
pal. Turchln, etc^ Silver Co. v.
Baugh, 117 N. Y. Supp. 137, l33 N. Y.
App. Div. 899 (no opinion).
1037
§ 1408] THE LAW OF AGENCY [bOOK IV
has used no language sufficient to charge him. He cannot be held
liable upon any express or implied warranty of authority, because there
is no failure or lack of authority. It is simply a case of defective ex-
ecution. If, however, the agent has expressly warranted the sufficiency
of his method of execution, he could undoubtedly be held liable upon
such warranty so far as matters of fact are concerned.
Whether there is in every case from the mere fact that the agent
assumes to execute in a certain manner, an implied warranty of the
sufficiency of that manner to bind the principal, is a question not set-
tled by the authorities. Upon reason, it would seem that this question
is to be determined by substantially the same considerations that apply
to the case of a warranty of authority. It is, indeed, simply a question
of a warranty of authority to execute in that form.
If the agent knowing a certain form to be insufficient in point of
fact, yet assumes to adopt it, to the damage of an innocent third party
*vho has relied thereon, he should certainly be held liable for the de-
ceit. And so where no deceit is practiced, unless the agent fully dis-
closes the nature and limitations of his authority so that the other party
may judge for himself as to the proper method, it would seem that he
is still to be held liable for a defect in fact as upon an implied warranty.
But for a defect in point of law only, the agent would not ordinarily
he bound."
§ 1408. Where agent intending to bind principal, inadvertently
'sises apt words to bind himself. — It often happens that an agent
known to be such and seeking and intending tp bind his principal
upon a contract, so defectively executes it that he fails to accomplish
that purpose. In such cases it is not infrequently the result that no
one is bound; but, more often, it is found that the agent has so ex-
ecuted as to bind himself.®^
It is true, as has already been pointed out, that the law aims to carry
into effect the intention of the parties, but this is so only where it can
be done consistently with legal rules. Parties constantly attempt to
make contracts which are in fact subject to definite legal rules respect-
ing form or content, who arc entirely ignorant of, or indifferent to,
the rules which govern the transaction. Where the parties are ne-
gotiating informally and by word of mouth, the rules are most flexible
and permit a wide search after the intention of the parties. This is
also true, to a considerable degree, in the case of informal but written
8« See Beattie v. Lord Ebury, L. R. ^f See ante. Book III, Chapter I;
7 Ch. Ap. 777. Stewart v. Shannessy, 2 Ct. Sees. Cas.
See also, cases cited In § 1367, ante. (5th ser.) 1288.
1038
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I409, I4IO
contracts. When, however, the case involves formal contracts in writ-
ing, less latitude is permissible. When the contract is a negotiable
instrument, strict and definite rules, based upon the nature and pur-
pose of such instruments, are applicable. When the contract takes
the form of a deed, — a specialty, an instrument necessarily under
seal, — the rules, as has been seen, are not only rigid but highly tech-
nical. A perusal of the vast number of cases shows that, in these
latter fields, parties are constantly using forms of expression which
they then think, or at least subsequently pretend to think, to be con-
trolling of the obligation, but which the law disposes of as merely
descriptive of the person. The vast number of cases- in which parties
are held personally liable who have added to their signature such words
as "Agent," "President," "Treasurer," "Secretary," "Trustee," and
the like, furnish many illustrations of situations wherein parties are
held to have incurred personal obligations who undoubtedly intended
to act only in a representative capacity.
This whole subject has been fully discussed under the head of the
Execution of the Authority,®* and nothing further needs to be added
to it here, than that where by those rules of construction it is deter-
mined that the agent has contracted in his personal capacity, he is, of
course, bound upon the contract to the person with whom it was made.
§ 1409, ' Reformation of contract to release agent. — Al-
though the agent may thus have bound himself by the express terms
of the contract, if he did this as the result of a mistake of fact, equity
may, it is held, grant him relief by a reformation of the contract to
conform to the actual bargain between the parties.^*^
§ 1410. Where agent conceals fact of agency or name of princi-
pal— ^As has been already frequently pointed out, it is usually the
interest as w^ell as the duty of the agent, in his contractual dealings
with third persons, to fully disclose his representative character, and
to make all contracts in the name of his principal. Intentionally or
unintentionally, however, he may fail to make this disclosure, and may
either conceal the fact of his agency altogether, or, though he discloses
that he is an agent, may conceal the name or identity of his principal.
In the former case, since no one else is named or suggested who may
be liable, the rule of law is entirely clear. An agent who conceals the
fact of his agency and contracts as the ostensible principal is liable in
S8 See ante, Book III, Chap. I. v. Partridge, 11 Ohio, 223, 38 Am. Dec.
80 EuBtifi Mfg. Co. y. Saco Brick Co., 731.
198 Ma88. 212. See also, McNaugbteo
1039
§ I4IO]
THE LAW OF AGENCY
[book IV
the same manner and to the same extent as though he were the real
principal in interest.**^
As has often been pointed out, it affords no defence in such a case
that he is known to be an auctioneer, broker, or other agent or that he
•oWood ▼. Brewer, 73 Ala. 259;
Brent v. Miller, 81 Ala. 309; Armour
Packing Co. v. Vletch- Young Produce
Co. (Ala.) 39 So. 680; Drake v. Pope,
78 Ark. 327; Boynton v. Brannum,
— Ark. — , 136 a W. 979; Murphy
y. Helmrick, 66 C|il. 69; Bradford v.
WoodWorth, lOS CaL 684; Evans Y.
Swan (Colo.), 88 Pac. 149; Jones t.
Aetna Ins. (To., 14 Conn. 601; Pierce
T. Johnson, 34 Conn. 274; Gerard ▼.
Moody, 48 Oa. 96; Nail v. Farmers'
Warehouse Co., 95 Gfa. 770; Whitney
y. Woodmansee, 15 Idaho, 735; Bick-
ford v. First Nat. Bank, 42 111. 238,
89 Am. Dec. 436; Wheeler y. Reed, 36
m. 81; Corrigan y. Reilly, 64 111. App.
6S1; WeU y. Defenbaugh, 66 III. App.
489; Trench y. Hardin County Canning
Co., 67 111. App. 269; Loehde v. Hal-
sey, 88 111. App. 452; Scaling y. Knol-
lin, 94 111. App. 443; Merrill y. Wil-
son, 6 Ind. 426; Lowrey y. Scargill* 7
Ind. Ter, 497; (Nixon y. Downey, 49
Iowa, 166; Lull y. Anamosa Nat Bank,
110 Iowa, 537; Thompson y. Bldg. &
Loan Ass'n, 114 Iowa, 481; Fritz y.
Kennedy, 119 Iowa, 628; Temple y,
Pennell, 123 Iowa, 729; Mithofif y.
Byrne, 20 La. Ann. 363; York County
Bank y. Stein, 24 Md. 447; Bartl&tt y.
Raymond, 139 Mass. 275; Brigham y.
Herrick, 178 Mass. 460; Welch y.
Goodwin, 123 Mass. 71, 25 Am. Rep.
24; Newberry y. Slafter, 98 Mich. 468;
Lewis y. Weldenfeld, 114 Mich. 681;
Rochester Distilling Co. y. Bostrum,
158 Mich. 543; Bacon y. Rupert, 39
Minn. 512; Amans y. Campbell, 70
Minn. 493, 68 Am. St Rep. 547; Mc-
Clellan y. Parker, 27 Mo. 162; Porter
y. Merrill, 138 Mo. 555: Leckie v.
Rothenbarger, 82 Mo. App. 615;
Sheehy y. Wollman, 152 Mo. App. 506;
CNeil Lumber Co. y. Oreffet, 154 Mo.
App. 33; Jackson v. McNatt 93 N. W.
425 (Neb.); Batchelder y. Libbey, 66
N. H. 175; M'Comb v. Wright 4
Johns. (N. Y.) Gh. 659; Baltaen y.
Nicolay, 53 N. Y. 467; Mills y. Hunt
20 Wend. (N. Y.) 431; Cobb y. Knapp,
71 N. Y. 348, 27 Am. Rep. 61; Knee-
land y. Coatsworth, 9 N. Y. Supp.
416; Boyd y. Qulnn, 17 Misc. 278;
Ashner y. Abenhelm, 19 Misc. 282;
Forrest y. McCarthy, 30 Misc. 125;
Beldleman y. Kelly, ^1 Misc. 51;
Schmerler y. Barash, 113 N. Y. S. 745;
Forney y. Shipp, 4 Jones (N. C.) L,
527; Beymer y. Bonsall, 79 Pa. 298;
Meyer y. Barker, 6 Bins. (Penn.)
228; Dayenpart y. Ril^y, 2 MeCTord
(S. C), 198; Conyers y. Magrath, 4
McCord (S. C), 392; Bacon y. Sond-
ley, 3 Strobh. (S. C.) L. 542, 51 Am.
Dec. 646: Hardman y. Kelley, 19 S. D.
608; Siler y. Perkins, — Tenn. — ,
149 8. W. 1060: Book y. Jones, 98 S.
W. (Tex.) 891; Hfttchett A Large y.
Sunset Brick Co;, 99 S. W. (Tex.) 174;
Hauser y. Lane (Tex. Ciy. App.), 131
S. W. 1156: Royce y. Allen, 28 Vt
234; Baldwin y. Leonard, •«9 Vt 260,
94 Am. Deo. 324; Button y. Wlnslow,
68 Vt. 430; Leterman y. Charlotts-
yille Lumber Co., 110 Va. 769; Gordon
y. Brinton, 56 Wash, 568, 133 Am. St
R. 1038; Poole y. Rice, 9 W, Va. 785
Alexander A Edgar Lbr. O). y. Mo-
Geehan, 124 Wis. 325; Ye Seng Co. y.
Corbitt, 9 Fed. 423; American Alkali
Ck). y. Kurtz, 134 Fed. 668; Synnot y.
Douglas. 5 Austr. Jur. 165; Davis y.
Rood, [1906] Transy. L. R. (S. C.)
196; Coote v. Gillespie, 6 Victor. L.
R. (L.) 56; Wilcox y. Clarke, 21 Vic.
tor. L. R. 694.
Where the defendant ordered plain-
tiff to do a job of painting and deco-
rating, and did not inform plaintiff
that he was acting as a representatlye
for another, he was held personally
responsible for the yalue of the work
done. Corrigan y. Reilly, 64 111. App.
1040
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 14"
is usually employed in acting as agent for other persons. If he does
tiot disclose this agency and the identity of his principal, he will be
personally liable.
§ 141 X. Disclosing fact of agency, but concealing identity
of principal. — In the second case, — where the fact of the agency is
known but the name and identity of the principal are concealed, — ^the
case is not quite so clear. As was said in a case,*^ already cited in
another section, "there is no rule of law that mak'es it impossible to
contract with or sell to an unknown but existing party ;'* and the agent
may expressly stipulate that the contract shall bind the unnamed prin-
cipal and not the agent ; or the other party, as was the fact in the case
referred to, may expressly decline the responsibility of the agent and
rely on that of his undisclosed principal. While such cases are thus
possible, they are not the common ones ; and for the ordinary case the
rule is abundantly established that if an agent, though known to be
such, conceals the name or identity of his principal and contracts in
631. To same effect: Kneeland v.
Coatsworth, 9 N. Y. Supp. 416; Book
V. Jones, 98 S. W. (Tex.) 891.
The president of a mining company
^ho purchases lumber to be used in
the construction of a mill for the com-
pany, dealing as principal and not dis-
closing, and the seller not knowing of,
his agency, is personally responsible
for the value of the lumber purchased.
Bradford v. Woodworth, 108 Cal. 684.
In an action to recover the price of
a horse, purchased of plaii^tiff by the
defendant, an instruction that If de-
fendant did not disclose his agency to
the plaintiff, but left the plaintiff to
believe that he was acting for him-
self, he would be personally liable,
was upheld. Fritz v. Kennedy, 119
Iowa, 628.
Where the defendant company, act-
ing as agent of another, loaned money
to the plaintiff without disclosing its
agency, and plaintiff thought she was
borrowing from the defendant, the
defendant was held liable for over
payments made by her. Thompson v.
People's Loan Co., 114 Iowa, 481.
When the defendant employed the
plaintiff to procure a mortgage loan,
ivithout disclosing to the plaintiff that
66 104 1
he was not the owner of the land and
the real borrower, he is liable for the
value of the services. Bacon v. Ru-
pert, 39 Minn. 512.
F<ict that one is known generally to
act as agent does not exonerate him
if he does not disclose the fact of his
agency on the occasion in question
and the name of his principal. He
may, nevertheless, be acting for him-
self. Thus an express company mak-
ing collection of a draft through a
forged endorsement was held person-
ally liable where the fact of the
agency was not otherwise disclosed,
nor the name of the principal. "It
matters not that the general business
of the express company was to act as
agent for others. It could have
owned this draft and have collected
it as principal." It was not the duty
of the payer to inquire in what ca-
pacity it acted. Holt v. Ross, 54 N. Y.
472, 13 Am. Rep. 615, relying on
Canal Bank v. Bank of Albany, 1 Hill
(N. Y.), 287, In the case of a bank;
Mills ▼. Hunt, 17 Wend. (N. Y.), 333,
20 id. 431, the case of auctioneers.
•1 Rodliff V. Dallinger, 141 Mass. 1,
55 Am. Rep. 439.
§ I4I2]
THE LAW OF AGENCY
[book TV
his own name without limiting his liability, he will be personally lia-
ble upon the contract.®* Whether he has done so is, where the contract
is in writing or the facts are capable of but one interpretation, a ques-
tion for the court; otherwise it becomes a question for the jury.
§ 141 2. Identity of principal sufficiently disclosed — ^What
terms sufficiently exclude personal liability — ^Liability by custom.—
The identity of the principal may be disclosed by description as well
as by name, as where the agent made a contract "for the owners" of
a ship named ; *' and the agent may sufficiently exclude personal re-
a
82 In Argersinger v. Macnaughton,
114 N. Y. 585, 11 Am. St Rep. 687. It
Is said: "The proposition that an
agent contracting In his own name,
and falling to disclose the name of his
principal at the time of making a
contract for the sale or purchase of
goods, is personally liable for what-
ever obligation may arise out of the
contract, has the support of authority.
(Mills V. Hunt, 17 Wend. (N. Y.)
333; Morrison v. Currle, 4 Duer, 79;
Cobb V. Knapp, 71 N. Y. 848, 27 Am.
Rep. 51; Ludwlg v. Gillespie. 105 N.
Y. 653; Jemlson v. Citizens' Sav. Bk.,
44 Hun. 412, 122 N. Y. 135, 19 Am. St.
Rep. 482, 9 L. R. A. 708.) That doc-
trine is applicable to the present case.
The defendant made the contract of
sale In his own name, as commission
merchant, without disclosing the
£§5a§,-0l_anj[jrlnclpal£_and Jhis war-
agent to turn over to his customer an
undisclosed and, to the latter, un-
known principal, might have the ef-
fect to deny to the customer the bene-
fit of any available or responsible
means of remedy or relief founded
upon the contract The rule Is no less
salutary than reasonable that an
agent may be treated as the party to
the contract made by him in his own
name, unless he advises the other
party to it of the name of the princi-
pal whom he assumes to represent in
making It where that Is unknown to
such party."
To same effect, see Pugh v. Moore,
44 La. Ann. 209; Landyskowski v.
Lark, 108 Mich. 500; Dockarty v.
Tlllotson, 64 Neb. 432; Powers v. Mc-
Lean, 14 N. Y. App. Dlv. 92; Nicholft
V. Well, 30 N. Y. Misc. 441; Good v.
Rumsey, 50 N. Y. App. Dlv. 280;
Ip; t^ftt rule, aa between the partreC^ Long v. McKissick, 50 S. C. 218; Mor
ranty given to produce it may, wlth-
be deemed his undertaking. In such
case. It may be supposed that a pur-
chaser relies upon the responsibility
of the person with whom he deals for
the performance of the contract, and
that he Is not required to look else-
where to obtain it. When there is,
in fact, a principal the agent may
ordinarily relieve himself from per*
sonal liability, upon a contract made
in his behalf, by disclosing his name
at the time of making it. Upon such
disclosure, however, the party pro-
ceeding to deal with the agent may
or may not. as he pleases, enter into
contract upon the responsibility of
the named principal, but to permit an
rls V. Clifton Forge Grocery Co., 46
W. Va. 197; Macdonald v. Bond, 195
111. 122; McClure v. Central Trust
Co.. 165 N. Y. 108, 53 L. R. A. 153;
Meyer v. Redmond, 141 N. Y. App.
Dlv. 123; Neely v. State, 60 Ark. 66>
46 Am. St. R. 148. 27 L. R. A. 503;
Cooley V. Kslr (Ark.). 161 S. W. 254.
•swaddell v. Mordecal, 3 Hill (S.
C.) L. 22. In this case the contract
was: "Received from Mr. Waddell
one hundred dollars, on account of
passage of slaves on board the Brig
Encomium. For the owners. M. C.
Mordecal."
Said the court: "Did Mordecal
name his principal? The answer is,
he entered Into the contract
1042
-CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ I4I2
sponsibility by cxpressely stating that the contract is made for and on
account of his principal, although the principal is not directly named.'*
On the other hand in such a case, it may be shown that under the cus-
tom of trade the agent may be personally liable upon the contract, even
though the language used otherwise would have excluded him.*'
agent for the owners of the Enco-
mium— but he did not express or give
their paternal or christian names.
Now, 18 such fullness and precision
indispensible, where the communica-
tion made is intelligible? I concede
that every agent must so disclose his
principal at the time of the contract,
as to enable the opposite party to
have recourse to the principal. In
case the agent had authority to bind
the agent naming, specifically and
lilm. 2 Kent» 631. But I cannot per-
ceive wherein lies the necessity of
severally, every one of a class or com-
pany of his principals who are us-
ually designated among men of busi-
ness by some brief descriptive terms.
For instance, were an agent to say,
*the work is to be done for the
steamer Etlwan, and I am the cap-
tain, or for the owners of Fitzlmons'
wharf,' this would be enough prima
facie, unless* or until, the agent be
called on for a more precise specifi-
cation of the names of his principals.
To require more, in every instance,
would be very often to require mat-
ter utterly superfluous."
In Lyon v. Williams, 5 Gray
(Mass.), 657» the contract was made
on account of "the several railroad
companies between Boston and Zanes-
viUe," and was signed "J. S. for the
corporations/' and was held not to
bind J. S. personally. The court
said: "But It Is said that the names
of these corporations are not stated.
This Is true; but they are capable of
being made certain by proper inquiry,
and the plaintiff was content to take
a contract thus generally designating
the parties with whom the liability
was to rest for the safe and proper
conveyance of the goods."
9* The material question here is, of
course, to distinguish between the
case In which the agent says, "I" buy
or sell or promise, but recites that
he does it for a principal, in which
case he is clearly liable, and the case
In which he discloses that the prom-
ise or sale or purchase is to be the
promise or sale or purchase of the
principal. Thus, as was pointed out
by several of the Judges In Southwell
V. Bowdltch, 1 C. P. Div. 374, there
Is a material difference when you
seek to hold him liable as buyer, be-
tween the case in which the agent
says, "I have sold for you to my
principals," and the case In which he
says, "I have bought of you for my
principals." The former case Is a
sale to his principals (see Fleet v.
Murton, U R. 7 Q. B. 126) ; the latter
may be a sale to himself. Where
the contract read "We have this day
sold to you on account of J. M. A
Co." It was held that the seller suf-
ficiently appeared to be J. M. & Co.
and not the brokers who signed the
note. Gadd v. Houghton, 1 Ex. Dlv.
357.
So where the note read "Sold for
and on account of owner" it was held
that the note sufficiently indicated
the owner and not the broker as the
seUer. Pike v. Ongley, 18 Q. B. Dlv.
708.
So where the contract was mado
"for the corporations" 1. e., the sev-
eral railroad companies between Bos-
ton, Mass., and Zanes vi lie, Ohio,
though they were not specifically
named. Lyon v. Williams, 71 Mass.
(5 Gray) 557.
Signing **as broker" as distin-
guished from merely adding "broker,"
will usually be enough. See Cooper v.
Gardiner, [1902] 2 SUte Rep. N. S.
Wales, 67.
MThus in Pike v. Ongley, 18 Q.
B. Div. 708, supra. It was held that
1043
§ I4I3]
THE LAW OF AGENCY
[bCX>K IV
It is also to be noted that though the agent may make himself per-
sonally liable in these cases, the other party may also, at his option
(negotiable and sealed instruments excepted), ordinarily hold the real
principal liable when discovered, — ^ subject to be hereafter consid-
ered.***
§ 14 13. Burden on agent to disclose principal — The duty
rests upon the agent, if he would avoid personal liability, to disclose
his agency, and not upon others to discover it."^ It is not, therefore,
enough that the other party has the means of ascertaining the name
of the principal; the agent must either bring to him actual knowl-
edge or, what is the same thing, that which to a reasonable man is
equivalent to knowledge or the agent will be bound."' There is no
though the agents were clearly not
liable on the contract, they might be
made liable on proof of a custom to
be personally liable in such a case.
To same effect: Fleet v. Murton, L.
R. 7 Q. B. 126, supra; Humfrey t.
Dale, 7 B. & B. 266. B. B. k B. 1004;
Hutchinson v. Tatham, L. R. 8 C. P.
482.
— See post, S§ 1734, 1736.
•T Baldwin v. Leonard, 89 Vt 260,
94 Am. Dec. 824; Fritz v. Kennedy,
119 Iowa, 628; Book v. Jones. 98 S.
W. (Tex.) 891; Weil v. Defenbaugh,
65 111. App. 489; Bradford v. Wood-
worth, 108 Cal. 684.
•sThus in Cobb v. Knapp, supra,
it was said: "It is not sufficient that
the seller may have the means of
of being bound, and whom he had
authority to bind by the contract,
and if the contract was about the
business of the principal and such
facts were known to the plaintiffs,,
then, as Johnson did not expressly
bind himself, it must be held to be
the contract and debt of his princi-
pal, for which he is not responsible.
It clearly appears that plaintiffs
knew that the building was intended
for a public and not for a private
purpose. The evidence does not In so
many words show that they knew
that the building was to be con-
structed by an existing corporation so
as to apprise them that Johnson had
a principal capable of being bound
by the contract. But it does show
ascertaining the name of the princi-^hat there was in fact such a corpo-
pal. If so, the neglect to inquire
might be deemed sufficient. He must
have actual knowledge." See also.
Nelson v. Andrews, 19 N. Y. Misc.
623.
This rule, however, cannot be held
to mean that the other party may
shut his eyes to what would be ob-
vious to any reasonable man. Thus
where the question was whether the
defendant was personally responsi-
ble for the fees of architects who pre-
pared plans and specifications for a
college building of which the defend-
ant was president and financial agent,
the court said:
"If Johnson had a principal capable
ration and principal, and the circum-
stances that were known to plaintiffs*
were sufficient to put them upon in-
quiry. The inquiry that it was their
duty to make, under the circum-
stances of this case, would have de-
veloped a responsible principal, and
it Is difficult to conclude that plain-
tiffs did not have actual knowledge
that they were dealing with a corpo-
ration, notwithstanding the fact that
they did not at the time of making
the contract inquire for or get that
information from Johnson, the
agent." Johnson v. Armstrong, 83
Tex. 325, 29 Am. St. Rep. 648. See
also, Cuneo v. Wlmberly (Tex. Civ.
1044
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ I4I3
hardship to the agent in this rule, as he always has it in his power to
relieve himself from personal liability by fully disclosing his principal
and contracting only in the latter's name. If he does not do this, it
may be well be presumed that he intended to make himself personally
responsible."'
An agent who does not disclose his principal and to whom a per-
sonal credit is given, can not escape responsibility merely because he
generally acts for a disclosed principal in other transactions ; ^ nor, of
course, because he may not have actually intended to bind himself on
this occasion.*
On the other hand, the failure of the agent to expressly disclose his
agency will not make him individually liable where the other party
knew that he was dealing with a certain principal and had had similar
dealings with that principal through the agent's predecessor.*
App.), 116 £. W. 678: Alexmider A
Edgar Lumber Co. v. McGeetian» cited
in third note following.
So where the deacons of a church
invited a minister to accept the paa<
torate of their church, revealing the
Identity of the church and stating
in the letter that they were acting
by virtue of a resolution at the
church meeting, it was held In an ac-
tion by the minister for salary that
the fund from which he was to be
paid was sufficiently identified and
that. therefore the deacons were not
agents for an indisclosed principal
and eonsequetntly not liAble. Morley
V, MaWn, 22 T. L. R. 7.
»»Ck>bb V. Knapp, 71 N. Y. 34», 27
Am. Rep. 51; Frits v. Kennedy, 119
Iowa, 628; Weil v. Defeabaugh, 65
111. App. 489; Bradford v. Wood-
worth, 108 Cal. 684; Armour Packing
Co. T, Vietch-Young Produce Co.
(Ala.), 39 80. 680; Porter v. Merrill,
138 Mo. 655; Kneeland v. Coatsworth,
9 N. y. Supp. 416; Raymond v. Crown,
etc., Ikails, 2 Mete. (Mass.) 319; Mo-
Connell v. Holderman, 24 Okla. 129.
Bat see Worthington v. Cowles, 112
Mass. 30, where the rule is laid down
that the agent Is bound unless from
his disclosures the other party under-
stood, or ought as a reasonable man
to have understood, that he was deal-
ing with the principal. To same ef-
fect, Johufiop V. Armstrong, 83 Tes(.
325. 29 Am. St. Rep. 648.
So far as the burden of proof upon
the trial is ooncerned, the burden is
upon the plaintiff to show that he
dealt with the agent under such cir-
cumstances as to make the latter lia-
ble to the plaintiff. Wilder v. Cowles,
100 Mass. 487.
1 Brent v. Miller, 81 Ala. 309;
Wood V. Brewer, 73 Ala. 259.
s McConnell v. Holderman, 24 Okla.
129; Leterman v. Charlottesville Lum-
ber Co., 110 Va. 769.
• Forrest v. McCarthy, 80 N. Y.
Misc. 125.
80 in Alexander ft Bdgar Lum-
ber Co. V. McGeehan, 124 Wis. 326»
It was said: "The general state-
ment, [of the rule] should not be
construed as requiring the agent un-
der all circumstances to expressly de-
clare his agency and the name of his
principal, — to do so regardless of
whether the person dealing with him
knows the facts, or is chargeable with
knowledge thereof from circum-
stances brought to his attention."
In Amans v. Campbell, 70 Minn.
493, 68 Am. St. Rep. 547, one Camp-
bell, who was really manager of a
business belonging to his wife, In
making a contract in relation to the
I04S
§§ I414* I415] THE LAW OF AGENCY [bOOK IV
Notice of the agency to one member of a firm, has been held not to
be sufficient notice to the firm to relieve the agent from personal re-
sponsibility for transactions subsequently had with another member,
who did no know, and was not informed of the agency.*
§ 1414. Disclose when. — ^The liability is to be determined
by the conditions known at the time the contract was made or other
transaction had. If at that time the principal was not disclosed, his
subsequent disclosure will not relieve the agent.'
A disclosure, however, is sufficient within this rule if, though not
made at the time negotiations were begun, it is full and complete before
any contract is made or obligation incurred. And, though not made
until after one contract has been entered into, the disclosure would be
operative as to further contracts if fully made before such new con-
tracts are consummated.*
As has already been pointed out, a usage that the agent shall be
personally liable if he does not disclose his principal within a reason-
able time, even though the agent would not by reason of its terms be
primarily liable upon the contract, is good.''
§ 1415. Agent liable although principal might also be
held. — As has been already suggested, although the agent makes him-
self liable in these cases, the undisclosed principal may also, when dis-
covered, be usually held liable.^ This is not true, however, as will be
more fully seen hereafter, in the case of negotiable instruments • and
instruments under seal.^*
business, signed "Campbell ft Co.," closed principal bid at an auction
without indicating in any way that sale and the goods were struck off
he did so as agent. It did not ap- to him by name. Upon his request,
pear that there was any other bust- made privately to the clerk, the lat-
ness in the community being con« ter entered the name of the principal
ducted under that name. Held, that as buyer upon the auctioneer's book,
the mere use of the name "Campbell Held, that this was not within the
ft Co." did not amount to a disclosure authority of the clerk and that the
of his agency for his wife, Delia agent was liable. Batchelder v. Lrlb-
Campbell, doing business under the bey, atupra,
name of "Campbell ft Co." « Brackenridge v. Claridge, 91 Tex.
4 Baldwin v. Leonard, 39 Vt 260, 527, 43 L. R. A. 593.
94 Am. Dec. 324. ? Humfrey y. Dale, El. BL ft EL
• Batchelder v. Libbey, 66 N. H. 1004; Fleet v. Murton. L. R. 7 Q. B.
175; Cobb v. Knapp, 71 N. Y. 348, 27 126; Hutchinson v. Tatham, I* R. 8
Am. Rep. 51; Meyer v. Redmond, 141 C. P. 482; Pike v. Ongley. 18 Q. B.
App. Div. 123; Nelson v. Andrews, 19 Div. 708.
Misc. 623; Whiting v. Saunders, 28 sSee po9i, Book IV, Chap. V« Un-
Misc. Rep. 332; Lull v. Anamosa Nat. disclosed Principah
Bank, 110 Iowa, 537; Pancoast ▼. » See post, S 1736.
Dinsmore, 105 Me. 471, 134 Am. St. 10 See posh S§ 1734, 1736.
Rep. 582. An agent of an undis-
1046
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I416, 1417
The fact that the other party may hold the principal when disclosed
does not relieve the agent. The other party has a right to hold the
agent who was apparently the contracting party, or (negotiable and
sealed instruments excepted), at his option, to charge the real princi-
pal in the transaction. This is not a case of joint-liability or of double
liability, but of alternative liability. If the other party elects to hold
the principal upon discovery, he will release the agent. What con-
stitutes such election is usually ^ question of fact, and many cases are
collected in a later section showing the effect to be given. to various
acts thought to evidence an election.^^ As will there be seen the
commencement of an action is ordinarily held not to be enough ; the
action must proceed to judgment.^*
§ 1416. Dealing with agent must have resulted in con-
tract, etc. — It is of course essential to the liability of the agent in
these cases that there shall have been a contract made with him by the
other party, or that he shall have induced some action on the part of
the other party. Thus where the defendant, known to be acting for
an undisclosed principal, caused stock in a corporation to be taken,
with the tacit assent of the corporation, in the name of a "dummy," it
was held that the defendant was not liable for assessments upon the
stock. He was not the record stockholder, and no contract had been
made with him; neither had any action been induced by him, except
with the consent of the corporation.^* The real owner could be
charged upon his discovery.
The alleged agent, obviously, must also, as will be more fully seen in
a later section, (§ 1462), be something more than a mere automaton or
messenger who purports onfy to deliver a message which he has been
directed to transmit*
§ 1417. Where agent acts for a foreign principal. — Somewhat sim-
ilar to the case of the undisclosed principal has sometimes been thought
to be the case of a foreign principal ; and a distinction formerly pre-
vailed in cases in which the principal was a resident of a foreign
state " or country. In such cases it was presumed that the other party
had not trusted to the distant and remote principal, but that credit was
given to the agent personally although the agent disclosed his agency."
But this rule no longer prevails in this country and the contracts of an
11 See posit § 1750 et seq. N. H. 296; Talntor t. Prendergaat, 3
"See post, §§ 1758, 1759. HiU (N. Y.), 72, 38 Am. Dec. 618.
18 Alkali Co. V. Kurtz, 134 Fed. 663. But contra, see per Walworth, and
14 That a different state in the Verplanck in Kirkpatrick v. Stainer,
United States is to be regarded as a 22 Wend. 224; Barham y. Bell, 112
foreign country, see argument of N. C. 131.
counsel in Kaulback y. Churchill, 59 is See Story on Agency, § 268
1047
§§ I418, 1419] T^E LAW OF AGENCY [bOOK IV
agent in behalf of foreign principals stand upon the same ground as
those made for domestic employers.^*
Such an agent may, like any other, incur personal liability by con-
cealing his principal, or by pledging his own responsibility.
§ 141 8. Where there is no responsible principaL — ^Akin to the
cases considered in a preceding subdivision is that wherein the agent
assumes to represent a principal who has no legal existence or status,
or who has no legal responsibility, even though there may have been
the forms of authorization which in other cases would have resulted
in authority. These cases are often dealt with as instances of a want
of authority {ante § 1389), though they ordinarily belong more prop-
erly among the cases considered in the following sections.
§ 1419. Where agent pledges his own fesponsibiKty. — It is en-
tirely competent for the agent, although his agency is known and he
is fully authorized to bind his principal, to pledge his own personal
responsibility. He may do this in two ways, namely, he may add his
responsibility to that of the principal, or he may tender his own re-
sponsibility instead of that of his principal.^^ The other party may
say to him, "I know your principal, and I mean to bind him, but I
also mean to make such a contract that, if I prefer, I may hold you
upon it." Or the other party may say to the agent, 'T. do not know
your principal well enough to trust him" (or, perhaps, "I know him
too well"), "and therefore I will not deal with him at all, but I will
deal with you exclusively." Either of these statements the other party
may make expressly, or by implication from words or conduct. The
agent is, of course, under no obligation to accept either one of these
proposals, but he may accept either, and his acceptance, like the offer,
16 Maury ▼. Ranger, 88 La. Ann. liunbia: Taylor v. Davenport, 14
485, 58 Am. Rep. 197; Bray v. Ket- West. L. Rep. 257.
tell, 1 Allen (Mass.), 80; Barry v. it Thus in Dahlstrom v. Gemunder,
Page, 10 Gray (Mass.), 398; Gold- 198 N. T. 449, 19 Ann. Cas. 771, It Ib
■mlth T. Manheim, 109 MasB. 187; ' held that the agent of a known and
Oelricks v. Ford, 23 How. (U. S.) 49, discloBed principal. In selling goods
16 L. Ed. 534; Rogers v. Marsh, 33 for the latter, may give his own per-
Me. 106. sonal warranty in addition to that
For the English rule, see: ESI- of the principal; but that the two
binger Actien-Gesellachaft t. Claye, warranties would not be bo inde-
L. R. 8 Q. B. 313; Green v. Kopke, 18 pendent of each other that the buyer
C. B. 549; Wilson v. Zulueta, 14 Ad. could recover damages upon both, and
ft Ell. N. S. (Q. B.) 405: Paice v. to the extent which the buyer ob-
Walker, L. R. 5 Ex. 173; Armstrong tains satiBf action from the princiiMl
v. Stokes, L. R. 7 Q. B. 603; Hutton to that extent would the agent be
V. Bulloch, L. R. 9 Q. B. 572. reUeved. See also, Shordan ▼. Kj-
In Victoria: Cheong v. Lohmann, ler, 87 Ind. 38.
[1907] Vict. L. R. 571; British Co-
1048
CHAP. HI J
DUTIES AND LIABILITIES OF AGENT
[^ I4»
may be made expressly or be deduced from the attendant circum-
stances. In the former case only does he really act as agent; in the
latter he is dealt with as an independent party. The differences in
the cases are material. In the former case, the principal or the agent
may be held ; the principal because he authorized the contract and it
is made on his accotmt, even though (sealed and negotiable instru-
ments excepted), he is not named in it; the agent, because he has made
the contract in his own name. Such a personal undertaking is based
upon a sufficient consideration ^^ and is not necessarily inconsistent
with his character as agent ; and where he has so promised personally,
the mere addition of the word "agent," "trustee," "president," etc., to
a written promise, will ordinarily, as has been seen, be regarded as
mere descriptio personae}*
In the second case, the agent only and not the principal is bound,
for, by the hypothesis, the principal has been expressly excluded as a
party.
§ 1420. The result is to disclose three possible situations
in which a known and authorized agent may place himself: (i) con-
tracting only in the name of his principal, he may altogether escape
personal liability; (2) he may make the contract in such form that
either the principal or the agent may be responsible; (3) he may make
the contract in such form that he only is liable upon it.
The first of these situations has been so fully discussed as to need
no further consideration here. Tlie second case is more difficult. Yet
even here it is possible that either the principal or the agent may be
bound, — ^the principal because he is such and authorized the contract,
and the agent because he has contracted in his own name, — and this is
true, according to the weight of authority (negotiable instruments and
Agent personally bound: Sadler v.
Young, 78 N. J. L. 594; Carroll v.
Bowen, 113 Md. 150; Jones v. Gould,
200 N. Y. 18.
18 See Sayre v. Edwards, 19 W. Va,
352.
10 See ante. Book III, Chapter III.
See also, Duval v. Craig, 2 Wheat.
(U. S.) 45, 4 L. Ed. 180; Townstnd
V. Hubbard, 4 Hill (N. Y.). 351; Qulg-
ley V. De Haas, 82 Pa. 267; White-
head V. Reddick, 12 Ired. (N. Car.) L.
95; Oliver v. Dix, 1 Dev. & Bat. (N.
C.) Eq. 158; Appleton v. Binks, 5
East. 147; Tippets v. Walker, 4 Mass.
595; Bryson v. Lucas, 84 N. C. 680,
37 Am. Rep. 634; De Bebian v. Gola,
64 Md. 262; Landyskowskl v. Lark,
108 Mich. 500; Cream City Glass Co.
V. Friedlander, 84 Wis. 53, 36 Am.
St. Rep. 895, 21 L. R, A. 135;
Hardman v. Kelly, 19 S. D. 608;
Manly v. Sptrry, 115 Ala. 524; Maine
Red Granite Co. v. York, 89 Me. 54;
Burkhalter v. Perry, 127 Ga. 438, 119
Am. St R. 343; Candler v. DeGlve,
133 Ga. 486; Mott Iron Works v.
Clark, 87 S. Car. 199; Fowler v. Mc-
Kay, 88 Neb. 387; Eddy v. American
Amusement Co., 9 Cal. App. 624;
Benedict v. Wilson, 10 CaL App. 719.
1049
§ I420]
THE LAW OF AGENCY
[book IV
sealed instruments excepted) , even though the agency was known and
the contract was in writing and made in the agent's name, without
disclosing the name of the principal.**
20 The leading case upon this ques-
tion Is doubtless Calder v. Dobell,
L. R. 6 C. P. 486. There the defend-
ant had authorized one Cherry, a
broker, to buy cotton for him but not
to disclose his name. The broker's
credit not being good enough to en-
able him to buy the cotton on his
own responsibility, he disclosed the
name of the defendant. Bought and
sold notes were then made In which
the broker was named aa the buyer,
and the defendant's name was not
mentioned. The broker advised the
defendant that he had bought the cot-
ton of the plaintiffs for him, and the
defendant did not object. The plain-
tifts first demanded that the broker
should accept and pay for the cotton,
but not obtaining payment from him,
they sued the defendant. It was held
that the fact of the defendant's name
being disclosed at the time of the con-
tract did not preclude the plain tlfFe
from having recourse to him; that
parol evidence of the circumstances
under which the contract was made
was admissible; and that the inser-
tion of the broker's name In the con-
tract, though his principal was
known at the time, and the subse-
quent demands upon the broker for
payment, did not necessarily amount
to an election on the part of the
plaintiffs to give credit to the broker,
and to him only. Wllles, J., in the
opinion, said: "I do not agree that
two persons cannot be severally lia-
ble on the same contract. The ques-
tion Is whether there was anything In
the circumstances of this case to
negative or exclude the liability of
both principal and agent, or to sub-
stitute the liability of the latter for
that of the former. The facts were
properly submitted to the jury; and
they have come to a conclusion up-
on them to which it was competent
to them to come. There Is nothing
to prevent the seller from insisting
upon having both principal and agent
liable to him at the same time, with
the additional advantage of knowing
the principal's name at the time. The
very object of the plaintiffs* insist-
ing upon being informed of the name
of the principal was to make him lia-
ble; and Cherry's name was Inserted
in the contract for the purpose of
enabling them to charge him, at their
option. To hold that asking the
name of the principal at the time is
to discharge the principal, would
seem to me to be contrary to common
sense."
The decision was affirmed in the
Exchequer Chamber, where, among
others, KeUy, C. B., said: "I think
this case is free from doubt or diffi-
culty. The contract was made in the
name of Cherry, the agent; but the
case shows that it was made on be-
half of a principal who was named
at the time. I think the plaintlffB
had a right to sue either the agent
or the principal, at their election.
No doubt, the election being once de-
termined, there is an end to the mat-
ter; as, where the agent has been
sued to judgment. Here, however,
nothing was done to determine the
election at the time this action was
brought against the principal. The
question was, I think, properly left
to the jury, and upon proper evi-
dence; and the verdict was quite
right."
So in Byington v. Simpson, 134
Mass. 169, 45 Am. Rep. 314, it was
held that the fact that a person knew,
when he entered into a contract In
writing not under seal, purporting on
its face to be made on the other part
by A, and signed by "A, agent," that
A was in fact contracting as agent
for B, will not prevent him from
maintaining an action against B on
the contract. Said the court: "We
are of opinion that the plaintiffs'
knowledge does not make their case
1050
CHAP, m]
DUTIES AND LIABILITIES OF AGENT [§»§ I42I, I422
In the third case, as has been pointed out, the agent really does not
act as agent at all. The credit is given to him personally. He is the
principal in the transaction, and there is no ground for adding any
other.
g 1431. ' In view of the possible forms which the contract
may thus take, the question arises, has the agent bound the principal
alone, has he bound himself and the principal, or has he bound himself
alone .-^ Where the negotiations take on an express form, little ques-
tion ordinarily arises; the difficulty is with those cases in which the
matter is not made precise and definite at the time of the transaction,
but is to be determined later, when one party affirms and the other
denies that the agent's responsibility in some form was pledged. The
question then becomes. To whom was the credit given, and, if given
to the agent at all, was it an alternative or an exclusive one? How
shall this question be determined?
§ 1422. How determined. — Where the promise is in writ-
ing, its construction and effect are ordinarily questions of law to be
determined by the court. The question is for the court also where,
though the promise is not in writing, only one inference can legally be
any weaker than it would have been
without It. Whatever the original
merits of the rule, that a party not
mentioned in a simple contract in
writing may be charged as a princi-
pal upon oral evidence, even where
the writing gives no indication of an
Intent to bind any other person than
the signer, we cannot reopen it, for
it is as well settled as any part of
the law of agency."
The leading case on the other side
is, doubtless, Chandler v. Coe, 54
N. H. 561, 22 Am. Rep. 437, in
which it was held that where a writ-
ten contract is made in the name of
an agent of a then known principal,
the making of the contract itself con-
stitutes an election to hold the agent
and the principal cannot afterwards
be held. It was conceded that the
rule would be different if the princi-
pal had not then been known. Said
the court: "But if the principal was
known when the contract was made
and signed the case is different. If
the party who received from an agent
a written contract executed in the
name of the agent, knowing that he
acted for a principal, seeks to hold
the principal, it must be on the
ground that it was intended to be
and was received by him as the con-
tract of the principal; because, if he
received it as the contract of the
agent, knowing that he was an agent,
that constitutes a conclusive election
to look alone to the agent. Parol evi-
dence* therefore, if admitted in such a
case, does show that the contract
which the parties Intended to make
was not what the writing indicates,
but different. It shows that an error
was committed in writing it. Its ad-
mission, therefore, allows the uncer-
tain testimony of slippery memory'
to come in and control what the par-
ties have deliberately written and
signed, and this is inadmissible be-
cause the writing furnishes the best
evidence of the actual contract" See
also, Ferguson v. McBean, 91 Cal. 63,
14 L. R. A. 65; Gillig v. Lake Bigler
Road Co., 2 Nev. 214; Heffron v. Pol-
lard, 73 Tex. 96, 15 Am. St. Rep. 764.
1051
§ 1422]
THE LAW OF AGENCY
[book IV
drawn from the facts. In other cases, the question whether the credit
was given to the agent personally is always one of fact to be determined
from all the circumstances of the case.*^ In either event, the law aims
to ascertain the intent of the parties, and when that is ascertained it is
usually conclusive if it can be made so without conflicting with estab-
lished rules of law.**
In searching for the intention, several considerations may be called
in aid. Thus, where dealings are had with one known to be acting as
the agent of a disclosed principal, the legal presumption is that the
credit was given to the principal rather than to the agent personally,
and this presumption will prevail in the absence of evidence that the
credit was given to the agent, and the burden of proof rests upon the
party alleging it** So the fact that the agent was known to be in-
solvent may be taken into consideration in determining whether the
credit was given to the agent or his principal.**
So, too, in determining the intention, the fact that under one con-
struction the contract will have validity and force, while under the
other it will have neither may be taken into consideration.**
SI Anderson v. Timberlake, 114 Ala.
377, 62 Am. St. Rep. 106; Cobb ▼.
Knapp, 71 N. T. 348, 27 Am. Rep. 61;
Steamship Co. v. Merchants' Desp.
Trans. Co., 136 Mass. 421; Hovey v.
Pitcher, 13 Mo. 191; Fleming v. Hill,
62 Qa. 751; Whitney v. Wyman, 101
U. S. 392, 26 Lk Ed. 1050; Paterson v.
Gandasequi, 16 East, 62; Addison ▼.
Qandasequi, 4 Taunt 674.
22 Whitney v. Wyman, supra;
Worthington v. Cowles, 112 Mass. 30;
Phlnizy V. Bush, 129 Oa. 479.
ss Anderson v. Timberlake, 114 Ala.
377, 62 Am. St. Rep. 105; Spry Lum-
ber Co. v. McMillan, 77 111. App. 280;
Ketehum v. Sears, 164 III. App. 62;
Mead V. Altgeld, 186 III. 298; Mi-
chael v. Jones, 84 Mo. 578; Huston v.
Tyler. 140 Mo. 252; Blount ▼. Tomlln-
son, 67 Fla. 35, 48 So. 751; Meade
Plumbing Co. r. Irwin, 77 Neb. 385;
Meeker v. Claghorn, 44 N. T. 349,
352; Foster v. Persch, 68 N. Y. 400;
Ferris v. Kilmer, 48 N. Y. 300; Hall
y, Lauderdale, 46 N. Y. 70; Bank of
Genesee ▼. Patchin Bank, 19 N. Y.
312; Title Guarantee Co. ▼. Sage, 181
N. Y. Supp. 278; Key v. Parnham, 6
Har. ft J. (Md.) 418; Johnson r.
Welch, 42 W. Va. 18; Alexander, etc.,
Lumber Co. v. MoGeofaan, 124 Wis.
325; Boyd Grain Co. ▼. Thomas
(Ark.), 142 S. W. 1150; Jewell v.
Colonial Theater Co., 12 CaL App. 681;
Walker v. Cross, 87 C. C. A. 324. 160
Fed. 372. Says Swayne, J., in Whit-
ney V. Wyman, aupra^ **Where the
principal is disclosed, and the agent
is known to be acting as such, the
latter can not be made personally lia-
ble unless he agreed to be* so."
Where a physician summoned to
attend a tramp run OTer by a rail-
way engine telephones the general
superintendent of the company ask-
ing if he shall go and the latter re-
plies, yes, there can be no presump-
tion that the superintendent intended
to bind himself personaUy for the
physician's pay. Michigan College of
Medicine y. Charlesworth, 54 Mich.
622.
2* Garrett v. Trabue, 82 Ala. 227;
Ferris v. Kilmer, 48 N. Y. 300.
25 Thus in Knickerbocker v. Wil-
cox, 83 Mich. 200, 21 Am. St. Rep. 596,
a letter written by the cashier of a
105a
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1423
§ 14^3-
What facts not conclusive. — In endeavoring to
determine to whom the credit was given, a number of common facts
may be considered which, while ordinarily significant, are not neces-
natlonal bank upon the official letter-
head of the bank, requesting the per-
son addressed to furnish a bond for
certain persons named In the letter
and saying "They are good customers
^f ours and if you will sign said bond
we will stand between you and all
harm," was signed "L. T. Wilcox,
•Cashier/' In an action against Wil-
<Mx brought by the person addressed
who furnished the bond and now de-
manded Indemnity, the court held
that the letter could not bind the
bank because such an undertaking
■would be ultra vires. Did It, then,
hind Wilcox? It is weU settled that
.such a signature as this contrary to
the ordinary rule of deacriptio per-
sonae^ Is regarded as the signature
'Of the bank. It being legally impos-
sible to hold the bank, can the prom-
ise be regarded as an individual one?
The court below directed a verdict
for the defendant. The supreme
court held this error, saying: "The
paper not being the contract of the
bank, then, can it be said to be the
<:ontract of Wilcox himself? Does It,
upon its face, appear so clearly to
have been intended as the undertak-
ing of the bank, executed through
Wilcox as its cashier and agent, as
to bring it within the rule that his
want of authority to bind the bank,
for which he assumed to act, does
not render him Individually liable,
when the facts and circumstances in-
dicate that no such Uablllty was in-
tended by either of the parties? In
deciding this question, weight must
be given to the argument that the
writing of this letter will not lightly
be assumed to have been a mere idle
ceremony. We must assume that the
parties to it intended it to have some
^effect. The cases in Missouri, (Mi-
chael v. Jones, 84 Mo. 578; Hum-
phrey V. Jones, 71 Mo. 62; and Ce-
ment Co. y. Jones, 8 Mo. App. 373), re-
lied on by counsel for defendant,
were all cases in which the guardian
of an insane person had traded with
his ward's estate, contrary to the
provisions of law, and had suffered
losses. The persons dealing with
him had done so with full knowledge
of the fact that he was acting not
for himself, but for his ward. It
was held that where the facts are
known to both parties, and the mis-
take is one of law as to the liability
of the prinefpal, the fact that the
principal cannot be held is no
ground for charging the agent.
"We cannot apply that rule to
this case, for the reason that it does
not clearly and unequivocally ap-
pear that Wilcox was claiming to
act for the bank, and that he was not
intending to bind himself. To say
that he intended to bind the bank Is
to suppose him ignorant of the plain
rules of law governing the institu-
tion of which he was a principal of-
ficer. There are many casts In which
It has been held that the addition
to one's signature of his title does
not make the paper the contract of
the corporation In which he Is an
officer. Such designation has been
treated as a mere description of the
person. Tllden v. Barnard, 43 Mich.
376, 38 Am. Rep. 197; Hayes v.
Brubaker, 65 Ind. 27.-
While the rule stated In the text
Is believed to be sound the conclu-
sion In the case just referred to, Is
believed to be questionable. Where
the agent adopts a form of signature
which Is the common and accepted
form when it Is Intended to bind the
principal, can any fair Inference be
drawn that he Intended to bind him-
self personally In this case because
the contract was one not "Within the
power of the principal? In Mer-
1053
§ I4231
THE LAW OF AGENCY
[book vr
sarily conclusive. Thus the fact that goods sold were charged to the
agent "is no conclusive evidence that tlie credit was given by the
vendors exclusively to the agent, and that they intended to look U>
him solely for their pay ;" *• the fact that the other party accepts a
written obligation signed by the agent alone is not conclusive ; -^ and
even, by the weight of authority at least, as has been seen, the fact
that the other party with knowledge of both principal and agents
enters into a written contract, in which the agent alone is named as a
party, is not conclusive of his intention not to hold the principal also.
2S
chants' A Planters' Packet Co. v.
3treuby» 91 Miss. 211, the facte and
the opinion are so brief that they
may be reproduced entire. Opinion
by Calhoon, J.: "This action is to
hold Streuby liable personally as a
subscriber on his signature to the
capital stock of a corporation. His
signature is in these words: 'F.
Streuby, for Levy Bros. Oil Mills,
Ltd.' The oil mill was a corpora-
tion, and so it was powerless, in
this state, to subscribe for stock of
another corporation. This was equal-
ly known to him and appellant cor-
poration, and no fraud or fraudulent
representation appears. We havev
therefore, not a case where the prin-
cipal was or could have been bound
by the subscription in any event; it
being ultra vires. We hold that the
signatures did not bind Streuby per-
sonally, and adopt the reasoning of
Judge Brewer in the two cases of
Holt V. Winfleld Bank (C. C), 25
Fed. 812, and Abeles v. Cochran, 22
Kan. 405, 31 Am. Rep. 194."
In the opinion of Brewer, J., in
Abeles v. Cochran, supra, there is a
very exhaustive examination of the
question.
See also Thilmany v. Iowa Paper
Bag Co., 108 Iowa, 357, 75 Am. St.
Rep. 259.
2« Meeker v. Claghorn, 44 N. Y.
349; so also, Foster y. Persch, 68 N.
Y. 400.
So where the question was
whether painting had been done for
the wife or for her husband as her
agent in the contracting, the fact
that after the painter had been told
that the house belonged to the wife,
he made out his bill against the hus-
band, while perhaps evidence of an
intention to look to the husband
alone, was not absolutely conclusive
of such a purpose, and of an aban-
donment of any claim against the-
wife. Dyer v. Swift, 154 Mass. 159.
The mere fact that one Is an in-
dependent contractor for the erection
of a building is not conclusive that
in the particular case he did not act
as agent for the proprietor. Lambert
V. Phillips, 109 Va. 632. See also,
Gardner v. Bean, 124 Mass. 347; Ray-
mond y. Eagle Mills, 2 Mete. (Mass.)
319.
27 Coleman v. First Nat. Bank of
Elmira, 63 N. Y. 388; Gates v. Brew-
er, 9 N. Y. 205, 59 Am. Dec. 530.
asCalder v. Dobell, L. R. 6 C. P.
486; Byington v. Simpson, 134 Mass.
169, 45 Am. Rep. 314.
In York Co. Bk. v. Stein, 24 Md.
447, it was said: "The law is well
settled that the principal is person-
ally responsible in all cases of con-
tracts made by an agent, within the
scope of his authority, and this is
not varied by the fact that the agent
contracts in his own name, whether
he discloses his agency or not, pro-
vided the circumstances of the case
do not show that an exclusive credit
was given to the agent."
In Merrell v. Witherby, 120 Ala.
418. 74 Am. St. R. 39, it is said:
"From the authorities, the rule is
deducible that, when a sale is made
to one who is acting in the purchase
1054
-CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1423
Where, under the circumstances, it is properly found that the agent
has pledged his own responsibility, the fact that he did not intend to
do so, will not relieve him.**
as agent for a principal who is
known to the vendor, and only the
personal obligation of the agent is
taken for the price of the property
sold, the prima facie presumption
arises that the personal credit is
given to the agent alone."
Contra: The leading case to the
contrary as has been seen Is Chand-
ler V. Coe, 54 N. H. 561, 22 Am.
Rep. 437. See Anderson v. Timber-
lake. 114 Ala. 377, 62 Am. St. Rep. 105,
-supra, where it is said that In order
to make the agent liable the credit
-must have been given excltisively to
him. In Calder v. Dobell, supra,
Hannen, J., in the Exchequer Cham-
ber, referred with approval to Story
•on Agency, S 160a. With reference
to this authority, the court, in Chand-
ler V. Coe, expressed itself as fol-
lows:
"It is laid downia Story on
Agency, sec. 160a, that the doctrine
maintained in the more recent au-
thorities' is, that 'if the agent pos-
.sesses due authority to make a writ-
ten contract not under seal, and he
makes it in his own name, whether
lie describes himself to be an agent
•or not, or whether the principal be
known or unknown, he» the agent,
will be liable to be sued and be en-
titled to sue thereon, and his princi-
pal also will be liable to be sued, and
be entitled to use thereon, in all cases,
unless from the attendant circum-
stances it is clearly manifested that
an exclusive credit is given to the
agent, and it is intended by both
parties that no resort shall in any
event be had by or against the prin-
cipal upon it.' This section first ap-
peared in the second edition of the
work, published a short time before
the death of the distinguished au-
thor. A careful examination of the
numerous authorities there cited in
support of it will show that perhaps
not one of them sustains it to the
full extent of holding it to be im-
material whether the principal Is
'known or unknown,' unless Bate-
man V. Phillips, decided in 1812, 15
East, 272, may be an exception. On
the contrary, this unguarded state-
ment of our great jurist has occa-
sioned most of the decisions which
might now be cited as going to
that extent. The dictum of Baron
Parke, which we have already quoted
from Higgins v. Senior, the leading
case cited by Story, does indeed sus-
tain him, and it was doubtless the
authority on which he chiefly relied;
but the point did not arise in that
case, the question there being, not
whether parol evidence is admissible
to charge the principal in such a
case, but whether it is admissible to
discharge the agent, — which was de-
cided in the negative, and is every-
where well settled. But in Calder
V. Dobell, before cited, the precise
question arose, and the decision sus-
tains the section quoted from Story
to the fullest extent; and such is
now, unquestionably, the law in
England."
Chandler v. Coe, is approved and
followed in Ferguson v. McBean, 91
Cal. 63, 14 L. R. A. 65, and Gillig v.
Lake Bigler Road Co., 2 Ner. 214,
though the latter case involved a
negotiable instrument.
The syllabus in Mcintosh-Hunting-
ton Co. V. Rice, 13 Colo. App. 393,
also contains a statement of the prop-
osition which is contrary to Calder
▼. Dobell, but the case shows that
the contract was under seal and the
court refers to Rice v. Bush, 16 Colo.
484, in which case the contract was
also under seal.
So in Heffron v. Pollard, 73 Tex.
2oMcConnell v. Holderman, 24 Okla. 129.
loss
§ 1424]
THE LAW OF AGENCY
[book IV
§ I4«4-
Principal also may be bound — ^Election. — ^Where,
within the rules above referred to, it is found that the agent has pledged
his own responsibility, he will of course be bound accordingly.** Where
both the principal and the agent are liable, the liability of the ageni
continues vmtil the other party has done something showing that he
intends to enforce it against the principal alone. Whether he has-
done so or not is usually a question of fact to be decided with reference
to the significance of the acts relied upon as evincing an election,"
although there are certain acts which may constitute an election as a>
96. 15 Am. St Rep. 764. In which
Chandler v. Coe, supra, is cited
with apparent approval. It is said:
"If however the principal be dis-
closed, and the face of the writing
shows that the agent is bound, It
Is presumed that the other party has
elected In the contract Itself to look
to the agent and the principal is
not liable upon it."
soBell V. Teague^ 85 Ala. 211;
Manly v. Sperry, 115 Ala. 524; Mead
V. Altgeld, 136 111. 298; Miller v.
Early (Ky.) 68 S. W. 789; Ziegler
V. Fallon, 28 Mo. App. 295; Ross v.
McAnaw, 72 Mo. App. 99; Landys-
kowski V. Lark, 108 Mich. 500; Maine
Red Granite Co. v. York, 89 Me. 54;
Dockarty v. TlUotson, 64 Neb. 432;
McBratney v. Heydecker, 8 Migc. 309;
O'Rorke v. Geary, 207 Pa. 240; Hard-
man V. KeUey, 19 a D. 608; Cream
City Glass Co. v. Friedlander, 84
Wis. 53, 36 Am. St. Rep. 895, 21 L.
R. A. 135; Higgins v. Senior. 8 M.
& W. 834.
In order to hold the agent upon a
written contract, It is of course es*
sential that the contract shall con-
tain apt words to bind him. Johnson
V. Welch. 42 W. Va. 18.
Where an agent in selling goods
for a principal, makes an oral war*
ranty for himself, and afterward
makes a written contract for his
principal, with a warranty by the
principal, his personal oral warranty
is not merged in the written war-
ranty of his principal; and in an
action on a note payable to the
agent, for the goods, evidence of the
oral warranty Is admissible. Shor-
dan V. Kyler, 87 Ind. 88. See also,
Dahlstrom v. Qemnnder, 198 N. Y»
449, 19 Ann. Cas. 717; Lnckes v.
Meserole, 132 App. Div. N. Y. 20.
>i As to the effect, as constituting
an election, of such acts as taking*
the note of one party, charging the
goods to him, filing a claim against
his estate and the like, see post,.
Book IV. Chap. V, under UndiscloseS
Principals. Also see, Gardner v.
Bean, 124 Mass. 347; Raymond T»
Crown, etc.. Mills, 2 Mttc. (Mass.)
319; Dyer v. Swift, 154 Mass. 159.
Where a note signed by an agent,,
as accommodation maker for hi»
principal, came to the hands of the
plaintiff without knowledge of the^
agency of the signer: after the dis-
closure to him of the principal, the
principal became insolvent, and the
plaintiff presented his claim against
the estate and received a dividend.
The plaintiff contended that his ac*
tion was solely for the purpose of
keeping alive the agent's claim
against his principal's estate. The
court held that this did not consti-
tute such an election to hold the
principal as to preclude the plain*
tiff from recovering the residue
from the agent. Hoffman v. Ander-
son, 112 Ky. 893.
Where the facts show that the
third party has manifested an inten>
tion to hold the principal exclusively,
he cannot thereafter hold the agent
Provenchere t. Reifess, 62 Mo. App,
50.
105^
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 14^5
matter of law. Whether the commencement of an action against the
principal is per sc an election, or whether the action must be prosecuted
at least to judgment, is a question upon which there has been some
difference of opinion, but the weight of authority is with the latter
view.'^
Where on the other hand the credit was originally given to the agent
exclusively, the election is made at the time of the contract and the
other party cannot afterward resort to the principal.*'
§ 1425. Agent alone liable on negotiable and sealed in-
struments.— ^The rule that either the principal or the agent may
usually be held liable even upon written contracts made in the agent's
name is, as has already been suggested, subject to two well-defined
exceptions.
In the case of negotiable instruments, the rule is well settled that
no one can be charged as a party who does not appear as such upon
the face of the instrument. If, therefore, witiiin the rules already laid
down,** the instrument is not so executed as to bind the principal by
its terms, he cannot be held upon the instrument at all. In such a
case (except in the rare event in which the instrument is so executed
««8o held In Codd Co. v. Parker,
97 Md. 819; Cobb v. Knapp, 71 N. Y.
348, 27 Am. Rep. 51; Murphy v.
Hutchinson, 93 Miss. 643, 21 L. R.
A. (N. S.) 785, 17 Ann. Cas. 611;
Buckingham v. Trotter, [1901] 1
State Rep. N. S. Wales, 253.
The question commonly arises, as
would naturally be expected. In ac-
tions against the principal, in which
It is claimed that the other party
has elected to hold the agent. The
principle, however, seems to be the
same In both cases, and the weight
of authority is clearly to the effect
that nothing short of a prosecution
of the claim to Judgment operates
per 86 as an election.
See post, Book IV, Chap. V, under
Undisclosed Principal, Priestly v.
Fernie, 3 H. & C. 977; Kingsley v.
Davis, 104 Mass. 178; Lindquist v.
Dickson, 98 Minn. 369, 6 L. R. A. (N.
S.) 729, 8 Ann. Cas 1024; Perry v.
Moore, 18 111. App. 135; Steele Smith
Gro. Co. V. Potthast, 109 Iowa, 413;
Tuthin V. Wilson, 90 N. Y. 423.
In McLean v. Sexton, 44 N. Y. App.
DiT. 520, it was held that under the
mechanics' lien act of New York,
one action may be maintained
against both principal and agent, al-
though only one satisfaction can be
had.
s8 Silver V. Jordan, 186 Mass 319;
Watle V. Thayer, 56 111. App. 282.
In the Matter of Bateman, 7 Misc.
(N. Y.) 683.
If the seller of a* chattel takes
the promissory note of the agent of
the buyer, knowing him to be such
and intending to receive it as pay-
ment and to give exclusive credit to
the agent, he cannot, upon Its dis-
honor, recover of the principal. Per-
kins V. Cady, 111 Mass. 318.
Where an agent contracts for his
principal with the distinct under-
standing that the agent is to pay for
the work, he is liable therefor, and
the act of the plaintiff In erroneously
joining the principal as a party de-
fendant is not an act which will re-
lease the agent. Ross v. McAnaw,
72 Mo. App. 99.
«* See ante, § 1123 et. seq.
67
1057
§§' 1426, 1427] THE LAW OF AGENCY [BOOK IV
that no one is bound) , the agent alone is bound.*' What the forms of
execution are, which impose personal liability upon the agent, has been
so fully considered in an earlier chapter •• that nothing further need
be added to it here. As has there been seen, where the promise is
otherwise an individual one, words indicating a representative charac-
ter are usually regarded as mere dcscripHo personae.
The case of the instrument under seal furnishes the second excep-
tion. Here also under well-settled rules, that person only is bound
who appears on the face to be the party to the deed. If that person
be the agent, he alone is liable. A fuller discussion of this exception
will be found in a later section.*^
§ 1426. Agent may be jointly liable with principal — The cases
referred to in the preceding sections are chiefly cases in which the prin-
cipal was the only party having any real interests. It is perhaps
scarcely necessary to mention that there may be cases in which the
agent will have such an interest of his own, together with his prin-
cipal, that the principal and the agent may both be bound upon the
contract.'* And even though the agent may have no personal interest
in the transaction, no reason is apparent why in binding a disclosed
principal he may not bind himself jointly with that principal. It is,
however, diflicult to see, how he can bind himself jointly with an un-
disclosed principal.'*
§ 1427. Agent may bind himself by collateral contract — Still
further, it is possible that the agent may bind his principal only upon
the main or principal contract and may bind himself only by a sub-
sidiary contract collateral to the main one. Thus an agent in selling
his principal's goods, for example, may add to the contract of sale
which he makes for his principal his own collateral agreement to
warrant the quality of the goods so sold.** In such a case, of course,
>s See ante. Book III, Chap. III. cussion and the judges in both courts
stt See Book III, Chap. III. were divided in opinion. The only
S7 See vosty Book IV, Chap. V. thing, however, which seems to be
MGill V. General Electric Co., 129 decided is that the anomalous corn-
Fed. 349; Moore v. Booker, 4 N. D. plaint In the case was not open to
548. demurrer upon the ground that two
Where an agent acts in behalf of causes of action had been improperly
himself and an undisclosed princi- joined, the majority in the court of
pal both are liable upon the contract, appeals holding that the complaint
Lull y. Anamosa Nat. Bank, 110 stated but one cause of action upon
Iowa, 537. a contract either of the principal
S9 See the curious case of Tew v. alone made by the agent or by the
Wolfsohn, 77 N. Y. App. Dlv. 454, principal and agent jointly,
in the Court of Appeals, 174 N. Y. *o Wilder v. Cowles, 100 Mass. 487;
272, in which there was much dis- Rondquist v. Higham, 33 Minn. 490;
1058
CHAF. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I428, I429
there is no room for election, becatise both are not bound to the same
undertaking.
§ 1428. How in case of public agent. — It is also competent for
a public agent to bind himself personally, if he so elects, but it is not
presumed that he will or has done so. Indeed, the presumption that
the agent of a known principal intends to bind the latter rather than
himself, is stronger in the case of a public agent than in that of the
agent of an individual. It is incumbent, therefore, upon him who
seeks to hold a known public agent personally responsible, to adduce
clear proof of an intention so to be bound."
§ 1429. Agent's right of set-off and recoupment. — ^When an agent
who has made himself liable on a contract made for his principal is
sued thereon, a question may arise respecting his right of set-off or
recoupment against the plaintiff's claim. With respect of claims of
his own of which he may desire to avail himself, there would seem to
be no doubt of his right to do so. With respect of claims belonging
to his principal the case is not so clear. The editors of the ninth
American edition of Smith's Leading Cases express the opinion that
the agent should be allowed to set off a claim due from the plaintiff
to his principal, provided the principal consents ; but they are also of
opinion that the authorities are opposed to their view.** The cases
actually in point are very few. In the case most frequently referred
to,** where the agent was being sued upon a contract for services
made for a principal, but alleged to bind the agent personally, the
court held that the defendant could not set-off, against the plaintiff's
claim, a demand which the principal had against the plaintiff arising
out of an entirely separate transaction. There was no evidence as to
whether the principal was willing or unwilling. No question was in-
volved respecting a claim growing out of the same transaction, but the
court said: "If the principal had made payments to the plaintiff (as
distinguished from a set-off) for and on account of his work, that would
have presented a different question."
Argersinger v. Macnaughton, 114 N.
T. 535, 11 Am. St Rep. 867; Shordan
V. Kyler, 87 Ind. 38; Dahlstrom v.
Gemunder, 198 N. T. 449, 19 Ann.
Oae. 771; Lucfces v. Meserole, 132
N. Y. App. Div. 20.
*2New York, etc., Co. v. Harbison,
16 Fed. 688: Hall v. Lauderdale, 46
N. Y. 70; Gill v. Brown, 12 Johns.
(N. Y.) 386: Miller v. Ford, 4 Rich.
(8. C.) h. 376. 55 Am. Dec. 687;
Hodgson ▼• Dexter, 1 Cranch (U. S.
C. C.)» 109, Fed. Gas. No. 6,565; Bfao-
beath v. Haldimand, 1 T. R. (Durnf.
6 E.) 172; Ogden v. Raymond, 22
Conn. 379, 68 Am. Dec 429; Walker
V. Swartwout, 12 Johns. (N. Y.)' 444,
7 Am. Dec. 334; Roach ▼. Rutter, 40
Mont. 167.
«s2 Smith's Leading Cases, 9th
Am. Ed. page 1370.
44 Forney v. Shipp, 4 Jones (N.
C), Law, 527.
1059
§§ I430» I431] THE LAW OF AGENCY [BOOK IV
In a case in New York *• counsel contended, "that an agent who is
sued to compel him to pay a claim for which he has made himself lia-
ble can recoup any claim which his principal would have, arising out
of the contract on which the agent is liable, but that he cannot recoup
a claim of the principal arising out of another contract." The court
said: "This is a correct statement of the law."
3, Where the Agent has Received Money,
§ 1430- In generalw — The question of the liability of the agent to
third persons, for money received by him, may arise under two states
of fact. It may be money which the agent has received from such
third persons to be paid over to his principal, but which, for some
reason, they are desirous of recovering before it reaches the hand of
his principal. Or it may be money received by the agent from his
principal to be paid to such third persons, but which the agent has
failed or refused to pay to them, either for some purposes of his own,
or because he has been directed by his principal so to do.
The reasons why the party paying, in the first class of cases, may
desire to recover the money may be very numerous. He may have
paid it under mistake of law or fact, either as to his own liability to
pay or the principal's right to receive. He may have paid it because
he was induced or coerced by the fraud or extortion of the principal
alone, of the agent alone, or of both. He may also desire to recover
it because, though he would concede that the principal had the right
to receive it at the time it was paid, he contends that something has
since occurred that terminates the right of the principal to receive it.
a. Where Money has been Paid to Agent for Principal.
§ 1431. No liability where money properly paid to which princi-
pal vsras entitled. — Before taking up the cases in which there is al-
leged to have been some infirmity in the payment, it may be profitable
to observe that where money has been paid to an authorized agent
which was properly paid and which the principal had the right to re-
ceive and retain, the person paying it can not recover it from the
agent, even though the agent fails or refuses to pay it to his principal.
The agent owes a duty to his principal to pay it to the latter ; the prin-
cipal has ample remedies to compel payment; and it is no concern of
the person paying that the agent does not perform this his duty to his
principal.**
45ElweU V. Sklddy, 77 N. Y. 282. (N. Y.) 627; Hall v. Lauderdale, 46
Same: Leterman v. Charlottesville N. Y. 70; Fisher v. Meeker, 118 App.
Lumber Co., 110 Va. 769. Div. (N. Y.) 452; Colvln v. Holbrook,
49 Smith v. EBsex Bank, 22 Barb. 2 N. Y. 126.
1060
CHAP, in]
DUTIES AND LIABILITIES OF AGENT
l§ 1432
§ 1432. Liability for money paid to him by mistake.-*-An agent
acting for a known principal and duly authorized, to whom money has,
by mistake or other similar cause, been voluntarily paid for the use of
his principal, is not liable to the person so paying it where, before
notice of such mistake, he has paid it over to his principal, even though
the principal had no legal right to receive it. In such event, the per-
son paying it must look to the principal.^^
The agent, however, may in most cases be held liable if, after being
apprised of the mistake and required not to pay it over, he then pays
the money to his principal."
Where a third person buys goods
of an agent and properly pays him
for them, and later on demand pays
again directly to the principal, he
cannot recover from the agent
Fisher V. Meeker, supra.
♦^Hauenstein v. Ruh, 73 NT. J. L.
98; Shepard v. Bherin, 48 Minn. 382;
Gulf City Const. Co. v. Louisville,
etc., Ry. Co.. 121 Ala. 621: Lang v.
Friedman, 166 Mo. App. 354, 148 S.
W. 992; Ashley v. Jennings, 48 Mo.
App. 142; La Farge v. Kneeland, 7
Cow. (N. Y.) 465; Law v. Nunn, 8
Ga. 90; Granger v. Hathaway, 17
Mich. 500; Duller v. Harrison, 2
Cowp. 566; Wallis v. SheUy, 80 Fed.
747; Morrison v. Currie. 4 Duer (N.
Y.), 79; Pool V. Adkisson, 1 Dana
(Ky.), 110; Duffy v. Buchanan, 1
Paige (N. Y.), 453; Cabot v. Shaw,
148 Mass. 459; Garland ▼. Salem
Bank, 9 Mass. 408, 6 Am. Dec
86; Silliman v. Wing, 7 HiU (N. Y.),
159; Upchurch v. Norsworthy, 15
Ala. 705; Trlpple v. LittleOeid, 46
Waah. 156; Gable v. Crane, 24 Pa.
Super. ^6. See also Ledwith v. Mer-
ritt, 74 N. Y. App. Div. 64. afTd, 174
N. Y. 512. But in Baylis v. Bishop of
London, [1913] 1 Ch. 127, it was held,
distinguishing Sadler v. Evans, 4
Burr. 1984, that this rule did not ap-
ply to the Bishop of London, who had
received tithe rent charges which
had been paid in mistake of fact,
and by him duly paid out or ac-
counted for. It was held that the
Bishop was not an agent within the
meaning of the rule.
MSee BuUer v. Harrison, 2 Cowp.
565, (where plaintiff paid money, be-
lieved to be due on an insurance pol-
icy, to defendant as agent of the In-
sured, but the loss was misrepre-
sented); O'Connor v. Clopton, 60
Miss. 349, (where the plaintiff paid
to defendant usurious Interest on a
note which defendant's principal held
against plaintiff) ; United States Nat'l
Bank v. National Park Bank, 69 Hun
(N. Y.), 495, (afRrmed without opin-
ion, 129 N. Y. 647), (where plaintiff
bank paid by mistake to defendant
bank, which was agent of another
party for collection, $5,000 on a draft
which was originally drawn for a
much smaller amount, the figures
having been fraudulently raised);
Garland v. Salem Bank, 9 Mass.
408, 6 Am. Dec. 86 (where the plain-
tiff, an endorser, had paid to the
defendant, a collecting bank, the
amount of the note, mistakenly be-
lieving that his liability as endorser
had been fixed); Griffith v. Johnson,
2 Harr. (Del.) 177, (where the de-
fendant, a collecting agent, by error
in computation, had received more
than was due on the amount he was
authorized to collect.)
In Cox v. Prentice, 3 Maule ft S.
344, the defendant had received a
bar of silver from his principal. He
sold it to plaintiff who paid him at
the rate it assayed. The plaintiff
upon discovering a mistake in the as-
say, recovered from the defendant
the excess payment occasioned by
the mistake.
IO61
§ 14331
THE LAW OF AGENCY
[book IV
Although the agent may thus be held, it is usually true that the oilier
party may, at his option, hold the principal liable.
Even though the money has not yet actually come into the princi-
pal's hands, it is in the hands of his agent, and wherever at least the
principal can be deemed to have authorized the agent to receive it,
the party paying may recover it from the principal as though the prin-
cipal had in fact received it**
§ 1433. — — The situation here seems to be this : the party pay-
ing the money to the agent, influenced by a mistake under which the
principal may or may not also labor, has paid the money to the agent,
with the understanding that he is to pay it to his principal. If, before
he is notified of the mistake, the agent does the very thing he is ex-
pected to do, — namely, pays the money to his principal, — the other
party can certainly have no claim upon him for its repayment. If,
however, the agent is notified of the mistake before he has paid the
money over, two situations may present themselves, (i) If the prin-
cipal and the other party were mutually mistaken as to the right
of the principal to receive the money, and the principal authorized
the agent to receive it, and the other party paid it to the agent
for the principal, it might very well be held that, even though
the money has not yet been paid over, it is, in contemplation of law,
in the hands of the principal, and the action should be against him
only for its recovery. Against this view it may be urged that the
principal was not really entitled to the money, that the authority to
receive it was conferred by mistake, that the party paying is clearly
entitled to have it back, and that he should be entitled to intercept it
before it has gone further.
In Shepard v. Sherln, 43 Minn. 382,
It was said: "The notice of the mis-
take, and requirement not to pay the
principal, need not be formal. The
rule Uiat, If he pays over without
notice, he Is not liable. Is for the
agent's protection; and, to deprive
him of the protection, the noUce to
him should be sufficient to apprise
him what the mistake is and that
by reason of It the party paying it
to him Intends to reclaim it."
Even If the agent be liable, the
proper action, in the absence of
fraud, is for money had and received
and not for conversion. Mathews v.
O'Shea, 45 Neb. 299.
♦•Cook T. Cook, 28 Ala. 660;
Eufaula Grocery Co. v. Missouri Na-
tional Bank, 118 Ala. 408.
In Eufaula Grocery Co. v. Missouri
National Bank, ausMra, it Is said:
"The general proposltloxi can not be
well denied, that where a person, as
authorized agent of another, receives
and holds money which ex equo et
l>ono belongs to a third, the latter
may elect to hold either the princi-
pal or the agent responsible (the
latter, by giving him notice of the
election before he pays the money
over to the principal), and maintain
an action for money had and re-
ceived against the party bo elected
1062
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ 1 434, I435
(2) Where the mistake is the mistake of the party paying only, the
case is somewhat clianged. Here the principal never thought that
he was entitled to the money ; he has given the agent no authority to
receive it ; he ought not to take it if the agent should oflFcr to pay it
to him, and there would seem to be no ground upon which such a pay-
ment, which the principal has not actually received, should be deemed
a payment to him. The right to recover from the agent the money
which is still in his hands would seem to be clear.
§ 1434. Liability for money received by him through wrongful
act of principal alone.— The same rules should apply where the
party paying has been led to make the payment as the result of the
fraud or coercion of the principal alone, the agent being in no way a
party to it.
In the cases in this section and the preceding one, the party paying,
although his action may have been induced by mistake or fraud, really
intended that the money should be paid to the principal, and if it has
been so paid by the agent, before the other party demands it back, the
agent should not be liable.'^ Inasmuch, however, as the principal in
these cases had no right to the money, and there could really be no
agency to receive it, the other party should be enabled to regain it if
he can intercept it before it leaves the agent's hands."^
§ 1435. Change in agent's situation as equivalent of pay-
ment—Within the contemplation of the rule of the two preceding
sections, the agent should not be liable where, before notice of the
mistake or fraud, he has done some act upon the assumption that the
payment was good, by which he will be prejudiced if it be held in-
valid."
to be held.-~2 Greenl. Ev. (15Ui ed.)
125, and authorities there cited.
Story on Agency, 266-68, 300, 301;
Paley on Agency (by Lloyd), pp.
38S-94; Kennedy v. Bait. Ins. Co., 3
Har. ft J. (Md.) 367, 6 Am. Dec 499;
2 Ency. PI. ft Pr. 1021. The case of
Cook V. Cook, 28 Ala. 660, is also
directly in points An election to
hold the one is a renunciation of all
remedy against the other. If the
principal be sued, he mast be at lib*
ei*ty to receive the money from the
agent. The plalntiCC cannot coerce
money out of him, and, pending the
proceeding for that purpose, stop it
in the/ hands of the agent, depriving
him, the principal, of the means of
obtaining it to meet the plaintiff's
recovery against him. For the same
reason, if the election is to hold the
agent, and the proper notice is given
to stop the money in his hands, the
principal could not, thereafter, be
properly sued. The remedies are,
indeed in every respect, inconsistent,
not concurrent"
BO Agent not liable for money re-
ceived by him as result of duress or
extortion practiced by principal
without the agent's knowledge where
he has paid over the money to the
principal before notice or demand.
Owen v. Cronk, [1895] 1 Q. B. 265,
eiHerrick v. Gallagher, 60 Barb.
(N. Y.) 566.
88 See La Farge v. Kneeland, 7 Cow.
(N. T.) 455; Mo watt v. McLean. 1
1063
§ 1436]
THE LAW OF AGENCY
[book IV
But so long as he stands in his original situation, and until there
has been a change of circumstances by his having paid over the money
to his principal or done something equivalent to it, he remains liable
if he be liable at all.^'
The mere forwarding of his account to his principal and placing the
money to his credit, is not such a change of circumstances as will re-
lieve him.'*
§ 1436. Liability where principal's rig^t terminated after pay-
ment—The question of the right to recover the money may also
arise, as has been pointed out, where, though it is conceded that the
principal had a right to it at the time it was paid to the agent, it is
contended that his right to it had ceased before it was paid over by the
agent. Here, by the h)rpothesis, the principal's right to the money
was clear at the time it was paid, and if the agent has paid it over to
the principal, before the change in circumstances relied upon, there
would be no ground for contending that the agent was liable to the
party paying.** But suppose that after payment to the agent and be-
fore he has paid it to his principal or altered his situation respecting
Wend. (N. T.) 178; Langley v. War-
ner, 3 N. Y. 327; McDonald v. Napier.
14 Ga. 89; HoHand v. Russell, 1 B. 4b
S. 424: Buller v. Harrison, 2 Cowp.
665.
The application of the money, with
the principal's consent, to a debt he
owed the agent, and a closing of the
account between them, constitutes a
payment to the principal within the
rule. Mo watt v. McLean, supra; Mc-
Donald V. Napier, supra; Holland v.
Russell, supra.
In LaFarge v. Kneeland, mprti, the
agent had by the direction of his
principals, who were partners, closed
the account with them and trans-
ferred the money to the individual
account of one of the partners. This
was held equiyalent to payment.
ssBlliott V. Swartwont, 10 Peters
(35 U. S.), 137. 9 L. Ed. 873; Buller
V. Harrison, supra; Cox v. Prentice,
3 Maule & Sel. 848.
5* Cox V. Prentice, supra; Buller ▼.
Harrison, supra. See also, Smith ▼.
Binder, 75 111. 492; Garland r. Salem
Bank, 9 Mass. 408, 6 Am. Dec. 86.
In Buller ▼. Harrison, supra^ It was
■aid: "In this case, there waa no new
credit, no acceptance of new bills, no
fresh goods bought or money ad-
vanced. In short no alteration in the
situation which the defendant and
his principal stood in towards each
other."
So In Smith v. Binder, 75 HI. 492,
quoting from Vol. I of Chltty on
Pleadings, it is said: "The mere pas-
sing of such money in account with
his principal, or makng a rest, with-
out any new credit given to him,
fresh bills accepted, or farther sums
advanced to the principal In conse-
quence of it, Is not equivalent to a
payment of the money to the princi-
pal."
That merely crediting the amount
to the prindpara account Is not
enough, see aleo. United States NaU
Bank v. National Park Bank, 59 Hnn,
495, (affirmed without opinion, 129
N. T. 647); National Park Bank t.
Seaboard Bank, 114 N. Y. 28. 11 Am.
8t R 612; Bank of Commerce ▼. Un-
ion Bank, 8 N. T. 236.
■s Cooper V. Tim, 16 N. T. Misc.
872; Cktble v. Crane, 24 Fa. Super. 56.
1064
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ 1437, H3^
it, it is contended that the principars right has terminated. May the
other party now recover the money from the agent ? Where the agent
of a fire insurance company had issued a policy and received the pre-
mium, but, before he had paid the premium to the company, the com-
pany was rendered insolvent by the great fire in Chicago during the
term of the policy, whereupon the insured demanded back the premium
from the agent, it was held that the insured could recover the premium
from the agent.'*
§ 1437. — — Where a judgement had been obtained, but a writ
of error had been sued out to reverse it, but the amount had been col-
lected upon execution and paid over to the plaintiff's attorney who
knew of the writ of error, it was held that, upon the reversal of the
judgment, while the money was still in the attorney's hands, the judg-
ment debtor could not recover it from the attorney.*^ So, where the
money had been paid to the attorney before any steps were taken to
reverse the judgment, it was held that the attorney was not liable,
although the money remained in his hands when the judgment was
subsequently reversed. Tlie money, it was held, belonged to his prin-
cipal, and the action should be against the latter.'*
§ 1438. Where money to apply upon the purchase price
of land under a contract for its sale had been paid to the agent of the
seller authorized to receive it, and the buyer afterward rescinded the
contract and brought an action against the agent to recover the part
payment which was still in his hands, it was held by the supreme court
of Pennsylvania that the action against the agent could not be main-
tained.'* Said the court: "He entered into no contract with the plain-
Be Smith V. Binder, 75 IH. 492. 6 Peters (31 U. S.>, 8, 8 L, Ed. 299,
The decision here was based upon the defendants paid a Judgment to
the theory that, upon the insolvency the agent of the plaintiff and gave
of the company, there was a total him verbal notice of their intention
failure of consideration, and It had to appeal; they did appeal and the
no right to the premium. Judgment was reversed; they now d3-
67 Lfingley v. Warner, 8 N. T. 827, maud of the agent the money so paid
reversing s. o. 1 Sandf. 209. Here, to him. It was held that they could
the attorney had retained the money not recover.
in pursuance of an agreement with B9Kurzawski v. Schneider, 179 Pa.
his client that he might apply 600. See to same effect: Gable v.
it on what the client owed him; but Crane, 24 Pa. Super. 56; Huffman ▼.
the court said that, upon collection, Newman, 65 Neb. 713; Bogart v. Cros-
the money became the property of the by, 80 Cal. 195; Bills y. Qoulton,
client and he could do what he [1893] 1 Q. B. 850.
pleased with it So in Wilson ▼. Wold, 21 Wash.
6s McDowell T. Napier, 14 0a. 89; 898, 75 Am. St. Rep. 846, respondent
Wright V. Aldrich, 60 N. H. 161. In was the agent of the purchaser of
Bank of IT. S. v. Bank of Washington, land at execution sale and had col-
1065
§ 1438]
THE LAW OF AGENCY
[book IV
tiff, and violated no duty which he owed him. An agent who receives
money paid on account of a contract for the purchase of real estate
made with his principal cannot be held liable in an action by the pur-
chaser to recover the money back on proof of facts which would en-
title the purchaser to rescind the contract."
This conclusion seems to be the sound one for the class of cases here
being considered. At the time of payment, by the hypothesis, the
money belonged to the principal and the payment was rightfully made.
Payment to the agent, under these circumstances, was payment to the
principal, and the agent is responsible to the principal for it The
agent had made no contract with the person paying, and was guilty
of no breach of duty toward him. Even though the agent may have
the money still in his possession, he holds it for his principal, and the
action should be against the principal,®^ especially where there may b&
controversy respecting the existence of such a change in circtim-
lected reats for him. Later appel*
lant redeemed the land and brought
this action against respondent to re-
cover the rents collected during the
period of redemption. It was held
that the action could not be main-
tained against the respondent Said
the court: "Respondent was merely
the agent of the purchaser. The fact
of his agency was known to the ap-
pellant At the time of their col-
lection the law entitled him to col-
lect these rents, and, had not the ap-
pellant subsequently redeemed the
property, respondent's principal
would have been entitled to retain
the rents so collected. So that origi-
nally the money was rightfully re-
ceived by respondent as agent for his
principal, the purchaser at the sale.
The fact of agency being known, ap-
pellant's right of action was against
the principal and not against the
agent."
Where an agent authorized to do
so, received a payment on the sale of
land, promising to refund it if the
owner did not approve of the sale,
and then paid the money over to his
principal, the purchaser cannot re-
cover the money of the agent upon
breach, by the principal, of the prom-
ise to refund* Tripple v. Littlefield,
46 Wash. 156. See also. Gulf City
Const. Co. V. Louisville, etc., Ry. Co.,
121 Ala. 621; Edgell v. Day, L. R. 1
C. P. SO; Bamford v. Schuttleworth,
11 Ad. 4b B. 926.
But where a sum of money, as part
payment on the purchase price of
land, was paid by the buyer to an
agent of the seller on the signing of
the contract, with an understanding
that the balance would be paid when
rood title was made, but title was
not made, it was held that the buyer,
on demand, could recover this sum
from the agent, although the agent
claimed the same as commission due
him from his principal. Gtosslin v.
Martin, 56 Greg. 281..
In Wells V. Blrtchnell, 19 Vict L.
R. 478, it is said that where an agent
authorized to sell land receirves a
deposit in respect of it and then does
not effect a sale, the money may be
recovered from the agent See also,
Walder v. Cutts, [1909] Vict. L. R.
261. But compare Ellis v. Goulton,
[1893] 1 Q. B. 350; ChrlsUe v. Rob-
inson. 4 Comw. L. R. (Australia)
1338. See also po8t, § 1445.
eo Where a lessee paid rent to duly
authorized agents of lessors, agreeing
to treat the payment as conditional
upon a payment of rent by a co-
ig66
CHAP. Ill]
DUTIES AND LIABILITIES OP AGENT
[§ 1439
Stances as will justify the party paying in demanding back bis money.
That is a question which should be litigated with the principal and not
with the agent.
§ 1439. Agent liable for money mispaid though paid over, if
agency was not known. — Where, however, the third person who
paid money to an agent under a mistake of fact had no notice of the
agency, he may recover the money so paid from the agent although
the latter has paid it over to his principal.*^ In such a case, as has
been pointed out,** "there is of course no presumed consent or direc-
tion that he may pay over, and payment to his principal will be no
defence. In such a case, having acted as a principal, he will not be
permitted to defend on the ground that he was not the principal."
leflsee, who failed to pay, hetd, the
rent could not be recovered from the
agents who were fully authorized*
even though they had not accounted
to the principal, but resort must be
had to their principal. Cooper v. Tlm»
16 N. Y. Misc. 372, ciUng CoMn v.
Holbrook, 2 N. Y. 126 (where a dep-
uty sheriff received money rightfully
paid to him, in his official capacity,
by a third person, and this payment
so affected the rights of plaintift, that
the plaintiff was entitled to the
money, he could not recover of the
deputy sheriff who acted with au-
thority and owed a duty only to the
sheriff, even though the money still
remained in the deputy's hands);
Hall V. Lauderdale, 46 N. Y. 70.
A life Insurance agent who receives
an application for a policy accom-
panied by a payment of the first pre-
mium, and gives a receipt, on a form
provided by the company and headed
with its name, stating that if the ap-
plication is not accepted the payment
will be returned, — all being done by
the general authority of the com-
pany,— is not personally liable for the
return of the money if the policy be
not Issued as agreed. The liability is
upon the company. Bleau y. Wright,
110 Mich. 183.
An attorney foreclosed a mortgage
for his client, the first mortgagee, and
from the proceeds of the sale, paid
the costs and the first mortgage debt;
a surplus remained in his hands, and
the plaintiff in this action, claiming
under a second mortgage, seeks to
recover the surplus from the attor-
ney, ffeld, the action would not lie
against him, but against the first
mortgagee, his client. Costigan v.
Newland, 12 Barb. (N. Y.) 456.
Where money is deposited with an
agent for his principal to be re-
turned by the principal if the princi-
pal does not perform, the agent is
not liable for the return of the money
on the principaVs default Cohen t.
Barry, 108 N. Y. Supp. 573 (lease);
Finnegan v. Oeoghegan, 111 N. Y.
Supp. 656 (lease); Levine y. Field,
114 N. Y. Supp. 819 (sale).
«i Smith V. Kelley, 43 Mich. 390;
Newall V. Tomlinson, L». K, 6 C. P.
405; Canal Bank y. Bank of Albany,
1 Hill (N. Y.), 287; Needles v. Fuson,
24 Ky. L. Rep. 369, 68 S. W. 644;
Klotz V. Gordon, 117 N. Y. Supp. 240.
In Holt V. Ross, 54 N. Y. 472, 18
Am. Rep. 615, the rule was applied to
an express company which collected a
check through a forged endorsement
The court (one judge dissenting) held
that the nature of its business, etc.,
was not sufficient notice of its agency.
"To shield themselves from liability
for their acts they must give the
names of their principals."
«« United States Y. Plnover, 3 Fed.
306.
1067
§§ I440, I44I]
THE LAW OF AGENCY
[book IV
§ Z44Q. Agent liable without notice for money illegally obtained. —
An agent who has obtained money from third persons illegally, as by
compulsion or extortion, — the persons paying it having done so in-
voluntarily and with no intent or purpose that he should pay it to bis
principal — is liable to the persons from whom he received it, although
he has paid it over to his principal without notice not to do so.*'
Where the agent in these cases acts from some wrong motive of his
own, he is clearly liable; but even though he acts in good faith sup-
posing that the demand he make3 is justified, still if he coerces the
other into paying what he was not legally liable to pay, the agent will
be liable.
Money so paid is not paid voluntarily nor really on the accotmt of
the principal, since no authority he could derive from his principal
would justify it, but merely as the result of the agent's illegal demands.
This principle has been frequently applied to the cases of excise and
custom-house officers, tax collectors, sheriflFs, and other officers who
by virtue of their office have exacted and enforced the payment of il-
legal fees, taxes and duties.
The rule, however, does not apply to an agent who has merely been
the innocent conduit through whom money illegally exacted by an-
other has been paid over to the principal.**
§ 1441. Agent liable without notice for money obtained through
his misconduct. — For similar reasons, the agent will be liable, even
though he may have paid it over, for money which his principal had
not authorized him to receive, and which the agent obtained by his
own misconduct or default.**
«» Ripley V. Gelston. 9 Johns. (N.
T.) 201, 6 Am. Dec. 271; Prye v. Lock-
wood, 4 Cow. (N. Y.) 456; Hearsey v.
Pruyn, 7 Johns. (N. Y.) 179; Messer-
Moore Ins. Co. v. Trotwood Park
Land Co., 170 Ala. 473, Ann. Cas.
1912 D. (25 A. ft E. Ann. Gas.) 718;
Elliott V. Swartwout, 10 Pet (U. S.)
137. 9 L. Ed. 373; Flrat National
Bank v. Watkins, 21 Mich. 483; Boc-
chino V. Cook, 67 N. J. L. 467; Snow-
don y. Davis, 1 Taunt. 359; MiHer y.
Aris, 3 Esp. 231. See Grover y. Mor-
ris, 73 N. Y. 473.
o*Owen y. Cronk, [1895] 1 Q. B.
265.
•0 Thus where a lawyer was oyer-
paid the amount of a Judgment in
fayor of a non-resident client, — the
oyer-payment being attributable to
his failure to inform the Judgment
debtor of a preyious payment there-
on by his debtor, of which he had no
notice — the transmission of the over-
payment to the client before discov-
ery of the mistake was held to be no
protection against liability for its
re-payment to the judgment debtor.
The court said that the rule that pay-
ment to the principal exonerates the
agent does not apply "where the
agent receives the money outside of
his agency and of his own wrong."
Metcalf y. Denson, 63 Tenn. (4 J.
Baxt.) 565.
Where a debtor pays money in
fraud of the state insolyent law to an
agent of his creditor, the agent hav-
1068
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§ I442
§ z44a« Agent liable where money is proceeds of act which prin-
cipal could not lawfully authorize. — ^As will be seen in another place,
the agent will not ordinarily be protected, even though he acts in good
faith, where the act is one which the principal could not lawfully au-
thorize.** Thus an agent who in good faith receives from his princi-
pal and sells by his direction, property which did not belong to the
principal, is ordinarily held liable to the true owner, even though he
may have paid over the proceeds to his principal before he was notified
of the true owner's claim.*^ In a recent case,'® before the appellate
division of the supreme court of New York, in which it was sought to
recover of the defendant rents which he had collected and paid over
to one who had represented himself to be, but was not in fact, the true
owner of the premises (although there was some evidence that the real
owner had in fact authorized the act of the apparent 'owner), the court,
while recognizing the general rule above referred to, said that to that
general rule, "there is an exception in the case of money and negotiable
instruments." ••
This action however was not brought by the person who had paid
the rent, but by the personal representative of the true owner. In a
somewhat similar case, lately before the supreme court of Tennessee,
defendant was an agent who had been collecting rents for the owner
and who continued to collect and pay over the rents to his principal,
after the premises had in fact been conveyed to the plaintiff, but with-
ing reasonable ground to believe the blm until after delivery), it is lia-
payee to be insolvent, the assignee of ble to the consignee for the money
the debtor may recover It of the collected, although it has transmit-
agent, although he has paid it to his ted it to the consignor. Hardy t.
principal. Larkln v. Hapgood, ^56 Vt. American Express Co., 182 Mass. 828,
597. To same effect: Ex parte Ed- 59 L. R. A. 731.
wards, 13 Q. B. Div. 747. Agent is personally liable for
Where an agent by false represen- money won in illegal gambling trans-
lation, sells securities, known by actions carried on by him for his
him to be worthless, the buyer can principal. Llllenthal v. Carpenter,
recover the money paid from the ;i48 Ky. RO.
agent, although the agent had paid •» See post, § 1456.
it over to his principal. Moore v. «7 See post^ § 1457.
Shields, 121 Ind. 267. «8Ledwith v. Merritt, 74 App. Div.
An express company, knowing that 64. Affirmed without opinion by the
goods received by it for delivery C. Court of Appeals, 174 N. Y. 612.
O. D., have been so damaged ia «oThe court referred to Spraights
transit as to be practically worth- v. Hawley, 39 N. Y. 441, 100 Am. Dec.
less, owes a duty to disclose that 452. Also to Truesdell v. Bourke,
fact to the consignee, and if it falls 145 N. Y. 612, 618. Also as a "case
to disclose it and demands the money quite apposite to the present discus-
from him before delivering the goods sion" to Duffy v. Buchannan, 1 Paige
(the defect not being discoverable by (N. Y.), 453.
JoCr)
§§ 1443-^445] THE LAW OF AGENCY [BOOK IV
out actual notice of that conveyance. It was held that the defendant
was not liable for the rents collected and paid over under such circum*
stances^®
§ Z443. Agent liable for money received without authority and
not paid over to the principwil. — Several different situations of this
sort may arise : ( i ) The defendant receives money from the plaintiff,
representing that he has the authority from a principal to so receive
it; if the prospective principal fails to ratify the defendant's act, the
defendant is liable to the plaintiff for the money received/^ (2) The
defendant may receive the money under such circimistances that the
plaintiff knows there is no existing authority in the defendant to re-
ceive it, but both parties expect a ratification ; if the ratification fails
the defendant is liable. (3) The defendant may, as in the first case,
assume an authority and may receive the money, but before the matter
is submitted to the prospective principal for the purpose of having it
ratified, the plaintiff may demand back the money. He would seem to
be entitled to recover it. (4) The defendant may, as in the second
case, receive the money as one without authority but one whose act
the parties expect to be ratified, but before the prospective principal
is made aware of the act, the plaintiff demands it back ; here also, it
would seem, the defendant is liable.
§ 1444. Agent personally liable for return of deposits where he
has pledged his own responsibility. — An agent' who receives pay-
ments or deposits upon condition that they shall be returned in a given
event, may in this, as in other cases, pledge himself personally for the
return ; and where he has done so the fact that he was an agent is no
defence.''*
§ 1445. Where agent is a mere stakeholder. — ^Where an agent,
who stands in the situation of a stakeholder, receives money to be
paid over upon the happening of a certain contingency or the per-
formance of given conditions, and pays it over before the happening
of the contingency or the performance of the conditions, such payment
will be no defense to an action by the party ultimately found to be
entitled to receive the money.''*
7oEmbry ▼. Galbreath, 110 Tenn. of lands. Goodrldge v. Wood, 133
297. Compare Wilson v. Wold, 21 111. App. 483; Cox v. Borstadt, 49
Wash. 398, 75 Am. St. Rep. 846. Colo. 83; Mead v. Altgeld. 33 IH. App.
71 Simmonds v. Long, 80 Kan. 155, 373, 186 111. 298.
28 L. R. A. (N. S.) 553. Same, on sale of stocks: White t.
"Coble V. Denison, 161 Mo. App. Taylor, 113 Mich. 543.
319. Cases of deposits of money up- t« Burrough ▼. Skinner, 5 Burr,
on preliminary contracts for the sale 2639; Edwards y. Hodding, 6 Taunt.
1070
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I446, I447
So where the person who receives the money is a mere stakeholder
and not the agent of the opposite party, and the money is put into his
hands as a stakeholder and not for the opposite party, the person who
deposited the money with him may recover it of him if the transaction
fails, even though he may have paid it over to the other party in con-
travention of the arrangement.
§ 1446. Agent for undisclosed principal liable for returnable de-
posit.— If a person has received deposits which are now returnable,—
as where the contract which they were given to secure has not been
or can not be performed — and is personally liable for their return, the
fact that he was merely agent for an undisclosed principal is no defense.
The other party can not be forced to look to the undisclosed principal
or to accept performance from him in any case at least in which any
personal considerations are involved.^*
b. Where Money has been Paid to Agent for Third Person.
§ 1447. When agent's liability to such third person attaches^^
Revocation by principal. — Where money has been delivered by a
principal to his agent to be, by the latter, paid over to a third person,
the duty to make such payment is one which the agent owes, in the
first instance, to the principal only. Between the agent and the third
815. In botli of these cases the de-
fendant was an auctioneer. As to
the distinction between a stakehold-
er, like an auctioneer, and an agent,
like a solicitor, see Bamford v.
Shuttleworth, 11 Ad. & E. 926; Ed-
gell V. Day, L. R. 1 C. P. 80; Ellis v.
Goulton,.[1893] 1 Q. B. 350. See also,
Martin v. Allen, 125 Mo. App. 636;
Oonness v. Baird (Tex. Civ. App.),
124 S. W. 113.
Agent or stakeholder, — It is not al-
ways easy to determine whether the
person to whom the money was paid
was an agent for the opposite party
or a mere stockholder, presumably in-
different between them; and the
cases can not all he reconciled. If
he be the agent for the opposite
party and the money is paid to the
agent for his principal, it belongs to
the latter and recourse must be
sought against him, even though the
money may not yet have been paid
over to him by his agent. See Ellis
V. Goulton, [1893] 1 Q. B, 350; Kur-
zawski y. Schneider, 179 Pa. 500;
Bogart V. Crosby, 80 Cal. 195 (here
the money had been paid to the prin-
cipal and then returned to the
agent) ; Huffman v. Newman, 55 Neb.
713 (here agent claimed right to keep
the money as commissions). See
also, Christie v. Robinson, 4 Comw.
L. R. (Australia) 1338.
If he be merely a stakeholder, it
may be recovered from him by the
payer. See Read v. Riddle, 48 N. J.
L. 359 (agent still had the money);
Gosslin y. Martin, 56 Ore. 281 (agent
claimed right to retain money as
commissions); Martin y. Allen, 125
Mo. App. 636 (here money had been
paid to principal); Walder y. Cutts,
[1909] Victoria L. R, 261; Wells y.
Birtchnell ,19 Vict. L. R. 473. Ed-
wards y. Hodding. supra^ which treats
dn auctioneer as a stakeholder Is fol-
lowed in Gray v. Gutteridge, 3 Car. A
P. 40, and Furtado v. Lumley, 6
Times L. R. 168. See also, ante,
§ 1438, and note 59.
T4Pancoast y. Dinsmore, 105 Me.
471, 134 Am. St Rep. 582.
IO71
§ 1448]
THE LAW OF AGENCY
[book IV
person, there is primarily no privity. The former has entered into no
relations with the latter by virtue of which he owes to him the per-
formance of any duty other than those imposed upon every member
of society.
Until the agent has paid over the money to the third person, or has
assumed to the latter the obligation to do so, the principal may at any
time revoke or countermand his directions to the agent to make the
payment.""*
In order to create a liability against the agent, it is necessary to show
that he has in some way, in dealings with such third person, so rec^
ognized and assented to the appropriation of the money to the latter
as to create a privity between them.''* When this has been done, the
principal can no longer revoke the appropriation, nor can the agent
refuse to perform it.''^
Where, however, the agent has previously assumed obligations to
third persons for the accommodation of the principal, against which
the latter has expressly or impliedly agreed to indemnify him, a de-
livery of money to the agent for that purpose can not be revoked by
the principal ; ^' neither can an appropriation of money in the agent^s
hands be revoked by the principal where, upon the faith of such ap-
propriation the agent has assumed liabilities to third parties.^* In the
concise language of Maule, "An act done in performance of a binding
contract is not revocable." **
§ 1448. What constitutes assent — Consideration. — No ex-
press form of words is ordinarily requisite to constitute an assent on
the part of the agent to the appropriation. Like other promises, this
may be implied.
76 wniiams y. Bverett, 14 Bast, 582;
Brlnd v. Hampshire, 1 Mees. & Wels.
365; Scott v. Porcher, 3 Mer. 652;
Stewart v. Fry, 7 Taunt 339; Tier-
nan V. Jackson, 5 Pet. (30 U. S.)
580, 8 L. Bd. 234; Seaman v. Whitney,
24 Wend. (N. Y.) 260, 35 Am. Dec
618; Denny v. Lincoln, 5 Mass. 385.
See also, Dixon v. Pace, 63 N. Car.
603; Mayer ▼. Bank, 51 Ga. 326; Kelly
V. Babcock, 49 N. T. 318; Beers v.
Spooner, 9 Leigh (Va.), 153; McDon-'
aid v. American Nat Bank, 25 Mont.
456.
Where P directs A to pay certain
money to T which A starts to do, hut
before T knows of or assents to the
arrangement or A attorns to T, the
money is garnished hy P's creditors,
the garnishment is effective and A
Is not thereafter liable to T. Center
V. McQuesten, 18 Kan. 476.
76 Williams y. Everett 14 Bast 582.
TTWyman v. Smith, 2 Sandf. (N.
T.) 331; Williams v. Everett 14 Bast
582; Stevens v. Hill, 5 Esp. 247;
Walker v. Rostron, 9 Mees. ft Wels.
411; Griffin v. Weatherby, L. R. 3 Q.
B. 753; Tates v. Hoppe, 9 Man. G. ft
S. (9 Com. B.) 541; Crowfoot v. Our-
ney, 9 Bing. 372; Goodwin v. Bowden,
54 Me. 424.
78 Yates V. Hoppe, supra.
T* Walker v. Rostron, supra.
80 In Yates v. Hoppe, supra.
1072
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§ I449
The direction from the principal to the agent may often be in sub-
stance or in form an ordinary bill of exchange, to which the rules re-
lating to the acceptance of such paper will apply. As is said by a
learned writer," an acceptance, according to the law merchant, may
be (i) expressed in words, or (2) implied from the conduct of the
drawee. (3) It may be verbal or written. (4) It may be in writing
on the bill itself or on a separate paper. (5) It may be before the bill
is drawn or afterward. And (6) there may be absolute, conditional
and qualified acceptances.
By the statutes of many of the states, however, the rule of the law
merchant has been changed, and an acceptance must be in writing.
The question of the consideration for the appropriation by the prin-
cipal may, in certain cases, become material. When it is so, the ordi-
nary rules of law apply. The existence of a debt, although it be not
due, is a good consideration for such an appropriation to pay it"
No new or separate consideration moving from the third person to
the agent is necessary to sustain the latter's assent to the appropriation
of the money," when directed by the principal.
§ 1449. Action at law by beneficiary against agent. — ^When in
accordance with the rules laid down in the preceding sections, the
agent has brought himself under obligations to third persons, the
person entitled may sue the agent at law to recover the money in an ac-
tion for money had and received."* Where there is, not simply a
direction by the principal to the agent to pay the money to the third
person, but a contract between the principal and the agent for the bene-
fit of the third person, but no enforceable promise by the agent to the
latter, the question whether the third person may enforce the obligation
against the agent by an action at law is a question upon which there is
much conflict of authority, and which belongs more properly to a treatise
upon the law of contracts. The English rule, and the rule prevailing
in several of the states, is that no such action may be maintained, but
the rule prevailing in the majority of states permits the beneficiary to
sue. Professor Williston has collected and arranged the cases in the
various states, according to the alphabetical order of the states, in an
wi Daniel Neg. Inst. S 496. Smith, supra; Seaman v. Whitney,
82 Walker v. Rostron, 9 Mees. ft supra; Crowfoot v. Gurney, supra,
Wels. 411, 420; McKee v. Lamon, 159 Where A receives money from B to
U. S. 817, 40 L. Ed. 165. TfBj to 0, and C requests A to pay It
88 See Goodwin v. Bowden, supra; to D, but A, Instead of actually pay-
Wyman v. Smith, supra. Ing D, retains It for what he wrong-
83a Goodwin v. Bowden, supra; fully claims D owes him, D may re-
Keene v. Sage, 76 Me. 138; Wyman v. cover it of A. Keene v. Sage, supra.
68 1073
§§ I45O-I452] THE LAW OF AGENCY [bOOK IV
article first published in the Harvard Law Review" and afterwards
substantially reproduced in his edition of Wald's Pollock on Con-
tracts,*' to which the reader must be referred.
§ 1450. Trusts for the benefit of third persons. — Instead of put-
ting the money into the hands of an agent as such, and expressly or
impliedly reserving the power to change the directions to the agent,
at any time before the directions have been executed or the agent has
assumed obligations to the third person, as in the cases considered in
the preceding sections, the money or property may be put into the
hands of the agent as a trustee so finally and conclusively that no
power to revoke or to change the directions can be conceded. The
question whether a mere revocable agency or an irrevocable tru^t has
been created seems to depend on the intention of the principal as evi-
denced by his words and conduct. Where a trust has been created,
it may be enforced by the beneficiary as in other cases.**
II.
IN TORT.
§ 1451. In general. — ^The question of the liability of the agent to
third persons in tort cases involves very different considerations from
those which govern his liability upon contracts. In tlie contract case
the question whether any contract at all shall be made is one which
the parties may determine for themselves, and if they decide to make
a contract, they may determine with whom it shall be made. They
have the power to determine in advance who shall be the party to be
bound by the contract, and may so shape the contract as to impose its
liabilities upon the party so selected.
In the case of the tort, the situation is ordinarily entirely different.
The question of whether a tort shall be committed has not been left
to the determination of the injured party ; he has had no opportunity
nor power to determine by whom the tort shall be committed; the
situation lacks every element of consent and is the result of the un-
authorized and unlawful breaking in of one person upon the rights or
security of another.
§ 1452. Agency usually no defense in tort cases. — It is sometimes
said that "in torts the relation of principal and agent does not exist.
They are all wrongdoers and the liability of each and all does not
S4 15 Harvard Law Review, 767. 40 L. Ed. 165; Rogers Locomotive
65 Edition, 1906, p. 237 et 9eq, Wks. v. Kelley, 88 N. Y. 234.
8«McKee v. Lamon, 159 U. a 317,
1074
CHAP. Ul] DUTIES AND LIABILITIES OF AGENT [§§ I4S3, I454
cease until payment has been made or satisfaction rendered or some-
thing equivalent thereto." '^ While this statement undoubtedly re-
quires some qualification, it is, nevertheless, declaratory of a more or
less general principle, and it is, as will be seen, in many cases true
that the fact that the wrongdoer purported to do the act as agent for
another is entirely immaterial so far as his own liability is concerned.
That fact may make the alleged principal liable also, but it will in
many cases have no tendency to exonerate the alleged agent.
§ X453. Agent liable for negligent acts outside the scope of his
agency. — Before taking up the more difficult questions, certain
simple cases may be disposed of, concerning which there could not
well be any difference of opinion. Thus, if an agent, while doing an
act which has some relation to his agency, but is really beyond the
scope of it, wilfully or negligently injures a third person, he would
undoubtedly be personally liable to the person injured. In such a
case, the reputed principal would not be liable and the agent would be
the real principal. Thus, for example, if a servant or agent, acting
entirely outside the scope of his employment, should take his master's
horse and wagon and go off upon a frolic of his own and in doing so
should wilfully or negligently so manage the horse and wagon as to
cause injury to a third person, the servant or agent would undoubtedly
be personally liable.
§ 1454. When agent ostensible principal. — It has been seen in
the earlier portion of this chapter, that the agent may often make
himself liable to third persons in contract by concealing his real prin-
cipal or by pledgfing his own responsibility. So far as such a liability
is based upon theories of estoppel, it must be less frequent in tort
cases than in those involving contractual relations, since the suffering
of torts is much more rarely induced by appearances than the making
of contracts. There may be cases, however, in which such a liability
would arise, especially in torts arising out of contractual dealings.
Thus an agent carrying on a business as ostensible principal has
been held personally liable to a servant employed by him who was in-
jured in the course of the work.**® It has also been held that such an
agent is personally liable to third persons for the torts of a servant
employed by him while carrying on a business really as agent but os-
tensibly as principal.®' This conclusion is very much more difficult
>7 See Berghoff y. McDonald, 87 « Tarslowitz ▼. Bienenstock, 130
Ind. 549; Carraher y. AUea, 112 N. Y. Supp. 931. See also, Malone v.
Iowa, 168. Morton, 84 Mo. 436.
MGockraa y. Rice, 26 S. Dak. 893.
I07S
§ 1455]
THE LAW OF AGENCY
[book IV
to sustain^ where the third person was not misled by the appearances ;
and it can only be upheld upon the ground that, although the defend-
ant was really an agent, he had in the particular employment actually
made himself the employer of the negligent servant,*^® or upon the
ground, considered in a later section, that as the agent had actual con-
trol of the servant and negligently exercised it, the injury can be at-
tributed to the agent's own default.
§ 1455. Liability of agent for trespass. — It is in general true that
every person who does an act which invades or violates the right of
property or security of another, does so at the peril of being able to
furnish legal justification for his act if he be called upon legally to
account for it. Such a justification cannot be found either in the
general or the specific command or direction of one who had no legal
right to command or direct that the act be done. It is therefore the
general rule that an agent who trespasses upon the person or property
of another is liable to the person so injured and the fact of his agency
furnishes no excuse."
00 That there can ordinarily be no
liability in tort cases based upon
mere appearances, see Smith v. Bai-
ley, [1891] 2 Q. B. 403; Shapard v.
Hynes, 45 C. C. A. 271, 104 Fed. 449,
52 L. R. A. 675.
91 A surveyor is personally liable
for a trespass committed by him,
though the act was done in behalf
and under the direction of a highway
board by which he was employed.
MiU v. Hawker, L. R., 10 Ex. 92. To
same effect: Smith v. Ck)lbyy 67 Me.
169. An agent who fences in a por-
tion of the highway is liable for an
Injury caused thereby, though he
does it for and under the direction
of his principal, a railway company.
Blue T. Briggs, 12 Ind. App. 106. An
agent who commits an assault on a
third person is personally liable even
though he did It in the principal's in-
terest and for the protection of his
property. New Ellerslie Fishing Club
V. Stewart, 123 Ky. 8, 9 L. R. A. (N.
S.) 475; Canfleld v. Chicago, etc., Ry.
Co., 59 Mo. App. 354.
Same, where he negligently shot a
trespassing slave. Carmouche v. Bou-
is, 6 La. Ann. 95, 54 Am. Dec. 56S.
An agent who, while acting for his
principal, sues out an attachment
against the plaintiff's property with-
out reasonable cause for belieying
that the statements, upon which it
was obtained, were true, may be held
liable for the malicious prosecution.
Carraher v. Allen, 112 Iowa, 168. An
agent who, without justification,
though acting for his principal,
caused a distress for rent to be made,
is personally liable. Bennett t.
Bayes, 6 H. & N. 391. See also,
Hazen v. Wight, 87 Me. 233: Welsh
V. Stewart, 31 Mo. App. 376; Homer
y. Lawrence, 87 N. J. L. 46; Baker v.
Davis, 127 Ga. 64»: Burns v. Hor-
kan, 126 Ga. 161.
But where the principal would not
have been liable for doing the act,
the agent who does it by the princi-
pars authority, will not be. Strong
V. Colter, 13 Minn. 82.
Where the agent entirely dis-
claimed responsibility for having a
piece of work done, e, g,, digging a
ditch, alleged to be a trespass or nui-
sance, the mere fact that he promised
to see that the work was paid for if
done upon some one else's authority,
does not make him liable. Crandall
V. Loomis, 66 Vt. 664.
1076
CHAP, III]
DUTIES A^-D LIABILITIES OF AGENT [§§ I4S6, I457
§ 1456.
Principal's knowledge or direction no defense. —
It does not relieve the agent that the wrong was committed with the
knowledge of the principal, or by his consent or express direction,"^
because no one can lawfully authorize or direct the commission of a
wrong. A fortiori, it is no defense that the agent in committing the
wrong violated his instructions from his principal.®^ Neither is it ma-
terial that the agent derives no personal advantage from the wrong
done.'* The fact that the agent acted in good faith, supposing the
principal had a legal right to have done what was done, is no defense.
He who intermeddles w^th property not his own must see to it that he
is protected by the authority of one who is himself, by ownership or
otherwise, clothed with the authority he attempts to confer.**
§ 1457. Liability of agent for conversion. — In accordance with
the principles of the preceding section, it is generally held that an
agent who, for his principal, takes, sells or otherwise disposes of, the
goods or chattels of another, without legal justification, is personally
liable, even though he acted in good faith, supposing the goods to be
his principars,®* and although he may have delivered the goods taken
»2 Weber v. Weber, 47 Mich. 569;
Lee V. Mathews, 10 Ala. 682, 44 Am.
Dec. 498: Baker v. Wasson, 53 Tex.
157; Johnson v. Barber, 5 Glim.
(111.) 425, 60 Am. Dec. 416.
•8 Starkweather v. Benjamin, 32
Mich. 305; Johnson v. Barber, supra.
»4 Weber v. Weber, supra
»»Spraight8 V. Hawley, 39 N. Y.
441, 100 Am. Dec. 452; Kimball v.
Billings, 55 Me. 147, 92 Am. Dec.
581; Everett v. Coffin, 6 Wend. (N.
T.) 603, 22 Am. Dec. 551; Williams
V. Merle, 11 Wend. W. Y.) 80, 25 Am.
Dec. 604.
•«Lee v. Mathews, 10 Ala. 682, 44
Am. Dec. 498; Permlnter v. Kelly, IS
Ala. 716, 54 Am. Dec. 177; Merchants
ft Planters' Bank v. Meyer, 56 Ark.
499; Swim v. Wilson, 90 Cal. 126, 25
Am. St. Rep. 110, 13 L. R. A. 605;
Berghoff v. McDonald, 87 Ind. 549;
Warder, etc., Co. v. Harris, 81 Iowa,
153; Kimball v. Billings, 55 Me. 147,
92 Am. Dec. 581; McPheters v. Page,
83 Me. 234, 23 Am. St. Rep. 772;
Wing ▼. Milliken, 91 Me. 387, 64 Am.
St. Rep. 238: Milliken v. Hathaway,
148 Mass. 69, 1 L. R. A. 510; Coles
V. Clark, 3 Cush. (Mass.) 399; Mc-
Partland v. Read, 11 Allen (Mass),
231; Edgerly v. Whalan, 106 Mass.
307; Robinson v. Bird, 158 Mass. 357,
35 Am. St. Rep. 495; Kearney v. Clut-
ton, 101 Mich. 106, 45 Am. St. Rep.
394; Koch v. Branch, 44 Mo. 542, 100
Am. Dec. 324; Arkansas City Bank v.
Cassidy, 71 Mo. App. 186; Mohr v.
Langan, 162 Mo. 474, 85 Am. St. Rep.
503; Gage v. Whlttier, 17 N. H. 312;
SpraighU v. Hawley, 39 N. Y. 441,
100 Am. Dea 452; Thorp v. Burling,
11 Johns. (N. Y.) 285; Farrar v.
Chauffetete, 5 Den. (N.Y.) 527; Ever-
ett V. Coffin, 6 Wend. (N. Y.) 603, 22
Am. Dec 551; Spencer v. Blackman,
9 Wend. (N. Y.) 167; Williams v.
Merle, 11 Wend. (N. Y.) 80, 25 Am.
Dec. 604; Fowler v. HoUins, L. R. 7
Q. B, 616; Perkins v. Smith, 1 Wils.
328; Stephens v. Elwall, 4 Maule 6
Sel. 259; McCombie v. Davies, 6 East,
538; Baldwin v. Cole, 6 Mod. 212;
Pearson v. Graham, 6 Ad. & El. 899.
Contra: See Frlzzell v. Bundle, 88
Tenn. 396, 17 Am. St. Rep. 908;
Roach V. Turk, 9 Heisk. (Tenn.) 708,
24 Am. Rep. 360*
1077
§ 1457]
THE LAW OF AGENCY
[book IV
to his principal or to some other person for and on account of his prin-
cipal.*^
Where the conversion charged against the agent consists of the
fact that he has refused to surrender, upon demand by one who is
really the rightful owner and entitled to possession, goods which were
The Minnesota court has also, in
Leuthold t. Fairchlld, 85 Minn. 99,
laid down doctrines which cannot be
reconciled with the preceding cases.
See this case distinguished in Dolliff
V. Robbins, 83 Minn. 498, 85 Am. St.
Rep. 466.
See also McLennan y. Elevator Co.,
57 Minn. 317.
»7 Miller V. Wilson, 98 Ga. 567, 58
Am. St. Rep. 319; McConnell v.
Prince (Ga. App.), 76 S. E. 754; Ed-
gerly v. Whalan, 106 Mass. 307; Lee
V. Mathews, 10 Ala. 682, 44 Am. Dec.
498; KimbaU v. Billings, 55 Me. 147,
92 Am. Dec. 581; Spraights v. Haw-
ley, 39 N. Y. 441, 100 Am. Dec. 452;
Thorp v. Burling, 11 Johns. (N. Y.)
285; wniiams v. Merle, 11 Wend. (N.
Y.) 80, 25 Am. Dec. 604; Perkins v.
Smith, 1 Wils. 328; Stephens v. El-
wall, 4 Maule ft Sel. 259.
Sewing machine agent who without
the authority or consent of her hus-
band secures from a married woman
an old sewing machine and some
money, both belonging to her hus-
band, In exchange for a new machine,
and delivers the old machine to his
company, is guilty of conversion of
the machine. No demand for the re-
turn of the old machine is necessary.
Rice V. Yocum, 156 Pa. 538.
The essence of the conversion lies
in the fact that the agent has done or
participated in doing some act which
denies, repudiates, or destroys the
true owner's title and right to posses-
sion, as where he sells, delivers or
otherwise disposes of the property in
such a way as to cut ofT or impede
the owner's right. Swim ▼. Wilson,
90 Cal. 126, 25 Am. St. Rep. 110, 13
L. R. A. 606; Porter v. Thomas, 28
Ga. 467; Cassidy Bros. v. Elk Grove
Cattle Co., 58 111. App. 39; Fort v.
Wells, 14 Ind. App. 631, 56 Am.
St. Rep. 816; Shearer v. Evans, 89
Ind. 400; Kearney v. Glutton* 101
Mich. 106, 45 Am. St. Rep. 394; La-
fayette Co. Bk. V. Metcalf, 40 Mo. App.
494; Stevenson v. Valentine, 27 Neb.
338; Bercich v. Marye, 9 Nev. 312;
Hoffman v. Carow, 20 Wend. (N. Y.)
21; Iredale v. Kendall, 40 L. T. N. S.
362; Fine Arts Society v. Union
Bank of London, 17 Q. B. Div. 7P5:
Consolidated Co. v. Curtis (1892), 1
Q. B. Div. 495; Barker v. Furlong,
[1891] 2 Ch. Div. 172; Perklna v.
Smith, 1 Wils. 328; Pearson v. Gra-
ham, 6 Ad. ft El. 899; Ewbank v.
Nutting, 7 C. B. 797; Ganly v. Led-
wldge, 10 Irish Rep. C. L. 33; Cranch
V. White, 1 Bing. N. C. 414, 6 Car. ft
Payne, 767.
But this rule is held not to apply
where an agent in good faith and
without negligence takes by delivery
negotiable instruments and trans-
fers them again by delivery, paying
the proceeds to his principal and de-
riving no profit himself. Spooner v.
Holmes, 102 Mass. 503, 3 Am. Rep.
491.
In National Safe Deposit Co. v.
Hibbs, 32 App. Cas. D. C. 459, it is
held that if the purchaser from the
innocent agent acquires an indefeaa-
ible title, as in the case of the sale
of negotiable or quasi negotiable se-
curities, the agent is not liable. See
also, Higgins v. Lodge, 68 Md. 229, 6
Am. St Rep. 437; Jones ▼. Hodg-
kins, 61 Me. 480, po$t.
So one who receives from hia prin-
cipal the property of another and
afterward returns it to his principal
is not guilty of a converaiott, even
though he may have reason to be-
lieve that the principal is not the
TO78
CHAP. Ill]
DUTIES AND UABILITIES OF AGENT
[§ 1457
delivered to him by his principal to be held for the latter, somewhat
different considerations apply. A mere refusal to surrender is not
necessarily a conversion; it may be open to explanation. "Thus," it
is said in one case,*® "it is no conversion for the bailee of a chattel,
who has received it in good faith from some person other than the
owner, to refuse to deliver it to the owner making demand for it until
he has had time to satisfy himself in regard to the ownership."* In
the case of a servant who has received the chattel from his master, it
has been held that he ought not to give it up without first consulting
the master in regard to it.^ But if, after having had an opportunity
to confer with his master, he relies on his master's title and absolutely
refuses to comply with the demand, he will be liable for a conversion.*
owner. Loring v. Mulcaliy» 3 Allen Judges dissented. This case i? not
(Mass.), 575; Wando Phosphate Co.
V. Parker, 93 Ga. 414; National
Merc. Bk. v. Rymill, 44 L. T. N. S.
767.
So it is not ordinarily a conver-
sion, where what the agent has done
amounts to simply changing the lo*
cation of the property, but not in
any way denying or interfering with
the owner's title. Burditt v. Hunt,
25 Me. 419, 43 Am. Dec. 289; Met-
calf V. McLaughlin, 122 Mass. 84;
Gurley v. Armstead, 148 Mass. 267,
12 Am. St. Rep. 555, 2 L. R. A. 80;
Archibeque v. Miera, 1 N. M. 419.
However, where the agent takes
goods from the plaintiff and delivers
them to a third person under cir-
cumstances indicating a denial of
the owner's right, the agent may be
held liable for the conversion. Mead
V. Jack, 12 Daly (N. Y.), 65.
Selling after termination of at*-
thority, — In Jones v. Hodgkins, 61
Me. 480, where an agent, who had
been given authority to sell a quan-
tity of logs in a boom, sold and de-
livered them in good faith after his
principal had sold them to the plain-
tiff— the plaintiff not having taken
actual possession and the agent hav-
ing no notice — it was held that the
agent was not liable in trover to the
plaintiff, the first purchaser. Three
easy to sustain, unless it be upon the
ground — relied upon in such cases
as National Safe Deposit Co. v.
Hibbs, supra — that because the sec-
ond purchaser would be protected,
having bought in ignorance of the
first sale and the first purchaser not
having taken possession (see such
cases as Lanfear v. Sumner, 17 Mass.
110), the agent is entitled to the
same protection.
»8 Singer Mfg. Co. v. King, 14 R.- 1.
511.
»» Citing: Carroll v. Mix, 51 Barb.
(N. Y.) 212; Lee v. Bayes, 18 C. B.
599, 607; Sheridan v. The New Quay
Co., 4 C. B. N. S. 618; Coles v.
Wright, 4 Taunt. 198. To same ef^
feet; see Goodwin v. Wertheimer, 99
N. Y. 149; Mount v. Derick, 5 Hill
(N. Y.), 455; Arthur v. Balch, 3
Fost. (23 N. H.) 157.
1 Citing: Mires v. Solebay, 2 Mod.
242, 245; Alexander v. Southey, 5 B.
ft A. 247; Berry v. Vantries, 12
Serg. ft R. (Pa.) 89.
2 Citing: Lee v. Bayes, 25 L. J. C.
P. 249. 18 C. B. 599; 1 Addison on
Torts, § 475; Greenway v. Fisher, 1
Car. ft P. 190; Stephens v. Elwall, 4
M. ft S. 259; Perkins v. Smith, 1
Wils. 328; Gage v. Whittier, 17 N.
H. 312. To same effect. Elmore v.
Brook8» 6 Helsk. (63 Tenn.) 45.
1079
§ 1458]
THE LAW OF AGENCY
[book IV
The mere fact that he refuses for the benefit of his principal will not
protect him." *
§ 1458. Agent's liability for fraud, misrepresentation or deceit.—*
No one can give to another any lawful authority to practice wilful
fraud, misrepresentation or deceit upon a third. An agent, therefore,
who intentionally defrauds a third person whom he induces to deal
with him or injures him by wilful misrepresentation or deceit, is per-
sonally liable for the injury he inflicts.* The principal may or may
not be liable also according as he may or may not be deemed to have
authorized or approved the wrongful acts. Where, however, the agent
acted in good faith and the fraud or deceit was the principal's act
alone, the agent would not be liable.^
In accordance with these principles an agent who fraudulently in-
duces a person to take out an insurance policy is liable to an action
s Citing: Kimball v. Billings, 56
Me. 147, 92 Am. Dec. 581. See also,
Kimble v. McDermott, 154 Mo. App.
209.
* Wilder v. Beede, 119 Cal. 646:
HamUn y. Abell, 120 Mo. 18S; Reed
V. Peterson, 91 111. 288; Endsley V.
Johns, 120 111. 469, 60 Am. Rep. 572;
Moore v. Shields, 121 Ind. 267; Salis-
bury V. IddingB, 29 Neb. 736; Weber
T. Weber, 47 Mich. 569; Starkweath-
er V. Benjamin, 82 Mich. 305; Clark
V. Lovering, 87 Minn. 120; Alpha
Mills V. Watertown Steam Engine
Co.. 116 N. C. 797; Norrls v. Kipp,
74 Iowa, 444; Hedin v. Minn. Med.
Inst., 62 Minn. 146, 64 Am. St. Rep.
628, 36 L. R. A. 417; Wimple v. Pat-
terson (Tex. Civ. App.), 117 S. W.
1034; Poole ▼. Houston, etc., R. Co.,
58 Tex. 134; Mann v. McVey, 3 W.
Va. 232; Eaglesfield v. Londonderry,
L. R. 4 Ch. Dlv. 693; Sheppard Pub.
Co. V. Press Pub. Co., 10 Ont. L. R.
243.
See also, Kleine Bros. v. Qidcomb,
— Tex. Clr. App. — , 152 S. W. 462.
Fraud of agent not sufficiently
proved: Ray County Sav. Bank v.
Hutton. 224 Mo. 42.
Conspiracy to defraud: Miller v.
John, 111 111. App. 56.
Joining principal and agent in one
action. Krolik y. Curry, 148 Mich.
214.
An agent who knowingly partici-
pates with his principal in defraud-
ing the other party is, of course, li-
able either with or without his prin-
cipal. Lewis V. Hoeldtke (Tex. Civ.
App.), 76 8. W. 809.
Misrepresentation or deceit re-
specting his authority has been con-
sidered in the preceding subdivision.
See also, Wilkins, etc., Realty Co. v.
Jones, — Colo. — , 127 Pac. 224.
(»Thus in Cullen v. Thomson, 4
Mac Q. 424, 439, it is said by Lord
Wensleydale: "In some cases a man
may innocently assist In a transac-
tion which is a fraud on some one.
Of course, such a person cannot be
responsible criminally or civilly. Or
he may be a partaker in the fraud to
a limited extent, as, for instance, in
the supposed case adverted to in the
course of the argument, the print-
er of the alleged false statement,
who may know it to be false, and
yet may not have intended or known
sufficiently the fraudulent purpose to
which it was meant to be applied, to
make him responsible for the Injuri-
ous consequences of it"
A disclosed agent is not liable for
the fraud of the principal in carry-
ing out the contract made, e. g., forg-
ing signatures on a note which he
gives for a loan obtained through the
agent. Huston v. Tyler, 140 Mo. 262.
1080
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I459> I460
for the injury sustained;* in such a case the party deceived has two
remedies; he may retain the policy and sue for damages, or he may
rescind the contract and recover from the agent the premium paid.
So an insurance agent who misrepresents material facts to the insured
by reason of which the insured loses his claim against the company
for a loss sustained, is personally responsible to the insured for the
amount.' An agent is responsible individually to the purchaser for a
fraud committed by him in the sale of property, though he does not
profess to sell the property as his own, hut acts throughout in his
capacity as an agent.*
As pointed out in the preceding sections, it is entirely immaterial
that the agent derived no personal benefit from the wrong done."
§ ^459* Aj;ent's liability for his wilful or malicious acts. — An
agent or servant is undoubtedly liable for his own wilful or malicious
acts. Under rules formerly prevailing and not yet entirely inoperative,
holding the principal or master not liable in such a case, there would
be no one liable if the agent or servant could not be held. The master
or principal is now held liable in many cases of this sort,**^ but this
additional liability of the principal does not destroy the liability of
the agent.^*
§ 1460. Agent liable to third persons for negligent injuries com-
mitted by him while acting in performance of agency. — So if an
agent or servant, while acting upon his master's business, so negli-
«Hedden v. GrifBn, 136 Mass. 229,
49 Am. Rep. 25.
7Kroeger v. Pitcaim, 101 Pa. 311,
47 Am. Rep. 718.
8 Campbell v. HiUman, 15 B. Monr.
(Ky.) 508, 61 Am. Dec. 195. As
where he makes misrepreBentations
concerning title, qtiantity, or incuia-
brances. Garrett ▼. Sparks, 61
Wash. 397; Riley v. Bell, 120 Iowa,
618: Wlllard v. Key, 83 Neb. 850.
But a failure to disclose information
received for his own guidance, is not
fraud. Armstrong t. Campbell, 140
Iowa, 564. So there would be no liar
bility where the representation is
one which the buyer had no right to
rely upon, as where it is the misrep-
resentation of a selling agent, deal-
ing at arm's length, as to what is
the lowest price at which the princi-
pal will sell the property. Ripy ▼•
Cronan, 131 Ky. 631. 21 L. R. A. (N.
8.) 305.
• Weber t. Weber, 47 Mich. 569.
10 See post, §S 1629 et seq.
"Homer v. Lawrence, 37 N. J. L.
46; Able v. Southern Ry. Co., 78 8.
C. 173; Schumpert v. Southern Ry.,
65 S. C. 332, 95 Am. St. Rep. 802;
Gardner y. Southern Ry. Co. A Pier-
son, 65 S. C. 341; Holmes v. Wake-
field et ah, 94 Mass. (12 Allen), 580,
90 Am. Dec. 171; Hewett v. Swift, 85
Mass. (8 AUen), 420.
Many of these were caaes in which
the question was whether the master
and servant could be Joined in the
same action, but they all concede the
liability of the agent.
Criminal liaHlity. — ^Agency is or-
dinarily no defence in a prosecution
for crimes or penal acts. See State
V. Jones, 88 Minn. 27; Com. v. Leslie,
20 Pa. Super. 529.
1081
§ I460J
THE LAW OF AGENCY
[book IV
gently acts as to cause direct and immediate injury to the person or
property of a third person, whether he be one to whom the master
owes a special duty or not, under circumstances which would impose
liability on the agent or servant, if he were acting under the same con-
ditions on his own account, he will be personally liable.** In prac-
tically every case in which the master could be held liable for the neg-
ligence of his servant, the servant himself is personally liable. This
must be so from the very nature of the case. The whole theory of
the master's liability is that the servant has done a legal wrong, for
which the law imposes a liability upon the master however innocent he
may be. The person actually and primarily at fault, however, is the
servant, and if he would not be liable, the master ordinarily cannot be.
The liability of the servant is the direct and primary one ; that of the
master is a secondary and imputed one. In actual practice, the lia-
bility of the servant or agent is usually ignored because it is more con-
venient or effective to pursue the master, but the servant's liability
nevertheless exists. Thus, if a servant while running upon his mas-
ter's errand should negligently knock down a by-stander, under cir-
cumstances which would make the servant liable if he were running
upon his own errand, he would be personally liable. And so if a
servant while driving his master's horse, operating his master's ma-
chine, or managing or conducting any other property of his principal
over which he has control, so drives or manages as to inflict injury
upon third persons under circumstances which would render him lia-
ble if he were doing the same thing on his own account, he will be
personally liable. In such a case the servant or agent is the actor, and
the fact that he is acting for a principal is only the occasion or the
opportunity for his act, but not its justification. The principal or mas-
is Humphreys Co. v. Frank, 46
Colo. 624: Miner v. Staples, 3 Colo.
App. 93; Phelps v. Walt, 30 N. Y. 78;
Hewett ▼. Swift, 8 Allen (85 Mass.),
420.
Thus the director of a corporation
may be held personally liable for an
assault which he orders (Peck v.
Cooper, 112 111. 192, 54 Am. Rep.
231) or in which he participates
(Brokaw T. N. J., etc., Railroad Co.,
32 N. J. L. 328, 90 Am.* Dec. 659).
So of a malicious prosecution: Hus-
sey V. Norfolk, etc., R. Co., 98 N.
Car. 34, 2 Am. St. Rep. 312. So direc-
tors haye been held personally liable
for their negligent (Cameron v. Ken-
yon Co., 22 Mont. 312, 74 Am. St.
Rep. 602, 44 L. R. A. 508) or wilful
conduct in the management of the
corporation. Nunnelly v. Iron Co.,
94 Tenn. 397, 28 L. R. A. 421; and
for the infringement of patents. Na-
tional Cash Register Co. ▼. Leland,
87 C. C. A. 872, 94 Fed. 502. The
president of an incorporated club
may be held personally liable for the
negligent discharge of fireworks un-
der his direction. .Tenne v. Sutton,
43 N. J. L. 257, 39 Am. Rep. 578.
1082
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ I46I
ter might also be liable in such a case^ but that would not excuse or
exonerate the agent.^*
It is also immaterial that the servant or agent violates a duty he
owes to his principal or master at the same time. Thus the servant
who, while driving his master's team, negligently crushes the wagon
of a third person, is liable to the latter, though he may by the same
negligent act crush his master's wagon and be liable to him also.
§ 1461. The liability of the agent in these cases is not
affected by the fact that tliere is no privity of contract between himself
and the person injured. His liability does not depend upon privity,
but upon the general duty imposed on every one to so govern his con-
duct as not to negligently injure another. Many illustrations may be
found in the reported cases. A railway engineer who negligently
runs his master's engine at a high rate of speed through a populous
district would be liable if it were his own engine or if it were an engine
which he had hired or borrowed for the occasion, and the case should
not be different where it is an engine under his control, because he is
in the service of a railroad company.^^ If the running at that rate in
that place was the result of the specific command of the company, a
somewhat different case would be presented, although even then he
would not be justified in obeying specific conunands in the face of
obvious danger. So a bricklayer who negligently drops a brick upon
a passer-by should be personally liable. It is his own act of negli-
gence, in a case in which he owes a duty of care, and the fact that he
did it while working for a master does not excuse him.^' For similar
reasons, an engineer of a switch engine and a switchman are per-
sonally liable for negligently running down another servant of the
same company in disregard of signals given them by the person in-
i> Eaglesfleld ▼. Londonderry, 4
Ch. Dlv. 693 (per Jessel, M. R.);
Breen v. Field, 157 Mass. 277; Cor-
liss ▼. Keown, 207 Mass. 149.
It is true that Blackstone declares
that "if a smith's servant lames a
horse while he is shoeing him, an ao
tion lies against the master, but not
against the servant." But, as has
often been pointed out, this was
probably not true eren in Black-
stone's time, and is certainly not
true to-day.
The case of Burch v. Caden Stone
Co., 93 Fed. 181, is apparently con-
trary to the rule of the text.
14 Southern Ry. Co. v. Grizzle, 124
Ga. 735, 110 Am. St. Rep. 191; South-
ern Ry. Co. V. Reynolds, 126 Ga. 657;
Able V. Southern Ry. Co., 73 S. C.
173; Ellis v. Southern Ry. Co., 72 S.
C. 465, 2 L. R. A. (N. S.) 378; Mar-
tin V. Louisville ft Nashville Ry. Co.,
95 Ky. 612; Illinois Central Ry. Co.
V. Coley, 121 Ky. 385, 1 L. R. A. (N.
S.) 370; Illinois Central Ry. Co. v.
Houchins, 121 Ky. 526, 1 L. R. A. (N.
S.) 875. •
18 Mayer v. Thompson-Hutchison
Bldg. Co., 104 Ala. 611, 58 Am. St
Rep. 88^ 28 L. R. A. 433.
1083
§ 1462] THE LAW OF AGENCY [bOOK IV
jured ; *• and servants of a house-mover are liable for their negligent
acts in moving a house.*^ So where an agent, while acting for his
principal, opened a gap in another's fence and left it open, trusting to
his own supervision to see that no injury was caused thereby, he was
held personally liable for the loss of animals escaping through tlie
opening.**
§ 1462. Agent must have been an actor, not a mere automaton. —
It would seem to be a necessary limitation upon the liability of the
agent in any case, that he can fairly be deemed to have been an actor
in the transaction rather than a mere automaton or mechanical instru-
mentality. Thus, in a case in which the question was whether two
agents, Bayes and Pennington, could be held liable for directing a
distress for rent to be made in behalf of their principals, the landlords,
by one Harrison, another agent, it was said by Baron Bramwell in the
court of exchequer : *• "It occurred to my brother, Channell, and my-
self, who, together with my brother Martin, heard this case, that it
was doubtful whether, under the circumstances, Baycs and Pennington
could be liable for the act of Harrison, whether in fact they were any-
thing more than a mere conduit-pipe for communicating authority from
the landlords to Harrison. For my own part, and I believe I may say
for my brother Channell, if there had been nothing more, we should
have continued to entertain great doubt whether they would have been
liable. It is certain that a messenger who delivers a letter containing
a warrant of distress, not knowing the contents of the letter, is not
responsible ; and I cannot help thinking that if a servant were sent
with this message to a broker, 'My master desires you to distrain for
rent due to him,' the servant would not be liable as a person ordering
or committing the trespass. So, if a person wrote a letter in these
terms, *My friend, having a bad hand, is unable to write, and he re-
i«Mayberry v. Northern Pac. Ry. llgently ordering five timbers to be
Co., 100 Minn. 79, 12 L. R. A. (N. S.) carried in a sling, instead of four, on
675, 10 Ann. Cas. 754. Compare account of whicb one fell on plain-
Bryce v. Southern Ry. Co., 125 Fed. tiff. In Moyse v. Northern Pac. Ry.
958. Co., 41 Mont. 272, defendants, part of
In Coalgate Co. v. Bross, 25 Okla, yard crew, were held liable for al-
244, 138 Am. St. Rep. 915, it was lowing cars to escape and collide
held that an engineer operating an with the car in which plaintift, a
engine hoisting cars was liable to a conductor, was riding,
fellow-servant for injury caused by ^^ Blckford v. Richards, 154 Mass.
negligence in not obeying a signal 163, 26 Am. St. Rep. 224.
given by another fellow-servant. In is Horner v. Lawrence, 37 N. J.
Galvin v. Brown & McCable, 53 Or. L- 46.
698, a general superintendent of a ^" Bennett ▼. Bayes, 5 H, & N. 391
corporation was held liable for neg-
1084
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I463, I464
quests me to write and tell you to distrain on his tenant/ it is difficult
to say tliat a person so writing would be liable to an action."
§ 1463. Mere intermediate agent not liable. — For analo-
gous reasons, a mere intermediate agent who has not the control, does
not participate in the act, and is guilty of no fault, can not be held
liable. The liability must rest upon the master and the direct agent,
and not upon the intermediate one.-^
§ 1464. Agent's liability for negligent omissions — Misfeasance—
Nonfeasance. — ^When the question of the agent's liability to third
persons for negligent omissions to act is reached, a problem of greater
difficulty is presented. The doctrine very early found expression in
English law, that while a servant could be personally charged for his
active wrongdoing, the responsibility for his negligence rested on his
master only. Thus Chief Justice Holt in 1701 declared that "a servant
or deputy quatcnus such cannot be charged for neglect, but the prin-
cipal only shall be charged for it. But for a misfeasance an action
will lie against a servant or deputy, but not quatcnus a deputy or a
servant, but as a wrongdoer." *^
More than a hundred years before, in an action involving the lia-
bility of an under-sheriff, Coke, in arguing in the King's Bench, had
said : "I grant that an action for any falsity or deceit, lyeth against
the under-sheriff, as for embesseling, rasing of writs, and so forth,
but upon nonfeasans, as the case is here, the not retom of the sum-
mons, it ought to be brought against the sheriff himself." "
20 In Brown v. Lent. 20 Vt. 529, It tlcipated in. Stone v. Cartwright, 6
Is said: "A mere intermediate agent Term Rep. (Durn. & E.), 411; Bath
between the master and the direct v. Caton, 37 Mich. 199; Johnson v.
agent cannot be held constructively Memphis, 77 Tenn. (9 Lea) 125;
responsible for the acts of the lat- Canfield v. Chicago, etc., R. Co., 59
ter." Approved but distinguished in Mo. App. 354.
Bileu V. Paisley, 18 Oreg. 47, 4 L. R. See also, Nicholson v. Mounsey, 15
A. 840. So in Hewett v. Swift, 3 East, 384.
Allen (85 Mass.), 420, it was held Agent not at fault.— Within the
that the president of a corporation same reasoning, the agent cannot be
was not liable where, in his capacity held liable where he had no duty or
as president and as a "mere conduit power in the matter. Dudley v. II-
for communication between the cor- linois, etc., Ry. Co., 127 Ky. 221, 13
poration and the agent" who did the L. R. A. 1186.
wrong, he transmitted to the latter He must also have such connec-
the orders of the corporation directr tlon with and part in the act that he
ing the doing of the act. An inter- would be liable if he were not an
mediate agent like a steward or gen- agent. Frorer v. Baker, 137 111. App.
eral manager is not personally lia- 58S.
ble for the acts of servants hired by 21 In Lane v. Cotton, 12 Mod. 472,
him for his principal, and whose act 488.
he neither directed, caused or par- 22 Marsh v. Astrey. 1 Leonard, 146.
1085
§ I46sl
THE LAW OF AGENCY
[book IV
And in a very much more recent case in Louisiana, the court said :
"At common law, an agent is personally responsible to third parties
for doing something Which he ought not to have done, but not for not
doing something which he ought to have done ; the agent in the latter
case being liable to his principal only. For non-feasance, or mere
neglect in the performance of duty, the responsibility therefor must
arise from some express or implied obligation between particular par-
ties standing in privity of law or contract with each other. No man is
bound to answer for such violation of duty or obligation except to
those to whom he has become directly bound or amenable for his con-
duct. * * * An agent is not responsible to third persons for any
negligence in the performance of duties devolving upon him purely
from his agency, since he cannot, as agent, be subject to any obliga-
tions toward third persons, other than those of his principal. Those
duties are not imposed upon him by law. He has agreed with no one,
except his principal, to perform them. In failing to do so he wrongs
no one but his principal, who alone can hold him responsible."^
§ 1465. Certain rules quoted. — Before attempting to work
out any more definite principles certain rules which have been widely
quoted may well be noticed. Thus, in one case,^* before the supreme
judicial court of Massachusetts, Chief Justice Gray, later of the su-
preme court of the United States, used the following language: "It
is often said in the books that an agent is responsible to third persons
for misfeasance only, and not for non-feasance. And it is doubtless
true that if an agent never does anything towards carrying out his con-
tract with his principal, but wholly omits or neglects to do so, the prin-
cipal is the only person who can maintain any action against him for
ssDelaney v. Rochereau, 84 La.
Ann. 1123, 44 Am. Rep. 456.
So in Kahl y. Love, 87 N. J. L. 5,
It is said: "It is not everyone who
suffers a loss from the negligence of
another that can maintain a suit on
such a ground. The limit of the doc-
trine relating to actionable negli-
gence is, that the person occasioning
the loss must owe a duty, arising
from contract or otherwise, to the
person sustaining such loss. Such a
restriction on the right to sue for a
want of care in the exercise of em-
ployments or the transaction of busi-
ness, is plainly necessary to restrain
the remedy from being pushed to an
impracticable extreme. There would
be no bounds to actions and litigious
intricacies, if the ill effects of the
negligence of men could be followed'
down the chain of results to the final
effect. Under such a doctrine, the
careless manufacturer of iron might
be made responsible for the destruc-
tion of a steamer Trom the bursting
of a boiler, into which his imperfect
material, after passing through
many hands and various transac-
tions, had been converted. To avoid
such absurd consequences, the right
of suit for such a cause has been cir-
cumscribed within the bounds al*
ready defined."
34 Osborne v. Morgan, 180 liass.
102, 39 Am. Rep. 487.
1086
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§ I465
the non-feasance. But if the agent once actually undertakes and en-
ters upon the execution of a particular work, it is his duty to use rea-
sonable care in the manner of executing it, so as not to cause any in-
jury to third persons which may be the natural consequence of his
acts ; and he cannot by abandoning its execution midway, and leaving
things in a dangerous condition, exempt himself from liability to any
person who suffers injury by reason of his having so left them with-
out proper safeguards. This is not non-feasance or doing nothing,
but it is misfeasance, doing improperly."
In another case in the same court,^' in which an agent had been
charged with negligence in admitting water into the pipes of a build-
ing without first seeing that they were in proper condition, Judge Met-
calf said: "Non-feasance is the omission of an act which a person
ought to do ; misfeasance is the improper doing of an act which a per-
son might lawfully do ; ahd malfeasance is the doing of an act which
a person ought not to do at all. The defendant's omission to examine
the state of the pipes in the house before causing the water to be let
on was a non-feasance. But if he had not caused the water to be let
on, that non-feasance would not have injured the the plaintiff. If he
had examined the pipes and left them in a proper condition, and then
caused the letting on of the water, there would have been neither non-
feasance nor misfeasance. As the facts are, the non-feasance caused
the act done to be a misfeasance. But from which did the plaintiff
suffer? Clearly from the act done, which was no less a misfeasance
by reason of its being preceded by a non-feasance."
So in the Louisiana case above referred to, it is said: "Every one,
whether he is principal or agent, is responsible directly to persons in-
jured by his own negligence, in fulfilling obligations resting upon him
in his individual character and which the law imposes upon him inde-
pendent of contract. No man increases or diminishes his obligations
to strangers by becoming an agent. If, in the course of his agency,
he comes in contact with the person or property of a stranger, he is
liable for any injury he may do to either, by his negligence, in respect
to duties imposed by law upon him in common with all other men.
* * * The whole doctrine on that subject culminates in the prop-
osition that wherever the agent's negligence, consisting in his own
wrongdoing, therefore in an act, directly injures a stranger, then such
stranger can recover from the agent damages for the injury." *•
» Bell ▼. Jofiwelyn, 3 Gray (BCass.), Rochereau, S4 La. Ann. 1123, 44 Am.
309, 63 Am. Dec. 741. Rep. 466.
2« Bermudez, C. J., in Delaney ▼.
1087
§ 1466]
THE LAW OF AGENCY
[book IV
§ 1466. Attempted distinction betwieen misfeaaance and non-
feasance.— ^The attempted distinction between misfeasance and non-
feasance has been very much criticized and often denied to exist. It
is undoubtedly true that the Latin names employed may not be very
appropriate or illuminating. Notwithstanding this, however, it is be-
lieved to be true that there is a real distinction lying back of these
phrases which it is important to discover and which is not more vague
or indefinite than many other distinctions which it is necessary in our
law to recognize.^^
It is sometimes said that the only distinction, if one exists, is to be
s^ In the following cases acts of al-
leged negligent omission have been
dealt with criminally. Rex v.
Friend, Rub. ft Ry. 20, where a mas-
ter was held guilty of a misde-
meanor for not providing proper
food and clothing for his apprentice,
causing loss of health. Regina v.
Lowe, 3 C. ft K. 123, where an en-
gineer, employed to run an engine
to draw miners out of a coal
pit, deserted his post and left an
ignorant boy in charge, and a miner
was injured. The court held "that
a man may, by neglect of duty,
render himself liable to be convicted
of manslaughter, or even murder."
Biit in Regina v. Smith, 11 Cox C. C.
210, where the servant employed to
watch at a crossing, there being no
duty on the master to keep a servant
there, deserted his post, it was held
that the servant was not criminally
liable because he owed no duty to
the public. Regina v. Nicholls, 13
Cox C. C. 75, where a grandmother,
who was compelled to leave home to
work during the day, left an infant
of tender years in the care of her
nine-year-old son, and the child
died from want of food, the court
charged that there must be "wicked
negligence" or recklessness to make
the defendant criminally liable. In
Regina v. Downes, 13 Cox C. C. Ill,
a father from religious motives, ne-
glected to furnish proper medical at-
tention for his son. The court said,
"In this case there was a duty im-
posed by the statute on the prisoner
to provide medical aid for his in-
fant child, and there was the delib-
erate Intention not. to obey the law;
whether proceeding from a good or
had motive is not material." Regina
V. Instan (1893), 1 Q. B. 450, a niece
was held criminally liable for falling
to provide food and medicine for an
aunt, seventy-three years old, with
whom the niece lived. "The prison-
er," said the court, "was under a
moral obligation to the deceased
from which arose a legal duty to-
wards her." In Rex v. Smith, 2 C. ft
P. 449, it was held that a brother
was not criminally liable for neglect-
ing to provide food, warmth, etc., for
an idiot brother In his house.
"There is strong proof that there
was some negligence; but my point
is, that omission, without a duty,
will not create an indictable of-
ense." For an elaborate discussion
of The Moral Duty to Aid Others as
a Basis for Tort Liabllltyt see arti-
cles by F. H. Bohlen, 56 Univ. of Pa.
Law Review, 217, 316. For the lia-
bility, under a statute, for not fur-
nishing sufficient food to a child
whose care the defendant had under-
taken, see Cowley v. People, 83 N. Y.
464, 38 Am. Rep. 464. For not furn-
ishing medical attendance where the
parties believed in "Christian Sci-
ence," etc., see People v. Plerson, 176
N. Y. 201, 98 Am. St. Rep. 666. 63 L.
R. A. 178; Westrup v. Common-
wealth, 128 Ky. 95, 6 L. R. A. (N.
S.) 685.
1088
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ I467, I468
found in the fact that in one case the agent has, while in the other
case he has not, actually entered upon the performance of an under-
taking which he has assumed for his principal. In the latter case, it
is said that if he had never entered upon the performance at all, as he
had agreed to do, he is liable to his principal for not performing, but
that he will not be liable to third persons, although they may have also
suffered injury by reason of his non-performancp. In these cases, the
agent's duty will often be merely a contractual one and the third per-
sons are not parties to the contract. Even if it be a non-contractual
one, it will usually arise out of some act, condition or relation which
is personal to the principal and the agent, and therefore will not sus-
tain an action by third persons, who are strangers to it.
§ 1467. This aspect of the matter may be made somewhat
clearer by some further distinctions.. In the case in hand, it may be,
(i) that the principal was under no obligations to the third person;
or (2) that the principal had undertaken some duty to the third per-
son which he relied upon the agent to perform. The principal, for
example, is party to an action involving a question in which several
others are equally but separately interested. The principal has agreed
with an attorney that the latter shall argue his case. But the attorney
wholly neglects to undertake it. It is conceded that if he had argued
it, he would probably have won it. In any event, its determination
would have settled the question not only for his own client, but for all
the others similarly interested and would have saved the latter the ex-
pense and trouble of settling it for themselves. The attorney is lia-
ble to his own client for the loss he may have sustained, but no one
would suggest that he is liable to the other parties. Or the principal
is proprietor of a steamboat and has undertaken to carry a company
of people across a stream at a certain time. He has engaged a captain
to pilot the boat across. At the appointed time the passengers are
present, the captain is upon the ground, everything is in readiness, but
the captain utterly refuses to go upon the boat or in any respect to
enter upon or perform his tmdertaking. The loss or inconvenience to
the assembled passengers may be very great. Can any one of them
maintain an action against the captain ?
§ 1468. Further of this distinction. — ^It is said, however,
that while the agent may not be liable if he never enters upon his un-
dertaking, yet if he has actually entered upon the performance of his
duties he will be liable to third persons who are injured by reason of
his failure to exercise reasonable care and diligence in their perform-
ance. In this case also some distinctions are possible. Suppose that,
69 1089
§ 1469] THE LAW OF AGENCY [bOOK IV
though the agent owes his principal a duty, the principal himself owes
no duty to third persons who may sustain loss by reason of the agent's
neglect. The principal confides to the charge of his agent certain
premises which it is the agent's duty to his principal to keep in good
condition and repair ; the agent fails to perform this duty, permits the
premises to become dilapidated, and disreputable, and he is clearly lia-
ble to his principal for the injury he sustains. But is the agent liable
to the adjoining proprietors because their premises are rendered less
attractive or rentable or saleable or valuable by reason of the condi-
tion in which the agent has thus permitted his principal's premises to
be, that condition not constituting in law a nuisance? The principal
owes no duty to the adjoining proprietors and the agent would owe
them no duty if he were himself the principal.
§ 1469. Suppose, next, that the principal is under some
obligation to the other party. A principal has contracted with a third
person to supply a horse fit for a lady to ride. He instructs his agent
to go into the market and buy a horse fit for a lady to ride, but says
nothing further to the agent respecting the use to which tlie horse is
to be put. The agent goes into the market and negligently buys a
horse unfit for a lady to ride and delivers it to his principal. The
principal delivers the horse to the other party in pursuance of the
agreement, and the other party — a woman, let us say — is injured while
riding the horse as a result of its vicious character. Is the agent lia-
ble to her? If the purchaser gives the horse to her daughter, and the
daughter is injured, is the agent liable to the daughter?"
The principal is the proprietor of a steamboat, as in the case already
supposed in a previous illustration. The pilot, instead of refusing to
go at all, starts with the passengers for the desired destination. After
going part way, however, the pilot turns the boat about, and sets the
passengers all down again, unharmed, at the point from which they
started. Is he now liable to them ?
The principal again is a carrier of passengers. He has undertaken
to exercise at least reasonable care and dispatch to bring a passenger
to his destination at a particular time. The principal entrusts the
conduct of the vehicle to an agent, who knows the facts. The agent
so negligently manages the vehicle that the passenger does not arrive
2sSee Cameron v. Mount, 86 Wis. try It and, while doing so, was In-
477, 22 If. R. A. 512, where the de- jured because of the vicious charac>
fendant undertook to sell to plain- ter of the horse. Held, that she
tiff's husband a horse fit for a wo- might recover damages from the pro-
man to drive. At defendant's re- posed seller. See also post, § 1481.
quest, the wife drove the horse to
1090
CHAP. Ill] DUTIES AND LIABILITIES OF AGENT [§§ 1470-1472
on time, and thereby sustains great loss. May the. passenger recover
damages from the agent?
§ 1470- A client, again, about to buy real estate, submits
the abstract of title to his attorney for examination. The attorney
examines the abstract and gives to his client a written opinion that
the title is good. As a matter of fact, the attorney has negligently
failed to observe a defect in the title. The client buys the land and
holds it without discovering the defect. He then offers to sell the
land to another and exhibits to him the opinion of the attorney con-
cerning the title. The purchaser buys in reliance upon the opinion
without making further investigation. The client conveys the land
without warranty and never suffers in any way from the defective title.
The purchaser, however, does suffer from it. In the absence at least
of anything to indicate that the attorney had reason to believe that his
opinion would be put to such a use, is he liable to this second pur-
chaser for the injury he sustains?
Without attempting here to answer categorically these and count-
less other similar questions which will at once occur to the mind, let
us see how the rules already laid down by the courts in this connection
would apply to certain of them.
§ 147 1. Effect of beginning performance. — In the first
place, as has been seen, it is constantly said that there is a radical dis-
tinction in the liability of the servant or agent depending upon whether
he has or has not entered upon the performance of his undertaking,
and it will be worth while to examine this distinction more closely to
see what it really contains. It is said by Gray, C J.,** in the quotation
already given in a preceding section, "that if an agent never does any-
thing towards carrying out his contract with his principal, but wholly
omits and neglects so to do, the principal is the only person who can
maintain any action against him for the non-feasance." Applying this
to the case of the steamboat suggested above, if the servant never
starts upon the voyage, his refusal to start as he had agreed with his
principal to do, will not render him liable in tort to the expectant pas-
sengers. Neither could they have any remedy against him in contract
except upon some theory of a contract made for their benefit and en-
forceable by them.
I 1472. Chief Justice Gray, however, continues by say-
ing: "But if the agent once actually undertakes and enters upon the
execution of a particular work, it is his duty to use reasonable care in
the manner of executing it, so as not to cause any injury to third p^r-
S9 In OBborne t. Morgan, 130 Mass. 102, 39 Am. Rep. 437.
1091
§ 1473] T^^ ^^^^ 0^ AGENCY [book IV
sons which may be the natural consequence of his acts ; and he cannot
by abandoning its execution midway and leaving things in a dangerous
condition, exempt himself from liability to any person who suffers
injury by reason of his having so left them without proper safeguard."
Here are two ideas: (i) Negligence in the performance of his under-
taking; and (2) negligently abandoning performance and leaving
things in a dangerous condition. Applying these rules to the case of
the boat, if the servant starts upon his journey but negligently injures
his passengers or third persons by his management of the boat while
on the way, he would be personally liable. There is nothing new in
this. It is the now familiar rule already referred to which makes the
servant or agent liable for direct and immediate injuries caused by his
negligence while in the performance of his undertaking.**
He is also said to be liable for injuries caused "by abandoning his
execution midway and leaving things in a dangerous condition." If,
then, in the case of the boat, the servant negligently (o fortiori if he
does it wilfully) abandons the boat, or abandons its management in
midstream, and thereby causes injury to the passengers, he would be
liable to them.
§ 1473. — ^ But suppose the servant or agent in the case of
the boat does neither of these things, but, as in one of the cases sup-
posed, after taking the boat and the passengers in safety half-way
across the stream, he then, against their protests, turns the boat about
and puts them down in safety again at the place from which they
started. Is he now liable to them ? Unless* the liability of the servant
in these cases is to be confined to acts of physical injury to person or
property, would he not be liable for so negligently managing the boat
that instead of making his proper destination he makes some other;
or even comes around again to the point from whence he started?
Or, if he does it wilfully, would he not be liable to passengers right-
fully on the boat and rightfully headed toward their destination, if
against their will he wilfully turns them about and carries them in the
opposite direction? Has he any more right to bring them back to the
place from which they started than to take them to some other ciesti-
nation than that originally agreed upon ?
M In Schloeser v. jQreat North. Ry. a gas company, having arranged
Co., 20 N. D. 406, the liability of the with the city to supply gas to lamps
defendant is put upon this ground, owned by the city, was held to stand
though it seems a misapplication un- In the attitude of an agent of the
der the facts. city and to be liable to a third per-
In Consolidated Gas Co. v. Connor, son for negligence In performing Its
114 Md. 140, 32 U R. A. (N. 8.) 809, undertaking.
1092
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1474
§ 1474. Agent liable for condition of premises over which he has
controL— On analogy to cases already considered, the agent should
be held responsible for injuries caused by the condition of premises in
the possession or under the control of the agent where the condition is
one for which he is responsible and the injury is such as he would be
liable for if he were controlling the premises on his own account.
Thus, if an agent, having control of premises, should permit or main-
tain a nuisance thereon for which he would be liable if he were the
principal in the transaction, he should be equally liable notwithstand-
ing the fact that he is but an agent.
For similar reasons, the agent should be held responsible for injuries
caused by his neglect to keep in repair premises under his control
where he is charged by his principal with the duty to repair and has
the necessary means, in any case in which he would be. liable for the
same injury if he were controlling the premises on his own account.
In these cases in which the agent has both the duty (to his principal)
and the power to repair, and fails to do so, the injury can fairly be
regarded as the consequence of his ow^ act.'* If an agent would be
>i Oases holdinff agent not tiahle.-^
The case moat frequently cited and
perhaps most thoroughly considered
in which the agent was held not li-
ahle is Delaney v. Rochereau, 34 La.
Ann. 1123, 44 Am. Rep. 456. This
was an action to charge defendants
with liability for an injury result-
ing from the defective condition of
premises, for the owner of which
they were rental agents. The owner
of the premises resided in France, the
premises were a two-etory building
in New Orleans; the defendants were
agents of the owner, "having control
as such of the property." Half of
the building was rented and half va*
cant. A balcony extended along the
front of the entire building and
needed repair* as the defendants
knew. But there is nothing in the
case to show that they had as to
their principal either any duty or
any authority to repair or any money
with which to pay for repairs. On
two or more occasions defendants
had permitted the vacant half to be
used for purposes of amusement. On
the night in question, a dance was
^ven in the vacant portion pf the
building, without the knowledge or
consent of the defendants, by a per-
son who had obtained the key from
a neighbor, and taken possession of
the premises. During the evening
twelve or thirteen of the dancers
rushed out upon the balcony, which
gave way under them, and they were
thrown to the ground. One of them,
a boy about fourteen years of age,
was kiUed by the faU. His parents
brought this action against the agents.
It was held that the agents were
not liable. The case was very ftiUy
considered with reference to the
English, Roman and Prench law.
Some quotations from the opinion
have already been made In the text.
This gist of the conclusion .is found
In the following extract: *An agent
is not responsible to third persons
for any negligence In the perform-
ance of duties devolving upon him
purely from his agency, since he
cannot, as agent, be subject to any
obligations toward! third persons
other than those of his principal.
Those duties are not imposed upon
1093
§ 1474]
THE LAW OF AGENCY
[book IV
responsible for negligently driving his principars team against a third
person, as he would undoubtedly be, is he any the less responsible
him by law. He has agreed with no
one, except his principali to perform
them. In failing to do so, he
wrongs no one but his principal, who
alone can hold him responsible."
It is not at all clear that the facts
of this case bring it within the rule
of the text. If they do, the answer
which it is submitted may be made
to the argument of the court, is that
the duty is one not merely imposed
upon the defendants as agents by
their contracts with their principals,
but imposed upon them by law as
Individuals having control of prop-
erty not to so control it as to cause
injury to third persons. To same ef-
fect as the principal case, is, Carey
V. Rochereau, 16 Fed. 87.
Another case frequently cited Is
that of Feltus v. Swan, 62 Miss. 415,
wherein the principal and agent
were sued together to recover dam*
ages for not keeping open a drain
upon land adjoining the plaintifT'Si
and alleged in the declaration to
have been under the charge and con-
trol of the defendants, one as owner
thereof and the other as manager
and agent thereof. Nothing is al-
leged to show that the agent had any
actual control of the premises or any
power or duty in the matter. It was
held that the agent was not liable
and under the allegations of the dec-
laration the conclusion would seem
to be sound.
In Dean v. Brock, 11 Ind. App. 507,
the action was brought against both
principals and agents but the princi-
pals did. not appear and seem not to
have been served with process. It
was alleged in the complaint that
the agents were employed to rent the
building, collect the rents, pay the
taxes and make the necessary re-
pairs to keep the building in a ten-
antable condition. Plaintiff was in-
jured, as he alleged, because of the
rotten condition of certain sills
which had not been examined or re-
paired for more than twenty years,
as the agents knew, as he also al-
leged, and he charged the agents
with negligence in not knowing the
conditions and in not making repalra.
It was held that the agents were not
liable, on the ground that their ne-
glect, if there waa any, was mere
non-feasance.
It would be possible to make some
distinctions with reference to this
case, but it undoubtedly proceeds
upon a theory which cannot be recon-
ciled with the rule laid down In the
text.
The same conclusions were reached
In the similar case of Drake t. Ua-
gan, 108 Tenn. 265, where the doctrine
of Delaney t. Rochereau, Bupra, Is ap-
proved. In Kuhnert v. Angell, 10 N.
D. 59, 88 Am. St. Rep. 675, it was held
that the agent had not such control as
to make him liable.
In Labadle v. Hawley, 61 Tex. 177,
48 Am. Rep. 278, an agent was held
not liable to an adjoining proprietor
for an injury sustained by him by
reason of excessive heat and smoke
caused by hot fires in a cooking
range which the agent had permitted
the tenant to erect in his principal's
building. The case is put upon the
ground that in any event it was a
mere non-feasance, but it does not
appear that the agent had any real
control over the premises, nor that
it was negligent to permit the range
to be erected, nor that there was any
negligence In its construction. The
Injury arose from the manner in
which the tenant used the range.
See Scheller v. Sllbermlntz, 50 N.
T. Misc. 175; Dudley v. lU. Cent. R,
Co., 127 Ky. 221, 128 Am. St. Rep.
835.
Cases holding the agent liable, —
The following cases hold the agent
liable where he had the control and
1094
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1474
because he negligently fails to guide the team or negligently permits
it to go unguided or negligently leaves it unattended and injury
thereby results ? If the agent is not in control or has neither the duty
nor the power to repair, the failure to repair cannot be regarded as his
act. But where these conditions are present it is difficult to see why
it is not properly to be regarded as his act. It is, of course, in one
sense a not-doing, a non-feasance; but his act of control is a doing, a
feasance, and his failure to properly control is a misfeasance, if any
th^ power and the duty to make the
repairs. Balrd v. Shipman, 182 111.
16, 22 Am. St. Rep. 504, 7 L. R. A.
128, where agents for a non-resident
owner, with general power to lease
and make repairs, were held liable
for negligently allowing a stable
door to get into a dangerous condi-
tion so that an expressman deliver-
ing goods to the tenant was injured.
Carson v. Quinn, 127 Mo. App. 625,
where the agent with general control
over the premises, a flat building,
constructed a new walk in the court
and left a hole uncovered. Sills v.
McNaughton, 76 Mich. 237, 15 Am. St.
Rep. 308, where the agent had general
oversight over the erection of a build-
ing. One of the workmen, against the
agent's orders, removed a part of the
sidewalk, but the agent, after knowl-
edge of its removal, allowed It to so
remain for some time until the Injury,
Bannlngan v. Woodbury, 158 Mich.
206, where plaintiff was injured while
passing along the street, by glass
falling from window of building over
which defendant had control to rent.
Lough V. Davis, 30 Wash. 204, 94 Am.
St. 848, 59 L. R. A. 802; same case,
35 Wash. 449. Here the agent was
authorized to rent, repair and man-
age. Railing around veranda was al-
lowed to become old and rotten. In
Campbell v. Portland Sugar Co., 62
Me. 552, 16 Am. Rep. 503, plaintiff
was Injured by falling through a hole
in a wharf. The court said: "The
general agents who had the care of
this wharf and who had agreed with
the lessees to make all needful re-
pairs, are certainly In no better po-
sition than their principal." In Stle-
wel V. Borman, 63 Ark. 30, It was
held that the mere fact that defenid-
ant was operating a mine as agent
did not make him liable for injury
caused by the collection of gas, un-
less it appeared that he had a duty
and power to do what was necessary.
In Carter v. Atlantic Coast Line
R. Co., 84 S. Car. 546, It was held
that a railroad section boss was li-
able for allowing weeds to accumu-
late on the right-of-way, where they
caught fire and burned plaintiff's
house. See also, Patry v. Northern
Pac. Ry. Co., 114 Minn. 375, 34 L, R.
A. (N. S.) 586. In Orcutt v. Century
Bldg. Co., 201 Mo. 424, 8 L. R. A.
(N. S.) 929, the defendant was a
trustee under a deed of trust with
power to rent, collect rent, pay taxes,
and all expenses in connection with
the imaintenance, repair and manage-
ment of an office building. An ele-
vator was allowed to become out of
repair. In Hagerty v. Montana Ore
Purchasing Co., 38 Mont. 69, 25 L.
R. A. (N. S.) 356, the agent, a gen-
eral manager of the mine, allowed a
shaft to become defective. Applying
the same principles: Mayer v.
Thompson-Hutchinson Bldg. Co., 104
Ala. 611, 53 Am. St. Rep. 88, 28 L.
R. A. 433: Illinois Cent. R. Co. v.
Foulks, 191 111. 57; Murray v. Cow-
herd, 148 Ky. 591; Consolidated Qas
Co. V. Connor, 114 Md. 140, 32 L. R.
A. (N. S.) 809; Greenberg v. Whit-
comb Lumb. Co., 90 Wis. 225, 48 Am,
St. Rep. 911, 28 L. R. A. 439; Ferrler
▼. Trepannier, 24 Can. S. C. 86;
Owens V. Nichols. 139 Ga. 475.
1095
§§ ^475"^477] THE LAW of agency [book IV
importance is to be attached to these terms. It would seem to need
no argument to show that the mere not-doing of a particular act which
is in itself but a mere incident in the larger act of doing, ought not to
be regarded a such a non-feasance as will excuse the agent within any
proper meaning of that term.
Not all the cases, it is true, are in harmony with the rules above laid
down, but these rules are believed to be sound, and to be sustained by
the weight of modern authority.
§ 1475. Agent must be responsible. — It is, of course, es-
sential to the liability of the agent in these cases^ that he shall be re-
sponsible for the condition. If the premises were in the defective
condition when they came under his charge, and he has neither the
power nor the authority to change them, or if the defect arose while
they were in his charge, but he had no power or authority to correct
it, he could ordinarily not be held responsible. Thus, where an agent
who was carrying on a miU was charged with responsibility for in-
juries caused by maintaining the dam at too high a level, but it ap-
peared that the dam was erected at that height long before he became
agent and he had no power or authority to change it, it was held that
he was not liable.^'
§ 1476- — — Duration of lability. — How long the liability of
the agent in these cases would continue, is a question of torts rather
than of agency. It would doubtless continue while the conditions
continue to which it owes its existence, and would cease when the prin-
cipal by personally assuming control or otlierwise interrupted the causal
relation between the agent and the injury."
§ 1477. — — Other cases involving the same principle. — Many
other cases involving the same principle as that referred to in the pre-
*
ceding section may be determined in the same way. Thus, an agent
having complete charge and control of building operations owes a duty
not only to his principal to see that the work is properly done, but also
to third persons to see to it that while doing it and with reference to
matters over which he has complete control, he docs not negligently
S2 Brown Paper Co. ▼. Dean, 123 done to the plaintiff, it was held that
Mass. 267. Where a niannfacturing the servant was not liable. Hill ▼.
company having a feeble and insnf* Caverly, 7 N. H. 215, 26 Am. Dec.
flcient dam acroBs a stream of wa- 735.
ter, ordered its servant to shut the *• See Curtln v. Somerset, 140 Pa.
gate and keep it shut until ordered 70, 23 Am. St. Rep. 220, 10 L, R. A.
to raise it, and the servant obeyed 322; Memphis Asphalt Co. v. Flem-
the order, by means of which the ing, 96 Ark. 442; Daugherty v. Her-
water was raised so high that the zog, 146 Ind. 255, 67 Am. St Rep. 204.
dam broke away, and an injury was
1096
CHAP. IIlJ
DUTIES AND LIABILITIES OF AGENT
[§ ^^7!
injure them, whether it be by his direct act or by his failure to take
the precautions, without which he ought not to act at all.'*
So the managing agent of a lumber company having full charge and
control of its mill and machinery and of assigning employees to work
at various machines, is personally liable for an injury caused by setting
an inexperienced and ignorant employee at work upon a dangerous
machine.'*
So an agent having complete control and management of a mine
with power and authority to do whatever is reasonably necessary to
prevent injury from its operation is personally responsible for an in-
jury caused by his neglect to take necessary precautions against the
accumulation of dangerous gas therein.**
So an agent who takes complete charge and control of an office
building, employing, supervising and discharging the necessary serv-
ants, and controlling and directing the operation of the elevators in the
building, is personally liable for injury caused by the careless super-
vision and management of the elevator by an employee whom he has
placed in charge thereof.*^
An agent who has personal charge and fcontrol of a building, which
he rents for his principal, is personally liable to a tenant for injuries
caused to his goods because the agent, after the water had been shut
off from the building for a time, caused it to be turned on again with-
out seeing that pipes and faucets were in proper condition."
The ma^iagii^ directors of a corporation are personally responsible
for loss caused to a third person because they negligently permitted
an undue quantity of high explosives' to be accumulated upon the prem-
ises under their control.^^
"Mayer v. Thompson-Hutchlngon
Bldg. Co., 104 Ala. 611, 53 Am. St.
88, 28 L. K. A. 433. To same effect:
Lottman v. Bamett, 62 Mo. 159; Har-
rlman v. Stowe, 57 Mo. "93; Lee v.
Bodd, 20 Mo. App. 271. But see
Stelnhauaer v. Spraul, 127 Mo. 641,
27 Ii. R. A. 441, in which the doe-
trine of non-liability for alleged non-
feasance Is carried to the extreme.
See also, ElHs v. Southern Ry. Co.,
72 S. C. 4^5, 2 L. R. A. (N. S.) 378;
Fort V. Whipple, 11 Hun (N. Y.) 686.
«»Greenberg v. Whitcomh Lumb.
Co., 90 Wis. 225, 48 Am. St. Rep. 911,
28 If. R. A. 439. Compare CNell v.
Young, 68 Mo. App. 628.
M Stiewel V. Borman, 68 Ark. 80. TV)
same effect: see, Hindson V. Markle,
171 Pa. 138, where the superinten-
dent of a mine was held liable for
the pollution of a stream -which
caused plaintiff Injury.
•TOrcutt ▼. Century Bldg. Co., 201
Mo. 424, 8 U R. A. (N. S.) 929.
««Bell V. Josselyn, 3 Gray (Mass.),
309, 63 Am. Dec. 741.
s» Cameron v. Kenyon-Connell Com.
Co., 22 Mont 812, 74 Am. St. Rep.
602, 44 U R. A. 608.
To same effect: Nunnelly r. SontH-
ern Iron Co., 94 Tenn. 397, 28 Ia R.
A. 421.
The president of an incorporated
1097
§ 1478]
THE LAW OF AGENCY
[book IV
There are, of course, courts, notably those in New York,**^ which
would probably regard these cases as cases of non-feasance merely,
and therefore as imposing no liability upon the agent directly to third
persons. But the weight of authority is clearly the other way.
§ 1478. Within the principle of the preceding section
would also doubtless be included the case of a superior agent, like a
foreman or manager, who has the actual control of servants of his
principal, and who would be liable to third persons for injuries result-
ing to them from his negligent exercise of that power of control;
though, of course, he would not be liable for the mere negligence of
one of the servants in doing or not doing that whose doing or not
doing involved no negligence on the part of the superior agent.*^
Such a superior agent or servant would also be liable to the servants
under his control for injuries caused to them by his negligence in
exercising that controL
omnibus line directed its drivers to
exclude colored persons. He was
held individually liable for an in-
Jury caused by a driver in obeying
such order, and he was not exoner-
ated from such liability because the
corporation might also have been li-
able. Peck V. Cooper, 112 111. 192, 54
Am. Rep. 231. But compare Bullock
V. Gafflgan, 100 Pa. 276.
In Brower v. Northern Pacific Ry.
Co., 109 Minn. 386, 26 L. R. A. (N.
S.) 354, an engineer, charged with
the duty of keeping a water gauge in
repair, negligently put in a gauge
and also negligently failed to put the
usual guard around the gauge.
Plaintiff was injured by an explosion.
Held, the engineer was liable. The
negligent putting in of the gauge
was misfeasance, even If the leaving
off the guard was mere non-feasance.
"The distinction between misfeas-
ance and non-feasance is sometimes
fanciful."
Agent having no power to correct
defect — ^The doctrine of the forego-
ing cases^ of course, cannot apply
where, however great tl\e defect, the
agent sought to be held was without
duty, power or means to correct it.
Dudley v. Illinois, etc., Ry. CkK« 127
Ky. 221, 128 Am. St Rep. 335.
40 Thus in Murray v. Usher, 117 N.
Y. 642, it was held that the general
manager of a saw mill was not per-
sonally liable to an employee in-
jured by reason of defective equip-
ment which it was within the power
and the duty of the manager to keep
in safe condition.
The same principles were applied
in Van Antwerp v. Linton, 89 Hun
(N. T.), 417, affirmed by the court
of appeals on the opinion below, in
157 N. Y. 716. In Potter v. Gilbert,
130 App. Div. 632, aff'd 196 N. Y.
676, where an architect owed the con-
tractual duty to the owner to see
that the contractor complied with
the plans and plaintiff, a servant of
the contractor, was injured by the
falling of a wall defectively con-
structed; the architect was held not
liable, it not being contended that the
plans themselves were negligently
drawn. See also, Henshaw v. Noble,
.7 Ohio St. 226.
41 The master of a ship at sea is
not liable for injuries to a passenger
caused by the negligence of the crew,
there being no personal negligence
on his part. Stacpoole v. Betridge,
5 Vict. Li. R. 302. The master of
a ship in harbor is not liable for in-
juries caused by the mere negli-
1098
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1479
§ 1479. Cases in which agent held not liable. — On the other hand,
there are a number of cases, usually called cases of non-feasance, and
some of which probably were really such, in which the agent was held
not liable. Thus it has been held, that the agent is not liable to a third ^
person for the breach of his duty to his principal to give the latter no-
tice of information coming to his attention and which a third person
was interested in having communicated to the principal.**
So it is held that the transfer agent of a corporation is not respon-
sible to a third person for refusing to permit him to make a transfer
of stock upon the transfer books of the corporation in the custody of
the agent. The remedy, it was said, was by an action against the
corporation itself.**
For similar reasons it has been held that the treasurer of a corpora-
tion is not liable in his individual capacity to a stockholder for refusing
to pay him a dividend.**
So it is held that a depositor cannot maintain an action against the
cashier of a bank for the misapplication of funds, but the action must
be against the bank itself.**
And, generally, it is held that no action at law can be maintained by
stockholders in a corporation against the directors personally to re-
cover for losses sustained by reason of the misconduct of the directors.
gence of the crew. Clancy v. Harri-
son, 4 Vict. L. R. 437.
«aln Reld v. Humber, 49 Oa. 207,
the court said: "A party shipped his
cotton to his factor; he then told the
agent of that factor, who was at an-
other depot from where the cotton
was shipped, that he did not wish the
cotton sold until further orders.
Was there a legal obligation on that
agent towards the shipper to trans-
mit his directions to the factor?
From what did it spring? The agent
was bound to his principal, and
would have been responsible to him
for any damages recovered against
the principal, on account of thb
agent's failure. And the shipper may
have been entitled to recover against
the principal, either for the neglect
of the agent in not forwarding the
instructions, or for the violation of
them by the principal, if they had
been communicated. But we cannot
see that there was any such relation
between the agent and the shipper as
to render the agent liable to him for
the neglect Had the shipper made
the agent his own agent in the mat-
ter for a consideration, the case
would be different."
Where an agent, being duly author-
ized, impounded cattle trespassing on
the principal's land, he was not lia-
ble for damage suffered by the cattle
on account of the principal's failure
to care for them properly while they
were impounded. Kimbrough v. Boa-
well, lid Ga.- 201.
«3 Denny v. Manhattan Co., 2 Denio
(N. Y.), 115, 5 id. 639.
See also, Eames v. Brunswick (Con-
struction Co., 104 N. T. App. Div. 566.
4* French v. Fuller, 23 Pick.
(Mass.) 108.
43 Wilson v. Rogers, 1 Wyo. 51.
1099
§ i48o]
THE LAW OF AGENCY
[book IV
The directors do not owe the proper performance of their duties as
such directly to the stockholders.*"
§ 1480. So in the case of persons employed in a profes-
,sional capacity. The duties which they owe are ordinarily held to be
owing to their immediate employers only, and not to third persons, even
though the latter may in some way sustain injury because this duty is
not performed. Thus, in a case often referred to, it was held that an
attorney at law was not liable to a third person who had relied upon
an opinion of title negligently erroneous, which the attorney had given
to his client.*^ In another the attorney of a testator was held not lia-
able to a donee under the will for so negligently drafting the will that
it did not secure to the donee the benefits which the testator intended
to give him.** In another, mortgagees who had advanced money upon
the strength of a certificate given by an architect and surveyor to his
employer, the mortgagor, concerning the stage of progress of a build-
ing, were held to have no remedy against the architect for his negli-
gence in making the certificj^te.** The same question has also arisen
a number of times with reference to the makers of abstracts of title;
and while in general the abstractor has not been held liable to anyone
except his immediate employer, special circumstances have in several
cases been held to be sufficient to extend his liability, as was suggested
in the note respecting the attorney."^
4«See Smith y. Hurd, 12 Meta
(Mass.) 371, 46 Am. Dec. 690; NUes
v. New York, etc., R. Co., 176 N. Y,
119, and many other cases to be
found in the books on Ck)rporationB.
47 National Savings Bk. v: Ward,
100 U. S. 195, 25 U Ed. 621. It Is
easy, however, to imagine ciroiim-
stances under which a different rule
would be applicable; as, for example,
where the attorney knew or ought to
have known, that the opinion which
he rendered was to be relied upon by
such persons as the plaintiff. Thus in
this case, it was said by Watte, C. J.,
with whom Swayne and Bradley, JJ.,
concurred, and who thought that the
facts in the case brought it within
the rule: "I think if a lawyer, em-
ployed lo exao^ine and certify to the
recorded title of real property, gives
his client a certificate which he
knows or ought to know is to be
used by the client in some business
transaction with another person as
stldeAoe of the facts certified to, he
is liable to such other person relying
on his certificate for any loss result-
ing from his failure to find on record
a coaveyance- affecting the title, which
by the use of ordinary professionar
care and skill he might have found."
M Buckley v. Gray, 110 Cal. 339, 62
Am. St. Rep. 88, 81 L. R. A. 86L See
also, the comments upon the subject
in Alton V. Midkihd By. Co., 19 C. B.
(N. S.) 218 at p. 244.
MLe Lievre v. Gould, [1893] 1 Q.
B. 491.
M In Day v. Reynolds* 28 Hun <N.
Y.), 131, plaintiff, on being applied
to for a loan to be secured by a
mortgage, requested the borrower ta
procure a search from the county
clerk's office. The search was made
by defendant, the county olerkt (paid
by the borrower), without knowl-
edge of the purpose for which it was
IIOO
CHAP. Ill]
DUTIES AND INABILITIES OF AGENT
[§ I48I
§ I48Z.
With reference to certain of the cases here under
consideration, it may well be that a ground for the agent's or servant's
to be used. Held, the defendant
owed the plaintiff no duty In the mat-
ter and was not liable for failing to
note a recorded conveyance by the
borrower to a third person. In Tal-
pey V. Wright, 61 Ark. 27B, 64 Am.
St. Rep. 206, it was held that an in-
dorsee of notes secured by a deed of
trust could not maintain an action
against the abstracter for negligently
preparing an abstract for the bor-
rower and lender. Houseman v. Oir-
ard Mutual B. 6 L. Ass'n, 81 Pa. 256,
to same effect (semhle).
In Schade ▼. Gehner, 133 Mo. 252,
the plaintiff was the devisee of her
husband whom defendant had under-
taken to assist in examining the ti-
tle to land to be purchased. The
court said: "Ck>nceding the defend-
ant's negligence. . . . That a right of
action could not accrue to anyone
else who was not privy to the con-
tract, although damage may have re-
sulted to such person by reason of
the negligence, is the uniform doc-
trine of the authorities." In Zwcl-
gardt V. Birdseye, 57 Mo. App. 462, it
was held that the purchaser had no
cause of action against the abstracter
for negligently preparing an ab-
stract for the seller. In Mallory v.
Ferguson, 50 Kan. 685, 22 L. R. A. 99,
the court said: "We think the great
weight of authority is to the effect
that the party making the examina-
tion and certificate is liable only to
his employer and never to a strang-
er or third party." In Mechanics
BJdg. Ass'n V. Whitacre, 92 Ind. 547,
speaking of the liability of a regis-
ter who makes a search and certifies
to a title, the court said, "he would
be liable to the party who employed
him, but not to such as might sim-
ply see and rely upon such certif-
icate." In Morano v. Shaw. 23 La.
Ann. 379, it was held that the ven-
dee of a purchaser at sheriff's sale
has no right of action against the
recorder of mortgages for having
given an Imperfect certificate where-
by his vendor was induced to pur*
chase. The same thing was held In
Smith V. Moore, 9 Rob. (La.) 65.
In Brown v. Sims, 22 Ind. App. 317, 72
Am. St Rep. 808, the abstracter was
informed that the abstract was to be
used to induce plaintiff to make a
loan, and before the loan was made
the abstracter told plaintiff in per-
son that the title was clear and that
he might rely on the abstract. The
court said, "Where the abstracter
has no knowledge that some person
other than his employer will rely
in a pecuniary transaction upon the
correctness of the abstract, the gen-
eral rule that his duty extends only
to his employer must be main*
tained." But held: "We think it
cannot properly be said that the ap-
pellee did not owe a duty to the
appellant arising under the contract,
the attending circumstances indicat*
ing that it was the understanding
of all the parties that the service
was to be rendered for the use and
benefit of the appellant. . . . " In
Dickie V. Abstract Co., 89 Tenn. 431,
24 Am. St. Rep. 616, it was held
that the abstract company was liable
to a purchaser for aegligence In
furnishing an abstract to the seller.
The deed was drawn up by the ab-
stract company. The court said:
"The allegations of the bill clearly
make a privity of contract between
the purchasers and the defendant."
See Siewers v. Commonwealth, 87
Pa. 15. In Peabody B. ft L. Ass'n v.
Houseman, 89 Pa. 261, 33 Am. St.
Rep. 757, the defendant left certain
mortgages off the search on promise
by the borrower that they would be
paid and "the defendant's search
clerk knew when he issued the
searches that the plaintiffs were
about to loan money on the faith of
them." Defendant held liable.
IIOI
§§ 1482, 1483] THE LAW OF AGENCY [BOOK tV
liability to third persons may be founTd in the rule which has been in-
voked to make liable a manufacturer of goods, dangerous inherently
or dangerous through negligent manufacture, to a remote purchaser
and user, even though no contractual relation between the parties ex-
ists. The agent or servant might be liable with his employer, and no
reason is apparent why, in many cases, the agent or servant who is
really at fault should not be held liable, though no case is now in mind
in which this has been attempted.
§ 1482. Agent not liable in tort to third persons for breach of
principal's contracts with them. — An agent is not usually liable to
third persons for the breach of his principal's contracts with such third
persons even though the performance of those contracts was confided
to the agent by the principal. The agent clearly is not liable on the
contract, nor can he ordinarily be liable to the third party in tort for
the breach of the contract.
Whether upon an analogy to the rule which gives an action against
a third person in certain cases for inducing the breach of a contract,**
an action in tort might be maintained against an agent who wilfully
disables his principal from performing by withholding his own per-
formance, seems nowhere to have received much attention.
The moral considerations may often be stronger in the latter case
than in the former. As a "short cut" to the party really at fault, such
an action would have some justification. There is, however, less need
for giving a new action here than in the former case. There, there is
no remedy against the party at fault unless it be one in tort; here,
there is always the contractual remedy of the third person against the
principal, and of the latter against the agent.
§ 1483. Liability of servant or agent to fellow servant or agent —
Where, under the rules herein laid down, an agent or servant would
be liable to a third person for his negligence, he will ordinarily be
equally liable although the person injured be another agent or servant
in the employment of the same principal or master, and even though,
under the so-called fellow-servant doctrine, the principal or master
would not be liable."
•1 See discussion In Tale Law Ind. 547, 32 Am. Rep. 114; Hinds r.
Journal for November 1910. 20 Yale Harbou, 58 Ind. 121: Ward v. PuU-
I». Jour. 69. man Co., 181 Ky. 142, 25 L. R. A. (N.
82 0gborne v. Morgan, 130 Mass. S.) 843; Hare v. Mclntire, 82 Me.
102, 39 Am. Rep. 437 (overruling Al- 240, 17 Am. St. Rep. 476, 8 L. R, A.
bro V. Jacquith, 4 Gray (Mass.), 99, 450; Qrlfflthg v. Wolfram, 22 Minn.
64 Am. Dec. 56); Rogers v. Overton, 155; Brower v. Northern Pacific Ry.
S7 Ind. 410; Hinds v. Overacker, 66 Co., 109 Minn. 385, 26 L. R. A. (N.
iioa
CHAP. Ill]
DUTIES AND UABIUTIES OF AGENT [§§ 1^4-1487
§ 1484. No liability for negligence of fellow agent or servant. —
One who is merely a co-agent or fellow servant is not liable to third
persons for the negligence or default of his co-agent or fellow servant
where he himself is free from fault and has no authority or duty with
reference to the acts of the other.**'
§ 1485. Liability in respect of sub-agents. — Whether a sub-agent
is to be considered the agent of the agent or of the principal is a ques-
tion which has been already considered.** Where in accordance with
the rules there laid down it is determined that the sub-agent is to be
regarded as the agent of the agent, the latter will be liable to the sub-
agent, the principal and third persons as a principal. But where, oti
tlie other hand, the sub-agent is found to be the agent of the principal^
then the intermediate agent will not be liable to the sub-agent or to
third persons as a principal."'
The sub-agent, like the agent, is personally responsible to third per-
sons for his own misfeasances, although the agent or the principal may
be responsible also."* He would not, however, be liable to third per-
sons for mere non-feasance, in the sense already explained. On these
subjects, the rules laid down above respecting the liability of the agent
to third persons, apply, mutatis mutandis, to the sub-agent
§ i486. Agent who conceals principal liable as principal
to sub-agent. — The rule that an agent who conceals his principal
may himself be charged as principal, has been applied in favor of sub-
agents who have received injuries while in the employment of the
agent as an ostensible principal. In such cases the agent is liable to
the sub-agent in the same manner as though he were in fact the real
principal."^
§ 1487. Joinder of agent and principal in same action. — ^Whether
the agent and the principal may be joined as defendants in the same
action is a question involving a variety of considerations and leading
to much difference of opinion. Inasmuch, however, as the question
is substantially the same, whether approached from the standpoint of
joining the principal with the agent or the agent with the principar,;
S.) 354: Malone v. Morton, 84 Mo.
436; Kenney v. Lane, 9 Tex. Civ.
App. 150.
Contra: Southcote y. Stanley (dic-
tum), 25 L. J. Bxch. 339.
M Cargin V. Bower, 10 Ch. Div. 502.
s«See ante, § 326.
BB Stone V. C&rtwrlght, 6 T. R. 411;
Bennett v. Bayes, 5 H. & N. 391;
Brown v. Lent, 20 Vt. 529.
B« Stone V. Cartwrlght, supra;:
Bush V. Stelnman, 1 Bos. ft Pul. 404;
Denison v. Seymour, 9 Wend. (N.
Y.) 11; Rapson v. Cubitt, 9 M. & W.
710; Quarman v. Burnett, 6 M. it
W. 499.
B7 Malone v. Morton. 84 Mo. 436;
McGowan v. St Louis, etc., R. R. Co.,.
61 Mo. 528; Tarslowitz v. Bienen-
stock, 130 N. T. Supp. 931.
1 103
§§ 1488, 1489I
THE LAW OF AG£NCY
[book IV
and as the latter question is discussed in a later chapter,"* upon the lia-
bility of the principal to third persons, no attempt will be made to enter
upon its discussion here. It will suffice here to say that there is a large
and constantly growing number of cases in which it is held that such
a joinder is proper."
B. PUBLIC AGENTS.
§ 1488. What here included. — It is the purpose of this work to
deal primarily with the private agent, although from time to time ref-
erences have been made to the rules which apply in the case of public
agents. In the first edition of this work, however, some space was
given to the discussion of the general liability to third persons of the
more important classes of public agents or officers. It is less necessary
than ever to renew that discussion here because, since the first edition
of this work appeared, the writer has very much more fully discussed
these questions in a separate treatise •^ to which the reader may be re-
ferred. A very brief statement, however, of the most important of these
rules, may not be entirely out of place here, and will be given.
I.
LIABILITY FOR THEIR CONTRACTS.
§ 1489. Already considered. — ^What may be pertinent to say re-
specting the liability of public officers to third persons in contract has
already been said in various sections in the preceding subdivision, and
nothing further will be added here.**
M See post, Chap. V.
MSee Knuckey v. Butte Ry. Co.,
41 Mont. 814: Southern Ry. Co. v.
Rowe, 2 Ga. App. 557; Dowell v. Chi-
cago, Rock Island, etc., Ry., 83 Kan.
562; Wlllard v. Key, 83 Neb. 850; Coal-
gate Co. V. Bross, 25 Okla. 245, 138
Am. St, K. 916: Englert v. New
Orleans Ry., 128 La. 473; LoulsvUle,
etc., Ry. ▼. Gollehur, 40 Ind. App.
480; Lefkovitz v. Sherwood (Tex.
Civ. App.), 136 S. W. 850; Moore v.
Kopplin (Tex. Civ. App.), 185 S. W.
1033; Kirkpatrick v. San Angelo
Bank (Tex. Civ. App.), 148 8. W.
362; Jewell v. Bolt & Nut Co., 231
Mo. 176, 140 Am. St R. 515; Cincin-
nati, etc., Ry. ▼. Martin, 146 Ky. 260;
Lllienthal v. Carpenter, 148 Ky. 50;
Galvin y. Brown, 53 Ore. 598; Shep-
herd Pub. Co. Y. PreflB I^b. Co., 10
Ont L. R. 243; Turcotte ▼. Ryan, 89
Can. Sup. Ct. R. 8.
<oSee Mechem on Public Offloeri,
Callaghan A Co., Chicago.
«i See ante, 9{ 1371, 1428.
II04
CHAP, in] DUTIES AND LIABILITIES OF AGENT [§§ 1490^ I49I
IL
LIABILITY FOR THEIR OWN TORTS.
§ 1490. In general — Classification. — Public agents may be clas-
sified according to several lines of distinction. They may, for example,
be divided into two classes based upon the character and the manner
in which they serve the public. One class embraces those whose duty
is owing primarily to the public collectively and not to any particular
individual, — who act for the public at large and who are ordinarily
paid out of the public treasury. The other class includes those vvho,
while they may not owe ,to the public as such the performance of any
given duty, come, by virtue of an employment by an individual to do
some act for him in an official capacity, under a special and particular
obligation to him as an individual. Officers or agents of this class
usually receive their compensation from fees paid by each individual
who employs them.
Another classification may be made based upon the nature of the
duties to be performed. One class, for example, includes those whose
duties are of a purely judicial nature ; another, those whose duties are
of a quasi- judicial or discretionary character; another, those whose
duties are legislative, and still another those whose duties are minis^
terial in their nature.
In respect of this classification it will be found that it is not always
easy to determine whether the given duty is judicial or discretionary,
or whether it is ministerial in its nature, particularly in view of the
fact that the same officer may often, in the same transaction even, be
compelled to exercise both sorts of function.
It will be evident that the question of the liability of the public agent
may involve not only his responsibility for his own torts, but for those
of his subordinates, assistants and employees.
§ 1491. No action by individual for breach of duty owing solely
to the public— The first question for determination in considering
the liability of a public officer to private action, is whether such officer
owes any duty to the individual. Public officers are chosen upon public
grounds, they are part of the machinery of the government, and they
owe the performance of the duties imposed upon them primarily to the
public.
Many of them, in the course of the performance of their duties, incur
obligations to individuals, but these obligations are so incurred as a
part of their public duty attaching to these individuals as distributive
70 1105
§§ 1492, 1493]
THE LAW OF AGENCY
[book nr
members of the public, and not because the performance of these du-
ties, for these particular individuals, was the object and end of their
appointment.
Other of the public agents may never come under any obligation to
individuals at all.
Unless, therefore, it appears that the duty violated was one owing
to the individual complaining of its non-performance, and unless it
appears that he has sustained a special injury therefrom, no civil action
can be maintained against the officer. Recourse in such a case must
be had by a public prosecution.'*
§ 1492. Liable for wrongs committed in private capacity. — It
will be understood that it is the liability of public agents for wrongs
committed while they were acting, or assuming to act, in their public
capacity, that is now to be considered, and not their liability for those
wrongs which they may commit as private individuals- For the latter
they are, of course, liable like any other private individuals, and their
official character affords them no defense.
i. Superior Governmental Officers*
S 1493. Not usually subject to private action. — ^^^^ith reference to
the higher executive officers of the government, such as the president
of the United States, the governors of the states, the heads of depart-
|ments, and the like, it seems to be everywhere agreed that they are
not subject to private actions for damages for their official discre-
tionary acts within their jurisdiction." With respect of the governors
of the states, there is a considerable body of authority both for assert-
ing " and denying •* that their ministerial action may be controlled by
«2See Mobs y. Cummlngs, 44 Mich.
369; Butler ▼. Kent, 19 Johns. (N.
Y.) 223. 10 Am. Dec. 219; McPhee T.
Guaranty Co., 62 Wash. 164.
M See Marbury v. Madison, 1
Cranch (17. S.), at p. 170, 2 L. Ed.
60; United States v. CommlBsioner,
6 Wall (U. S.), 563, 18 L. Ed. 692;
Decatur v. Paulding, 14 Pet (U. S.)
497, 10 L. Ed. 559; New York Ins.
Co. y. AdamB, 9 Pet. (U. S.) 573, 9
L. Ed. 234.
64 See Martin t. Ingham, 38 Kan.
641; Harpending v. Haight, 39 Cal.
189, 2 Am. Rep. 432; Middleton v.
Low, 80 Cal. 596; Tennessee R. R.
Co. T. Moore, 36 Ala. 371; Wright
V. Nelflon, 6 Ind. 496; Baker v. Kirk»
83 Ind. 517: Gray v. State, 72 Ind.
567; Magruder v. Swann, 25 Md. 173;
Groome v. Gwinn, 43 Md. 572; Cham-
berlain y. Sibley, 4 Minn. 309; Chu-
maaero y. Potts, 2 Mont. 242; State
V. Blasdel, 4 Key. 241; Gotten y. El-
lis, 7 Jones (N. C), L. 545; State y.
Chase, 5 Ohio St. 528.
«s See Hawkins y. Goyernor, 1 Ark.
570, 33 Am. Dec. 346; SUte y. War-
mouth, 22 La. Ann. 1, 2 Am. Rep. 712;
Mauran y. Smith, 8 R. I. 192, 5 Am.
Rep. 564; State y. Warmouth, 24 La.
Ann. 351, 13 Am. Rep. 126; People
II06
"CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT
[§ 1494
mandamus. With reference, however, to heads of departments and
state officers below the rank of governor, there is quite general agree-
ment that, where ministerial duties of a clear and positive nature, are
imposed upon them by the law, mandamus will lie to compel their per-
iormance/^
2. Judicial Officers.
§ 1494. Judicial officers not liable when acting within their juris-
•diction. — It is a general principle of the highest importance to the
proper administration of justice that a judicial officer, in exercising the
authority vested in him, shall be free to act upon his own convictions
without apprehension of personal consequences to himself. No civil
action, therefore, can be maintained against a judicial officer by one
•claiming to have been injured by his judicial action within his juris-
diction.*' From the very nature of the case, he is called upon to exer-
T. Governor, 29 Mich. 320, 18 Am.
■Rep. 89; Jonesboro Turnpike v.
Brown, 8 Baxt. (Tenn.) 490, 36 Am.
Hep. 718; Vicksbnrg R. R. Co. v.
Ix)wry, 61 Miss. 102, 48 Am. Rep. 76;
State v. Drew, 17 Fla. 67: Low v.
Towns, 8 Ga. 360; People v. Blssell,
19 in. 229; People v. Yates, 40 IlL
126; People v. CuUom, 100 111. 472;
Bennet v. Governor, 82 Me. 508; Rice
V. Austin, 19 Minn. 103, 18 Am. Rep.
530; Western R. R. Co. v. DeGraff.
27 Minn. 1; State v. Governor, 39 Mo.
388; State T. Price, 1 Dutch. (N. J.)
331.
^^See Martin v. Ingham, 38 Kan.
€41; State v. Doyle, 40 Wis. 175, 220;
State V. Wrotnowski, 17 La. Ann.
156; State v. Houston, 40 La. Ann. 393,
:8 Am. St R. 532; State y. Barker, 4
Kan. 379; State v. Secretary of State,
53 Mo. 293: Northwestern, etc., R. R.
Co. V. Jenkins, 65 N. C. 173; State ▼.
Dubuclet, 26 La. Ann. 127; People v.
Schuyler, 79 N. Y. 189; Citizens'
Bank v. Wright, 6 Ohio St. 318; Peo-
pie V. Auditor-General, 9 Mich. 134;
Employers' Assur. Co. v. Commission-
er of Insurance, 64 Mich. 614.
•7 Some of the cases on this snh-
ject are the following: Houlden ▼.
Smith, 14 Ad. k KL (N. S.) 841, 19
L. J. Q. B. 170; Holroyd v. Breare, 2
B. 4b Aid. 473; Basten v. Carew. 3 B.
A C. 652; Gamett v. Perrand, 6 B. ft
C. 611; Fawcett ▼. Powlis, 7 B. A C.
394; Pray v. Blackburn, 3 B. & S.
576, Pike V. Carter, 3 Bing. 78; Mills
V. Collett, 6 Bing. 86; Miller t. Seare,
2 BL 1145; DIcas v. Lord Brougham,
6 C. * P. 249; Floyd ▼. Barker, 12
Coke, 25; Kemp v. Neville, 10 C. B.
(N. S.) 523; Mostyn v. Fabrfgas, 1
Cowp. 172; Lowther v. Earl of Rad-
nor, 8 Bast, 113; Scott v. Stansfield, 3
L, R. Ex. 220; Ackerly v. Parkinson,
3 Maule ft S. 411; Miller v. Hope,
2 Shaw, 126; Ward v. Freeman, 2 Ir.
C. L. Rep. 460; Randall v. Brigham,
7 Wall. (74 U. S.) 535, 19 L. Ed. 285;
Bradley v. Fisher, 13 Wall. (80 U. S.)
335, 20 L. Ed. 646; Johnson v. Tomp-
kins, 1 Bald. (U. S. C. C.) 571; Cooke
V. Bangs, 31 Fed. 640; Hamilton v.
Williams, 26 Ala. 527; Craig v. Bur-
nett, 32 Ala. 728; Busteed v. Parsons,
54 Ala. 393, 25 Am. Rep. 688; Irion
V. Lewis, 56 Ala. 190: Woodruff v.
Stewart, 63 Ala. 206; Heard v. Harris,
68 Ala. 43; Grlder ▼. Tally, 77 Ala.
422, 54 Am. Rep. 65; Broom v. Doug-
lass, Ala. , 57 So. 860; Bor-
den V. State, 11 Ark. 519, 54 Am. Dec.
217; Mcintosh v. Ballard, 95 Ark.
1 107
§ 1495]
THE LAW OF AGENCY
[book IV
cise his judgment, and his duty to the individual is performed when he
has exercised it, however erroneous or disastrous in its consequences
it may appear either to the party or to others.
§ 1495. Liability not affected by motive. — This immunity of ju-
dicial officers from civil liability is not affected by the motives with
which they are alleged to have performed their duties. If the officer
227; Inos v. Winspear, 1-8 Cal. 397;
Porter v. Halght, 45 Cal. 631; Pickett
▼. WaUace, 57 Cal. 555; Wyatt ▼. Ar-
not, 7 Cal. App. 221; Hughes v. Mo-
Coy, 11 Colo. 591; Phelps v. Sill, 1
Day (Conn.), 315; Ambler v. Church,
1 Root (Conn.), 211; Qrumon v. Ray-
mond, 1 Conn. 40, 6 Am. Dec. 200;
Tracy v. Williams, 4 Conn. 107, 10
Am. Dec. 102; Holcomb v. Cornish, 8
Conn. 875; Bailey r. Wiggins, 5 Harr.
(DeL) 462, 60 Am. Dec. 650; Flack
v. Harringfton, Breese (111.), 165, 12
Am. Dec. 170; Qarfield v. Douglai^,
22 IlL 100, 74 Am. Dec. 137; State ▼.
Flinn, 8 Blackf. (Ind.) 72, 23 Am.
Dec. 880; Barkeloo v. Randall, 4
Blackf. 476, 32 Am. Dec. 46: Walker
V. Hallock, 32 Ind. 239; Blmore v.
Overton, 104 Ind. 348, 54 Am. Rep.
343; Londegan v. Hammer, 80 Iowa,
508; Jones v. Brown, 54 Iowa, 74, 37
Am. Rep. 185; Clark y. Spicer, 6 Kan.
440; Connelly v. Woods, 31 Kan. 369;
Kennedy v. Terrlll, Hardin (Ky.),
490; Gregory v. Brown, 4 Bibb (Ky.),
28, 7 Am. Dec. 731; Walker v. Floyd,
4 Bibb (Ky.), 237; Bullett v. Clem-
ent, 16 B. Mon. (Ky.) 193; Morgan T.
Dudley, 18 B. Mon. (Ky.) 693, 68 Am.
Dec. 735; Revill y. Pettlt, 3 Mete.
(Ky.) 314; Terrall y. Tinney, 20 La.
Ann. 444; Lilienthal v. Campbell, 22
La. Ann. 600; Spencer y. Perry, 17 Me.
413; Morrison v. McDonald, 21 Me.
550; Downing v. Herrick, 47 Me. 462;
Pratt V. Gardner, 2 Cush. (56 Mass.)
63, 48 Am. Dec. 652; Chickering y. Rob-
inson, 3 Cush. (57 Mass.) 543; Ray-
mond y. Bolles, 11 Cush. (65 Mass.)
315; Piper y. Pearson, 2 Gray (68
Mass.), 120, 61 Am. Dec. 438; Clarke
V. May, 2 Gray (68 Mass.), 410, 61
Am. Dec. 470; Sullivan v. Jones, 2
Gray (68 Mass.), 570; JBla y. Smith,
5 Gray (71 Mass.), 136, 66 Am. Dec.
856; Way v. Townsend, 4 Allen (86
Mass.), 114; Doherty v. Munaon, 127
Mass. 495; White y. Morse, 189 Mass.
162; Wall v. Trumbull, 16 Mich. 228;
Ross y. Griffin, 53 Mich. 5; Stewart
y. Cooley, 28 Minn. 847, 23 Am. Rep.
690; Wilcox y. Williamson, 61 Misa.
310; Bell y* McKinney, 63 Miss. 187;
Stone y. Graves, 8 Mo. 148, 40 Am.
Dec. 181; Wertheimer y. Howard, 30
Mo. 420, 77 Am. Dec. 623; BSyans y.
Poster, 1 N. H. 374: Bumham v.
Stevens, 83 N. H. 247: Jordan y. Han-
son, 49 N. H. 199, 6 Am. Rep. 508;
LitUe y. Moore. 4 N. J. L. 74, 7 Am.
Dec. 574; Mangold y. Thorpe, 33 N.
J. L. 184; Grove v. Van Duyn, 44 N.
J. L. 654, 43 Am. Rep. 412; Yates y.
Lansing, 6 Johns. (N. T.) 282, 9 Id.
395, 6 Am. Dec. 290: Butler y. Potter,
17 Johns. (N. Y.) 145; Adkins v.
Brewer, 3 Cow. (N. Y.) 206, 15 Am.
Dee. 264; Cunningham y. Bucklin, 8
Cow. (N. Y.) 178, 18 Am. Dec. 482;
Bissell v. GJold, 1 Wtnd. (N. Y.) 210,
19 Am. Dec. 4SiO; Everston v. Sutton,
5 Wend. (N. Y.) 281, 21 Am. Dec. 217;
Rogers v. Mulliner, 6 Wend. (N. Y.)
597, 22 Am. Dec. 546; Tompkins y.
Sands, 8 Wend. (N. Y.) 462, 24 Am.
Dec. 46: Millard v. Jenkins, 9 Wend.
(N. Y.) 298; Wickware y. Bryan, 11
Wend. 545; Harman y. Brotherson,
1 Denlo (N. Y.), 537; Wilson v. Mayor,
1 Denio (N. Y.), 595, 43 Am. Dec.
719; Lange y. Benedict, 73 N. Y. 12,
29 Am. Rep. 80; East River Gas L.
(Do. y. Donnelly, 93 N. Y. 557; Evarts
y. Kiehl, 102 N. Y. 296; Root v. Rose,
6 N. D. 575; Ramsey v. Riley, 18
Ohio, 157; Truesdell y. Combs, 38
Ohio St. 186; Jones v. Hughes, 5 S.
St R. (Pa.) 298, 9 Am. Dec. 364; Ken-
nedy y. Bamettv 64 Pa. 141; Sining
108
CHAP. Ill]
DUTIES AND LIABIUTIES OF AGENT [§§ 1 496, I497
be in fact corrupt, the public has its remedy, but the defeated suitor
can not maintain an action against the judge, by alleging that the
judgment against him was the result of corrupt or malicious motives."
§ 1496. This immunity extends to judicial officers of all grades,—
This exemption from civil action extends to every judicial officer, from
the highest judge in the land to the humblest justice who tries petty
cases.®® Whoever is invested with judicial office, whether of high or
low degree, cannot be called to account to the private individual for his
acts within his jurisdiction although, as has been seen, the aggrieved
party may allege that the act was corrupt or malicious.^® For such
acts, the officer must account only to his conscience and the state.
5. Quasi-judicial Officers.
§ 1497. Quasi-judicial officer exempt from civil liability for his
official actions. — ^The same reasons of private interest and public
policy which operate to render the judicial officer exempt from civil
liability for his judicial acts within his jurisdiction, apply as well to
v. Bentham, 2 Bay (S. C), 1; Brodie
V. Rutledge, 2 Bay (S. C), 69, State
V. Johnson, 2 Bay, 385; Reid v. Hood,
2 Nott & McC. (S. C.) 168, 10 Am.
Dec. 582; Kelly v. Hembert, Harp.
(S. C) L. 65, 18 Am. Dec. 643: Mc-
Rep. 641; Webb v. Fisher, 109 Tenn.
Can ▼. Cohen, 16 S. Car. 445, 42 Am.
701; Rains y. Simpson, 60 Tex. 495,
32 Am. Rep. 609; Fuller v. Gould, 20
Vt.' 643; Johnston v. Moorman, 80
Va. 131; Carter v. Dow, 16 Wis. 298;
Steele v. Dunham, 26 Wis. 393.
MBradlfy v. Fisher, 13 WaU. (U.
S.) 335; Rains v. Simpson, 50 Tex.
495, 32 Am. Rep. 609; Weaver v.
Devendorf, 3 Den. (N. Y.) 117;
Pratt V. Gardner, 2 Cush. (Mass.)
63, 48 Am. Dec. 652; Cunningham v.
Bucklln, 8 Cow. (N. Y.) 178, 18 Am.
Dec. 432; Stone v. Graves, 8 Mo. 148,
40 Am. Dec. 131; Henke v. McCord,
55 Iowa, 878; Jones v. Brown, 64
Iowa, 74, 87 Am. Rep. 185; Green v.
Talbot, 36 Iowa, 499; Wasson v.
Mitchell, 18 Iowa, 153; Hughes v.
McCoy, 11 Colo. 591; Irion v. Lewis,
56 Ala. 190; Heard v. Harris, 68 Ala.
43; Evans v. Foster, 1 N. H, 377;
I
Barhyte v. Shepherd, 35 N. Y. 242;
Steele v. Dunham, 26 Wis. 396; Lit-
tle V. Moore, 4 N. J. L. 74, 7 Am.
Dec. 574.
6»Garnett v. Ferrand, 6 B. 4b 0.
611; Butler v. Potter, 17 Johns. (N.
Y.) 145; Pratt v. Gardner, 2 Cush.
(Mass.) 63, 48 Am. Dec. 652; Carter
v. Dow, 16 Wis. 298; Wall r. Tnim-
huU, 16 Mich. 228; Coleman y. Rob-
erts, 113 Ala. 323, 59 Am. St Rep.
Ill, 86 L. R. A. 84; State ex rel.
Egan v. Wolener, 127 Ind. 306; Wal-
dron v. Berry. 51 N. H. 186; Mills v.
Brooklyn, 32 N. Y. 489; Johnston r.
Moorman, 80 Va. 131; Irion v. Lewis,
56 Ala. 190; Rains v. Simpson, 50
Tex. 495, 32 Am. Rep. 609.
70 There are, in some of the cases,
dicta to the effect that inferior ju-
dicial official officers and magistrates
may be held liable for the Judicial
acta, even though acting within their
jurisdiction, if they were actuated
by corrupt or malicious motives, but
they are not sustained by the author-
ities. As is said in Irion v. Lewis,
56 Ala. 190, 196, "In support of such
action, even when the judicial error
109
§ I498J
THE LAW OF AGENCY
[book IV
the officer who exercises judicial functions although not as part of a
regularly established court, and to whom, therefore, the name quasi-
judicial officer has been applied. It is well settled that the quasi-
judicial officer can not be called upon to respond in damages to the
private individual for the honest exercise of his judgment within his
jurisdiction however erroneous or misguided his judgment may be."
§ 1498. Illustrations. — ^This principle extends, for example, to ar-
bitrators in their decision upon the controversy submitted to them;"
jurors in their deliberations and verdicts ; " assessors in the valuation
of property for taxation ; ^* commissioners appointed to determine and
award damages for property taken by virtue of the right of eminent
domain ; ^* officers authorized to lay out, alter or discontinue high-
ways;^* highway officers in deciding upon exemption from highway
taxes ; ^^ members of municipal boards in deciding upon the allowance
of claims ; ^' collectors of customs in the sale of perisfiable property ; ™
complained of Is corrupt or maUcl-
ous, few authorities can be found."
See also, Johnston v. Moorman, 80
Va. 131; Stone v. Graves, 8 Mo. 14S,
40 Am. Dec. 131; Cnrnam v. Kcssler,
110 Mich. 10.
The subject Is also ably and fully
discussed in llangold v. Thorpe, 83
N. J. L. 134.
71 See cases cited In following sec-
tion.
Ts Jones T. Brown, 54 Iowa, 74, 37
Am. Rep. 185; Pappa ▼. Rose, L. R.
7 C. P. 32, 1 Eng. Rep. 87, s. c. on
appeal L. R. 7 0. P. 525, 3 Eng. Rep.
875.
78 Hunter y. Mathls, 40 Ind. 356;
Turpen v. Booth, 56 Cal. 65, 38 Am.
Rep. 48.
74 Wall ▼. Trumbull, 16 Mich. 228;
Dillingham T. Snow, 6 Mass. 647;
Baston ▼. Calendar, 11 Wend. (N.
Y.) 90; Wearer v. Derendorf, 3 Den.
(N. Y.) 117; Vail v. Owen, 19 Barb.
(N. Y.) 22; Brown v. Smith, 24 Id.
419; People v. Reddy, 43 Id. 589;
Vose V. Wlllard, 47 Id. 820; Bell v.
Pierce, 40 Id. 51, Barhyte t. Shep-
herd, 85 N. Y. 238: Western R. R.
Co. T. Nolan, 48 Id. 518; Pentland ▼.
Stewart, 4 Dev. A Bat. (N. C.) 886;
Steam Navigation Co. T. Wasco
II
County, 2 Ore. 209; Macklot t. Dar-
en port, 17 Iowa, 379; Muscatine, etc.,
R. R. Co. V. Horton, 88 Id. 33; Walk-
er V. Hallock, 32 Ind. 239; Lilien-
thal T. Campbell, 22 La. Ann. 600;
Willlama v. Weaver, 75 N. Y. 30; Buf-
falo, etc., R. R. Co. V. Supervisors,
48 N. Y. 93; McDaniel v. Tebbetts. 60
N. H. 497; Wilson ▼. Marsh, 34 Vt
852; San Jose Gas Co. ▼. January, 57
Cal. 614.
75 Van Steenbergh T. Blgelow, S
Wend. (N. Y.) 42.
76 Sage V. Lauraln, 19 Mich. 137.
77 Harrington v. Commissioners,
etc., 2 McCord (S. C), 400.
78 Wall V. Trumbull, 16 Mich. 228.
7oQould T. Hammond, 1 McAllis-
ter (U. S. CO, 285.
«« Gordon v. Farrar, 2 Doug.
(Mich.) 411; Jenkins v. Waldron, 11
Johns. (N. Y.) 114, 6 Am. Dec. 359;
Miller V. Rucker, 1 Bush. (Ky.) 135;
Carter v. Harrison, 5 Blackf. (Ind.)
138; Rail v. Potts, 8 Humph,
(Tenn.) 225; Peavey v. Robbins, 3
Jones (N. C), L. 339; Caulfleld v.
Bullock, 18 B. Mon. (Ky.) 494; El-
bin V. Wilson, 33 Md. 135; Friend v.
Hamlll, 84 Md. 298; Weckerly ▼.
Geyer, 11 S. ft R. (Pa.) 35; Chris-
man T. Bruce, 62 Ky. 63, 85 Am. Dec
10
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I499, 150O
inspectors of elections *® and board of registration ®^ in deciding upon
the existence of the necessary qualifications of a voter ; school officers
in deciding upon the removal of a teacher;" aldermen in deciding
upon the letting of contracts ; " a board of county commissioners in
deciding upon an application for a permit to sell intoxicating liquors ; **
boards of supervisors in determining upon the sufficiency of a bond of
an officer, and whether by failing to file a new bond required by them,
he has forfeited his office ; ** pilot officers in deciding that a pilot was
no longer authorized to act as such and therefore revoking his li-
cense ; '^ and a great variety of other officers exercising similar func-
tions.
§ 1499. Liability not affected by motive. — An attempt has been
made in some cases to make a distinction between those officers whose
duties lie outside the domain of courts, — the ^o-called ^ucwt-judicial
officers, — and the judges of courts, to the effect that while the latter
are exempt, the former may be made liable if their motives were cor-
rupt or malicious. This distinction, however, is believed to be not well
founded. If the action is really judicial, the immunity which adheres
to judicial action should be applied whether the officer sits upon the
bench of a regularly established court or not. The weight of authority
is clearly with this view.*^
4. Legislative Officers.
§ 1500. Same immunity extends to legislative action.— ^The same
immunity from private action extends to legislative officers while act-
ing within the limits assigned to them. While their duties are not
strictly judicial in their nature, they are called upon to exercise discre-
603; Wheeler v. Patterson, 1 N. H.
88, 8 Am. Dec. 41; State v. McDon-
ald, 4 Harr. (Del.) 555; Patterson v.
D'Auterive, € La. Ann. 467, 54 Am.
Dec. 564; Keenan v. Cook, 12 R. I.
52; Blake y. Brothers, 79 Conn. 676,
11 L. R. A. (N. S.) 501; Ashhy v.
White, 2 Ld. Raym. 938.
A different rule prevails In Massa-
chusetts and Ohio, although the of-
ficers have acted in good faith. Lin-
coln V. Hapgood, 11 Mass. 850, 355;
Blanehard v. Stearns, 5 Mete. (46
Haas.) 298; Larned v. Wheeler, 140
Mass. 390, 54 Am. Rep. 483; Jeffries
y. Ankeny, 11 Ohio, 872; Monroe y.
Collins, 17 Ohio St. 665.
See also, Osgood y. Bradley* 7 Me.
411; Murphy v. Ramsey, 114 XJ. S,
15, 29 L. Ed. 47.
81 Fausler v. Parsons. 6 W. Va. 486,
20 Am. Rep. 431.
«« Burton v. Fulton, 49 Penn. St. 151.
See also, Chamherlain y. Clayton, 56
Iowa, 331, 41 Am. Rep. 101.
sa East River Gas L. Co. v. Don-
nelly, 25 Hun (N. T.), 614, s. c. 93
N. y. 557.
8« State y. Commissioners, 45 Ind.
501.
86 People y. Supervisors, 10 Cal.
344, 846.
«e Downer v. Lent, 6 Cal. 94, 65
Am. Dec. 489.
87 See Jones v. Brown, 54 Iowa, 74,
37 Am. Rep. 185; Turpen v. Booth, 56
nil
5 1501]
THE LAW OF AGENCY
[book IV
tion, judgment and foresight They are chosen to make such provi-
sions, within their jurisdiction, as to them seem for the best interests
of their constituents, and they cannot be called upon to defend their
action at the suit of private individuals, even though it be alleged that
they acted corruptly or maliciously.**
This exemption is not confined to the state or national legislatures,
but it applies also to inferior legislative bodies such as boards of su-
pervisors, county commissioners, city councils, and other bodies of a
like nature.'*
5, Ministerial Officers.
§ 1501. In general— Liable to party specially injured. — Some con-
sideration has already been given to the question of when the duties
to be performed are so particular to the individual as to give him a
right of action for an injury sustained by him in consequence of the
failure to perform such duties.**
In accordance with the principles there laid down, it may be said
that wherever the law imposes upon a public officer the performance
of ministerial duties, in which a private individual has a special and
direct interest, the public officer is liable to such individual for any
injury which he may sustain in consequence of the failure ^r neglect
of the officer either to perform them at all, or to perform them prop-
erly. In such a case the officer is liable as well for noo'^f easance as
for misfeasance or malfeasance.*^
Cal. 65, 38 Am. Rep. 48; Bradley v.
nsher, 13 Wall. (80 U. S.) 335, 20
L. Ed. 646: Downer v. Lent, 6 Cal.
04, 65 Am. Dec. 489; East River Gas
Ught Co. v. Donnelly, 93 N. Y. 567,
afllrmlng 25 Hun, 914; Fausler y.
Parsons, 6 W. Va. 486, 20 Am. Rep.
431; Steele t. Dunham, 26 Wis. 393;
Axnperse v. Winelow, 76 Mich. 234.
88 See Cooley on Torts, 376; Mechem
on Public Officers, Book lY, Chap. V.
•• Jonea v. liovlng, 55 Miss. 109, 80
Am. Rep. 608; County Commission-
ers v. Duckett, 20 Md. 469; Borough
of Freeport v. Marks, 69 Penn. St.
263; Baker v. State, 27 Ind. 485. See
City of Pontiac v. Carter, 82 Mich.
164.
90 Ante, i 1491.
•xRowning T. Gh)odchlld, 2 W. BL
906; Ashby v. White, 2 Ld. Raym.
938; Lane v. Cotton, 1 Salk. 17; Ainy
V. Supervisors, 11 Wall. (U. S.) 136,
20 L. Ed. 101; Sawyer v. Corse, 17
Gratt. (Va.) 230, 94 Am. Dec. 445;
Baaaett v. Pish, 12 Hun (N. Y.), 209;
Piercy v. AveriU, 37 Id. 360; Bennett
V. Whitney, 94 N. Y. 302; Jenner r.
JolifTe, 9 JohnB. N. Y. 381; Adsit T.
Brady, 4 HIH (N. Y.), 630, 40 Am.
Dec. 305; Rounds v. Mansfield, 38
Me. 686; Bailey y. Mayor, 3 HiU (N.
Y.), 631, 38 Am. Dec. 669; Maxwell ▼.
Pike, 2 Me. 8; McCarty v. Bauer, 8
Kan. 237; Wilson v. Mayor, 1 Den.
(N. Y.) 595, 43 Am. Dec. 719; Robin-
son V. Chamberlain, 34 N. Y. 389, 90
Am. Dec. 713; Raynsford t. Phelps,
43 Mich. 342, 38 Am. Rep. 189; Clark
Y. Miller, 54 N. Y. 528, 534; Keith r.
III2
^
CHAP, in]
DUTIES AND LIABILITIES OF AGENT
[§ 1502
It is no defense to such an officer upon whom the law has imposed
tlie positive duty of performance, that he was mistaken as to the nature
or extent of his obligation, or that he acted in entire good faith and
with an honest intention to do his duty.**
So it is immaterial that the duty is one primarily imposed upon pub-
lic grounds, and therefore a duty owing primarily to the public; the
right of action springs from the fact that the private individual re-
ceives a special and peculiar injury from the neglect in performance,
against which it was in part the purpose of the law to protect him.*^
It is also immaterial that the failure in performance is made by law a
penal offense,**
III.
LIABILITY FOR THE TORTS OP THEIR OFFICIAL SUBORDINATES.
§ 1502. Public officer of government not liable for acts of his of-
ficial subordinate. — Public officers of the government, in the per-
formance of their public functions, are not liable to third persons for
the misconduct, negligence or omissions of their official subordinates.**
This immunity rests upon motives of public policy, the necessities of
the public service, and the perplexities and embarrassments of a con-
trary doctrine.**
These official subordinates are themselves public officers, though of
an inferior grade, and are directly liable, in those cases in which any
public officer is liable, for their own defaults. Such subordinate of-
ficers are not infrequently appointed directly by the governmental
power and removable only at its pleasure, but even in those cases ip
which they are appointed and removed by their immediate official su-
perior, the latter is not liable,*^ unless he has himself been negligent
Howard, 24 Pick. (Mass.) 292; Hover
V. Barkhoof. 44 N. Y. 113; St. Joseph
P. ft M. Ins. Co. v. Leland, 90 Mo. 177,
69 Am Rep. 9; Grider v. Tally, 77
Ala. 422, 64 Am. Rep. 65.
»« Amy v. Super vIbofb, 11 Wall. (78
U. S.) 136, 20 L. Ed. 101.
MRaynaford v. Phelps, 43 Mich.
842, 88 Am. Rep. 189.
»*Rayiisford v. Phelps, 9upra;
Hayes v. Porter, 22 Me. 371.
•8 Robertson v. Sichel, 127 U. S.
507. 515, 32 L. Ed. 203; City of Rich-
mond V. Long, 17 Gratt. (Va.) 375,
94 Am. Dec. 461; Foster v. Metts, 55
Miss. 77, 80 Am. Rep. 504; Sehroyer
r. Lynch, 8 Watts (Pa.), 458; Wig-
gins V. Hathaway, 6 Barb. (N. Y.)
632; Ely v. Parsons, 55 Conn. 83;
Sawyer v. Corse, 17 Gratt. (Va.) 230,
94 Am. Dec. 445; Dunlop y. Munroe,
7 Cranch (U. S.), 242, 3 L. Ed. 829;
Tracy v. Cloyd, 10 W. Va. 19; Lane
V. Cotton, 1 Ld. Raym. 646; Whitfield
T. Lord Le Despencer, 2 Cowp. 754.
»«City of Richmond v. Long, 17
Gratt. (Va.) 875, 94 Am. Dec. 461.
•7 Keenan ▼. Southworth, 110 Mass.
474, 14 Am. Rep. 613.
III3
§ I503I
THE LAW OF AGENCY
[book IV
either in their selection or retention,** or in the manner of their ap-
pointment or qualification,** or in superintending the discharge of the
duties in his office,^ or unless he has himself directed, authorized or
co-operated in the wrong.'
§ 1503. To what officers this rule applies — ^Post officers. — ^This
rule has frequently been applied to the officials of the post office de-
partment, and the law is well settled both in England and America,
that the postmaster general, the local postmasters, and their assistants
and clerks appointed and sworn as required by law, are public officers,
each of whom is responsible for his own defaults only, and not for
those of any of the others, although selected by him, and subject to his
orders,* unless he has negligently or wilfully appointed or retained
unfit or improper persons ; * or has failed to require of them conform-
ity to the prescribed regulations ; * or has so carelessly conducted the
affairs of his office as to furnish opportunity for such default ; * or un-
less he has co-operated in, or authorized the wrong.^
Whether the employees of contractors for carrying the mail are
public governmental officers within the meaning of this nJe, so as to
exempt the contractor from liability for the defaults of the subordi-
nates, is a question upon which there is a conflict of authority, but the
better opinion is that they are not.*
••Wiggins T. Hathaway, 6 Barb.
(N. Y.) 632; Schroyer v. Lynch, 8
Watts (Penn.), 453.
•• Bishop y. Williamson, 11 Me. 495.
1 Dunlop V. Munroe, 7 Cranch (U.
S:), 242, 3 L. Ed. 329; Schroyer v.
Lynch, supra; Ford t. Parker, 4 Ohio
St 576.
2 Ely y. Parsons, 65 Conn. 83;
Tracy v. Cloyd, 10 W. Va. 19.
• Keenan y. Southworth, 110 Mass.
474, 14 Am. Rep. 613; Lane y. Cotton,
1 Ld. Raym. 646; Whitfield y. Lord
Le Despencer, 2 Oowp. 754; Dunlop
y. Munroe, 7 Cranch (U. S.), 242, 3
L. Ed. 329; Schroyer y. Lynch, 8
Watts (Penn.), 453; Bishop v. Will-
iamson, 11 Me. 495; Hutchlns y.
Brackett, 22 N. H. 252, 53 Am. Dec.
249; Foster y. Metts, 55 Miss. 77, 30
Am. Rep. 504; Bates y. Horner, 65
Vt 471.
4 Wiggins y. Hathaway, 6 Barb.
<N. Y.) 632.
0 Bishop y. Williamson, 11 Me. 495.
II
In this case the postmaster was held
liable for the default of an assistant
whom he had not required to take
the oath prescribed by law. To same
effect: Sawyer y. Corse, 17 Gratt.
(Va.) 230, 94 Am. Dec. 446; Bolan
y. Williamson, 1 Brey. (S. C.) 181.
• Dunlop y. Munroe, 7 Cranch (U.
S.), 242,3 L. Ed. 329; Ford y. Parker,
4 Ohio St 576.
T Tracy y. Cloyd, 10 W. Va. 19.
• Cent. R. ft B. Co. y. Lampley, 76
Ala. 357; Sawyer y. Corse, 17 Gratt.
(Va.) 230, 94 Am. Dec. 445. Contra,
Conwell y. Voorhees, 13 Ohio, 523, 42
Am. Dec. 206; Hutchlns y. Brackett,
22 N. H. 252, 53 Am. Dec. 248; Foster
y. Metts, 55 Miss. 77, 30 Am. Rep.
504.
That the railroad company, carry-
ing the mall while it is in the pos-
session of government officials, owes
no duty to individuals, is held in
Boston Ins. Co. v. Chicago, etc., Ry.
Co., 118 Iowa, 423.
14
CHAP. Ill]
DUTIES AND LIABILITIES OF AGENT [§§ I504-I506
So it has been held that the captain of a ship of war, whose sub-
ordinate officers are appointed by the government, is not liable for an
injury caused by the negligence of his lieutenant.*
And a confederate district commissary in Virginia during the late
war, was held not responsible for the misfeasances and wrongdoings
of his subordinates unless he co-operated in or authorized the wrong.^®
So a collector of customs is not personally liable for a tort committed
by his subordinates, there being no evidence to connect the collector
personally with the wrong, or that the subordinates were not com-
petent^ or were not properly selected for their positions.**
§ 1504- Public trustees and conunissioners* — ^The same
rule of immunity has also been extended to public trustees and commis-
sioners, having control of public works and enterprises and usually
acting gratuitously, to exempt them from liability for the negligence of
the servants, agents and contractors necessarily employed by them in
the prosecution of the work, and in whose employment and supervi-
sion they were personally free from negligence."
§ 1505. ' Not to ministerial offieere,-— But in the case of the
ordinary ministerial or administrative officers, like sheriffs, recorders,
clerks of courts, and the like, a different rule is ordinarily applied.
These officers are usually made liable by law for the acts and defaults
of their deputies and subordinates in the course. of the performance of
their duties,*' even though such deputies are authorized by law and
may to some extent be regarded as themselves public officers.**
IV.
LIABILITY FOR TORTS OF THEIR PRIVATE SERVANTS OR AGENTS.
§ 1506. Liable for torts of private servant or agent. — ^A public
officer of whatever grade is subject to the same liability for the negli-
gence or other defaults of his private servant or agent as adheres to
0 Nicholson v. Mounsey, 15 East,
384.
10 Tracy v. Cloyd, 9upra,
11 Robertson v. Sichel, 127 U. S.
607» 32 L. Ed. 203; Brissac v. Law-
rence, 2 Blatchf. (U. S. C. C.) 121.
12 See Donovan v. McAlpln, 85 N.
T. 185, 39 Am. Rep. 649; Walsh v.
Trustees, 96 N. Y. 427; County Com-
missioners V. Duvall, 54 Md. 350, 39
Am. Rep. 393; Donovan v. Board of
Education, 85 N. T. 117.
13 Harrington v. Fuller, 18 Me. 277,
36 Am. Dec. 719; Norton v. Nye, 56
Me. 211; State v. Moore, 19 Mo. 369,
61 Am. Dec. 563; Prosser v. Coots, 50
Mich. 262; Rider v. Chick, 59 N. H.
BO; Ross V. Campbell, 19 Hun (N. T.),
615.
14 Campbell v. Phelps, 1 . Pick.
(Mass.) 62, 11 Am. Dec. 139; Draper
T. Arnold, 12 Mass. 449.
II15
§ 1506] THE LAW OF AGENCY [BOOK IV
any other principal. Hence when the subordinate, whose acts are the
subject of the inquiry, 'liolds not an office known to the law, but his
appointment is private and discretionary with the officer, the principal
is responsible for his acts." *•
This distinction was applied in the case of a mail carrier who was
held, contrary to some cases previously referred to,** to be not a public
officer but the mere private servant or agent of the of the contractor,
who was therefore liable for the carrier's negligence or default in the
performance of his duties.*^
It has also been applied to the case of a laborer employed by a select-
man to cut brush and trees in order to make a highway passable, and
who, while so engaged, through mistaken judgment but not maliciously
or wantonly, cut down some trees upon the land of an adjoining pro-
prietor, the removal of which was not necessary. The selectman was
held liable."
i> Note to 1 Am. Lead. Cases ( Wil- iv Sawyer v. Oorse, 17 (}ratt. ( Va.)
son V. Peyerly)^ p. 786, quoted la Bljr 8S0, H Am. Dec 445; Cent. R. A R
y. Parsons, 66 Conn. 83. Co. v. Lampley, 76 Ala. 367.
i« See ante, i 1603. i< Ely v. Parsons, 65 Conn. 83.
III6
CHAPTER IV.
THB DUTIBS AND LIABIUTIES OF THE PRINCIPAL TO THE AGENT
§ 1507. In general — Employment —
Payment of Compensation-—
Reimbursement — Indem-
nity— ^Llen.
L THE agent's BIGHT TO EMFLOTMENT.
1508. What here included.
1509. The right to be received into
the employment.
1510. Right to be given work to do.
1511. Compensation dependent
upon work done.
n. THE agent's right to payment or
COMPENSATION.
1512. What here included.
i. The AgenVs Right to CompenMO'
tion,
1513. Agreement to pay compensa- -
tion — ^Bzpresa — Implied.
1514. Express agreement concla«
slve.
1515. When agreement must be ex-
press.
1516i 1517. When agreement to pay
will not be implied.
1518-1520. When promise to pay
will be implied.
1521. Unauthorized agent entitled
to compensation if acts are
ratified.
1522. When agent can recover for
extra services.
1523. Agent cannot recover com-
pensation if agency was un*
lawful.
S. The Amount of the Oompenaation,
1524. Express contract governs.
1525. May be left for principal to
determine.
II
1526. In the absence of express
agreement — How amount
determined — Market — Us-
age— Reasonable value.
1527. What elements may be con-
sidered.
1528. 1529. What evidence as to
value Is admissible.
1530. Agent continuing after ex-
piration of term presumed
to be at prior compensa-
tion.
5. When Compensation is Considered
to be Earned.
1531. In general.
1532. Compensation earned when
undertaking fully com-
pleted.
1683, 1534. When full performance
a condition precedent.
1535-1537. Agent's right not de-
feated by principars de-
fault.
1688. Same subject — No defense
that principal realized no
profit.
4. Effect of Termination of Agency.
1. Termination by the act of the
principal.
1539, 1540. When agent is entitled
to compensation if agency is
terminated before perform-
ance.
a. Agency Rightfully Terminated.
1641. When agency may be ter-
minated without liability.
1542, 1543. Agency at will of the
principal.
17
THE LAW OF AGENCY
[book vr
1544. Agency tenninable on contin-
gency.
1545. Agency tenninable only on
breach of express or im-
plied conditions.
154G-1548. When terminated for
agent's misconduct.
b. Agency Wrongfully Terminated.
1549, 1550. When agent discharged
without cause — Breach of
implied contract.
1551. What cases involved.
1652. Breach of contract with
agent to do particular acts.
1553. Breach of express contract of
employment — ^Agent's reme-
dies.
1554. Theory of these reme-
dies.
1555. A middle ground.
1556. When action may be
brought.
— The measure of dam-
ages.
— Same subject.
— Duty of agent to seek
other employment.
— New employment offered
1567. •
1558. -
1569. -
1560. -
1561. -
a different sort.
1562. Work for himself.
1663, 1564. When right of ac-
tion accrues.
1565. No damages If agent ac-
quiesces in discharge.
3. Termination by Operation of Law.
by defendant.
— Duty to take service of
1566. No damages where agency
, terminated by death of
principal.
1567. Joint principals — Part-
nership.
1568. Same rule where agency ter-
minated by insanity of the
principal.
1669. Rule where agency termi-
nated by bankruptcy of
principal.
1570. Rule where agency termi-
nated by death of the agent.
1571. Rule where agency termi-
nated by Insanity of the
agent.
Iil8
1672. How when agency terminated
by agenf 8 sickness or in-
capacity.
3. Abandonment by Agent
1573. 1. When abandonment lawfuL
1574. 2. When abandonment wrong-
ful.
1675, 1576. Entire and severable
contracts — Right to com-
pensation.
1577. Full performance of entire
contract usually required.
1678. The more liberal rule— Britr
ton V. Turner.
1579. Recovery for services under
contract unenforceable un-^
der Statute of Frauds.
1580. Brief absences as abandon-
ment.
1581. Condonation of abandonment.
1582. What will excuse abandon-
ment— ^Sickness — Bpidemic
— Physical violence.
1583. Recovery for servicer
actually rendered.
1584. Recovery of wages dur-
ing illness.
1585. Principal's right to ter-
minate employment
1586. Contracts not to terminate
without notice — ^Forfelture-
for breach.
1587. What works a forfeiture.
5. Effect of AgenVg Disloyalty upon
Compensation.
1588. Disloyal agent cannot re-
cover compensation.
1589. Good faith does not save
— Nor custom — Divisible-
transactions.
1590. Double agency — ^Agent can-
not recover compensation
from either party when
double agency unknown.
1591. How when agent mere mid-
dleman.
1592. May recover when double
agency was fully known
and assented to.
6, Effect of Agenfs WUM DUobedi^
ence.
1593. Forfeiture by wilful disobedi-
ence.
<:hap. iv]
DUTIES AND LIABILITIES OF PRINCIPAL
'7. PrincipaVs Right of Recoupment.
1594. Principal may recoup dam-
a!?e8.
1595, 1596. What damages may be
recouped.
1597. Limit of recovery.
1598. Right not cut off by assign*
ment.
1599. No recoupment against an In-
fant.
TTT. THB agent's right TO BSIMBUBSB-
MENT.
1600. What here Included.
1601. Agent must be reimbursed for
proper outlays.
1602. When not entitled.
aV. THE agent's bight TO INDEMNITY.
1603. Agent must be indemnified
against consequences of
lawful acts.
1604. Liability must be a direct
consequence of the execu-
tion of the agency.
1605. 1606. Illustrations.
1607. Right to indemnity extends to
contractual obligat ions
properly incurred.
1608. No indemnity where loss
caused by agent's default.
1609. No indemnity where obliga-
tion incurred in excess of
authority.
1610. Unless lack of authority
attributable to principal's
default.
1611, 1612. No indemnity where act
Is unlawful.
1613. Agent Indemnified only
against loss, not mere lia-
bility.
T. THE agent's BIGHT TO PBOTECTION
FBOM INJUBT.
1614. In general.
1. Risks Incident to the Business,
1615. 1616. General rule — Master
'not liable.
2. Negligence of the Master,
1617. Master responsible for his
own negligence.
II
1618.
1619.
1620.
1621.
I. For dangerous premises.
Warning.
Unsafeness where serv-
ant has no business to be.
Unsafeness resulting
1622.
1623.
1624.
1625.
1626.
1627.
1628.
1629.
1630,
1632.
1633,
1635.
1636.
1637,
from doing of the work It-
self.
Unsafeness caused by
conditions upon adjacent
premises.
Liability for places and
instruments used, but not
owned, by the master.
II. For dangerous appliances,
tools and machinery.
Warning.
Inspection — Mainte-
nance.
Repairing defective
tools, etc.
Servants having no busi-
ness to use — Using for un-
expected purposes.
— Dangers arising from
dangerous use of proper
appliances, etc.
163L III. For injuries re-
sulting from failure to re-
pair as agreed.
IV. For employment of in-
competent servants.
1634. Sufficient number.
V. For not making and en-
forcing rules.
VI. For not furnishing nec^
essary superintendence.
1638. VII. For injuries out-
side of employment.
3. Negligence of His Oenerat Super-
intendent or other Representative.
1639. Principal can not relieve
himself by delegating du-
ties.
1640. Liable for negligence of gen-
eral agent or superintend-
ent— Vice-principal.
4. Negligence of Independent Oon-
tractor Performing Master's
Duties,
1641. Liable for negligence of In-
dependent contractor per-
forming master's duties.
19
THE LAW OF AGENCY
[book IV
1642. When liable to agents of con-
tractor,
5. Negligenoe of FellovHiervant,
1643-1648. Master not liable to
one servant for negligence
of a fellow-servant.
1649. Who is a fellow-servant?
1650. — — Association rule.
1651. Departmental rule.
1652. Superior servant dis-
tinction.
1653-1656. The general rule.
1657. What risks within the rule.
1658. Volunteer assisting servant
cannot recover.
6. Assumption of BUka.
1659. In general.
1660-1666. Assumption o f
risks resulting from mast-
er's negligence.
1667. Obviousness of the risk.
1668. Voluntary action — Coercion
— Command.
1669. Emergencies — Assur-
ances of safety.
1670. Inexperience — Youth,
etc.
1671, 1672 Assumption of
risks existing in violation
of statute.
1673. Assumption of risk dis-
tinguishable from con-
tributory negligence.
1674. How determined— Ck)urt
or Jury.
1675. Protests against doc-
trine.
7. Contributory Negligence,
1^76, 1677. Contributory negll
gence of servant defeats
his recovery.
— Effect of express com
1678.
mand of master.
8. Statutes Changing Common Law
Rules,
1679, 1680. Statutory changes.
9. Contracts Waiving Masters' lAa-
Ulity.
1681. Agreements to waive liabil-
ity invalid.
J 120
VI. agent's sight to a uen.
1682. In general.
1683. Lien defined — General and
particular liens.
1684. Foundation of the claim of a
lien.
1685. Nature of lien.
1686. Requisites of lien — Posses-
sion.
1687. Possession must have been
lawfully acquired.
1688. Possession must be continu-
ous.
1689. Possession must have been
acquired In course of em-
ployment.
1690. No lien if contrary to inten-
tion of parties — ^Waiver.
1691. Waiver by Inconsistent con-
duct.
1692. Claim of lien no waiver of
personal remedies.
1693. How lien may be enforced.
1694. How these rules apply to
agents.
1695. Illustrations.
1696. Agent's lien ordinarily a
particular lien.
1697. For what sums the Hen at-
taches.
VII. agent's right of stoppage in
TRANSIT.
1698. Agent liable for price of
goods may stop them in
transit.
1699. Right exercised as in other
cases.
1700. Right of such an agent to
retain the title until paid
for.
Vin. BIGHTS OF bub-agent AGAINST
PBINdPAL.
1701. When principal liable for his
compensation.
1702. EfTect of ratification.
1703. Same rules govern reim-
bursement and indemnity.
1704. How as to protectidn against
injury.
1705. When sub-agent entitled to a
lien.
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ ISO7-I509
§ 1507. In geiieral — ^Emplojonent — ^Pa3anent of compensation —
Reimbursenifent — Indonnity— Lien« — ^Attention may next be given
to the question of the rights of the agent against the principal, and of
the correlative duties and obligations of the principal to the agent.
It is obvious that the most important claims which the agent has upon
the principal are: I. Employment in accordance with the contract.
11. The payment of his compensation. III. Reimbursement for his
expenses. IV. Indemnity against loss and liability incurred in the
performance of his duties. V. Protection against physical injury in
the performance of the undertaking. Incidental to certain of these,
and to secure their recognition and observance are, VI. The agent's
right of lien ; and VII. The agent's right of stoppage in transit These
may be considered in their order.
L
THE agent's right TO EMPLOYMENT.
§ 1508. What here included. — The first and most important right
of the agent against his principal is, perhaps, that of employment in
accordance with the contract. It is obviously wholly a matter of con-
tract. No man is under any natural obligation to employ another, or
to make a contract to employ him. But if he does make a contract
with him to employ him, the latter acquires at once the general right
to have the contract performed according to its terms, subject to the
qualifications and exceptions which apply to other contracts. The
chief essentials of this right will be, (i) the right to be received into
the employment, (2) the right to be kept in according to the terms,
or the right not to be wrongfully discharged, and, (3) perhaps, a right
to be employed, or to be given work of the sort contemplated during
the contract period.
The second of these has been considered under the head of Termi-
nation in a previous chapter, and is more fully considered from the
standpoint of compensation in the following subdivision. It seems un-
necessary therefore to say anything further concerning it in this place.
The first and the third, however, must be briefly considered.
§ 1509. The right to be received into the employment. — ^The claim
to be received into the service depends, as has been stated, wholly
upon the contract, and the rights and remedies are wholly contractual.
If the principal, having contracted to give an agent employment as
such, fails or refuses to do so, the remedy of the agent must ordi-
narily be an action at law to recover damages for the breach of con-
71 IT2T
§ iSio]
THE LAW OF AGENCY
[book IV
tract. As has been already seen in an earlier chapter, •contracts of
this sort are capable of specific performance in equity only in the rarest
and most exceptional cases. Considered from the standpoint of an
action at law to recover damages, the rules governing the matter are
not substantially different from those which apply where the agent has
been wrongfully discharged; and as the whole question is fully con-
sidered under that head in the following subdivision, it will not be
tal^en up here.
§ 1510. Right to be given work to do. — But has the agent not only
a right to have his contract of employment recognized and performed,
but has he also a right to be given work to do? In many cases the
question will be of little importance to the agent. If, being engaged
for a definite time, he is paid his stipulated compensation, he will often
have no ground for complaint if he is not kept at work. But suppose
a person be engaged in a calling in which the employment of his facul-
ties is essential to his business, — suppose he is an actor but is not
called upon or permitted to appear upon the stage, or is a commercial
traveler who can not keep his clientele unless he is allowed to visit his
patrons regularly and keep in touch with their condition and needs,
but he is not permitted to do so, — has he a legal ground for complaint,
in the absence of an express provision, where he is paid his compen-
sation regularly ?
It must be conceded in any case that any implied obligation would
be more or less elastic and adapted to the exigencies of business, but is
there an implied term that the agent shall be employed a reasonable
or any other portion of the time?
In the case of the commercial traveler, the English court has held
that a contract "to engage and employ" for a definite time, — in this case
four years, — did not imply a term that he should not only be paid his
salary but should also be given work to do.^
In the case of the actor, the same courts have held, — ^although there
were some exceptional facts, — that if the actor were not given an op-
portunity to appear within a reasonable time, he might make an en-
gagement with some one else.^
I Turner v. Sawdon, [1901] 2 K. B.
653, 2 Br. Rul. Cas. 751; LagrrwaU v.
Wilkinson, 80 L. T. (N. S.) 55.
A contract to "retain and employ"
an attorney for a given term does not
imp^y a term that actual business
shall be furnished him to do during
that term. Em mens v. Elderton, 4 H.
L. Cas. 624. Compare Kelly v. Carth-
agre Wheel Co., 62 Ohio St. 598.
2 Fechter v. Montgomery, 33 Bea-
van, 22 (though here the actor said to
the employer before the contract waa
closed "Remember I came to you not
to be idle, but to act" to which the
latter assented). See also, Bunning
112a
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ I5II
In the United States, such few courts as have passed upon the sub-
ject have given a rather more liberal interpretation to the employee's
rights. Thus where the plaintiff was employed as a designer and cutter
in a tailoring establishment "at a salary comparatively large," and who
"in order to command this salary or a higher one must continue to be
skillful and to enjoy a reputation for skill," it was held by the ap-
pellate division in New York, to be "one of the implied covenants of
plaintiff's contract that he should be permitted to labor in the manner
specified" even though he was paid his salary regularly.*
§ 151 1. — Compensation dependent upon work done. — Where
an agent is employed by a definite contract for a fixed term, but his
compensation, instead of being fixed, is dependent upon the amount
he accomplishes, as where he is to be paid by the piece or by the num-
ber of sales or the time spent, and the like, there is held to be, at least
as against any other cause than termination by vis major, an implied
term that he shall be given a reasonable opportunity to perform under
the contract.* Where, however, the only effect of the contract is that
he shall be paid for such work as he may do during a period named,
there is no implied term that he shall be given any work to do.'
V. Lyric Theater, 71 L. T. (N. S.)
396. Compare Pollack v. Shubert, re-
-erred to in a following note.
3Sigmon v. Goldstone, 116 App.
Div. 490.
*See Turner v. Goldsmith, [1891]
1 Q. B. 544. (Here the employee was
engaged for a definite term (five
years), and agreed to do his utmost
to obtain orders for and to sell the
various goods manufactured by the
employer "as should from time to
time be forwarded or submitted by
sample or pattern" to the employee.
After about two years the employer's
factory was destroyed by fire and ho
did not resume business. Held that
the employee was entitled to have a
reasonable amount of samples to en-
able him to earn his commission dur-
ing the term and that the destruction
of the factory was no excuse. Kay, L.
J., said: "If it had been shown that
not only the manufactory but the
business of the defendant had been
destroyed by vis majors without any
fault of the defendant, I think that
the plaintiff could not recover.")
Devonald v. Rosser, [1906] 2 K. B.
728, 2 Br. RuL Gas. 780. 6 Ann. Cas.
230. (Here the employee for a period
terminable only by notice was to be
paid by the piece. Employers discon-
tinued work because they could not
do it at a profit. Held that there was
an implied term to. give a reasonable
amount of work as long as the con-
tract continued.)
5 Thus where a manager agreed
with an actor that the latter should
be engaged to appear in musical
plays during a certain season and
agreed to pay him a certain sum per
week for each and every week that
the actor publicly appeared and per-
formed, and after a time the man-
ager put on no more musical plays
during the season, it was held that
the manager was not liable to the
actor, since there was no term Im-
plied that the manager woull permit
the actor to appear for any specified
time. Pollack t. Shubert, 146 App.
Div. 628.
II23
§§ 151^-1514] THE LAW OF AGENCY [bCX)K IV
II.
THE agent's right TO PAYMENT OF COMPENSATION.
§ 1512. What here included. — ^The subject of the agent's compen-
sation for his services to his principal involves a variety of considera-
tions. The most important are doubtless the question of his right to
any compensation ; the amount to be paid him ; when it is due; the ef-
fect upon the rights and liabilities of the parties of a discharge of the
agent by the principal, or the abandonment of his undertaking by the
agent; the eflfect upon the agent's right to compensation of his own
disloyalty or misconduct; and the principal's right of recoupment
against the agent's claim.
These questions will be considered in their order.
1. The Agent's Right to Compensation.
§ 1513* Agreement to pay compensation — Expres»-~Implied. — It
is entirely competent for the parties to agree expressly not only that
the agent shall be compensated for his services, but that his compen-
sation shall be a certain sum, or shall be paid in a certain way, or shall
be ascertained in a particular manner. It is also competent for them
to agree that he shall be compensated only in a certain event, or tliat
he shall receive no compensation at all.
In practice, however, it is frequently if not commonly found that
the parties have not made any express agreement at all, or that if they
have attempted to do so, the agreement does not provide for all of the
details or contingencies, so that the questions are constantly arising,
when will the law imply a promise to pay compencation, and how shall
the amount to be paid be ascertained.
§ 1514. Express agreement conclusive. — ^Wherever the parties
have expressly agreed upon the fact that compensation shall or shall
not be paid, or shall be paid only in a certain event, that agreement, in
the absence of fraud or mistake of fact, is conclusive. If the principal
has expressly agreed to pay a compensation, the fact that the service
was, through no fault of the agent, of no value to him furnishes no
excuse for not paying. So if the agent has expressly agreed to serve
without compensation, he will have no claim for wages however bene-
ficial his services may have proved to the principal. And so if com-
pensation is to be paid only in a certain event, or upon the happening
1 124
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1515
of a given contingency, no claim can arise excq>t upon the happening
of the event or contingency agreed upon.*
§ 1515. When agreement must be express. — ^There are certain
cases where the promise to pay compensation must have been express.
Thus where services are rendered for each other by near relatives or
others constituting members of the same family, the law presumes that
they are inspired by motives of affection, or gratitude, or are based
on other considerations than those of pecuniary recompense, as, for
example, that services are ofF-set by support furnished, and in order
to rebut this presumption, there must be clear and unequivocal evi-
dence of a promise or agreement to pay for the services rendered.
There must be shown to have been something more than a mere ifh
tention to pay, based upon gratitude or friendship. There must have
been an agreement to pay/ This rule is most frequently applied to
cases where the relation sustained is rather that of master and servant
•Gilbert v. JudBOn, 85 Cal. 105;
Morehouse v. Remson, 59 Conn. 392;
Zerrahn v. Ditson, 117 Mass. 553;
Beatty v. Russell, 41 Neb. 321; Ames
V. Lament, 107 Wis. 531; Lockwood
V. Levick, 8 C. B. (N. S.) 603.
7 Magarrell v. Magarrell, 74 Iowa,
378; Wilson v. Wilson, 52 Iowa, 44;
Scully V. Scully, 28 Iowa, 548; Kee-
gan Y. Malone, 62 Iowa, 208; Resso
T. Lehan, 96 Iowa, 45; Collar v. Pat-
terson, 137 111. 403; Faloon v. Mc-
Intyre. 118 111. 292; Guffln v. First
Nat. Bank, 74 111. 259; Reeves Estate
V. Moore, 4 Ind. App. 492; Nelson v.
Mafiterson, 2 Ind. App. 524; King v.
Kelly, 28 Ind. 89; Ayres v. Hull, 5
Kan. 419; Allen v. Allen, 60 Mich.
635; Thorp v. Bateman, 37 Mich. 68,
26 Am. Rep. 497; Coe v. Wager. 42
Mich. 49; Callahan v. Riggins, 43
Mo. App. 180; Morris v. Barnes, 35
Mo. 412: Hall y. Hall, 44 N. H. 293;
Petty v. Young, 43 N. J. Eq. 654; Dls-
brow v. Durand, 54 N. J. Law, 848,
33 Am. St. Rep. 678; CoUyer v. Col-
lyer, 118 N. Y. 442 (not servibes but
board); liv re Shubart'B Estate, 154
Pa. 280; In re Young's Estate, 148 Pa.
573; Houck Y. Houck, 99 Pa. 552;
Curry v. Curry, 114 Pa. 367; Duffey
v. Duffey, 44 Pa. 899; Briggs v.
I
Briggs, 46 Vt. 571; Sawyer v. Hebard,
58 Vt. 375; Hall v. Finch, 29 Wis.
278, 9 Am. Rep. 559; Kaye y. Craw-
ford, 22 Wis. 320.
It is to be observed in these cases
that it is not the fact of relationship
alone which raises the presumption,
but the fact that the parties are
members of the same family group,
living together under circumstances
which naturally rebut any Inference
of an agreement to pay. See Shu-
bart's Estate, 154 Pa. St. 230, supra;
KiUpatrick v. Helston, 26 111. App. 127.
And even though the parties are
living together, still if the person
performing the services Is not re-
garded as a member of the family, —
is not treated as other members of
the family, does not get the rights
and advantages which a member of
the family would ordinarily receive,
but on the other hand is regarded
as a mere servant, the presuhiptlon
above referred to, that the value of
the services Is to be offset by the
family advantages received, would
not arise. See for example, Doremus
V. Lott, 49 Hun (N. Y.), 284; Mc-
Millan V. Page, 71 Wis. 655; Lock-
wood V. Robblns, 125 Ind. 398, more
fully stated In note to f 1618.
125
§ I5i6]
THE LAW OF AGENCY
[book IV
than that of principal and agent, but the underlying principle is the
same.'
So, it is said to be a general rule that "if one of two or more parties
having an interest in the same subject-matter, acts for the benefit of
all, he is, in the absence of an agreement to pay compensation, ordi-
narily held not to be entitled to receive any." •
So where the person rendering the service is already in the employ-
ment of the other party to render similar service, at a fixed salary or
wage, a request to render services will ordinarily be presumed to have
been made in contemplation of the existing employment, and compen-
sation for them on the theory that they were extra services or services
rendered over time, cannot, as will be seen hereafter,^* ordinarily be
had, in the absence of an express agreement to pay for them.^*
§ 1516. When agreement to pay will not be implied. — ^The mere
fact that services have been rendered by the agent for the principal is
not, of itself, sufficient to raise a promise to pay therefor, but they must
have been rendered under circumstances from which a promise to pay
can be inferred.*^ No recovery can be had for services, however valu-
able, or however necessary, which have been rendered without the
express or implied request of the principal. A man can not, by mere
obtrusion of services, create an obligation to pay for them."
• See the discussion in Wood's Mas-
ter and Servant, sec. 72. See also 26
Gent. L. Jour. 51.
• Eberhart v. Camp, 55 111. App.
248.
10 See post, i 1594.
11 Ross V. Hardln» 79 N. Y. 84.
12 Cincinnati, etc., R. R. Co. v. Lee,
87 Ohio St. 479; Lange v. Kaiser, 34
Mich. 318; Burrows v. Ward, 15 R. I.
846; Busenbark v. Saul, 184 111. 343;
Viley V. Pettit, 96 Ky. 576.
18 This rule is tersely expressed by
Bell, J., as follows: "It is settled
that no man can do another an unso-
licited kindness, and make it a mat-
ter of claim against him; and it
makes no difference whether the act
was done from mere good will or in
the expectation of compensation. Un-
less the party benefited has done
some act from which his assent to
pay for the service may be fairly in-
ferred, he Is not bound to pay." In
Chadwick ▼. Knox, 31 N. H. 226, 64
Am. Dec. 329; [citing Reason T.
Wirdman, 1 Car. ft P. 434; Pelly v.
Rawlins, Peak's Ad. Cas. 226; Alex-
ander V. Bane, 1 Mees. ft Wels. 511;
Parker v. Crane, 6 Wend. (N. Y.)
647; 1 SeL N. P. 48: 2 Oreenl. Bv.
83.] See also, Palmer v. Haverhill,
98 Mass. 487: Bartholomew v. Jack-
son, 20 Johns. (N. Y.) 28, 11 Am. Dec.
237. In this case the plalntift had
voluntarily removed defendant's
wheat from a burning field to save It
from destruction. Piatt, J., said:
"The plaintiff performed the service
without the privity or request of the
defendant, and there was, in fact, no
promise express or Implied. If a
man humanely bestows his labor, and
even risks his life, in voluntarily aid-
ing to preserve his neighbor's house
from destruction by fire, the law con-
siders the service rendered as gratuit-
ous, and it therefore forms no ground
of action." See also, Seals v. Ed-
mondson, 73 Ala. 295, 49 Am. Rep.
II26
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1516
So no recovery can be had for services, although requested, if they
were rendered as a spontaneous act of kindness or in hope of receiving
compensation, but without an express or implied promise to pay it,
A fortiori can no recovery be had for services volimteered upon the
chances of obtaining future employment Such services are mere
gratuities.^*
Illustrations of this are found where one undertakes to do some act
for another out of kindness or friendship merely, or with a hope and,
perhaps, an expectation that the other will recognize the value of the
services and compensate him accordingly. So architects, engineers,
authors, artists and others who undertake to furnish a satisfactory
plan, design, machine, story or other thing in competing for a prize.
51; Allen v. Bryson, 67 Iowa, 591, 56
Am. Rep. 358.
Tfiis rule has frequently been ap-
plied where a real estate broker was
seeking to recover commissions for
the sale of the defendant's property.
Thus in a case often cited, [Pierce v.
Thomas, 4 B. D. Smith (N. Y.), 354]
It was said: "To entitle a broker to
recover commissions for effecting a
sale of real estate, it is indispens-
able to show that he was employed
by the owner (or on his behalf), to
make the sale. A ratification of his
act, where original employment is
wanting, may, in some circumstances
be equivalent to an original retainer,
but only where there is a plain in-
tent to ratify. An owner cannot be
enticed into a liability for commis-
sions against his will. A mere vol-
unteer without authority is not en-
titled to commissions, merely be-
cause he has inquired the price which
an owner asks for his property, and
has then sent a person to him who
consents to take it. A broker has
no better claim to recover for volun-
teer service, rendered without em-
ployment, and not received and acted
upon by the owner as rendered in his
behalf, than any other volunteer."
To same effect: McVlckar v. Roche,
74 App. Dlv. (N. Y.) 397; Campbell
Printing Press & Mfg. Co. v. Yorks-
ton> 11 Misc. (N. Y.) 340; Johnson v.
Whalen, 13 Okla. 820; Stewart v.
Pickering, 73 Iowa, 652; Welch v.
Collenbaugh, 150 Iowa, 695; Seevers
V. Cleveland Coal Co., — Iowa, — ,
138 N. W. 793: Samuels v. Lucken-
bach, 206 Pa. 428; Castner v. Richard-
son, 18 Colo. 496.
Of course the plaintiff must also
show that his employment was by
the defendant, and that his perform-
ance was within the conditions of
the employment.
See Crosby v. St. Paul Lake Ice Co..
74 Minn. 82; PairchUd r. Cunning-
ham, 84 Minn. 521; Dartt v. Son-
nesyn, 86 Minn. 55; Hale v. Knapp,
134 Mich. 622; Comm. Nat Bank v.
Hawkins, 35 111. App. 468; Callaway
v. Equitable Trust Co., 67 N. J. L. 44.
1* Osborne v. Governors, 2 Strange,
728; Scott v. Maier, 56 Mich. 554, s.
c. «Mb nam,, Scott v. Martin, 56 Am.
Rep. 402; Wood v. Ayres, 39 Mich.
345, 33 Am. Rep. 396; Bartholomew
V. Jackson, 20 Johns. (N. Y.) 28, 11
Am. Dec. 237; James v. O'Driscoll, 2
Bay (S. C), 101, 1 Am. Dec. 632; St.
Jude's Church v. VanDenberg, 31
Mich. 287; Livingston v. Ackeston, 5
Cow. (X. Y.) 531; Otis v. Jones. 21
Wend. (N. Y.) 394; Ehle v. Judson,
24 Wend. (N. Y.) 97; Eastwood v.
Kenyon, 11 Ad. & El. 438; Hertzog T.
Hertzog, 29 Pa. 465; Seals v. Edmond-
son, 73 Ala. 295, 49 Am. Rep. 61.
1 127
§ I5I7]
THE LAW OF AGENCY
[book IV
contract or reward, but without success, can have no claim for com-
pensation in the absence of an express agreement to pay it, although
they may have been requested to compete.**
§ 1517. Xo contract for payment will be implied in the
face of an express refusal to pay, or where the implication would be
repugnant to an express promise, or where the circumstances rebut all
the grounds upon which a promise to pay could be inferred.*^ So
where the circumstances account for the transaction on some ground
more probable than that of a promise of recompense, no promise will
be implied.*'
All contracts for services, it is said, must be good or bad at their
inception, and a party will not be permitted on account of subsequent
events, to recover for services which when rendered were intended to
be gratuitous.**
Neither will purely gratuitous services furnish a good consideration
for a subsequent promise to pay for them,** but when beneficial serv-
ices, not intended to be gratuitous, have been rendered under such
circumstances that no legal claim exists therefor, a subsequent promise
to pay in consideration of the benefit received is binding.'*
§ I5i8« When promise to pay will be implied. — But whenever
services are rendered by one person at the express request of another,
the law will, except in the case of near relatives or others who arc
members of the same family, presume that the person for whom they
were rendered intended to pay for them.'* If the latter alleges that
ift Scott T. Maier, 5« Mich. 554, 56
Am. Rep. S96: Palmer v. Haverhill,
98 Mass. 487.
!• Watson T. Steever, 26 Mich. 386;
Coe V. Wager, 42 Mich. 49; St. Jude'»
Charch v. VanDenberg, 31 Mich. 287.
IT Wood V. Ayres, 39 Mich. 345, 33
Am. Rep. 896.
18 James v. O'Driscoll, 2 Bay (S.
Car.), 101, 1 Am. Dec. 632.
19 Allen V. Bryson, 67 Iowa, 691, 56
Am. Rep. 358, [citing Cook t. Brad-
ley, 7 Conn. 57, 18 Am. Dec. 79; Wil-
liams v. Hathaway, 19 Pick. (Mass.)
387; Dawson v. Dawson, 12 Iowa,
612; McCarthy t. Hampton, 61 Iowa,
282.
soporbis T. Inman, 23 Ore. 68;
Viley V. Pettit, 96 Ky. 576. See also,
Snyder v. Castor, 4 Teates (Pa.), 353;
Darison t. Davison, 18 N. J. Eq. 246;
Lee ▼. Lee. 6 G. ft J. (Md.) 316; Lit-
tle V. Dawson, 4 DalL (Pa.) 111.
21 Linn V. Linderoth, 40 III. App.
820; Mugnier v. Dendlinger, 104 La.
767; Simonson v. Simonson, 53 Hun
(N. T.), 634; McEwen v. Loucheim,
115 N. C. 348; Prince v. McRae, 84
N. C. 674; Harrel v. Zlmpleman, 66
Tex. 292; Bard y. Banigan, 39 Fed.
13; Martin v. Roberts, 36 Fed. 217;
Forhls V. Inman, 23 Ore. 68.
In Louisiana, see Stewart ▼. Sou-
bral, 119 La. 211; Succession of Kre-
keler, 44 La. Ann. 726.
Persons not deemed members of
the family within the rule, — ^A young
girl was hired by defendant to work
at his home upon a farm for a sum-
mer for certain wages. At the ex-
piration of that time she remained,
as she contended, on defendant's
1 128
CHAP. IV]
DUTIES A,N0 LIABILITIES OF PRINCIPAL [§§ 1518, .ISI9
they were to be gratuitous, the burden of proof is upon him to estab-
lish it.** This is particularly true where the services rendered are in
the line of the agent's business or profession, or of a kind that are
usually paid for. Thus if one employs an attorney to try his case in
court, or a physician to attend his child in illness, or an auctioneer to
sell his goods at an auction, or a broker to effect insurance upon his
ship, or an architect to superintend the building of his house, but says
nothing about paying, the law will presume that the person so em-
ployed was to be paid for his services, and if the other party alleges
that the services were to be rendered without charge, he must prove
it.»«
§ 1519. So though there be no express request, a promise
to pay may be implied from the circumstances of the case. Thus if
beneficial services are rendered for a person under such circumstanct$
as to show that the agent expects to be paid for them as a matter of
promise "to par her well when 8he
got through;" as defendant con-
tended, for her keep and clothes. For
Bix years she did Tieavy out-door
farm work, receiving only the most
cheap and meager clothing, and about
$15 in money. Held that she was not
a member of the family within the
rule, and could recover the reason-
able value of her services^ even
though she might not be able to
prove an express contract to pay. Mc-
Millan V. Page, 71 Wis. 655.
So where an orphan boy went to
work for decedent, "not being taken
into decedent's family and cared for
and treated as a member thereof;"
Beld, to be entitled to the fair value
of his services, after deducting the
value of his keep, even though no
express contract to pay was shown.
Lockwood, Adm'r v. Robbins, 125 Ind.
398. To same effect: Doremus v.
Lott, 49 Hun (N. T.), 284.
So where an ignorant colored girl,
born and reared as a slave, was kept
in ignorance of her emancipation, by
her former owner, and for twenty-
four years thereafter worked for de-
fendant as though she were still his
slave; heldt that she could recover
for the whole period, the fraud of
defendant preventing the operation of
the statute of limitations. Hlckam
IT
V. Hlckam, 46 Mo. App. 4S«. See also.
In re Oidfleld's Estate, — Iowa, — ,
138 N, W. 846.
22 Linn v. Llnderoth, 40 111. App.
320; Dougherty v. Whitehead, 31 Mo.
255; Lewis v. Trlckey, 20 Barb. (N.
y.) 387.
In Thomas v. ThomasviUe Shoot-
ing Club, 121 N. C. 238, plaintiff
upon request of defendant rendered
services in obtaining leases of
property which defendant desired.
He did not at the time expect to
make any charge because he hoped
and expected that he would be em-
ployed by defendant as steward. De-
fendant did not know that he did not
expect to make any charge. Plaintifif
was not employed as steward be-
cause of some "falling out" with de-
fendant. Held, he could recover the
reasonable value of his services.
23 In Prince v. McRae, 84 N. C.
674, it was held that a physician who
had rendered professional services in
the usual way upon request was en-
titled to reasonable compensation,
even though he had in fact made no
charge, and had not intended to pre-
sent a bilL The character of the
service, said the court, is not con-
trolled by the unexpressed and re-
vocable intention of the plaintiff.
29
§ IS20]
THE LAW OF AGENCY
[book IV
right, and the person for whom they are rendered does nothing to dis-
abuse him of this expectation, but permits him to render the services,
the law will imply a promise to pay for them.^* This is but the ordi-
nary rule of good faith. As has been seen, services are not to be ob-
truded upon another against his will, but one who stands by and per-
mits another to render him valuable services under such circumstances
as to convince any reasonable man that they were being done, though
mistakenly, with the expectation of being paid for them as a matter
of legal right and not as a matter of hope or expectancy, and says or
does nothing to prevent it, can not be permitted to avail himself of the
benefits of the services but refuse to pay for them, upon the ground that
they were rendered without his request or order.'*
§ 1520. — — In accordance with these principles it was held
that where an attorney who had undertaken to defend a certain action
and pay for such counsel as he desired, employed as counsel a firm of
attorneys who were not informed of this arrangement, and the counsel
performed valuable services for the defendants with their knowledge
and co-operation, the defendants were liable for the value of the serv-
ices so rendered. The court said that if the defendants did not in-
tend that the consulting attorneys should look to them for payment for
the services they were rendering, they should have objected or in-
formed them of the special contract, but that by their silence with full
knowledge of what was being done, and by receiving and enjoying the
benefit of the services rendered, a promise to pay therefor would be
implied. It would have been otherwise if the consulting attorneys
had been informed of tlie special arrangement, or had the circumstances
been such as to raise a presumption that they had such information.'*
24 Wood V. Brewer, 66 Ala. 570; Mo-
Crary v. Ruddick, 33 Iowa, 521; Mus-
cott V. Stubbs, 24 Kan. 520; Garrey v,
Stadler, 67 Wis. 512, 58 Am. Rep.
877; Shelton v. Johnson, 40 Iowa, 84;
Waterman v. Gilaon, 5 La. Ann. 672;
Weston V. Davis, 24 Me. 374; Dough-
erty V. Whitehead, 31 Mo. 255; Lewis
V. Trickey, 20 Barb. (K Y.) 387;
Kinder v. Pope, 106 Mo. App. 536;
Lucas V. Godwin, 3 Bing. (N. C.)
737; Phillips v. Jones. 1 Ad. ft Ell.
333.
25 The principle here Involved is
said by Brewer, J., to be "not merely
that one party has done work which
benefits the other, because it was
never the law that one party could
force a contract upon the other, but
also that such other party, knowing
that the services are being performed
for his benefit and on his account,
makes no objection, but permits the
party to continue doing the work and
performing the services." Moscott v.
Stubbs, 24 Kan. 520.
28McCrary v. Ruddick, 88 Iowa,
521. See case where the same prin-
ciple was recognized, but where the
court held that the facts did not war-
rant the application. Muscott v.
Stubbs, 24 Kan. 520.
1 130
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL [§§ I52I, I522
§ 1 5a I. Unauthorized agent entitled to compensation if acts are
ratified. — ^As has been seen, the effect of the ratification of the un-
authorized act of an agent is retroactive and gives vahdity to the act
from the beginning.*^ If therefore one acts as agent without author-
ity but his acts are subsequently ratified by the principal, he is entitled
to the same compensation and the same remedies as if the acts had
been originally duly authorized.^*
§ 1522. When agent can recover for extra services. — Where an
agent undertakes to render services for a fixed salary or at a fixed
rate, it will be presumed, in the absence of anything to show a con-
trary intention, that the amount so fixed is to cover his compensation
for. all services connected with that undertaking. If, therefore, the
principal enlarges his powers or imposes additional duties upon him,
but without stipulating for an increased compensation, the rate fixed
will be deemed to be full compensation for all the services rendered,
and no extra compensation can be recovered for the performance of
the added duties. To warrant such a recovery there must be an ex-
press or implied promise to pay for them,^** or a legal custom to that
effect.28b
«7 Wilson V. Dame, 68 N. H. 392;
Lawson v. Thompson, 10 Utah. 462.
Although a principal, who had em-
ployed an agent to effect a sale of
land, terminates the contract with
him, he will be liable if he still per-
mits the agent to go on and make
the sale. Dayton v. American Steel
Barge Co., 36 N. Y. Misc. 223.
No ratification where the alleged
principal did not know the agent was
working in his behalf. Downing v.
Buck, 135 Mich. 636; Thomaa v. Mer-
rifleld, 7 Kan. App. 669; Copeland v.
Stoneham Tannery Co., 142 Pa. 446.
No ratification of an unauthorized
sale, unless the principal knew the
terms and conditions of the sale.
Maze Y. Gordon, 96 Cal. 61.
Defendant offered plaintiffs some
goods for sale on commission on cer-
tain terms and in the letter contain-
ing the offer enclosed an order on
the warehouse for the goods. Plain-
tiffs rejected that offer, but made a
counter offer, which the defendant re-
fused, and demanded' the return of
the warehouse order. Plaintiffs failed
to comply with this demand but ob-
tained the goods and sold them. The
defendant accepted the payment for
the goods. Held that he thereby only
condoned the conversion, and did not
render himself liable for the com-
mission named in his first offer to
plaintiffs. Rapp v. Livingstone, 14
Daly (N. Y.). 402.
28 See ante, § 600.
28aMoreau v. Dumagene, 20 La.
Ann. 230; City of Decatur v. Vermil-
lion, 77 111. 315; MarsKall v. Parsons,
9 C. & P. 656; Guthrie v. Merrill, 4
Kan. 187; Fraser v. United States.
16 Ct of CI. 507; Collins v. United
States, 24 Ct. of CI. 340; Carr v.
Chartiers Coal Co., 25 Pa. 337; Jor-
dan V. Jordan, 65 Ga. 351; Pew v.
Gloucester Bank, 130 Mass. 391
Schurr v. Savigny, 85 Mich. 144
Bartlett v. St Ry. Co., 82 Mich. 658
Lachlne v. Manistique Ry. Co., 126
Mich. 519; Muir v. Corset Co., 155
28b United States v. Macdaniel, 7 States v. Fillebrown, 7 Pet (U. S.)
Pet (U. S.) 1, 8 L. Kd. 587; United 28, 8 L. Ed. 596.
§ I5231
THE LAW OF AGENCY
[book IV
This will be true even though the amount of compensation was origi-
nally fixed in contemplation of the expectation that the services which
the agent was to perform would normally be about a certain amount
or consume about a certain time, if the employment was not limited to
that, or there was no agreement for extra compensation.'*
Where the agent has, from time to time, entered into apparent set-
tlements in full, without making any claim for extra compensation, he
will ordinarily be estopped from setting up such a claim at a later
Of course the service for which extra compensation is claimed may
be of a nature so unusual, or so disconnected with those contemplated
by the contract of employment, that the presumption that they were
covered by the compensation agreed upon could not arise, and in such
a case the right to compensation for them would be governed by the
same rules that apply in other cases.
Where the contract is in writing, or but one inference can be drawn
from the facts, the question whether the services involved were inci-
dent to or disconnected with the main contract is usually for the court ;
otherwise it is a question for the jury.'^
§ 1523. Agent cannot recover compensation if agency was unlaw-
ful.— The law will not lend its aid to the enforcement of an illegal
contract. If, therefore, the undertaking of the agent was to perform
some act which was forbidden by law, or which was opposed to the
public policy, he can recover no compensation for the act though it be
fully performed according to the agreement.*"
Mich. 441; Rosa v. Hardin, 79 N. Y. 84;
Matheson v. N. Y. Cent. Ry. Co., 72
App. Dlv. 254; New York Life Ins.
Co. v. Goodrich, 74 Mo. App. 355;
Steam Dredge No. 1, 87 Fed. 760.
A farm-hand, working by the
month cannot recover for ordinary
Sunday "chores'* unless there was an
express agreement to pay. . Robinson
V. Webb, 73 111. App. 569.
There may of course be a recovery
where there was a special contract to
pay for such extra services. Elwell
V, Roper, 72 N. H. 585.
The fact that a statute fixes the
number of hours which shall consti-
tute a day's work, but does not re-
quire over time to be paid for, does
not change the rule. There can be
no recovery for extra work, unless
there was an agreement to pay for It.
Luske V. Hotchkiss, 87 Conn. 219, 9
Am. Rep. 314; McCarthy v. Mayor,
96 N. Y. 1, 48 Am. Rep. 601.
«• Benjamin v. Public Service Pub.
Co., 11 N. Y. Supp. 208.
«o Bartlett v. Grand Rapids St Ry.
Co., 82 Mich. 658; Lachine v. Manis-
tlQue Ry. Co., 126 Mich. 519; Forster
V. Green, 111 Mich. 264; Levi v. Reid,
91 111. App. 430; Carruthers v. Dief-
endorf, 66 App. Dlv. 31.
«i Standard Elevator Co, v. Brum-
ley, 149 Fed. 184.
MTrlst V. Child, 21 Wall. (U. 8.)
441, 22 L. Ed. 623; Marshall v. Balti-
more & Ohio R. R. Co., 16 How. (U. S.)
314, 14 L. Ed. 953; CUpplnger v. Hep-
baugh, 5 W. & S. (Penn.) 315, 40 Am.
Dec. 519; Harris v. Roof, 10 Barb.
(N. Y.) 489; Rose v. Truax, 21 Barb.
361; Gray v. Hook, 4 N. Y. 449; Tool
113*
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1524, I525
Full discussion has been given to this question in earlier chapters
of this work, and it will not be necessary here to determine what the
undertakings are which come within the limits of this rule.'*
2. The Amount of the Compensation.
§ 1524. Express contract governs. — ^The question of the agent's
right to receive a compensation having been determined in his favor,
the next inquiry is as to the amount to be paid to him. If the parties
have made an express agreement in reference to this matter, such
agreement is conclusive upon all questions arising within its scope.**
There can not be both an express and an implied agreement in refer-
ence to the same matter, and the express agreement, if any, must
govern.
This rule, that the express contract governs, applies not only to pre-
vent the agent from recovering more than the amoimt agreed upon,
but also, if the contract was fairly and intelligently made, to prevent
the agent's recovery from being reduced below that sum, even though
the sum fixed be more than the services were reasonably worth.''
§ 1525. May be left for principal to determine. — It is competent
for the parties to agree that the compensation shall be such an amount
Co. v. Norris, 2 WaU. (U. S.) 45, 17
L. Ed. 868; Swayze v. Hull, 3 Halst.
(N. J.) 54, 14 Am. Dec. 899; Oulich
V. Ward. 5 Halst. (N. J.) 87, 18 Am.
Dec. 389; McBratney v. Chandler, 22
Kan. 692, 81 Am. Rep. 213; Bbcby ▼.
Moor, 51 N. H. 402; Kabn T. Walton,
46 Ohio St 195; Lehman v. Feld» 87
Fed. 852; Samuels v. Oliver, 130 Hi
78; Street v. Houston Ice Co. (Tex.),
55 S. W. 516; Fryer v. Harker, 142
Iowa, 708, 23 U R. A. (N. S.) 477.
A broker is not entitled to a com*
mission for procuring a purchaser,
where the jmrchaser produced can not
buy without resorting to unlawful
practices to defraud the owner's wife
of her dower interest. Zlttle v.
Schlesinger, 46 Neb. 844.
83 See ante, §§ 79-123.
84 Ames y. Lamont, 107 Wis. 531;
Wallace v. Floyd, 29 Pa. 184, 72 Am.
Dec. 620; Hamilton y. Frothingham,
59 Mich. 253; Carruthers v. Towne,
86 Iowa, 318; Prouty v. Perry, 142
Iowa, 294.
Where there is an express contract
for a certain sum only, which is paid
and received without objection, agent
can not later recover more for the
same period, although he originally
wanted more and there was an in-
definite assurance that later the prin*
clpal could pay more. Seeber v.
American Mining Co., 10 N. T. Supp.
851.
35 In Smythe v. CKBrien, 198 Pa.
223, the agent was allowed to keep
$8,000, which he had saved in buy*
ing stocks for an experienced busi-
ness man under a contract freely and
intelligently made. See also, Wells
V. Parrott, 43 lU. App. 656.
Where there is a contract with a
traveling salesman for a certain sal-
ary and his traveling expenses, the
principal may not afterward set an
arbitrary limit to the amount to be
allowed for such expenses, Walker v.
Grant, 40 111. App. 359.
"33
§§ 1526, 1527]
THE LAW OF AGENCY
[book IV
as the principal may fix. Thus if the agent agree to serve for such
compensation as the principal shall, at the termination of the agency,
determine to be right and proper under all the circumstances, the
amount so fixed by the principal, if he acts honestly and in good faith,
is conclusive, although as a matter of fact it be less than the services
were really worth/*
Agreements of this sort, however, must be clear, and appear to have
been fairly made.'"'
§ 1526. In the absence of express agreement how amount deter-
mined — Market — Usage — Reasonable value. — Where, however,
there is no express agreement as to the amount, the market rate, if
there should be one, might determine ; or the usual rate, if there should
be a usage ; ** if neither, then the law implies a promise to pay what
the services are reasonably worth.'* The question of reasonable value,
in this, as in other cases, is one to be determined from all the facts and
circumstances surrounding the case.*^
§ 1527. What elements may be considered. — In determining the
amount of this reasonable compensation, there are many elements to
be taken into consideration. All services are not to be estimated bv
the same standard. In every case the nature of the undertaking, its
dangers and responsibilities, the amount involved, the skill, ability and
reputation of the agent, the result attained, the previous study, prep-
aration and expense required, as well as the actual time consumed, are
to be taken into consideration, and the value of the services is to be
estimated accordingly."
8« Butler ▼. Winona Mill Co.. 28 Sinz. 73 Wis. 243; Martin v. Roberta,
36 Fed. 217; Taylor Mfg. Co. v. Key,
86 Ala. 212; McCrary v. Ruddick, 33
Iowa, 520; Shelton v. Johnson, 40
Iowa, 84; Millar t. Cuddy, 48 Mich.
873, 38 Am. Rep. 181; Stockbridge v.
Crooker, 34 Me. 349, 56 Am. Dec. 662;
Nauman v. Zoerhlaut, 21 Wis. 466;
Jones V. School District, 8 Kan. 362.
*oRuckman v. Bergholz, 38 N. J.
L. 531; Eggleston v. Boardman, 37
Mich. 14. Where an agent was em-
ployed to help sell an automobile un-
der an agreement "to protect" him if
he made the sale, a finding that he
was entitled to receive the amount
paid to regularly appointed agents
was upheld. Fredrickson v. Locomo-
hlle Co., 78 Neb. 775.
«i Bggleston v. Boardman, 37 Mich.
14; Vilas v. Downer, 21 Vt. 419; Ken-
Minn. 205, 41 Am. Rep. 277.
87 MiHar v. Cuddy, 43 Mich. 273, d8
Am. Rep. 181. This case has been
cited as opposed to the preceding one.
Upon examination It will be found
not to be so. In the former there
was no Question as to the contract,
in the latter the court held that such
a contract could be made, but had not
been in that case.
S8 Agent may recover the usual
rate. Hollis v. Weston, 156 Mass.
867; Potts T. Aechternacht, 93 Pa.
138; Marshall y. Reed, 32 Pa. Super.
60.
3» Tucker ▼. Preston, 60 Vt 473;
Carruthers v. Towne, 86 Iowa, 318;
Hollis V. Weston, 166 Mass. 357; Bear
V. Koch, 2 Misc. (N. Y.) 334; Slater
y. Cook's Estate, 93 Wis. 104; Best v.
1 134
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL [§§ I528, I529
§ 1538. What evidence as to value is admissible. — In many cases
custom may have gone far towards establishing the amount of com-
pensation to be paid for certain services, and where parties either ex-
pressly or impliedly deal with reference to such a custom, evidence of
the amount so fixed is admissible/^
So evidence of what is usually charged for similar services by other
persons in the same line of business at the same place is admissible.**
It is also competent to show by persons acquainted with the value of
like services, what is their opinion as to the value of the services in
question.** This is a well-recognized use of what is ordinarily known
as expert testimony. If such a witness knows the value of such serv-
ices, it is not necessary that he should be shown to be acquainted with
the amounts which others are in the habit of charging in like cases/*
nor is it necessary that he should have personal acquaintance with the
agent, or personal knowledge of the services rendered,*' but he may
give his opinion upon a hypothetical question covering the elements in
controversy.
§ 1539. ^— Ordinarily the testimony of what such a witness
would himself have charged is not admissible ,*'^ yet if the evidence
given in reply to such a question is manifestly based upon the witness's
opinion as to its value and not upon any uncertain standard of his own,
the form of the question might be disregarded.**
So evidence of what was paid to a particular agent in another case
is not, ordinarily, admissible; such evidence having no necessary ten-
dency to prove either the usual charge or the actual value, inasmuch
as there may have been in that case peculiar circumstances or elements
which would not exist in another.** But upon cross-examination, in
tucky Bank v. Combs, 7 Pa. St. 543;
Stanton v. Bmbrey, 93 U. S. 548, 23
L. Ed. 983.
*2 Stanton v. Embrey, 93 U. S. 548,
23 L. Ed. 983: Masterson v. Master-
son, 121 Pa. 605; Thomas v. Brandt
'(Md.), 26 Atl. 524. On proof of
custom, see Calland v. Trapet, 70 IlL
App. 228.
48 Eggleston V. Boardman, 37 Mich.
14; Stanton v. Bmbrey, 93 U. S. 54S»
23 L. Ed. 983: HoUis v. Weston, 156
Mass. 357; Ruckman v. Bergholz, 38
N. J. Law, 531; Thompson r. Boyle, 86
Pa. 477; Vilas v. Downer, 21 Vt. 419;
Sayre v. Wilson, 86 Ala. 151; Ken-
nerly v. Somerville, 64 Mo. App. 75.
4*Bowen v. Bowen, 74 Ind. 470;
Johnson v. Thompson, 72 Ind. 167,
37 Am. Rep. 152; Parker v. Parker,
33 Ala. 459.
«B Commissioners v. Chambers, 75
Ind. 409.
4«Mish V. Wood. 34 Penn. St 451;
Miller V. Smith. 112 Mass. 470; Whit-
beck V. New York, etc., R. R. Co., 36
Barb. (N. Y.) 644.
4iFairchlld v. Railroad Co., 8 111.
App. 691.
MSee Elting v. Sturtevant, 41
Conn. 176.
*^ Eggleston v. Boardman, 37 Mich.
14; Lakeman v. Pollard, 43 Me. 46S,
69 Am. Dec 77.
1 135
§§ ^53^> 1531] TH£ LAW OF AGENCY [BOOK XV
order to test either the good faith or the qualifications of the witness,
it might be proper to inquire of him what he would have performed
the same service ioT,^^ or to ascertain the extent of his knowledge as to
the price usually paid by inquiring what -had to his knowledge been
paid in given cases.'^
§ 1530. Agent continuing after expiration of term presumed to be
at prior compensation. — If an agent, employed at a compensation
for a definite term, continues in the principal's service after the ex-
piration of that term, without any new or other arrangement, he will
be presumed to be continuing on the old terms, and there can be no
recovery on a quantum meruit,^^
3, When Compensation is Considered to be Earned,
§ 1531. In general. — The question when the agent's compensation
Is to be deemed to be earned, is one depending upon a variety of con-
siderations.
Thus it may appear: —
a. That the agent has fully completed his undertaking.
b. That he has only partially completed his undertaking.
c. That he has done nothing at all.
The fact that he has not completed his undertaking may be attrib-
utable to one of the following causes : —
a. That his authority was revoked before he had had time or op-
portunity to perform fully.
b. That he had abandoned the agency before he had made full per-
formance.
The revocation of his authority may have been :—
a. By act of the principal.
b. By operation of law.
If revoked by the act of tlie principal, that act may have been :—
a. For sufficient cause.
b. For insufficient cause.
So if the agent abandoned the agency, such abandonment may, un-
der the circumstances have been :—
a. Justifiable, or
b. Unjustifiable.
fioGinman ▼. Oard, 29 Ind. 291. Md. 22; Thompson ▼. Detroit Copper
61 Lakeman v. PoUard, supra. Co., 80 Mich. 422; Douglass v. Mer-
•2 Ewlng V. Janson, 57 Ark. 2S7; chants' Ins. Co., 118 N. T. 484, 7 L. R.
IngaUs y. AUen, 132 HI. 170; LAnbach A. 822; Wallace v. Floyd. 29 Pa. St.
V. Cedar Rapids Supply Co., 122 Iowa, 184, 72 Am. Dec. 620; Rauck r. Al-
648; Lalande ▼. Aldrlch, 41 L&. Ann. bright, 86 Pa. St. 367; Dickinson T.
307; Travelers' Ins. Co. t. Parksr, 92 Norwegian Pk>w Co., 96 Wis. 876.
1 136
CHAP, rv]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ I5J2
Again if the undertaking was performed in part, such part per-
formance may have been : —
a. Of value to the principal, or
b. Of no value, to the principal.
Without attempting to follow this classification precisely, the chief
questions here suggested will be considered.
§ 1532. Compensation earned vrhen undertaking fully completed.
As a general proposition, it must be true that the agent is entitled to
his compensation when and only when he has fully completed his un-
dertaking according to its terms.** In many cases, there is no difficulty
in determining when this time arrives, but in others it is not easy to
decide upon the full measure of the agent's undertaking or upon the
fact of its performance. Each case rests upon its own peculiar facts
and circumstances, and the inquiry in every instance must be : i. What
did the agent undertake to do? 2. Has he done it, and if not, then,
3. To whose act or to what occurrence is the failure to be attributed ?
6« CONSTRUCnOlT OF CONTRACT — In
General.
A sewing machine agent was to re-
ceive 112 a week, a 15 psr cent com-
mission on sales, payable as the in-
stallments were paid, and also 5 per
cent of the net remittances of his
office. There was a proviso that "all
his claims therefor shall cease im-
mediately upon the termination of
this agreement." This was held not
to apply to the 15 per cent selling
commissions earned when contract
terminated but not yet payable.
Singer Manufacturing Co. v. Brewer,
78 Ark. 202.
Agents for the sale of threshing
machines were, by the terms of
their contract to receive no commis-
sions on second hand goods. Court
construed this to mean second hand
goods taken in part payment for a
new machine, and not to apply to a
sale made by the agents at defend-
ant's request of a second hand
thresher taken In by other agents of
the defendant In another territory.
"This transaction was outside the
scope of plaintiff's employment as
regular agents of defendant, and not
controlled by the written contract."
Gooch V. Case Threshing Machine
Co., 119 Mo. App. 397.
A stipulation that the agent was to
receive no commissions on machinery
sold by him and "taken back" by his
principal, applies to a case where the
agent made a sale receiving only a
purchase money mortgage which was
not paid and which the principal had
to foreclose and buy In the worn ma-
chinery at the sale. Reeves v. Wat-
kins, 28 Ky. Law Rep. 401, 89 S. W.
266. Compare on this point: Taylor
Mfg. Co. V. Key, 86 Ala. 212; Sher-
man V. Pt. Huron Engine Co., 13 S.
Dak. 95; Newell v. Pt. Huron Engine
Co., Ala. , 57 South. 68.
An agent had a contract providing
for a commission for the sale of two
classes of bonds, his commissions to
be paid out of the money collections
as the purchase price was paid. He
made a sale of some of the $500 bonds,
receiving In part payment, with the
prlncipars consent, certain of the
$250 bonds previously sold to the
buyer by other agents. Nothing be-
ing said about commissions, he was
held not to be entitled to commis-
sions on these bonds taken back, as
they could not properly be deemed to
72
1 137
§ IS331
THE LAW OF AGENCY
[book IV
§ 1533.
When full performance a condition precedent
It is entirely competent for the parties to expressly agree that the full
performance of a particular undertaking shall he a condition prece-
dent to. the right to recover any compensation, and where such a con-
be money collections. Warwick v.
North American Investment Co., 112
Mo. App. 633.
Where an agent is to have a com-
mission upon every machine sold by
him, he is entitled to it, in the ab-
sence of a contrary stipulation, where
he really found the purchaser and
made the sale, though the principal
closes the matter up in person, or
through other agents. Woods v.
Case Threshing Mach. Co., — Iowa,
, 135 N. W. 399; Davis v. Huber,
119 Iowa, 56.
Where the contract was interpreted
to mean *'that commissions should be
earned upon all orders accepted and
filled by shipment, and not merely
upon orders obtained." Held, that
the agent was not entitled to commis-
sions on orders which were justifiably
cancelled by the buyer or rejected by
the seller. In re Ladue Tate Mfg. Co.,
135 Fed. 910.
Where a contract provides for both
a salary and commissions on sales
and also fixes a certain amount of
sales, "which shall be considered the
minimum amount of business neces-
sary to constitute the fulfillment of
this contract," the agent is not en-
titled to salary or commission unless
his sales reach the minimum. Haas
V. Malto-Grapo Co., 148 Mich. 358.
The fact that the agent performs
more quickly or more easily than
was contemplated does not affect his
right if he does fully perform,
as where the agent sold in one con-
tract the stipulated quantity al-
though it was evidently expected that
a year or so would be required to
sell that amount. Redwine v. Realty
Co., 107 C. C. A. 175, 184 Fed. 851.
Where an insurance agent is to
have commissions on renewals, this
prima facie is held to mean only on
II
renewals while he continues agent.
Spauldlng v. New York L. Ins. Co.,
61 Me. 329; Phoenix Ins. Co. v. Hollo-
way, 51 Conn. 310, 50 Am. Rep. 21;
Jacobson v. Connectlout Mvt L. Ins.
Co., 61 Minn. 330; Scott v. Travelers'
Ins. Co., 103 Md. 69, 7 Ann. Cas. 1166.
And a discharge for cause will termi-
nate his right. Jacobson v. Connecti-
cut Mut. Li. Ins. Co., supra; Frankel
V. Michigan Mut L. Ins. Co., 168 Ind.
304; Walker v. John Hancock Mut. L.
Ins. Co., 80 N. J. L. 342; Ann. Cas.,
1912 A. 626.
Custom cannot change a clear con-
tract upon the subject. Gooding v.
Northwestern Mut. L. Ins. Co., —
Me. , 85 Atl. 391; Stagg v. Conn.
Mut. L. Ins. Co., 10 Wall. (U. S.) 589,
19 L. Ed. 1038; Partridge v. Insur-
ance Co., 15 Wall. (U. S.) 573, 21 L.
Ed. 229. But contracts frequently ex-
pressly provide for interests after the
termination of the agency, upon terms
indicated. Gooding v. Northwestern
Mut. L. Ins. Co., supra.
In New York, see Aldrich v. New
York L. Ins. Co., 121 App. Dlv. 18;
Hercules Mut. L. Assur. Co. v. Drink-
er, 77 N. Y. 435; Hale v. Brooklyn L.
Ins. Co., 120 N. Y. 294.
Exclusive agency in certain terri-
tory.— Commissions on sales made
therein. Contracts giving an agent
the exclusive right to sell the princi-
pal's goods In a certain territory, may
be made: Garfield v. Peerless Motor
Car Co., 189 Mass. 395; though such
a contract must be established by
proof, and will not be inferred
merely from the fact that the agent
had been allowed for a consideraijle
period to sell goods in that territory
and had assumed that he was to have
It, though he concedes that nothing
had 1!)een said upon the subject,
Wiley V. California Hosiery Co.
38
CIIAF. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1533
tract is fairly made it will be enforced, and will be conclusive unless
it appears that the performance has been waived or prevented by the
(Cal.), 32 Pac. 522. See also, King tory in making sales, and represented
Powder Co. v. Dillon, 42 Colo. 316;
Aultman v. Joplin, 8 Ky. Law Rep.
62; Indiana Road Machine Co. v.
Lebanon Carriage Co., 25 Ky. Law
Rep. 1763, 78 S. W. 861. In Sutton v.
Baker, 91 Minn. 12, a contract for
exclusive agency was deduced from
the circumstances, though not ex-
press. Unless the agency is exclusive,
the principal may himself sell goods
in the territory without liability to
the agent. Aultman v. Joplin, Bupra;
Indiana Road Machine Co. v. Leba-
non Carriage Co., supra; Case Thresh-
ing Mach. Co. V. Wright Hardware
Co., Tex. Civ. App. , 130 S. W.
729; Schrocder v. Fine, 131 N. Y.
Supp. 575. Where the agency is ex-
clusive, the principal may still sell
in that territory, but if he does so, U
is a breach of the contract and he la
liable to the agent. Garfield v. Peer-
less Motor Car Co., supra (disapprov-
ing Golden Gate Pkg. Co. v. Farmers*
Union, 55 CaL 606); Masters v.
Wayne Auto. Co., 198 Mass. 25. The
contract may reserve to the princi-
pal the right to sell in the territory
under certain circumstances, and the
agent has no cause of complaint un-
less he shows that the sales were
made under other circumstances than
those specified. McCoy Eng. Co. v.
Crocker-Wheeler Co., 100 Md. 530.
Where sales are made by the princi-
pal at a lower rate than those fixed
in the agent's contract, the agent
is entitled to damages, but, it is held,
not to commissions on such sales in
the absence of a showing that he
would have been able to make the
sales himself at the higher rates. La
Favorite Rubber Mfg. Co. v. Chan-
non, 113 IlL App. 491. See also, Rob-
erts V. Minneapolis Thresh. Mach.
Co., 8 S. Dak. 579, 59 Am. St. R. 777.
But in Schiffman v. Peerless Motor
Car Co., 13 Cal. App. 600, where the
principal invaded the agent's terri-
at the same time that it had not a
supply of motor cars to meet the
agent's orders, it was held that the
agent could recover commissions on
cars so sold, and that the principal
was estopped to deny that the agent
might have made the sales. And in
Sparks v. Reliable Dayton Motor Car
Co., 85 Kan. 29, Ann. Cas. 1912, C.
1251, it was held that the measure of
the agent's damages was presump-
tively the commissions on the cars
sold by the principal. See also Clalr-
monte v. Napier, 11 Cal. App. 265.
After the agent leaves the employ-
ment, he is not entitled to commis-
sions on goods thereafter sold by the
principal, merely because they are
sold to his former customers. O'Neill
V. Ho.ve, 16 Daly, 181.
An agent having a contract of ex-
clusive agency is not entitled to com-
missions on goods sold by the princi-
pal in other territory merely because
they are afterwards brought by the
purchaser into the agent's territory.
Wycoff V. Bishop, 115 Mich. 414. See
also, Wig^in v. Shoe Co., 161 Mass.
697; Haynes Automobile Co. v. Wood-
ill Auto Co., 163 Cal. 102.
In Masters v. Wayne Automobile
Co., 198 Mass. 25, an ambiguous con-
tract was construed as giving the
agent the right to commissions upon
sales made by the principal, if made
to a person whom the agent had so-
licited, even though the principal was
ignorant of that fact Where the
principal has agreed to give the
agent an exclusive territory, he is
not liable to the agent because an-
other agent from a different territory
makes a sale in the first agent's ter-
ritory without the principal's knowl-
edge and consent. Cedar Rapids Auto
Co. V. Jeffrey, 139 Iowa, 7. See also,
Hilliker v. Northwest Thresher Co..
145 Iowa, 721.
Land cases. — For a discussion of
1 139
§ 1533]
THE LAW OF AGENCY
[book IV
principal.'* So, though there may not have been any express agree-
ment, it may be entirely clear, either from the nature of the undertak-
ing, or the words or conduct of the parties, that what the agent was
to be paid for was the accomplishment of a certain result, and in such
a case the agent will not be entitled to compensation unless that result
be accomplished, or its accomplishment be waived or prevented by the
principal." The case of the real estate broker, more fully to be con-
sidered in a later chapter, furnishes many typical illustrations.
Thus "where there is a special contract, by the terms of which the
broker is not to be paid commissions unless he sells the property at a
specified price, the sale by him at such a price is a condition precedent
to his right to compensation, unless pending the negotiations, and
exclusive agency in land cases see
Real Estate Brokers In chapter on
Brokers, Book V, Chap. III.
Agreement to pay commission if
property toithdravm from sale.— A
contract to pay commissions for the
sale of property, if the sale be made
within a specified time, may also pro-
vide that the agent shall be entitled
to his commissions in case the prin-
cipal withdraws the property from
sale, or sells it himself, during the
time specified. Such a contract is
valid and the agent's undertaking to
devote his time and services to the
finding of a purchaser within the pe-
riod named furnishes a sufllcient
consideration. Kimmell v. Skelly,
ISO Cal. 555; Crane v. McCormlck, 92
Cal. 176; Maze v. Gordon, 96 Cal. 61;
Rucker v. Hall, 105 Cal. 425.
5* Thus see Flower v. Davidson, 44
Minn. 46 (payment only if "the sale
is actually consummated"); Aultman
V. Ritter, 81 Wis. 395 (no commission
to be payable unless the property
was not only sold but paid for);
Walker v. Tlrrell, 101 Mass. 267, 8
Am. Rep. 352 (no commission unless
principal should *'see fit and proper"
to sell); Temby v. Brunt Pottery Co.,
229 III. 540 (no commissions on or-
ders which the principal does not
accept); Hllllker v. Northwest
Thresher Co., 145 Iowa, 721 (no com-
missions payable unless certain prices
were realized); Taylor Mfg. Co. v.
I
Key. 86' Ala. 212 ("no commissions
shall be paid on any article taken
back, or on any order taken and not
filled* on machinery not settled for
or on any sale to irresponsible per-
sons"). See also Sherman v. Pt
Huron Engine Co., 13 S. Dak. 95;
Newell V. Pt Huron Engine Co.,
— Ala. — , 57 South. 68; Ross v.
Portland Coffee Co., 30 Wash. 647.
5B As is said in Goldstein v. White,
16 N. Y. Supp. 860: "Unless there is
a special agreement to the contrary,
work, whether measured by the job
(Cunningham v. Jones, 20 N. Y. 486;
Smith V. Brady, 17 N. Y. 173, 72 Am.
Dec. 442; Lawrence v. Miller, 86 N.
Y. 131), or by time (Waters v. Da-
vies, 55 N. Y. Super. Ct. 39), must be
finished, In order that there shall be
a right to pay for it In other words,
there musb be a performance or a
waiver of conditions precedent before
there can be a right to recovery.
Phelan v. Mayor, 119 N. Y. 86; Avery
V. Willson, 81 N. Y. 341. 37 Am. Rep.
603."
Thus, though the contract be not
so specific as those referred to in the
preceding note, yet if the commission
ifl clearly to be paid only in case a
sale is effected, no commission can
be recovered, though a purchaser be
produced, if he fails to buy, unless
by the principal's fault. Yeager v.
Kelsey, 46 Minn. 402. To same effect :
Stewart v. Fowler, 37 Kan. 677;
140
CHAP. IV]
DUTIES AND UABILITIES OF PRINCIPAL
[§ 1533
whilst his agency remains unrevoked, the owner consents to a sale for
a sum other than originally agreed upon." *• For a like reason if the
promise is to pay a compensation if tlie sale is effected within a certain
time, proper performance on the part of the agent within that
time, unless excused or prevented by the principal, is a condition pre*
cedent to the right to compensation." So if payment of all or some
portion of the purchase price has been stipulated for, as where, for
example, the agent's commissions arc to be paid out of the purchase
price or out of a certain instalment thereof, the payment of the pur-
chase price or of such instalment, is similarly a condition precedent."
Gruesel v. Dean, 98 Iowa, 405; Kost v.
Rellly, 62 Conn. 57; McPhall v. Buell,
87 Cal. 115; Dorrlngton v. Powell, 52
Neb. 440; Tousey v. Etael, 9 Utah, 329.
So, where it is a condition that the
principal shall receive a certain sum
without deduction. Beale v. Bond, 84
Law. T. 318. To same effect: Oremcr
V, Miller, 56 Minn. 52; Hurd v. Nell-
son, 100 Iowa, 555; Seattle Land Co.
v.- Day, 2 Wash. 461; Beatty v. Rus-
sell, 41 Neb. 321; Ames v. Lamont,
107 Wis. 531. So where the pur-
chaser produced would not comply
with the conditions, e. g., to furnish
an abstract of the property, which he
was to give in part payment. Marple
V. Ives, 111 Iowa, 602.
Where actual sale is stipulated for,
a provisional sale is not enough.
Candlct v. Cowdrey, 139 N. T. 273.
Nor an optional one. Jones v. Ellen-
feldt, 28 Wash, 687; Lawrence v.
Pederson, 34 Wash. 1. Same where
orders taken are subject to cancella-
tion. Wolfsheimer v. Frankel, 130
App. Dlv. 853. See also, Pape v.
Romy, 16 Ind. App. 470.
Moreover the agent, in order to be
entitled to his compensation, must
produce results. No commission is
earned by service, however meritori-
ous, which does not lead to a sale or
the production of a purchaser, as the
contract may require. If the agent
does not bring his customer to defi-
nite terms, or If the customer or the
agent abandons the matter before a
definite conclusion is reached, no
commissions are earned. And it will
I
make no difference in such a case if,
after the agent has failed or aban-
doned the endeavor, the principal or
some other agent brings about the
saJe, even to the same purchaser,
where this has not been the result of
sharp practice on the part of the
principal to avoid the payment of
commission. Garcelon v. Tlbbetts, 84
Me. 148; Falrchild v. Cunningham,
84 Minn. 521; Gleason v. Nelson, 162
Mass. 245; Sawyer v. Bowman, 91
Iowa, 717; Cook v. Forst. 116 Ala.
395; Babcock v. Merritt, 1 Colo. App.
84; Crockett v. Grayson, 98 Va. 354;
Baars v. Hyland, 65 Minn. 150; Hale
V. Kumler, 85 Fed. 161; Crowley Co.
V. Myers. 69 N. J. L. 245; Butler v.
Baker, 17 R. I. 582, 33 Am. St. R.
897; Cadigan v. Crabtree, 179 Mass.
474, 88 Am. St R. 397; Ayres v.
Thomas, 116 Cal. 140; Alden v. Qarle,
121 N. Y. 688.
«« Jones V. Adler, 34 Md. 440. See
Stewart v. Mather, 32 Wis. 344.
67 Irby y. Lawshe, 62 Ga. 216; Fulty
V. Wlmer (Cal.), 9 Pac. 316; Ropes
V. Rosenfeld, 145 Cal. 671; Page v.
Griffin, 71 Mo. App. 524; Young v.
Trainor, 158 111. 428; Jacquin v. Bou-
tard, 89 Hun, 437; affirmed In 157 N.
Y. 686. To same effect: Greene v.
Freund, 150 Fed. 721.
5«Lindley v. Fay, 119 CaL 239;
Ormsby v. Graham, 123 Iowa, 202;
Parker v. Bldg. Ass'n, 55 W. Va.
134; Seattle Land Co. v. Day, 2 Wash.
451; Hale v. Kumler, 29 C. C. A. 67,
85 Fed. 161.
141
§§ I534» 1535] THE LAW OF AGENCY [BOOK IV
§ 1534- In many cases it has been held that the under-
taking of a real estate broker — ^at least under the circumstances there
disclosed — requires not only that he shall find a purchaser but that a
binding contract shall be made with him, and where this is the case the
broker must accomplish that result, to entitle him to his compensa-
tion."' Usually, however, as will be more fully seen hereafter,** the
undertaking of such an agent is construed to be, not that he will close a
binding sale, but only that he will find a purchaser to whom the prin-
cipal may sell. In such a case, the production by the agent of a pur-
chaser, who either actually buys, or is at least ready, able and willing
to buy, upon the terms proposed, is likewise a condition precedent*^
The production of a purchaser who will not close the transaction
unless some change be made in the terms proposed, or who insists upon
some privilege or exemption not provided for by the express or the im-
plied basis of the negotiation, will not satisfy the agent's obligation
unless the principal sees fit to waive the variance.*'
§ 1 535* Agent's right not defeated by principal's default. — ^If it be
found that the agent has done all that he undertook to do, his right to
his compensation is complete, and he cannot be deprived of it, because
the principal then fails to avail himself of the benefits of the act or
refuses to do what he had agreed to do upon performance. Neither
can the principal then defeat the agent's claim by revoking his author-
ity or withdrawing the subject-matter from his possession or control."
Thus an agent who is employed to procure a loan for his principal
is entitled to his commission when he procures a lender, ready, willing
and able to loan the money upon the terms proposed. His right to his
commission does not depend upon the contingency of the principal's
acceptance of the loan, but upon his performance of his part of the
contract, and the principal cannot deprive the agent of his commission
by refusing to accept the loan which the agent's efforts have resulted
in securing.**
&o See Hyams v. Miller, 71 Oa. 608; gold. Caston r. Qulmbr, 178 Mass.
Tombs V. Alexander, 101 Mass. 255, 153, 52 L. R. A. 785.
3 Am. Rep.- 349; Gilchrist v. Clarke, «3 See cases cited in following
86 Tenn. 583; Lunney v. Healey, 56 notes.
Neb. 313, 44 L. R. A. 593. «* Vinton v. Baldwin, 88 Ind. 104.
«o See post, chapter on Brokers. 45 Am. Rep. 447; Squires v. King, 15
«i See Stewart ▼• Smith, 50 Neb. Colo. 416; Hanesley v. Bagley, 109
631. Gfi. 346.
^ For example, a purchaser who But compare Demarest y. Tube Co.,
will not accept the ordinary form of 71 N. J. L. 14; Crasto v. White, 52
deed. Garcelon v. Tibbetts, 84 Me. Hun, 473; Ashfield v. Case, 93 App.
148. Or a lender who insists upon Div. 452, cited in preceding section,
payment of principal and interest in
1 142
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1536
Neither is a broker's right to his commissions affected ordinarily
by the fact that the principal proves to be unable to make a good title
to the property which he offered as security ; ** though it is, of course,
true that the terms of the broker's employment may be such that he
is not entitled to commissions unless the loan be actually made.
§ 1536. Upon the same principle it is held that an agent
who undertakes to negotiate a sale of his principal's property, — ^a bind-
ing contract not being required — has earned his commission when he
has procured a purchaser who is able, willing and ready to purchase
it upon the terms designated,"® and the principal cannot defeat the
agent's claim by then refusing to sell at all,"^ or only upon different
terms,®* or by ignoring the agent and secretly consummating the sale
with the purchaser so produced without the further intervention of
ofiMiddleton v. Thompson, les Pa.
112; Egan v. Kieferdorf. 16 Misc. 385;
GatUns v. Central Spar Verein, 67
App. DlY. 60; FuUerton v. Carpenter,
97 Mo. App. 197; Finck v. Bauer, 40
Misc. 218; Green v. Lucas, 33 L. T. R.
N. S. 584; Peet y. Sherwood, 43 Minn.
447.
<oOul]ahan v. Baldwin, 100 Cal.
648; Wilson v. Sturgls, 71 Cal. 226;
Henry v. Stewart, 185 111. 448: Wil-
son V. Mason, 158 111. 304, 49 Am.
St. R. 162; Scribner v. Hazeltlne, 79
Mich. 370; Gelatt v. Ridge. 117 Mo.
553, 38 Am. St. B. 683; Gibbons V.
Sherwln, 28 Neb. 146.
«7 Flske V. Soule, 87 Cal. 313; Caw-
ker y. Apple, 15 Colo. 141; Spalding
V. Salteil, 18 Colo. 86; Monroe t.
Snow, 131 111. 126; Flood v» Leonard,
44 111. App. 113; Bird v. Phillips, 116
Iowa, 703; Felts v. Butcher, 93 Iowa,
414; Niederlander v. Starr, 50 Kan.
770; Harwood v. Dlemer, 41 Mo. App.
48; Reeves v. Vette, 62 Mo. App. 440;
Greenwood v. Burton, 27 Neb. 808;
Jones V. Stevens, 36 Neb. 849; Veeder
V. Seaton, 85 App. Div. 196; York v.
Nash, 42 Ore. 321.
«8ThiB is true whether the princi-
pal changes the terms by making
them more favorable to himself.
Buckingham v. Harris, 10 Colo. 455;
Bishop v. Averill, 17 Wash. 209,
or whether he reduces bis terms in
some slight particular in order to
evade the payment of commissions
hy making the sale himself. Cook v.
ForBt, 116 Ala. 895; Corbel v. Beard,
92 Iowa, 360; Ranson v. Weston, 110
Mich. 240; Hubachek v. Hazzard, 88
Minn. 437; Schlegal v. Allerton, 65
Conn. 260; Snyder v. Fearer, 87 111.
App. 275; Hutten v. Renner, 74 111.
App. 124; Hafner v. Herron, 165 111.
242; Hobbs v. Edgar, 23 Misc. 618.
No objection where all parties con-
templated that possibility at time of
making contract Hilllker y. North-
west Thresher Co., 145 Iowa, 721.
In Dildine v. Ford Motor Co., 159
Mo. App. 410, although the contract
provided for change of price, court
refused to recognize it because being
used as a "club" to coeroe agent.
In Nosotti V. Auerbach, 79 L. T. R.
413, plaintiff was employed to find a
purchaser for defendant's house. The
jury found that there was no stipula-
tion respecting the time when defend-
ant would be ready to give posses-
sion. On January 26th the plaintiff
produced a purchaser who offered to
buy, provided possession could be
given by March 15th. Defendant re-
fused this offer, saying that he could
not give possession as soon as that.
The jury having found that from
January 26th to March 15th was a
reasonable time to allow defendant.
1 143
§ 15361
THE LAW OF AGENCY
[book IV
the agent.** Neither is such an agent's right to his commissions af-
fected by the fact that his principal's title is defective and the sale
fails for that reason ; ^** or that the principal has disabled himself from
conveying as proposed ; '^ or that the sale fails because of the misrep-
resentation by the principal of some material fact connected with the
Clark V. Thompson Co., 75 Conn. 161;
DavlB V. Morgan, 96 Ga. 518; Rottndfl
V. Allee, 116 Iowa, 345; Indiana Ai-
phalt Co. V. Robinson, 29 Ind. App.
59; Davis v. Lawrence, 52 Kan. 383;
Monk V. Parker, 180 Mass. 246; Flta-
patrlck V. Gltoon, 176 Mass. 477;
Stange v. Gosse. 110 Mich. 153; Gaa-
thier v. West. 45 Minn. 192; Roberts
V. Klmmons, 65 Miss. 832; Chrlsten-
sen V. Wooley, 41 Mo. App. 53; Ger-
hart V. Peck, 42 Mo. App. 644; Strong
V. Prentice Brown Stone Cd., 6 N. Y.
Mlso. 57; Gorman v. Hargis, 6 Okla.
360; Kyle v. Rlppey, 20 Ore. 446 (cit-
ing many cases); Sweeny v. Ten-
Mile Oil Gas Co., 130 Pa. 193; Mc-
Laughlin V. Wheeler. 1 8. D. 497;
Cheatham v. Yarbrough, 90 Tenn. 77;
Conklln v. Krakauer, 70 Tex. 735;
Wilson V. Clark, 35 Tex. Civ. App.
92; Brackenridge v. Clarldge, 91 Tex.
527, 43 L. R. A. 598.
TiFord V. Basley, 88 Iowa, 603;
Reed v. Union Cent L. I. Co., 21
Utah, 295; Hlx r. Edison Electric
Light Co., 10 N. Y. App. Dlv. 76.
An agent of an insurance company
was to receive, as compensation for
his services, a per cent of all sums
paid to and received by the said com-
pany as premiums on insurance se-
cured by the agent The agent sub-
mitted a risk to the defendant and
they accepted it and received as part
of first premium notes to the amount
of over $4,000. Afterward, deeming
the risk undesirable, they comprO*
mised with the insured and he sur-
rendered the policy and they returned
to him the notes. It was held that
the company did not avoid their lia^
bility to the agent for commission, by
thus voluntarily disposing of their
own right to premiums. Reed v. Un-
ion Cent Life Ins. Go^ 21 Utah, 295.
it was held that plaintiff was entitled
to his commission.
Bruce J. said: "If the plaintiff
found a person willing to accept the
defendant's terms, and to take pos-
session within a reasonable time, and
to wait for possession for a reason-
able time, I think he did all he was
bound to do to earn his commission."
eoCook V. Forst 116 Ala. 395;
Schlegal v. AUerton, 65 Conn. 260;
Snyder v. Fearer, 87 111. App. 275;
Hutten V. Renner, 74 111. App. 124;
Baker v. Murphy, 105 111. App. 151;
Hafner v. Herron. 165 111. 242: Cor-
bel V. Beard, 92 Iowa, 360; Ranson t.
Weston, 110 Mich. 240; Hubachek v.
Hazzard, 88 Minn. 487; Hobbs v. Ed-
gar, 23 N. Y. Misc. 618; Dreisback v.
Rollins, 39 Kan. 268; Scott v. Clark,
3 S. Dak. 486; Nicholas v. Jones, 28
Neb. 813; Love v. Miller, 58 Ind. 294,
21 Am. Rep. 192; Vinton V. Baldwin,
supra; Reyman v. Mosher, 71 Ind.
596; Moses v. Blerling, 81 N. Y.
462; Mooney v. Elder, 56 N. Y. 238;
Fraser v. Wyckoff, 63 N. Y. 445; Wy-
lie V. Marine Nat Bank, 61 N. Y. 415;
Hinds V. Henry, 36 N. J. L. 328;
Hannan v. Moran, 71 Mich. 261. See
also, Tombs v. Alexander, 101 Mass.
255, 3 Am. Rep. 349; Walker v. Tir-
rell, 101 Mass. 257, 3 Am. Rep. 362;
Richards v. Jackson, 31 Md. 250, 1
Am. Rep. 49. See this subject fully
discussed under the title ''Brokers,"
post
The fact that the principal may
have seen fit for some reason of
his own to require the purchasers,
secured by the agent to execute
new orders for the machines sold
by the agent, will not deprive him
of his commission. Merriman v.
McCormick Harvester Co., 101 Wis.
619, B. c, 96 Wis. 600.
TO Smith V. Schiele, 93 Cal. 144;
I
144
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1537
transaction '* or that the contract for sale entered into or ratified by
the principal is not specifically enforceable.'*
So where a binding contract is required, and the agent procures it
to be made, he will be entitled to his compensation, although no sale
actually takes place because the principal refused to enforce the con-
tract,'* induced '" or permitted '• the buyer to withdraw from it, or
consented with the buyer that the contract should be cancelled,'' or
because of any other reason not involving the sufficiency of the agent's
performance.'"
The same general principles apply to undertakings to bring about
the exchange of property.'*
§ 1537* Where the agent contends that he has thus sub-
stantially performed his undertaking, notwithstanding the default of
the principal, the act of the agent must have been the immediate means
of securing the purchaser or lender. In this case it is causa causans
and not the causa proxima that the law looks to.*®
The cases in which this question has most commonly arisen have
been cases involving the sale of real estate or the procuring of loans
upon it, but the principles of l*w herein referred to are by no means
peculiar to cases of that sort, and many cases will be found cited in
the note, involving similar contracts with reference to other subjects.®^
In a similar case, where the agent
was to receive a rebate on the stock
received by the defendant, as com-
pensation for promoting the company,
and the defendant afterward sur-
rendered its right to receive the
amount of stock stipulated for, the
decision was for the agent, the court
saying: "The principal may not bar-
gain away his right to receive the
fund, and thus deprive the agent of
the reward for his services. The lat-
ter has not agreed to any such thing
as this, and the injustice of it is
manifest." Hix v. Edison Electric
Light Co., 10 N. Y. App. Div. 75.
73Hannan v. Moran, 71 Mich. 261;
Cohen v. Farley, 28 N. Y. Misc. 168;
Washburn v. Bradley, 169 Mass. 86.
But see apparently contra, Haus-
man v. Herdtfelder, 81 N. Y. App. Div.
46; Curtiss v. Mott, 90 Hun, 439.
T8 Mattes V. Engel, 15 S. D. 330;
McLaughlin v. Wheeler, 1 S. D. 497.
t4 Parker v. Walker, 86 Tenn. 566;
Millet V. Barth, 18 Colo. 112; Alvord
V. -Cook, 174 Mass. 120; Witherell v.
Murphy, 147 Mass. 417; Ward v.
Cobb, 148 Mass. 518, 12 Am. St. Rep.
587; Canfleld v. Orange, 13 N. D.
522.
7 (^Phelps V. Prusch, 83 Cal. 626.
^« Foster V. Wynn, 51 111. App. 401;
Betz V. Williams A White Land ft
Loan Co., 46 Elan. 46.
7T Lawrence v. Rhodes, 188 111. 96;
Granger v. Griffin, 43 111. App. 421;
Parker v. Walker, 86 Tenn. 666.
f^Flynn v. Jordal, 124 Iowa, 457;
Gibson V. Gray, 17 Tex. Civ. App. 646;
Mattes V. Engel, 15 S. D. 380.
7» Brown v. Wilson, 98 Iowa, 816;
Lockwood V. Halsey, 41 Kan. 166;
Jenkins v. Hollingsworth, 88 111. App.
139; Roche v. Smith, 176 Mass. 595,
79 AnL St. Rep. 345; Kalley v. Baker,
8 N. Y. Supp. 851; Blair v. Slosson,
27 Tex. Civ. App. 403.
•0 AttriU V. Patterson, 58 Md. 226;
Ayres v. Thomas, 116 Cal. 140.
M See for example Veeder v. Seaton,
»5 N. Y, App. Div. 196 (principal re-
IMS
§§ IS38, 1539]
THE LAW OF AGENCY
[book IV
§ 1538. No defense that principal realized no profit — So if the
agent has done all that he undertook to do, the fact that the services
proved to be of no value to the principal, or that the .latter did not
realize from them the expected profit, furnishes no ground, upon which
to deprive the agent of his compensation.** And it is immaterial
whether this result be attributable to the act of the principal or of third
persons : the principal and not the agent must run the risk of his under-
taking's proving profitless.
4, Effect of Termination of Agency,
I. Termination by the Act of Principal.
§ 1539- When agent is entitled to compensation if agency is ter*
minated before performance. — ^The question of the agent's right to
compensation when his authority has been revoked or his employment
has been terminated before full performance, depends, as has been
seen, upon a variety of considerations. The termination may have
fused to perform parol contract for
sale of automobile, not enforceable
under the statute of frauds, but one
which the buyer was ready and will-
ing to perform) ; Taylor v. Morgan's
Sons Co., 124 N. Y. 184; Jacquin v.
Boutard, 89 Hun (N. Y.), 437 (prin-
cipal without excuse refused to accept
orders procured by agent) ; Madden
V. Equitable Life Assur. Soc, 11 N. Y.
Misc. 540 (insurance company arbi-
trarily rejected application procured
by agent) ; Strong v. Prentice Brown
Stone Co., 6 N. Y. Misc. 57 (principal
did not properly perform contract
made for him by agent and the pur-
chasers rejected goods sold by agent
because they did not comply with the
contract); Taylor Mfg. Co. v. Key,
86 Ala. 212; Bailey v. CarndufT, 14
Colo. App. 169 (principal refused
without reason to deliver stock sold
by the agent); Owl Canon Gypsum
Co. V. Ferguson, 2 Colo. App. 219
(same effect); Bush v. Mattox, 116
Ga. 42; StaufTcr v. Linenthal, 29 Ind.
App. 305 (principal unjustifiably re-
fused to complete sale of a stock of
goods negotiated by agent) ; Steven-
son V. Morris Machine Works, 69
Miss. 232 (principal unreasonably de-
layed filling orders procured by agent
and purchaser therefore refused to ac-
cept the goods); Tyler v. Bernard
(Tenn. Ch. App.), 57 S. W. 179 (same
facts as In preceding case; agent re-
covered commissions on the sale);
Delafleld v. Smith. 101 Wis. 664, 70
Am. St. Rep. 938 (where the princi-
pal approved of the contracts, but
failed to deliver the goods).
So in cases where the principal
falls to enforce a binding contract
against a recalcitrant buyer. Dougan
v. Turner, 51 Minn. 330; (]^ghegan
V. Kelly, 11 N. Y. Supp. 704; HaUack
V. Hinckley, 19 Colo. 38; Aikins v.
Thackara Mfg. Co., 15 Pa. Super. 250;
Yates V. Appleton, 61 Hun (N. Y.),
228.
»2 Scovell V. Upham, 55 Minn. 267;
Stone V, Argersinger, 32 App. Div.
208; Rockwell v. Hurst, 13 N. Y. Supp.
290; Hagar v. Donaldson, 11 Pa. Co.
Ct. 252, 1 Pa. Dist. 147; Shuts v. Mc-
Vitie (Tex. Civ. App.), 72 S. W. 433;
Lockwood v. Levick, 8 C. B. (N. S.)
603; Hendrickson v. Woods, 77 App.
Div. 644 (no opinion), 78 N. Y. Supp.
949.
1 146
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§. I54O
resulted from the act of the principal or by operation of law ; if termi-
nated by the. act of the principal, such termination may, as to the agent,
have been rightful or wrongful.
It has been seen that, unless the authority of the agent be coupled
with an interest, it may be revoked by the principal at any time.®^ It
has also been seen that, though there may be a contract of employ-
ment between the parties, the principal may usually, in fact, terminate
it and discharge the agent at any time. As has been already ex-
plained,** what is meant by this is, that the relation between the prin-
cipal and the agent, being a personal one founded upon trust and con-
fidence, the law will not ordinarily undertake to compel the principal
to continue to employ an agent against his will, — will not, in other
words, enforce specific performance of the contract. But notwith-
standing the fact that he possesses this power to revoke or terminate,
the principal, as has been seen,** may expressly or impliedly agree not
to exercise it, — and where there is an employment for a definite term,
there is an agreement not to wrongfully terminate it, — ^and where
such an agreement is made, the principal will be liable if he violates
it, without good cause, in the same manner as for the violation of any
other contract.
§ 1540. In the absence, however, of an express or implied
agreement that the agency shall continue for a definite time, it will be
presumed to be an agency at will merely, terminable at the will of
either party at any time.®* And the same rule applies although the
agent may have been employed to do a specific thing, unless there is
an express or implied agreement on the part of the principal that he
will continue to employ the agent until completion, and on the part of
the agent that he will continue to act until full performance — it is still
at will merely ; no implied agreement to continue the agency until com-
pletion necessarily arises from the mere fact of such an eniplojmient.
If, for example, I employ a broker, in the ordinary way, to sell my
house, this does not imply an agreement on my part with him either
that I will sell the house or that I will continue to employ him until he
sells it ; or, on his part with me, that he will sell it or keep at it until he
does. I may usually withdraw my property, or he may abandon the
effort, without liability.
So, as has been seen,®^ the agent may be under an agreement to act
for a certain period with no corresponding obligation on the part of
the principal to employ him during that period.
^Ante, S 563. 99 Ante, I 592.
e« Ante, S 668. st Ante, §§ 598-606.
MAnte, 8 566.
II47
^5 IS4I"'IS43l THE LAW OF AGENCY [BOOK IV
a. Agency Rightfully Terminated.
§ 1541. When agency may be terminated without liability^ — In
using the expressions rightfully and wrongfully terminated, it will be
understood that the question of the principal's power to revoke authority
is not involved, but whether by express or implied agreement having
undertaken not to exercise that power, or having agreed that the re-
lation shall continue for a certain period, he has, nevertheless, revoked
the authority or terminated the relation in violation of the agreement."
In this view of the case the principal may rightfully revoke the
agent's authority in one of two cases: a. Where the authority was
conferred to continue only during the will of the principal; and,
b. Where, though the authority was to continue for a definite time, it
was subject to revocation upon the happening of a certain event, or
upon the breach of an express or implied condition of its continuance,
and the event has happened or the breach has occurred. What mis-
conduct on the part of the agent will constitute a breach of the implied
conditions of every employment, has previously been considered."
§ 1542. Agency at will of the principal. — ^Where an agency has
been created to endure at the will of the principal and is terminated
by him before the agent has done anything in pursuance of it, the
agent would ordinarily be entitled to no compensation whatever; if
terminated by the principal without fault of the agent, after the agent
has entered upon the performance, but before full completion, the
agent will ordinarily be entitled to compensation for the reasonable
yalue of the work already done, and to be reimbursed for the costs and
expenses which he had fairly and in good faith incurred in the per-
formance of the agency up to that time.'^ This will always be the
case where, from the nature of the employment, the principal receives
the full value of the agent's services as they are rendered. It will also
be true in all other cases except those in which the full performance
of the undertaking is expressly or impliedly made a condition precedent
to the right to compensation, — a subject already considered.*^
§ 1543. It is undoubtedly competent for the agent to agree
that he shall receive no compensation if his authority is terminated
before performance, even though it be so terminated at the mere whim
«« See ante, { 568. No. 15,468, 2 Ware (U. 8. D. C), 278;
80 See ante, § 607. Chambers v. Seay, 73 Ala. 872.
•0 United States v. Jarvis, Fed. Cas. 91 See ante, } 1^33.
1 148
CHAP. IV]
DUTIES AND UAB^UTIES OF PRINCIPAL
[§ 1544
or caprice of the principal, and where such an agreement is fairly made
it will be enforced.'*
Where the agency is thus at the will of the principal, the agent can-
not, if it be revoked, recover damages for this withdrawal of the
power to act, or for the commissions or compensation he might have
earned had the authority not been revoked.*' Nor can it make any
difference that the principal acted unreasonably, capriciously or ma-
liciously in revoking the authority. No action can ordinarily be main-
tained in such a case for the doing of what one thus has a legal right
to do, even tliough the act be prompted by malice.*^*
If, on the other hand, though the power of revocation be fully con-
ceded, the agent has substantially performed his undertaking in full
before the revocation, he ^/ill be entitled to compensation as upon a
complete performance.^'
§ 1544. Agency terminable on contingency. — The same rule would
apply where the authority was terminable by the principal upon the
happening of a certain contingency. Unless the agent had expressly
or impliedly agreed that in the event of such a termination he should
have no compensation, he would be entitled to receive the reasonable
value of the services already rendered, and to be reimbursed for the
expenses and charges which he had fairly and in good faith incurred
in the performance of the agency. The agent, however, would not be
entitled to recover anything by way of compensation for any damages
occasioned by the revocation, as for wages or profits which he might
have earned had the revocation not occurred, although the revocation
was without reasonable cause if within the contingency agreed upon.
The exception referred to in the preceding sections would also apply
•2Se€i, for example. Walker v. Tlr-
rell, 101 Mass. 257, 3 Am. Rep. 352.
For right to terminate If service Is
not Batlsfactory. Tyler ▼. Ames, 6
Lans. (N. Y.) 280; Adrlance v.
Rutherford, 57 Mich. 170; Hotchklss
V. Oretna Gin. ft Compress Co., S6 La.
Ann. 517; Dulaney v. Page Belting
Co, (Tenn. Ch.), 59 S, W. 1082.
Compare, Hydecker y. Williams, 18
N. Y. Supp. 586.
M North Carolina State L. Ins. Co.
V. Williams, 91 N. C. 69, 49 Am. Rep.
637; Jacobs v. Warfleld, 23 La. Ann.
395; Kirk t. Hartman, 63 Pa. 97;
Coffin V. Landls, 46 Pa. 426.
•* Crescent, etc., Co. v. Eynon, 95
Va. 151.
If there was in fact good ground
for discharging the agent. It is imma-
terial that the principal did not know
It at the time. Odeneal v. Henry, 70
Miss. 172; Boston Deep Sea Fishing
Co. y. Ansell (1888), 39 Oh. D. 339;
Rldgway y. Hungerford Market Co.,
8 Ad. ft El. 171; Loveman y. Brown,
138 Ala. 608; Troy Fertilizer Co. v.
Logan, 90 Ala. 325. If master asserts
one cause, he is not estopped to as*
sert another even though both were
known to him at time. Strauss v.
Meertlef, 64 Ala. 299.
•B Stamets y. Deniston, 193 Pa. 548.
1 149
§ IS48]
THE LAW OF AGENCY
[book IV
authority, and to exercise reasonable care and diligence in the per-
formance of his undertaking. The nonperformance of these duties also
may defeat the agent's right to compensation,' It is not every case
of misconduct in this regard, however, even though sufficient to war-
rant the agent's discharge, which will deprive him of all claim to
compensation. If the agent were guilty of such misconduct as amounts
to treachery, or if he wholly failed to recognize the duties and respon-
sibilities imposed upon him by his situation, or so conducts himself
that his services are of no value, it is entirely just and reasonable that
he should receive no compensation whatever, and to this extent the
law is well settled.*
But if on the other hand, though the agent has been negligent or
has not performed according to his undertaking, his services are still
of some appreciable and substantial value to the principal, over and
above all damages sustained by him by reason of the default, the agent
should be entitled to recover that value."'
It may also be found that the principal has waived or condoned the
agent's default, in which event, of course, it will cease to be of legal
consequence; and such waiver or condonation may be implied from
circumstances and need not be express.*
BA servant discharged for wilful
and persistent disobedience of reason-
able orders cannot recover compensa-
tion under an entire contract. Von
Heyne v. Tompkins, 89 Minn. 77| 5 L.
R. A. (N. S.) 524.
• See cases cited in second note pre-
ceding. See also Alta Invest. Co. v.
Worden, 25 Ck>lo. 215; Qnlnn v. Le
Due (N. J. Ch.), 51 Atl. 199;
Schreiner v. Klssock, 91 N. T. Supp.
28.
7Hildebrand ▼. American Fine Art
Co., 109 Wis. 171, 50 L. R. A. 826;
Lawrence v. Gullifer 88 Me. 532^»
Kessee v. Mayfleld, 14 La. Ann. 90;
Massey v. Taylor, 5 Cold. (Tenn.)
447; Carroll v. Welch. 26 Tex. 147;
Shute V. McVitle (Tex. Civ. App.),
72 S. W. 433; Cotton v. Rand, 98 Tex.
7; Congregation v. Peres, 2 Cold.
(Tenn.) 620; Eaken v. Harrison, 4
McCord (S. C), 249.
8 Tickler v. Andrea Mfg. Co., 95
Wis. 352.
It has also been held in many Eng-
lish, and several American cases that
where a servant or agent employed
for a d^inite period, is guilty of
such misconduct as will justify his
discharge, he is not only not entitled
to recover damages for the discharge,
but he is not entitled to any com-
pensation for what he may have done
during the enrrent period. This is
upon the theory that the contract for
that period, whether it be a week, a
month, a quarter or a year. Is an en-
tire contract, the complete perform-
ance of which is a condition prece-
dent to the servant's or agent's right
to recover.
English: Turner ▼. Robinson, 5 B.
ft Ad. 789, 6 C. A P. 15; Rldgway v.
Market Co., 3 Ad. ft El. 171; LHley v.
Elwin, 11 Q, B. 742; Spain v. Amott,
2 Starkie, 256; Turner v. Mason, 14
M. ft W. 112.
American: Beach v. Mullin, 84 N.
J. L. 340; Peterson v. Mayer, 46 Minn.
468, 13 L. R. A. 72 (see also Nellchka
V. Esterly, 29 Minn. 146).
II52
CHAF. IVj DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1549,1550
b. Agency Wrongfully Terminated.
§ 1549. When agent discharged without cause — Breach of implied
contract— But where, by express or implied contract, the agency
has been created to endure for a definite period, it may not be termi-
nated by the principal, unless for the agent's default, or by virtue of
some agreement to that effect, without liability to the agent. As has
been seen • where no definite time is agreed upon, the agency is ordi-
narily held to be one to continue during the will of the principal.^*
But it is not necessary that there should be an express agreement that
the agency shall not be thus terminated without liability at the mere
will of the principal. It may be implied from facts as in other cases,
and such an implied understanding is frequently demanded by the
rules of ordinary good faith between parties. It is, of course, always
within the power of the agent to protect himself by an express agree-
ment, and in many cases the absence of such an agreement will put the
agent at the mercy of the principal's will.
As has already been frequently pointed out, the mere fact that an
agent is employed to perform a certain act will not, of itself, amount
to an undertaking on the part of the principal that the agent shall be
permitted to complete the act, at all events, and the principal may
fairly, and in good faith, terminate the agency without liability, at
any time before performance. The case of the real estate broker fur-
nishes many typical illustrations of this rule. But where the act is
one which is to be paid for only upon completion, and which requires
time and labor for its performance, and the agent has, within a rea-
sonable time, brought the act to the very point of completion so that
success is certain and immediate, it would be the height of injustice
to permit the principal then to withdraw the authority and terminate
the agency and appropriate the benefit of it, without being liable to
the agent for any of the compensation which he had thus substantially
and practically earned.
§ 1550. So where an agent is employed to perform an act
(to be paid for on completion) which involves expenditures of labor
and money before it is possible to accomplish the desired object, and
the agent has in good faith incurred expense and expended time and
But this Is not the general rule in 10 No substantial damagee for dis-
the United States. See Hlldebrand v. charge where the employment was
American Fine Art Co. and other only for so long lis the services are
cases cited in note preceding this one. satisfactory to the employer. Sax v.
9 See ante, § 692. Detroit, etc, R. Co., 129 Mich. 602.
73 "53
§ 1551] ^^^ ^^^ ^^ AGENCY [book IV
labor, but has not had a reasonable opportunity to avail himself of the
results of this preliminary effort, it could not be permitted that the
principal should then terminate the agency and take advantage of the
agent's services without rendering any compensation therefor unless
that result is required by the plain terms of the contract or the in-
herent nature of the service.**
So, while a broker, as will be more fully seen hereafter, must ordinar-
ily fully perform in order to be entitled to his commissions, still if after
such a broker, employed to sell property, had in good faith expended
money and labor in advertising for and finding a purchaser,, and was
in the midst of negotiations which were evidently and plainly ap-
proaching success, the seller should revoke the authority with the pur-
pose of availing himself of the broker's efforts and avoiding the pay-
ment of his commissions, it could not be claimed that the agent had no
remedy.** In certain of these cases it might well be said that there
was an implied contract on the part of the principal to allow the agent
a reasonable time for perfomiance, that full performance was wrong-
fully prevented by the principal's own acts, and that the agent had
earned his commission.**
All of these questions, however, will be more fully considered in
their appropriate place.
§ 1551. What cases involved. — ^Thc cases here involved may be
divided into two general classes: First, those wherein there is a con-
tract with the agent to do some particular act, but not involving a gen-
eral employment of him to devote his entire time to the principal's
service ; and, Second, those in which there was a contract to enter the
principal's service for a definite time and to give to him during that
time the exclusive service of the agent. To state it in different form,
the first class includes contracts to do specific acts, and the second in-
cludes ordinary contracts of employment Accurately speaking, the
first class only ordinarily involves matters of agency, and the second
class questions of master and servant. The first class would be illus-
trated by the case of the broker or other agent who is employed to
11 Approved In Olover v. Hender- ton v.- Edwards, 90 Mich. 500; Rees
son, 120 Mo. 367. 41 Am. St. Rep. 695. v. Fellow, 88 C. C. A. 94, 97 Fed. 167;
See also, Jaekel v. Caldwell, 156 Slbbald v. Bethlehem Iron Co., 8S N.
Pa. 266; Green v. Cole, 127 Mo. 587; Y. S78, 38 Am. Rep. 441; Wylie v.
Zwolanek ▼. Baker Mfr Co., 150 Wis. Marine Nat. Bank, 61 N. T. 415; Mar-
517. tin ▼. HMj, 104 N. C. S6; Cloe t.
IS See po9t. Book V, Chap. III. Rogers, 81 Okla. 256, 88 U R. A. (N.
19 See Gleaaon v. McKay, 37 111. S.) 866.
App. 464; Oreen v. Cole, $u^a; Hea-
1 154
CHAP. IV]
DUTIES AND LIABILITIES OF PWNCIPAL
[§ 1552
sell specific property for a commission, but who docs not undertake
to give his entire time and service to the principal; and the second
class by the agent or servant who is employed to work by the week,
month or year at a fixed wage or salary.
§ 1552. Breach of contract with agent to do particular acts.—'
Where an agent has been employed to do some particular act or acts
for the doing of which he is to receive a commission or other agreed
sum, under such circumstances as to involve a contract that he shall
be permitted to perform, and he is wrongfully prevented from per-
forming by the principal, his remedy must ordinarily be an action for
damages. He can not have wages, because, by the hypothesis, none
were to be paid to him. He cannot ordinarily recover the agreed com-
mission, because this was to be paid only upon performance, and, by
the hypothesis, this has been prevented by the wrongful act of the
principal. There may, of course, be cases, as already suggested, in
which he has so substantially and practically performed before the
breach, that he may recover upon that theory. In other cases, how-?
ever, the agent's recovery must be had upon some different basis.
He would, in any event, be entitled to compensation for the work,
labor and money properly expended before the wrongful termination ; ^*
or, in cases in which the damages could be estimated with the neces-
sary certainty, to compensation for the loss of what he would have
received had he been permitted to perform his undertaking.^"
"Jaekel v. Caldwell, 156 Pa. 266;
Martin v. Holly, 104 N. C. 26.
15 See Cloe v. Rogers, 31 Okla. 255,
88 L. R. A. (N. S.) 366: Durkee v.
Gunn, 41 Kan. 496, 13 Am. St Rep.
300; Green v. Cole, 127 Mo. 587.
Where the compensation is not a
fixed sum, and is not capable of being
rendered certain by reference to
known data, but depends upon uncer-
tain or conjectural events, as where
it is to be paid in the form of com-
missions upon the price of goods
which the agent may sell during a
certain period, the probable amount
of his sales during that period is or-
dinarily too speculative to be made
the basis of a recovery. Brigham v.
Carlisle, 78 Ala. 243, 56 Am. Rep. 28;
Beck V. West, 87 Ala. 213; Howe Ma-
chine Co. V. Bryson, 44 Iowa, 159;
Oberfeldes v. Mattlngly (Ky.), 120 S.
W. 352; Stern v. Rosenheim (Md.),
10 Atl. 221: labell v. Anderson .Car-
riage Co., 170 Mich. 304; Lewis ▼•
Atlas Ins. Co., 61 Mo. 534; Kelly v.
Carthage Wheel Co., 62 Ohio St 598.
But there may easily be cases in
which the experience of the agent
under similar circumstances may fur-
nish sufficient data for the determina-
tion of his probable sales (Crammer
V. Kohn, 7 S. D. 247; Oliver v. Per-
kins, 92 Mich. 304; Randall v. Peer-
less Motor Car Co., 212 Mass. 352;
Schumaker v. Heinemann,' 99 Wis.
251; McDougall v. Van Allen Co., 19
Ont. L. R. 351; Laishley v. Goold Bi-
cycle Co., 6 Ont. L. R. 319); as well
as cases wherein the experience of
others under circumstances substan-
tially similar may furnish sufficient
data. See Hitchcock v. Supreme Tent,
100 Mich. 40, 43 Am. St. Rep. 423;
Wakeman v. Wheeler & Wilson Mfg.
Co., 101 N. Y. 205, 64 Am. Rep. 676;
"55
§ 1553] "^^^ ^-^^ ^^ AGENCY [book IV
§ 1553. Breach of express contract of employment — ^Agent's rem-
edies.— Where, however, there has been an employment for a defi-
nite period, and the agent is discharged without cause before the ex-
piration of that period, or is not permitted to undertake the performance
at all, the principal is liable to the agent for the damages occasioned
thereby, as in any other case of the breach of a contract.
There has been, and still is, much uncertainty and confusion in the
cases as to the exact remedies which the agent, in such a case, may
pursue, and as to the measure and nature of the damages he may re-
cover, but it is believed that the preponderance of authority and rea-
son is in harmony with the following rule : —
An agent thus wrongfully discharged or prevented from performing
his undertaking has his choice of three remedies (although the second
and third differ only in respect of the time at which the action is
brought) : —
1. He may elect to consider the contract as rescinded, and at once
bring an action to recover the value of the services, if any, rendered
up to the time of the discharge, less the amount already paid to him ; or
2. He may at once bring an action for the breach of the contract,
and may recover compensation for the probable losses resulting there-
from ; or
3. He may wait until the end of the term, and then bring his action
Mueller v. Spring Co.. 88 Mich. 390; damages is not the fee, but the rea-
Aetna Life Ins. Co. y. Nexsen, 84 Ind. sonable value of the services ren-
347, 43 Am. Rep. 91. dered. French v. Cunningham, 149
In Durkce v. Gunn, 41 Kan. 496, 13 Ind. 632. See also. Western Union
Am. St. R. 300. where an agent who Tel. Co. v. Semmes, 78 Md. 9; Polsley
had been employed to sell a suhdlvl- v. Anderson, 7 W. Va. 202, 23 Am.
slon of land, and who wag to have no Rep. 613; Badger v. Mayer, 8 N. Y.
pay for advertising, services, etc., ex- Misc. 633.
cept a share of the profits, was wrong- In Rlghtmlre v. Hirner, 188 Pa. 325,
fully discharged before the subdlvl- the plaintiff was employed for three
slon was sold, he was allowed to re- years, to sell machines on commis-
cover such damages "as would be slon. The defendant was not bound,
equal in^amount to his share of the however, to furnish any machines,
profits which would have resulted had BeJd, that the measure of damages
the lands been sold by him." Pol- for a breach was the value of the con-
lowed in Green v. Cole, 127 Mo. 587. tract at that time; but that, in deter-
But cf. Glover v. Henderson, 120 Mo. mining Its value, the jury should take
367, 41 Am. St. R. 695. But where into account the fact that defendant
an attorney, employed to prosecute a was not obliged to continue to make
claim for a contingent fee, is dis- machines, the contingencies and de-
charged or prevented from contlnu- pressions of trade, and also what the
ing before judgment has been ob- plaintiff probably could earn in some
tained, It is held that the measure of other employment
II56
CHAP. IV]
DUTIES AND UABIUTIES OF PRINCIPAL
[§ IS54
for the breach of the contract and recover compensation for the actual
loss he has sustained thereby .^^
He cannot^ however, pursue all of these remedies, and a recovery
under one will be a bar to a recovery under the others."
The second and third of these remedies are in addition to his right
of action for wages earned but not paid.**
§ 1554- Theory of these remedies. — By pursuing the first
of these remedies, the agent elects to treat the contract as rescinded.
He has, however, rendered valuable services for the principal, and
there being now no contract to fix the price, he is entitled to recover
i« Howard v. Daly, 61 N. T. 862, 19
Am. Rep. 285; James v. Allen County,
44 Ohio St. 226, 58 Am. Rep. 821;
Weed V. Burt, 78 N. Y. 192; Saxonia,
etc., Co. V. Cook, 7 Colo. 569; Rich-
ardson V. Eagle Machine Works, 78
Ind. 422, 41 Am. Rip. 584; Garden-
hire V. Smith, 39 Ark. 280; Goodman
V. Pocock, 15 Ad. A Ell. (N. S.) 576;
Elderton y. Emmons, 6 Man. G. ft S.
(C. B.) 160; Smith v. Hay ward, 7 Ad.
4b Ell. 544.
17 Richardson v. Eagle Machine
Works, 78 Ind. 422, 41 Am. Rep. 584;
McCargo v. Jergens, 206 N. Y. 363;
Ldtchenstein v. Brooks, 75 Tex. 196;
James v. Allen County, 44 Ohio St.
266, 58 Am. Rep. 821.
IB Richardson v. Eagle Machine
Works, 78 Ind. 422, 41 Am. Rep. 584;
James v. Allen County, 44 Ohio St.
226, 58 Am. Rep. 821.
Judgment aa bar to further recov-
ery,— With respect ot wages already
earned and due but not paid, the
plaintiff has a fixed and vested right,
which is entirely independent of a
cause of action for any subsequent
breach of the contract, and which he
may enforce without regard to his
remedy for the breach of contract,
subject only to such rules respecting
the Joinder of actions as statutes may
prescribe or the court may enforce.
This action would be based upon the
contract for the recovery of wages
at the contract rate, and is not based
upon the theory of rescission nor
measured quantum meruit. This ac-
I
tion will only lie for the wages for a
completed period, and could be
brought only after that period had
expired. See Perry v. Dickerson, 85
N. Y. 345, 39 Am. Rep. 663; Levin v.
Standard Fashion Co., 4 N. Y. Supp.
867; Uliott v. Miller, 17 N. Y. Supp,
526; Keedy v. Crane, 71 Md. 395.
(It ia submitted, however, that
Keedy v. Crane, in holding that the
right to recover for a month's wages
earned and due, and the right to re-
cover for a breach of the contract
for the residue of the term, involved
distinct recoveries for the same cause
of action, is wrong.)
If the plaintiff is discharged in the
middle of a wage period, his right to
recover for so much of that period
aa has not been paid for seems to be
based upon the following considera-
tions: he cannot recover for that
period as wagen^ because wages are
due upon the completion of the serv-
ice for that period; he may recover
quantum meruit, but to do so in*
volves treating the contract as aban*
doned, and is held to be a bar to any
further recovery for a breach of the
contract See James v. Parsons, 70
Kan. 156 (where the plaintiff's re-
covery, quantum meruit, tor only
three days of a wage period was held
to be a bar to his recovery of any
damages for a breach of the con-
tract). Keedy v. Long, 71 Md. 385,
& L. R. A. 759. But cf. Levin v.
Standard Fashion Co., 4 N. 'Y. Supp.
867.
157
§ 1554]
THE LAW OF AGEKCY
[book IV
their value upon a quantum mcruit^^ In this recovery he is not lim-
ited by the contract price, not only because the contract has been
rescinded, but because it may be that on account of a fixed employ-
ment, or because of an expectation of an increased compensation at
a later period in the service, he agreed to render the services in ques-
tion for less than their actual value. Such a recovery should, of course,
be less the actual amount, if any, which has been already paid to him.
The two other remedies proceed upon the theory that the contract
still continues in force, though broken by the principal, and the recov-
ery had is for damages for the breach, and not for usages* A recovery
was formerly allowed for wages upon the ground of a constructive
service, but the doctrine of constructive service is almost universally
repudiated in modern times.** It is, however, still recognized in a
To avoid this result, he should sue
for breach of contract, and recover in
this action apparently from the termi-
nation of the last full wage period be-
fore his wrongful discharge.
Where he is paid up to the time of
his wrongful discharge, he can, ex-
cept in those states which admit the
doctrine of constructive service, re-
cover only for the breach of con-
tract. For this, as has been seen, he
can have but one action, whether
brought at once or after the expira-
tion of the contract term.
Inasmuch as he has but one ac-
tion, any recovery based upon any
portion of the period since wages as
such were last due, even though such
recovery was mistakenly based on the
notion that wages could be recovered,
is a bar to any further recovery. Olm-
stead V. Bach, 78 Md. 132, 44 Am. St.
Rep. 273, 22 L. R. A. 74. Here the
plaintiff was employed for a year at
a salary of $50 a week payable week-
ly. He was wrongfully discharged,
but his salary was paid to the end of
the week in which he was discharged,
so that no wages were due him at
the time of his discharge. After the
expiration of the next week he sued
for and recovered Judgment for $50
as one week's wages. The defend''
ant paid this Judgment Plaintiff
then waited five weeks and sued
again, claiming to recover $250. It
II
was held that the first recovery was
a bar to any further recovery; that
even though it purported to be for the
recovery of one week's wages. It was
in fact an action for the breach of
the contract; that but one action for
this could be brought, and If the
plaintiff inadvisedly failed to recover
all the damages he was entitled to, it
was his own misfortune. Followed
in Doherty v. Schipper, 250 111. 128.
i« Smith on Master and Servant*
96; Beck r. Thompson, 108 Ga. 242;
Fulton T. Heffelinger, 23 Ind. App.
104; Welch v. Livingston, 33 Misc.
116; Hartman v. Rogers, 69 Cal. 643;
James v. Parsons, 70 Kan. 156; Rich-
ardson T. Swartsei, 70 Kan. 778.
See Markham y. Markham, 110 N.
C. 356.
20 Howard ▼. Daly, 61 N. T. 862, 19
Am. Rep. 285; Jamts v. Allen Connty,
44 Ohio St 226, 58 Am. Rep. 821;
Richardson y. Eagle Machine Works,
78 Ind. 422, 41 Am. Rep. 684; Little
Bntte Consol. Mln. Oo. v. Girand, —
Ariz. — , 123 Pac. 209; Doherty v.
Schipper, 250 111. 128; Olmstead y.
Bach, 78 Md. 132, 44 Am. St Rep.
273, 22 L. R. A. 74; Archard y. Hornor,
3 C. ft P. 349; Smith y. Hay ward, 7
Ad. ft Ell. 544; Aspdin v. Austin, 5
Ad. ft Ell. (N. S.) 671; Fewings y.
TiBdal, 1 Bxch. 295; Elderton v. Em-
mons, 6 C. B. 160; Goodman v. Po-
cock, 15 Ad. ft EIL (N. a) 582.
S8
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ ^SSS
few states.*^ Under this theory it was incumbent upon the agent to
hold himself in readiness, at all times, to perform the service, and
having done so, he was permitted at the end of the term to recover his
wages as such, the same as if he had in fact performed the service.
If the ws^es were to be paid in installments, he might under this rule,
sue for and recover them as they became due.^* By holding himself
in readiness to perform, but being wrongfully prevented by the prin-
cipal, he was deemed in law to have constructively performed. This
doctrine is, however, as is said by a learned judge," "so opposed to
principle, so clearly hostile to the great mass of the authorities, and so
wholly irreconcilable to that great and beneficent rule of the law that
a person discharged from service must not remain idle but must ac-
cept employment elsewhere, if offered, that it cannot be sustained. If
a person discharged from service may recover wages or treat the
contract as still subsisting, then he must remain idle in order to be
always ready to perform the service. He is placed in the predicament
of being called upon by one rule of law to accept other employment if
offered, and by another rule to remain idle in order to recover full
wages. The doctrine is also not only at war with principle, but with
the rules of political economy, as it encourages idleness and gives
compensation to men who fold their arms and decline service, equal
to those who perform witli willing hands their stipulated amount of
labor."
This discussion of course presupposes that the dgent has in fact
been discharged from the employment. If he has not been discharged,
but has simply been prevented from performing the service, different
rules would apply.**
§ i555> A middle grotmd has been taken by the court in
Minnesota. It is that the agent is not to recover on the ground of
constructive service, nor is his action a single one to recover damages
21 Strauss v. Meertief, 64 Ala. 2S9,
38 Am. Rep. 8; Davis v. Ayres. 9 Ala.
292; Harney v. Holcombe, 21 Ala.
567; Fowler v. Armour, 24 Ala. 194;
Isaacs y. Daviee, 68 Ga. 169; Arm-
fleld v. Nash, 31 Miss. 361. See also,
Allen V. CoUiery Engineers' Co., 196
Pa. 512.
2S Strauss v. Meertief, 64 Ala. 299,
3S Am. Rep. 8; Davis v. Preston, 6
Ala. 83.
23Dwight, O., In Howard v. Daly,
61 N. Y. 362, 19 Am. Rep. 285.
MThuB where the plaintiff, em-
ployed for a definite term at a month-
ly wage toithout being discharged, was
prevented by the employer from work-
ing, though he was ready and willing
to work, it was held that he could
recover the monthly wages as they
accrued. "It is one thing," said Gray,
C, "to prevent a party from laboring,
and quite a different thing to dis-
charge him from all further employ-
ment." Stone T. Bancroft, 112 Cal.
652, 189 Cal 78.
"59
§ 1556] THE LAW OF AGENCY . [BOOK IV
for the breach of contract. What he is entitled to, in the view of this
Court, is indemnity for the loss of wages. Having been wrongfully
discharged, he is entitled, at the expiration of each wage period fixed
by the contract, to be indemnified for what he has lost by not being
employed during that period ; and he may bring as many actions as
there may be periods, during which, through inability to get other
employment, he has sustained the loss of wages. **It is our opinion,"
said the court,** "that the servant wrongfully discharged is entitled to
indemnity for loss of wages, and for the full measure of this indem-
nity the master is clearly liable. This liability accrues by installments
on successive contingencies. Each contingency consists in the failure
of the servant without bis fault to earn, during' the installment period
named in the contract, the amount of wages he would have earned if
the contract had been performed, and the master is liable for the de-
ficiency. This rule of damages is not consistent with the doctrine of
constructive service, but it is the rule which has usually been applied
by the courts which adopted that doctrine. Under that doctrine the
master should be held liable to the discharged servant for wages as if
earned, while in fact he is held only for indemnity for loss of wages.
The fiction of constructive service is false and illogical, btit the meas^
ure of damages given under that fiction is correct and logical. It is
simply a case of a wrong reason given for a correct rule. Instead of
rejecting the false reason and retaining the correct rule, many courts
have rejected both the rule and the reason. In our opinion, this rule
of damages should be retained; but the true ground on which it is
based is not that of constructive service, but the liability of the master
to indemnify the discharged servant, not to pay him wages, and this
indemnity accrues by installments. The original breach is not total,
but the failure to pay the successive installments constitutes succes-
sive breaches."
§ 1556. When action may be brought. — The cause of ac-
tion, for the breach of contract in these cases, arises when the agent
IS unequivocally discharged,^* and the agent may bring his action for
damages at once, or, except for the statute of limitations, he may wait
until the expiration of the agreed term. If he brings his action before
the expiration of the term, but the trial does not take place until after
ssMcMuUan t. Dickinson Co., 60 Alie ▼. Nadeau, 98 Me. 282, 74 Am.
Minn. 156, 51 Am. St. Rep. 511, 27 L. St. Rep. S46; Everson ▼. Powers, 89
R, A. 409. N. Y. 527, 42 Am. Rep. 319; Prichard
20 Utchensteln ▼. Broolss, 75 Tex. v. Martin. 27 Miss. 805.
196; Sutherland v. Wyer, 67 Me. 64;
n6o
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1556
its expiration, no partictilar question arises.'^ But if, in such cas€,
the trial takes place before the expiration of the term, it is held, in
some cases, that the damages can be estimated only down to the time
of the trial, upon the ground that the question of his employment and
earnings, during the residue of the term, is too uncertain and con-
jectural to be made the subject of a legal remedy,** As has often
been pointed out, however, the uncertainty here is no greater than in
many other cases in which a recovery is constantly permitted, as for
example, in cases of personal injury, where damages are awarded,
based upon the expectation of life and future earning power. More-
over, where the agreed term of service was long, it may be necessary
to bring the action before the expiration of the term in order to save
the bar of the statute of limitations, and it may not be possible to de-
lay the trial until after the expiration of the agreed term. Still fur-
ther, in the case of employments for life, which are not uncommon,
the action must be brought before the expiration of the term if it is
to be brought at all. It would be obviously unjust in these cases, to
deny the plaintiff the benefit of any recovery for the unexpired term.
Although the basis of recovery may be more or less conjectural, it is
probably as fair to one party as the other. Even if it should be thought
that the scales are likely to turn against the principal, it may still be
urged that, inasmuch as the situation was brot^ht about by his con-
fessedly wrongful act, it is not unfair that the doubts, if there be any,
should be resolved against him. In any event, the weight of authority
is believed to be to the effect that even though the trial occurs before
27 Inasmuch as all uncertainty as
to what may happen during the unex-
pired term. Is removed where, though
the action was begun before, the trial
does not take place until after the
expiration of the term, the same rule
as to damages is usually adopted as
where the action is begun after the
expiration of the term. Everson v.
Powers, 89 N. Y. 527, 42 Am. Rep.
319; Howay v. Going-Northrup Co., 24
Wash. 88, 85 Am. St Rep. 942, 6 L.
R. A. (N. S.) 49; Bailey v. Mclntire,
71 N. H. 329; Catholic Press Co. v.
Ball, 69 111. App. 591; Halsey v.
Meinratb, 54 Mo. App. 835; Roberts
V. Crowley, 81 Ga. 429; O'Neill v.
Traynor, 24 N. Y. Misc. 686.
28 The leading case In this country is
probably Gordon v. Brewster, 7 Wis.
855, and this case has been approved
and followed in several others. Van
Winkle v. Satterfield, 58 Ark. 617. 23
L. R. A. 853; Mt. Hope Cemetery
Ass'n V. Weidenmann, 189 111. 67; Mc-
Cormick Harvest Mach. Co. v. Cord-
siemon, 101 111. App. 140; Bassett v.
French, 10 N. Y. Misc. 672; Darst v.
Mathieson Alkali Works, 81 Fed. 284.
To same effect: Fowler v. Armour,
24 Ala. 194; Zender v. Sellger Toot>
hill Co., 17 N. Y Misc. 126; Everson
V. Powers, 89 N. Y. 527. 42 Am. Rep.
319; Sommer v. Conhalm, 26 N. Y.
Misc. 166; Lltchenstein v. Brooks, 75
Tex. 196; Louisville, etc., R. Co. v.
Offutt, 15 Ky. U R. 301,
I161
§ 1557]
THE LAW OF AGENCY
[book IV
the expiration of the term, the award of damages may cover the prob-
able loss for the unexpired portion.'*
§ 1557. The measure of damages. — ^If in accordance with
the rule above stated, the action is brought at once upon the discharge,
and the trial is had before the expiration of the term the measure of
damages, according to the weight of authority, is pritna facie a sum
equal to the stipulated compensation for the period following the dis-
charge.*® This sum, however, the principal may reduce if possible
by showing the probability of the agent's being able by the exercise of
reasonable diligence to secure other employment before the term would
have expired. The burden of this proof is held to be upon the de-
«» Seymour t. OelrlchB, 156 CaJ.
782; Hamnton ▼. Love, 152 Ind. 641,
71 Am. St Rep. S84; Pennsylvania R.
Co. V. Dolan, 6 Ind. App. 109, 61 Am.
St. Rep. 289; Forked Deer Pants Co.
▼. Shipley, 26 Ky. L. R. 2299, 80 S. W.
476; Sutherland v. Wyer, 67 Me. 64;
Cutter Y. Gillette, 163 Mass. 95; Estes
V. Desnoyers Shoe Co., 155 Mo. 577;
Boland y. Glendale Quarry Co., 127
Mo. 520; Lally v. Cantwell, 40 Mo.
App. 44; Brighton r. Lake Shore, etc.,
R. Co., 103 Mich. 420; School District
V. McDonald, 68 Neb. 610: Kelly v.
Carthage Wheel Co., 62 Ohio St. 598;
Wilke v. Harrison, 166 Pa. 202 (sem-
ble); Helfferich v. Sherman, — S.
D. — , 134 N. W. 815; Bast Tennessee
R. Co. V. Stauh, 7 Lea (Tenn.), 397;
Pierce v. Tenn. Coal, etc., Co., 173 U.
S. 1, 43 L. Ed. 591; Meade v. Doherty,
7 New Bruns. 195 (semble).
Where the contract was for employ-
ment for life or during ability to
work, a recovery was held proper
which allowed the contract price up
to the time of the trial, "and the
present worth of what he would be
able to earn in the future, so long as
he would, in the ordinary course of
events, be able to perform the serv-
ice, less any sums which he would be
able to earn in other employment."
Stearns v. Lake Shore. Ry. Co., 112
Mich. 651; Pennsylvania Co. v. Dolan,
6 Ind. App. 109, and Brighton v. Lake
Shore, etc., Ry. Co., 103 Mich. 420,
were relied upon. See also, Daniell
V. Boston ft M. R. Co., 184 Mass. 8.37;
Rhoades v. Chesapeake, etc., R. Co.,
49 W. Va. 494, 87 Am. St Rep. 826, 55
Lu R. A. 170.
so Gates y. School District, 57 Ark.
870, 38 Am. St Rep. 249; Webster v.
Wade, 19 Cal. 291, 79 Am. Dec. 218;
Utter y. Chapman, 88 Cal. 659; Alder-
son y. Houston, 154 Cal. 1; Seymour
V. Oelrlchs, 156 Cal. 782; Ansley v.
Jordan, 61 Oa. 482; Brown v. Board
of Education, 29 111. App. 572;
World's Columbian Exposition v.
Richards, 57 111. App. 601; School
Directors v. Orr, 88 lU. App. 648;
City of Jacksonville y. Allen, 25 IlL
App. 54; Hamilton y. Love, 162 Ind*
641, 71 Am. St Rep. 384; Gazette
Printing Co, v. Moras, 60 Ind. 153;
Richardson v. Eagle Machine Works,
78 Ind. 422, 41 Am. Rep. 584; Ricks
V. Yates, 5 Ind. 115; Hinchcllffe v.
Koontz, 121 Ind. 422, 16 Am. St Rep.
403; Jaffray v. King, 34 Md. 217;
Cumberland, etc.. Railroad Co. v.
Slack, 45 Md. 161; Baltimore Base
Ball Club V. Pickett 78 Md. 375, 44
Am. St. Rep. 304, 22 L. R. A. 690;
McGrath v. Marchant — Md. — ,
83 Atl. 912; Farrell v. School Dis-
trict 98 Mich. 43; Allen v. Whltlark^
99 Mich. 492; Champlaln v. Detroit
Stamping Co., 68 Mich. 238; Bennett
V. Morton, 46 Minn. 118; Horn v.
Western Land Ass'n, 22 Minn. 233;
Odeneal v. Henry, 70 Miss. 172; Hunt
y. Crane, 33 Miss. 669, 69 Am. Dec
381; Hansard v. Menderson Clothing
162
CHAP. IV]
DUTIES AND LIABILITIES OP PRINCIPAL
[§ 1557
fendant*^ If this rule seems harsh, it is replied that the principal has
brought the action upon himself by his own wrongful act, and it is but
just that if there be doubt as to the agent's finding other employment,
the burden of it should fall upon him who might have prevented any
doubt at all by performing his agreement. The damages for the
Co., 73 Mo. App. 584; Howard v.
Daly, 61 N. Y. 362, 19 Am. Rep. 285;
Grlffln T. BrooklTB B^ll Club, 68 App.
Dlv. 566; O'NeiU v. Traynor, 24 Misc.
686; Merrill v. Blanchard, 7 App. Dlv.
167; affirmed, 158 N. Y. 682; Emery v.
Steckel, 126 Pa. 171, 12 Am. St- Rep.
857; Latimer v. York Cotton MlHg,
66 S. C. 135; Alien v. Maronne, 93
Tenn. 161; Babcock v. Appleton Mfg.
Co.. 93 Wis. 124; Winkler v. Racine
Carriage Co., 99 Wis. 184.
In the following cases, where the
trial was held before the term of em-
ployment expired, the same thing was
held. Van Winkle v. Satterfleld, 58
Ark. 617, 23 L, R. A, 853; Pennsyl-
vania Co. V. Dolan, 6 Ind. App. 109,
51 Am. St. Rep. 289; Hamilton v.
Love, 152 Ind. 641, 71 Am. St. Rep.
384.
The rule in New Jersey seems not
to be substantially different. Thus in
Moore v. Central Foundry Co., 68 N.
J. Law, 14, although the court said
that the mere fact the servant brought
his action. to recover damages instead
of salary, part of which was not due,
did not entitle him to recover the full
amount of the compensation which he
would have received had he served
out the full term of his employment,
the court further said that the Jury
should consider the fact that after his
discharge his time became his own,
and it was his duty to seek employ-
ment elsewhere; that they should de-
duct from the total amount payable
under the contract the sum which the
plaintiff might reasonably earn dur-
ing the time the contract had yet to
run. See also. Smith v. Gilbert Lock
Co., 4 N. J. Law Jour. 312.
Where the agent was to receive his
living expenses in addition to his
wages he ia entitled to compensation
for this also. Estes v. Desnoyers
Shoe Co., 155 Mo. 577. Cf. Lagerwall
▼. WilkhkBon, 80 L. T. (N. S.) 55.
81 Troy Fertilizer Co. v. Logan, 96
Ala. 619; Gates v. School District. 57
Ark. 370, 38 Am. St. Rep. 249; Alder-
son V. Houston, 154 Cal. 1; Brown v.
Board of Education, 29 111. App. 572;
World's Columbian Exposition v. Rich-
ards, 57 111. App. 601; School Direct-
ors v. Orr, 88 111. App. 648; City of
Jacksonville v. Allen, 26 111. App. 54;
Ricks V. Yates, 5 Ind. 115; Baltimore
Base Ball Club v. Pickett, 78 Md. 375,
44 Am. St. Rep. 804; Bennett v. Mor-
ton, 46 Minn. 113; Odeneal v. Henry,
70 Miss. 172; Farrel v. School Dis-
trict, 98 Mich. 43: Allen v. Whitlark,
99 Mich. 492; Champlain v. Detroit
Stamping Co., 68 Mich. 288; Hansard
V. Menderson Clothing Co., 73 Mo.
App. 584; Saulre v. Wright, 1 Mo.
App. 172; McDermott v. DeMerldor
Co., 80 N. J, L. 67; Wlrth v. Calhoun,
64 Neb. 316; Grlffln v. Brooklyn Ball
Club, 68 App. Dlv. 566; Howard v.
Daly, 61 N. Y. 362, 19 Am. Rep. 286;
O'Neill V. Traynor, 24 N. Y. Misc.
686; Merrill v. Blanchard, 7 App. Div.
167; affirmed, 158 N. Y. 682; Emery
V. Steckel, 126 Pa. 171. 12 Am. fit.
Rep. 857; Coates v. Allegheny Steel
Co., 234 Pa. 199: Babcock v. Apple-
ton Mfg. Co., 93 Wis. 124; Gauf v. Mil-
waukee Athletic Club, Wis. ,
139 N. W. 207.
In the preceding cases the trial ap-
parently occurred after the expira-
tion of the term of employment.
In the following cases, the trial
occurred before the period had ex-
pired. Pennsylvania R. Co. v. Dolan,
6 Ind. App. 109, 51 Am. St Rep. 299;
Hamilton v. Love, 162 Ind. 641, 71
Am. St. Rep. 384; Van Winkle v.
Satterfield, 58 Ark. 617, 23 L. R. A.
1 163
§ 1558]
THE LAW OF AGENCY
[book IV
breach of contract could not exceed the stipulated sum/' The agoit
is entitled to compensation, but not to be placed in a better situatkxi
than he would have been if the principal had not made default
§ 1558. Same subject. — Where the action is not brought
until the end of the term, the measure of damages can then be more
certainly ascertained. It will then be known how much the agent has
been able to earn, or by the exercise of reasonable diligence might
have earned, at other employment, and to this extent therefore the
853: Webb v. Depew, 152 Mich. 698,
16 L. R. A. (N. S.) 813; Cutter T.
Gillette, 163 Mass. 95.
The burden of proof being on the
defendant, it la usually held that it
is not necessary for the plaintiff to
allege or prove as part of his prima
facie case that he was not able to
secure other employment See cases
cited in preceding note. Wirth v.
Calhoun, 64 Neb. 316.
It is held in a few states that it
Is incumbent on the plaintiff, as part
of his case, to show that by the ex-
ercise of reasonable diligence, he has
not been able to obtain other em-
ployment. Lewis Co. V. Scott, 95 Ky.
484, 44 Am. St Rep. 251; Hunt v.
Crane, 33 Miss. 669, 69 Am. Dec. 381;
Fowler v. Waller, 26 Tex. 695; Wil-
loughby ▼. Thomas, 24 Gratt (Va.)
521.
Damagea where contract termin-
able upon nottce.-^It is not uncom-
mon, in cases of contracts for a defi-
nite term, to proYide that one party
or either party may terminate it be-
fore the expiration of that term,
upon giring certain notice, and the
like. In such a case, of course, the
contract may be terminated in pur-
suance of its terms without any lia-
bility. But even though the defend-
ant may terminate the contract
without haying given the notice re-
quired, the measure of damages is
not compensation for the remainder
of the prescribed term, but treating
the discharge as notice, it is com-
pensation for the period which the
notice was to cover* Watson v. Rus-
I
sell. 149 N. Y. 388. reversing Watson
v. Russell, 5 N. Y. Misc. 352; Fisher
▼. Monroe, 2 N. Y. Misc. 326, revers-
ing Fisher v. Monroe, 1 N. Y. Misc.
14; Dallas v. Murry, 37 N. Y. Misc.
599; Derry v. Board of Education,
102 Mich. 631; French v. Brookes, e
Bing. 354; Hartley v. Harmon, 3 Per.
ft Dav. 567. (Compare Griffin v.
Brooklyn Ball aub, 68 N. Y. App.
Dlv. 566; affirmed without opinion,
174 N, Y. 635, where Watson v. Rus-
sell, supra^ was distinguished and
not followed because In the case at
bar the defendant had not undertak-
en to terminate the employment in
all respects, but to transfer the plain-
tiff to another club, and because the
provision in the contract permitting
termination upon notice was limited
to a termination during the playing
season, while the discharge in ques-
tion took place before that season
opened.)
The rule of Watson v. Russel)
has been applied in cases where, in-
stead of a provision in the contract
permitting discharge upon notice, the
contract was made in the light of a
custom to that effect Briscoe v. Litt,.
19 N. Y. Misc. 5.
Exemplary damages. — ^Exemplary
damages are not recoverable for
breach of contract in these cases.
Richardson v. Wilmington ft W. R.
Co.. 126 N. C. 100; Burnett v. Edling,
19 Tex. Civ. App. 711; or for mental
suffering. Addis v. Gramophone Co.,.
[19091 App. Cas. 488, 101 L. T. Rep.
466.
S2 Meade v. Rutledge, 11 Tex. 44.
164
CHAP. IV]
DUTIES AND UABIUTIES OF PRINCIPAL
[§ ISS9
prlncipars liability is diminished.'* The rule in this case, as in the
other, is compensation to the agent. Prima facie the stipulated sum
would be the measure of the damages, and the burden is upon the
principal to establish either that the agent has obtained other employ-
ment or that he might by the exercise of reasonable diligence have so
obtained it.'*
This action proceeds, as has been said, for the breach of the contract,
and the right of action accrues upon the breach. In cases, therefore,
of employment for a long term of years, the agent by deferring his
action until the end of the term, would be in danger of having the
statute of limitations operate against his claim.
If the agent is informed that his authority is revoked or that he will
not be permitted to continue its execution, he is justified in accepting
this as conclusive. It is not necessary that he should go through the
barren form of offering to perform. His readiness may be shown by
other evidence.*'
§ i559« Duty of agent to seek other employment. — It is in
general the duty of the agent wrongfully discharged to exercise rea-
M For the purpose of reducing the
plain tUf'B recovery, what the plain-
tiff earned, and what he might by
reasonable diligence have earned, at
other Bimilar employment, stand
upon the same footing. Emmens v.
Elderton, 13 Com. Bench. 495; Utter
V. Chapman, 38 Cal. 659; Williams v.
Chicago Coal Co., 60 III. 149; Gazette
Printing Co. v. Morss, 60 Ind. 153;
Hinchcliffe v, Koontz, 121 Ind. 422,
16 Am. St. Rep. 403; Sutherland v.
Wyer, 67 Me. 64; Cumberland, eta.
Railroad Co. v. Slack, 45 Md. 161;
Williams v. Anderson, 9 Minn. 50;
Squire v. Wright, 1 Mo. App. 172;
King v. Steiren, 44 Pa. 99, 84 Am. Dec.
419; Kirk v. Hartman, 63 Pa. 97;
Barker v. Knickerbocker L. Ins. Co.,
24 Wis. 630; Leatherberry v. Odell, 7
Fed. 641.
The voluntary surrender of employ-
ment actually obtained stands upon
the same footing. Sutherland v.
Wyer, 67 Me. 64. But this would not
be true where the new employmeut
was lost by reason of the agent's
Illness. Bassett v. French, 10 N. 7.
Misc. 672.
Ik)S8 of a new employment because
of the agent's misconduct would
doubtless ordinarily stand upon the
same footing as a voluntary surren-
der of it. But where, though the
agent was discharged from the new
employment by reason of his own
misconduct, he immediately obtained
employment at better wages and for
a longer time, it ^as held that the
defendant had no ground for com-
plaint. Allen V. Maronne, 93 Tenn.
161.
s^Ansley v. Jordan, 61 Ga. 482;
Horn V, Western Land Ass'n, 22
Minn. 233; Howard v. Daly, 61 N. Y.
362, 19 Am. Rep. 285; Leatherberry
V. Odell, 7 Fed. 641; King v. Steiren,
44 Pa. 99, 84 Am. Dec. 419; Kirk v.
Hartman, 63 Pa. 97; Barker v. Knick-
erbocker Life Ins. Co., 24 Wis. 630.
35 Howard v. Daly, 61 N. Y. 362,
19 Am. Rep. 285; Carpenter v. Hol-
comb, 105 Mass. 284; Alderson v.
Houston, 154 Cal. 1; W?illis v. War-
ren, 4 Exch. 361; Levy v. Lord Her-
bert, 7 Taunt. 314.
ii6s
§ 1559]
THE LAW OF AGENCY
[book IV
sonable diligence in seeking and obtaining other employment, and
thus to reduce his damages as far as he is able.** The non-perform-
ance of this duty is, however, as has been seen,*^ generally held to be
a matter of defense, and not a part of the plaintiff's prima facie case ;
and the burden of proving its non-performance is upon the defendant
This rule, moreover, as ordinarily stated, does not impose upon the
agent the duty to accept any other employment that may be offered. By
other employment is meant employment of the same general nature
but not that which is of an entirely different or more menial kind.**
Thus a person employed as a bookkeeper would not be compelled to
accept employment as a farm laborer, nor would a person employed
as an actor or singer be under obligation to accept employment as a
clerk in a store.
Neither, it is said, is the agent ordinarily bound to seek employment
«« Goodman v. Pocock, 15 Q. B. 574;
Beckham v. Drake, 9 M. & W. 79;
Bmmens ▼. Eldert<on» IS Ck)m. Beach
508; Utter v. Chapman, 38 Cal. €59;
Williams V. Chicago Coal Co., 60 111.
149; Stone v. Vlmont, 7 Mo. App.
277; Chamberlin v. Morgan, 68 Penn.
St. 168; Shannon v. Comstock, 21
Wend. (N. Y.) 457, 34 Am. Dec. 262;
King V. Stelren, 44 Pa. 99, 84 Am.
Dec. 419; Armfleld v. Nash. 31 Miss.
361; Ward v. Ames, 9 Johns. (N. Y.)
138.
The obligation of the agent to find
other employment is not an absolute
one, but only to exercise reasonable
diligence to obtain it. That there
was other employment in fact, which
he might have procured, is not ma-
terial unless the failure to find it
was inconsistent with the exercise of
reasonable diligence. The agent
wrongfully discharged is not obliged
to start Instantly upon his search,
or to prosecute it with unceasing ap-
plication, reasonable diligence only
being the test. For the same reason
he is not obliged to accept the first
employment that offers, and even
though he should reject offered em-
ployment, in a reasonable expectation
of finding better, and should fail to
find it, he would not necessarily be
derelict In the performance of his
duty.
S7 See ante, S 1557.
»8Wolf V. Studebaker, 65 Pa. 459;
Costigan V. Railroad Co., 2 Denio (N.
Y.), 609, 43 Am. Dec. 758; Sheffield
V. Page, 1 Sprague (IT. S. D. C), 285,
Fed. Cas. No. 12,743; Halloway v.
Talbot, 70 Ala. 389; Wilkinson v.
Black, 80 Ala. 329; Van Winkle v.
Satterfleld, 68 Ark. 617, 23 L. R. A.
853; Elbert v. Los Angeles Gas Co.,
97 Cal. 244; McKlnley v. Goodman,
67 111. App. 874; Hinchcllfte v. Koontz,
121 Ind. 422, 16 Am. St. Rep. 408;
Farrell v. School District, 98 Mich.
43; Fuchs v. Koerner, 107 N. Y. 529;
Briscoe v. Litt, 19 N. Y. Misc. 6;
Harger v. Jenkins, 17 Pa. Super. 616.
A base-ball player, employed for a
year and wrongfully discharged, held
not bound to endeavor to reduce the
damages for a longer period than
that year, and though he was offered
employment by two other clubs at
higher salary, yet since these offers
were only upon the condition that
the club should have an option upon
his services for two more years, it
was held that he was not obliged to
accept such services. Griffin v.
Brooklyn Base Ball Club. 68 N. Y.
App. Div. 566; affirmed without opin-
ion, 174 N. Y. 535.
l66
CHAP. IV] DUTIES AND LIABIUTIES OF PRINCIPAL [§ I560
in another locality,'** nor with an objectionable employer.*® The ques-
tion of locality, however, is one depending upon the facts and circum-
stances of each case. What might reasonably be deemed the same
locality in the case of one employment might not coincide with a like
view of another employment
g 1560. ' New employment offered by defendant — ^The
question whether employment offered by the defendant should be con-
sidered by way of mitigation, depends upon a variety of circumstances.
If the new. employment "varied the terms of the first engagement or if
anything had occurred to render further intercourse or association
between the parties offensive or degrading, or if the agent bad engaged
in other employment incompatible with his returning," he may, it is
said, reject the offer with safety. Otherwise the invitation to return
should be accepted.*^ It is clear enough that the plaintiff is under no
more obligation to accept different employment from the defendant
than from any other person. If the defendant's offer be of the same
employment, at less wages, or upon more disadvantageous terms, the
plaintiff would be under no obligation to accept it as against employ-
ment with some other person at better terms. Neither is the plaintiff
bound to accept employment offered by the defendant, where his doing
so would cause a relinquishment of his cause of action for the breach ; **
but where this is not involved, nor any necessary injury to feelings,
and the only alternative is idleness, no satisfactory reason is apparent
why the agent should not accept it.
»» Harrington v. Gles, 45 Mich. 374; v. Wright, 1 Mo. App. 172; Bigelow
Strauss v. Meertief, 64 Ala. 299, 38 ▼• Powder Co., 39 Hun (N. Y.), 699;
Am. Rep. 8; Costigan v. RaUroad Co., Saunderi v, Anderson, 2 Hill (S. C),
2 Denlo (N. Y.), 609; Wilkinson v. 486.
Black, 80 Ala. 329. A servant who has been wrong*
40 "Any reasonable objection, be* fully dismissed and whose dismissal
cause of capacity, reputation, mode was accompanied by foul and abuslYe
of dealing and transacting business, language la not bound to accept a
or of habits or morals, which could subsequent ofFer from the same maa-
be made to the person from whom ter to re-employ him. Crawford v,
employment could be obtained, would Tommy, [1906] Transv, L. R, S. 0.
afford a justiflcation to the plaintiff 843.
for rejecting it when oftered, or ex- *2 Chisholm v. Preferred Assur. Co.,
cuse him from not jnaking exertion 112 Mich. 60; People's Co-op. Ass*n,
to secure it" Brickell, C. J., in v. Lloyd, 77 Ala. 387; Trawick v.
Strauss v. Meertief, 64 Ala. 299, 38 Peoria St Ry. Co., 68 111. App. 166;
Am, Rep. 8. Howard v. Vaughan-Monnig Shoe Co.,
*i Birdsong v. Ellis, 62 Miss. 418. 82 Mo, App. 405; Wilson v. Kiari, Ig
To same effect: Levin v. Standard New Zealand, 807.
Fashion Co., 4 N. Y. Supp. 867; Bey- . If the plaintiff was wrongfully dls-
mer v. McBrlde, 37 Iowa, 114; Squire charged, defendant's subsequent re-
1167
§§ 1561,1562]
THE LAW OF AGENCY
[book IV
§ 1561-
Duty to take service of a different sort. — If, hav-
ing exercised reasonable diligence to find other employment of the
same sort, the agent fails to do so, may he then consider himself ex-
onerated from all obligation to the employer, or would he then be re-
quired to seek and accept any other reasonable employment for which
he may be fitted? Many of the cases state the rule as though tlie
latter obligation were not imposed upon him.** But this obligation
seems to be a reasonable one, in harmony with the principles which
require effort on his part to refrain from idleness and to exercise rea-
sonable care to minimize his loss, and a number of cases expressly
impose it.** In any evfnt, if he does accept other employment, his
actual earnings in such other employment should be used in mitiga-
tion.**
§ 156^.
Work for himself.-— If having made a reasonable
effort to find other employment but without success, the agent then
does work for himself the question whether the principal is entitled
to have the value of it deducted from the agent's claim, is in dispute,**
quest to him to return and go on
with the employment cannot destroy
the effect of the breach of the con-
tract: it can only be considered upon
the question of damages. Rottlesber-
ger v. Hanley, Iowa — , 136 N.
W. 776. See also Youngberg v. Lam-
berton, 91 Minn. 100; Mitchell v.
Toale, 25 S. C. 238, 60 Am. Rep. 502.
48 Fuchs V. Koerner, 107 N. Y. 529;
Farrell v. School District, 98 Mich.
43; Holloway v. Talbot, 70 Ala. 889;
McKinUy v. Goodman, 67 111. App.
374; Wilkinson v. Black, 80 Ala. 329;
Briscoe ▼. Lltt, 19 N. Y. Misc. 5; El-
bert v» Los Angeles Gas Co., 97 Cal.
244; Hinchcliffe v. Koonti, 121 Ind.
422, 16 Am. St. Rep. 403.
*4Thus in Simon v. Allen, 76 Tex.
898, where the plaintiff had been em-
ployed as a clerk, the court said:
••Plaintiff had the right to seek, for
a reasonable time, the same charac-
ter of employment that he had
when he was discharg€d. If after a
reasonable time it became evident
that he could not procure employ-
ment as a clerk, it would have be-
come his duty, in so far as it con-
cerned his relations with his late
employers, to seek other employment
for which he was fltted."
So in Perry v. Simpson Wateri»roof
Mfg. Co., 37 Conn. 520, the court,
after referring to the employee's ob-
ligation to use ordinary diligence to
find other employment, said: •'Upon
the same principle he has no right
to insist upon employment in the
same business or at the same price.
If that is not to be had, he is bound
to engage in other business, and if
need be, at a less price."
In Maynard v. Royal Worcester
Corset Co., 200 Mass. 1, the court
speaks of '•other employment reason-
ably adapted to his abilities."
*5 In Stevens v. Crane, 37 Mo. App,
487, the court held, in regard to this
question, that the discharged serv-
ant's "duty to seek employment Is
confined to similar employment; his
duty to account for compensation
actually received extends to all em-
ployment."
46 Harrington v. Gies, 45 Mich. 874,
holds that It Is not to be deducted.
Huntington v. Ogdensburgh, etc., R.
Co., 33 Howards Pr. (N. Y.) 4H
holds the contrary.
168 .
CHAP. IV]
DUTIES AND LIABrLITIES OF PRINCIPAL
[§ 1562
but unless such work is merely casual or incidental, no good reason is
obvious why it should not be deducted.*^ If the agent engages in
some regular business, on his own account, the fair value of his time
under all the circumstances ought certainly to be considered."
It has been suggested in several cases,** that the question of deduct-
ing earnings in other employment depends upon whether such oth^r
employment is consistent with the agent's being in readiness to take
up the original employment again if he were called upon to do so.
But this does not seem to be a sound distinction where the theory of
constructive service does not prevail.
4T See School Directors v. Birch, 93
IlL App. 499; Stevana v. Crane, 37
Mo. App. 487.
*« In Lee v. Hampton, 79 Miss. 321,
where the plaintiff, after wrongful
discharge* l^ised and operated a
farm on his own account, the court
said that "it was his bounden duty
to use his best endeavors in its man-
agement, and whatever was a rea-
sonable sum for his wages as such
superintendent, should be deducted
from the damages suffered in conse-
•Quence of such breach of contract."
But In TopUta v. Ullman. i N. Y.
Misc. 130. where the plaintiff after
failing to find other employment,
went into business for himself, and
made but a small profit, it was held
that, since the plaintiff took all the
risk, the defendant was not entitled
to the actual value of his services,
hut only to the amount he actually
made.
This was followed in Richardson t.
Hartmann, 68 Hun (N. Y.), 9.
But where the plaintiff, in the
business of his own, did not make
any profits, still the value of the
business may have been appreciably
increased, and this element the jury
may regard in making their award.
ICramer v. Wolf Cigar Stores, 99 Tex.
597.
Where a woman teacher wrong-
fully discharged, being unable after
proper effort to find another position,
tri<d to start a school of her own,
which proved to be a financial fail-
ure and resulted in a loss, although
she "used every effort within my
power to make it a success," it was
held that no deduction was to be
made. Worthington v. Park Im-
provement Co., 100 Iowa, 39.
Where it appeared that after
plaintiff's discharge he made his
home for a time with his father, who
resided upon a farm, and did some
work there. It was held competent for
him to show, that, though ef age, he
received no compensation for this
work. Gwinn v. King, 107 Iowa, 207.
Earnings made after the expira-
tion of the term are not to be con-
sidered. Hughes V. School District,
66 S. C. 259.
And where the plaintiff, by doing
harder or different work, working
longer hours, contributing capital, or
otherwise doing what the original
employment did not re(iaire» is en-
abled to earn more than the original
contract rate the defendant is not en-
titled to the benefit of the excess.
Evesson v. Ziegfeld, 22 Pa. Super. 79
(here the plaintiff, an actress, by
playing about twice as many hours
was enabled to earn nearly double
the salary promised by defendant);
Williams V. Chicago Coal Co., 60 111.
149.
«• Gates V. School District, &7 Ark. v. Satterfleld, 68 Ark. 617, 23 L. H. A.
570, 38 Am. St. R. 249; Van Winkle 853. '
74 1169
§§ 1563. 1564]
THE LAW OF AGENCY
[book IV
What the agent may earn in another employment which he had the
right to carry on, even if defendant had not broken his contract, is
not to be deducted from plaintiff's damages.**
§ 1563, When right o£ action accrues. — ^Thc right of ac-
tion, as has been already stated, accrues when the breach of contract
occurs. Where the agent is wrongfully discharged after entering
upon the performance of his agency, there can be no question, as has
been seen, that he has then a cause of action for the breach.*^
Where, however, before the time arrives for performance to begin
and before the agent has entered upon it, the principal repudiates the
contract and informs the agent that he will not permit him to under-
take the performance of it when the performance is due, some ques-
tion has arisen whether such repudiation may be treated as a present
breach, or whether the agent must wait until the time for performance
arrives and then tender his services. The weight of authority both
in England and America, sustains the doctrine of a present breach
in case of such repudiation.'*
§ 1564. The theory of the decisions in this class of cases
is, to adopt substantially the language of a learned judge, that there
is a breach of the contract when the principal repudiates it and de-
clares he will no longer be bound by it. The agent has an inchoate
right to the performance of the bargain which becomes complete when
the time for performance has arrived. In the meantime, he has a
right to have the contract kept open as a subsisting and effective con-
tract. Its unimpaired and uninipeached efficacy may be essential to
his interests. His rights acquired under it may be dealt with in vari-
ous ways for his benefit and advantage. Of all such advantages the
Where the employee after discharge
ohtalned employment with another
eompany on condition that he huy
15,000 of Its stock which proved to
he of no valne, It was held, in com-
puting: damages for breach of his first
contract, that this $5,000 was an ex-
pense incidental to his effort to seek
employment, and that the loss occa-
sioned by the decline of the stock
could be reckoned with salary earned
in the second employment to arrive
at sum by which the plaintiff's prima
facie damages should be mitigated.
Development Co. v. King, 96 C. C. A.
189, 170 Fed. 923.
90 For example, tf an agent has m
proper contract to represent two dif-
ferent automobile manufacturers, and
one breaks his contract, the damages
of the agent are not affected by what
he earns under the other contract.
Randall v. Peerless Motor Car Co.,
212 Mass. 352.
SI See ante, § 1553.
BzDugan V. Anderson, 86 Md. 667,
11 Am. Rep. 509; Howard v. Daly, 61
N. Y. 862, 19 Am. Rep. 285; Menage
V. Rosenthal, 187 Mass. 470; Alderson
V. Hoaston, 154 Cal. 1; Lake Shore*
etc., Ry. Co. v. Richards, 152 111. 59,
30 L. R. A. 83; Hochstfr v. De la
Tour, 2 E. ft B. 678; Daniibe St Black
Sea Ry. Co. v. Xenos, 13 Com. Bench
CN. S.), 825.
II70
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1565, I566
repudiation of the contract by the principal, and the announcement
that it never will be fulfilled, 'must, of course, deprive him. It is
therefore quite right to hold that such an announcement amounts to
a violation of the contract in omnibus, and that upon it, the agent, if
he so elect, may at once treat it as a breach of the entire contract and
bring his action accordingly. The contract having been thus broken
by the principal, and treated as broken by the agent, performance at
the appointed time becomes excluded, and the breach, by reason of the
future non-performance, becomes virtually involved in the action as
one of the consequences of the repudiation of the contract, and the
eventual non-performance may therefore, by anticipation, be treated
as a cause of action, and damages be assessed and recovered in respect
of it, though the time for the performance may yet be remote. Such
a course, it is said, must lead to the convenience of both parties, and
though decisions ought not to be founded upon grounds of conven-
ience alone, they yet tend strongly to support the view that such an
action ought to be admitted and upheld. By acting on such a notice
of the intention of the principal, the agent may in many cases avert,
or at all events materially lessen, the injurious effects which would
otherwise flow from the non-fulfillment of the contract; and in as-
sessing the damages for breach of the performance, a jury will, of
course, take into account whatever the agent has done or has had the
means of doing, and, as a prudent man, ought in reason to have
done, whereby his loss has been, or would have been, diminished.'*'
§ 1565. No damages if agent acquiesces in discharge. — If the
agent, though wrongfully discharged acquiesces in, and consents to,
the termination of the agency, no damages can be recovered for it.'*
But in order to effect this result the evidence of acquiescence must be
clear. The mere fact that the agent did not protest, or that he peace-
ably and quietly surrendered his trust, would not justify a claim of
acquiescence.
2. Termination by Operation of Law.
§ 1566. No damages where agency terminated by death of the
principal — As has been seen, the death of the principal, by operation
of law, revokes the authority, if not couj^ed with an interest." Inas-
much, moreover, as a contract of employment between principal and
»« Miller, J., In Dugan v. Anderson, Am. Dec. 664; Boyle v, Parker, 46 Vt
S6 Md. 567, 11 Am. Rep. 609. 348.
•« Patnote v. Sanders* 41 Vt. 66, 98 s^ See ante, S' 652.
I171
§ 1567]
THE LAW OF AGENCY
[book IV
agent ordinarily involves personal considerations, and contemplates
the continued existence of both principal and agent, the death of the
principal will, where such personal considerations are involved, oper-
ate to dissolve the contract.^* The agent in such a case is, of course,
entitled to the compensation earned up to the time of the death, but
he is afterwards entitled neither to future wages nor to damages for
the termination of the agency.*^
§ 1567. Joint principals — Partnership. — Where there are
joint principals, the death of one will not dissolve the contract, unless
it involves something that cannot be properly performed by the sur-
vivor.*^* Where a partnership is the principal, and one partner dies,
the effect of such death upon contracts of employment is not entirely
settled. The death of one partner, of course, ordinarily dissolves the
partnership, and it has been said in several cases that it also operates
to dissolve contracts of employment to which the firm was a party .••
"See Lacy t. Getman, 119 N. Y.
109, 16 Am. St R. 806, 6 L. R. A. 728;
Yerrlngton v. Greene, 7 R. L 589, 84
Am. Dec 678.
Compare McDaniel v. Parks, 19 Ark.
671; Zinnell v. Bergdoll, 19 Pa. Su-
per. 508; Pugh V. Baker, 127 N. C. 2.
In Lacy v. Getman, supra, It was
said by Finch, J.: "The relation of
master and servant is no longer
bounded by its original limits. It
has broadened with the advance of
civilization until the law recognizes
Its existence in new areas of social
and business life, and yields in many
directions to the influence and neces-
sities of its later surroundings.
When, therefore, it is said generally,
as the commentators mostly agree in
saying^ that the contract relations of
principal and agent, and of master
and servant, are dissolved by the
death of either party. It is very cer-
tain that the statement must be lim-
ited to cases in which the relation
may be deemed purely personal, and
Involves neither property rights nor
independent action. Beyond that, a
further limitation of the doctrine is
asserted, which approaches very near
to its utter destruction, and is
claimed to be the result of modern ad-
judication. That limitation Is that
the rule applies only to the contract
I
of the servant, and not to that of the
master, and not at all, unlew the
service employed is that of skilled
labor peculiar to the capacity and ex-
perience of the servant employed,
and not the common possession of
men In general; and It is proposed to
adopt as a standard or test of the
limitation an Inquiry In each case
whether the contract On the side of
the master can be performed after
his death by his representatives sub-
stantially, and In all Its terms or re-
quirements, or .cannot be so per-
formed without violence to some of
its inherent elements."
See also generally as to the effect
of the death of one party upon con-
tracts. Note, 22 Am. St Rep. 81L
57 Yerrlngton v. Greene, 7 R. I. 589,
84 Am. Dec. 578.
B8See Martin v. Hunt, 1 Allen
(Mass.), 418.
6© Griggs V. Swift, 82 Ga. 392, 5 L.
R. A. 405, 14 Am. St. Rop. 176; Green-
burg V. Early, 4 N. Y. Misc. 99, 30 Ab-
bott's N. C. 300; Hoey v. MacEwan, 5
Ct. of Sess. 3rd Ser., 814: Mason v.
Secor, 76 Hun (N. Y.), 178; Burnet
V. Hope, 9 Ont 10.
See also Tasker v. Shepherd, 6 H.
A N. 675.
Compare Brace v. Calder, [1895]
2 Q. B. 258.
172
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL J§§ 1568,1569
But this does not seem to be a necessary result, and it has been held
that if, in fact, the firm actually goes on and continues to receive the
service, the contract of employment is not dissolved.*®
§ 1568* Same rule where agency terminated by insanity of the
principal.— The same rules would probably be applied in the case of
the after-occxirring insanity of the principal. Such insanity, as has
been seen,*^ will ordinarily terminate or suspend the authority of the
agent, and wherever the contract involved personal considerations
and clearly contemplated the continued mental ability and business
capacity of the principal, no reason is apparent why a known and
complete disability of this sort should not ordinarily affect the con-
tract like the principal's death. If the contract did not involve per-
sonal considerations, and especially where its performance can be con-
tinued by and with the representatives of the insane principal, a dif-
ferent rule would apply.'*
§ 1569. Rule where agency terminated by bankruptcy of princi-
paL — ^While, as has been seen,'^ the bankruptcy of the principal or-
dinarily operates to terminate the authority of a business agent, the
fact that the principal becomes bankrupt furnishes usually no defense
to an action brought by an agent, employed for a definite time, to re-
cover damages for a refusal or neglect of the principal to employ him
after the bankruptcy.**^
It has been held that where the principal is a corporation, and is
prevented from continuing business by the action of the state, which
enjoins the further prosecution of the business and causes a receiver
to be appointed, no damages can be recovered by an agent employed
for an unexpired period, who is thus prevented from continuing his
performance." But this doctrine would not apply to the voluntary
MHnghes v. Gross, 166 Mass. 61, •» People v. Globe Mut. Life Ins.
55 Am. St. Rep. 375, 32 L. R. A. 620. Co., 91 N. Y. 174. The court said, in
See also Ferelra v. Sayres. 5 Watts this case, that the effect of the In-
ft 8. 210, 40 Am. Dec. 496; Bank v. junction was to make it unlawful for
Vanderhorst, 32 N. Y. 558; Johnson either principal 6r agent to continue
V. Judge, 16 Pa. Super. 187. performance. It was as much Illegal
« See ante, § 677. for the agent to perform or tender
•a Sands ▼. Potter, 165 111. 397, 66 performance, as for the principal to
Am. St Rep. 253. permit or require him to perform.
«s See ante, § 687. The agent could not, therefore, prop-
er Lewis V. Atlas Mutual Life Ins. erly allege that he had himself heen
Co., 61 Mo. 534; Vanuxem v. Bost- legally ready or able to perform. Ap-
wick (Pa.), 7 Atl. 598; Hassenfus v. proved, followed in Malcomson v.
Fhlla. Packing Co., 15 Pa. Co. Ct. 650; Wappoo Mills, 88 Fed. 680; Griffith
In re Silverman^ 101 Fed. 219. v. Blackwater Boom Co., 46 W. Va. 56.
See also Couturle v. Roensch (Tex. But cf. Rosenbaum v. Credit Sys-
Giv. App,), 134 S. W. 413. tern Co., 61 N. J. Law, 543, where
"73
§§ I570-I572]
THE LAW OF AGENCY
[book IV
dissolution of a corporation which was the principal,** nor, doubtless,
to a case wherein the corporation was itself culpably responsible for
the intervention of the state.*^
§ 1570. Rule where agency tenninated by death of the agent —
Where the agency is terminated before full performance, by the deatii
of the agent, his representatives are entitled to recover the value of his
services already rendered. And even in the case of an entire contract
for the performance of a given service, the representatives of the de-
ceased agent may recover the value of the services rendered, not ex-
ceeding the price named in the contract.**
§ 1 57 1. Rule where agency terminated by insanity of the agent. —
Where the agency is terminated by the agent's insanity, the question
of his rights and liabilities would be determined by the same principles
which govern in the case of his sickness or other incapacity, — a subject
considered in the following section.
§ 1572. How when agdncy terminated by agent's sickness or in-
capacity.— ^Where the agency is terminated by the sickness or other
physical disability of the agent, which incapacitates him from com-
pleting the performance of his undertaking, he will not be liable for
not performing,** and, on the other hand, will be entitled to recover
the reasonable value of his services up to the time of his incapacity.
And even though the contract be entire to perform a stipulated service
for a stipulated price, so that, under other circumstances, full per-
formance would ordinarily be considered a condition precedent to the
right to recover compensation, yet if the agent be disabled by sickness
or other act of God from accomplishing a full performance, he is en-
titled to recover the reasonable value of die services actually rendered.
much of tbe reasoning in People v.
Globe Mutual Lrlfe Ins. Co., supra,
was disapproved.
«« Schleider v. Dlelman, 44 La. Ann.
462; Tiffin Glass Co. v. Stoehr. 54
Ohio St. 157; Macgregor v. Union L.
Ins. Co.. 57 C. C. A. 613, 121 Fed. 493.
Contra, so far as the compensation
was to consist of commissions on
business which might be done: there
is no implied agreement to do busi-
ness during the period. Pellet v.
Manufacturers' Ins. Co., 43 C. C. A.
669, 104 Fed. 502; Jn re ESngUsh, etc.,
Ins. Co., 5 Ch. App. 737.
No liability where emplojrment was
not for any prescribed time. Moore
V. Security, etc., Ins. Co., 93 C. C. A,
652, 168 Fed. 496.
9T People V. Globe Mutual Life Ins.
Co., 91 N. Y, 174; Rosenbaum v.
Credit System Co., 61 N. J. Law, (48.
88 Persons v. McKibben, 5 Ind. 261.
61 Am. Dec. 85; Wolfe v. Howes, 20
N. Y. 197, 75 Am. Dec. 388; Clark v.
Gilbert, 26 N. Y. 279, 84 Am. Dec
189.
«» Spalding ▼. Rosa, 71 N. Y. 40, 27
Am. Rep. 7; Wolfe v. Howes, 20 N. Y.
197, 75 Am. Dec. 388; Robinson v.
Davison, L. B., 6 Ezch. 269; Boast v.
Firth, L. R., 4 C. P. 1. In Robinson
V. Davison, the employe, a pianist,
was held liable for not giving th«
1 174
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ IS73
not exceeding the contract priced* If, however, the sickness was such
that it could have been anticipated at the time the service was under-
taken, this rule would not apply/*
3, Abandonment by Agent.
§ 1573* '• When abandonment lawful. — Where the agency is cre-
ated to endure for an indefinite period, it is, as has been seen, ordi-
narily held to be an agency at will merely and it may be lawfully termi-
nated by either party at his will at any time.''* Analogous to this is
the somewhat common arrangement that the relation shall continue
so long as each of the parties or either of the parties, is satisfied. In
the event of dissatisfaction, the party having the option may lawfully
terminate the agency upon that ground.^' In cases of this nature
there being no agreement to continue the agency for a definite time,
no forfeiture can result from its termination by the party having the
right. The agent, therefore, would be entitled to recover the stipu-
lated compensation for the services rendered without diminution on
the ground of the termination of the agency.
The same result ensues, also, in those cases in which the agency,
though primarily for a definite time, may, by the terms of the contract
creating it, be terminated upon the happening of a given event, or the
arising of a certain contingency. If terminated in the manner and
employer timely notice of the disabil-
ity 80 that he might make other ar-
rangements.
»o Fuller v. Brown, 11 Mete.
(Mass.) 440; Ryan v. Dayton, 25
Conn. 188, 65 Am. Dec. 560; Green v.
Gilbert, 21 Wis. 395; Hilly ard v.
Crabtree, 11 Tex. 264, 62 Am. Dec.
475; Fenton v. Clark, 11 Vt. 557;
Seaver v. Morse. 20 Vt, 620; Coe v.
Smith, 4 Ind. 79, 58 Am. Dec. 618;
Lakeman v. Pollard, 48 Me. 463, 69
Am. Dec. 77; Pahy v. North, 19 Barb.
(N. Y.) 341.
In Fuller r. Brown, supra, a con-
tract to give notice before quitting
was held to apply only to voluntary
abandonment and not to quitting be-
cause of illness.
71 Jennings v. Lyons, 39 Wis. 553,
20 Am. Rep. 57. (Absence during
confinement of a female employe.)
Compare Davies v. District Council,
27 T. L. R. 543.
72DeBriar v. Minturn, 1 Cal. 453;
Frankhn Mining Co. v. Harris, 24
Mich. 115; Palmer v. Marquette, etc.,
Co., 82 Mich. 274; Tatterson v. Suf-
folk Mfg. Co., 106 Mass. 56; Harper
V. Hassard, 113 Mass. 187; Peacock v.
Cummlngs, 46 Pa. 434.
78 See Beissel v, Vermilion Farm-
ers' Elev. Co., 102 Minn. 229, 12 L. R.
A. (N. S.) 403, (with Note); Spring
V. Ansonla Clock Co., 24 Hun (N. Y.),
175; Rossi ter v. Cooper, 28 Vt. 622.
Where the contract gives the prin-
cipal the power to terminate it in
case, for certain stated reasons, he is
dissatisfied, and expressly makes him
the sole Judge as to the existence of
the reasons, this does not give him
an arbitrary right of discharge, but
only for reasons actually existing or
in fact found. Winship y. Base Ball
Association, 78 Me. 571.
"75
§§ 1574, 1 575] THE LAW OF AGENCY [bCX)K IV
upon the event specified, the agent may recover full compensation for
the services rendered.^*
So though employed for a definite time, if the conduct of the prin-
cipal is such as to justify the agent in abandoning the service, the
agent will be entitled to recover the value of his services.'''
§ 1574. 2. When abandonment wrongful. — But where, on the
other hand, the agent has agreed that he will continue to act for a
definite period; or that he will fully perform a given undertaking; or
that he will terminate the relation only upon the happening of a certain
event or the arising of a certain contingency ; or that he will not ter-
minate it in any case without giving a specified notice; and he does
terminate it in violation of this agreement, without good cause, the
termination in the sense of which we have spoken, as being a breach
of his contract, must be regarded as wrongful.^^ True, as has been
seen,^^ he has the power to terminate it: The law will not compel him
to continue performance in accordance with his agreement. But un-
der his contract, his right to terminate is suspended and if he insists
upon exercising his power, he must answer for the broken contract.'*
§ 1575. Entire and severable contracts — Right to compensation. —
The question of the right to recover compensation for services ren-
dered in part performance of an undertaking to act for a given period,
or to accomplish a given object, but which has been abandoned by
the agent before full performance, is one of the most vexatious and
difficult ones in the law. It is certain that the parties may expressly
agrefg that no compensation shall be paid unless the undertaking is
performed, and in such a case if the agent abandons the undertaking,
without fault of the principal, before full performance, he cannot re-
cover. Full performance is here expressly made a condition pre-
cedent to the right to compensation.''®
But the most difficult question arises where the agreement is not
thus express and it becomes necessary to detennine whether tmder all
the facts and circumstances of a given case full performance was in-
tended by the parties to be a condition precedent. In determining
this question it is important to ascertain whether the contract is entire
or severable. As has been well said,®^ no precise rules can be given
T4 Booth V. Ratcliffe, 107 N. C. 6. " Word v. Winder, 16 La. Ann. 111.
TB Bishop V. Ranney, 59 Vt. 316; t« See ante, § 1532.
Patterson v. Qage, 23 Vt. 558, 56 Am. ^ Parsons on Contracts, Tth Ed.
Dec. 96; Warner v. Smith, 8 Conn. 14. Vol. 2, p. 'SIT.
7« See ante^ 8 641. See also the discussion in Clark v.
TT See ante, § 641. West, 187 N. Y. App. Div. 23, affirmed
II76
CHAP. IV]
DUTIES AND UABIUTXES OF PRINCIPAL
[§ 1576
by which this question in a given case may be settled. Like most
other questions of construction it depends upon the intention of the
parties, and this must be discovered in each case by considering the
language employed and the subject-matter of the contract. If the
part to be performed by one party consists of several distinct and
separate items, and the price to be paid by the other is apportioned to
each item to be performed or is left to be implied by law, such a con*
tract will generally be held to be severable. And the same rule holds
where the price to be paid is clearly and distinctly apportioned to dif-
ferent parts of wliat is to be performed, although the latter is in its
nature single and entire. But if on the other hand, the consideration
to be paid is entire and single, the contract must be held to be entire,
although the subject of the contract may consist of several distinct
and wholly independent items.
§ 1576. ' In accordance with this rule a contract by which
A agrees to serve B for an indefinite time at a given sum per month,
would be held to be severable.*^ So an agreement by A to serve B
for one year at a certain sum per month to be paid at the expiration
of each month, though an entire contract, is, by its terms, so far
severable that A would have a right of action for the stipulated sum
at the expiration of each month.^' But a contract by A to serve B
for one year for a given sum is plainly entire.'* And so a contract by
A to serve B for one year for a given sum per month is held to be
entire." In both cases, no time for payment being specified, the law
"without pasaing upon the question
whether the contract was entire or
severable;" no opinion. 201 N. Y.
569.
91 Idem, p. ♦521. A contract at so
much per week "for the first year"
no definite time being stated, is a
weekly and not a yearly hiring. Rob-
ertson T. Jenner, 15 L. T. (N. 8.) 514.
"See Capron v. Strout, 11 Nev.
304; Thayer v. Wadsworth, 19 Pick.
(Mass.) 349; Walsh v. New York &
Ky. Co., 88 N. Y. App. DiT. 477; Mous-
seau y. Tone, ^ W. L. R. (Regina)
117.
A contract for a year with weekly
payments Is still a yearly hiring un-
less rebutted by evidence to the con-
trary. Noble V. Gunn, 16 Ont. W. R.
504; Davis v. Marshall, 4 L. T. (N.
8.) 216.
8a Stark v. ParKer, 2 Pick. (Mass.)
267, 13 Am. Dec. 425. (In this case
the party agreed to work for one
year for $120.) Eldridge v. Rowe, 2
Glim. (111.) 91, 43 Am; Dec. 41;
Miller V. (Joddard, 34 Me. 102, 56 Am.
Dec. 638; Knox v. Munro, 13 Mani-
toba Rep. 16. But see Parcell v. Mo-
Comber, 11 Neb. 209, 38 Am. Rep. 3^6,
rereported in note to 85 Am. Rep.
476.
"Thus a contract to work '*for
eight months for $104, or $13 a
month," Is entire. Reab v. Moor, 19
Johns. (N. Y.) 337. So a contract to
work "seven months at $12 per
month," was held to be an entire con-
tract to pay $84, at the end of the
seven months and not a contract to
pay $12, at the end of each month.
Davis ▼. Maxwell, 12 Mete. (Mass.)
1177
$ 1577] '^^^ LA^ OP AGENCY [book IV
presumes that it was to be paid only when the year's service was per-
formed."
So a contract to perform a g^ven duty for a given sum would be
entire,** but a contract to perform the same duty for a given sum to
be paid in installments as the performance progressed would be sev-
erable so far as the right to recover the several installments is con-
cerned.*^
Where the compensation was thus payable in installments, but is
not in fact paid, and the agent subsequently makes default in a later
installment period, such default will not affect his right to recover
previous installments earned except as the amount may be reduced by
proper recoupment or counterclaim of damages for the breach in the
last period.**
§ 1577* Pull performance of entire contract usually required. —
Where the contract was thus found to be entire, it was early estab-
lished as the doctrine of the common law that full performance of it
was a condition precedent to the right to recover the stipulated compen-
sation.** If the agent should voluntarily fail, though by a single day,
to complete the designated term, he could recover nothing upon the
contract for all the services previously rendered, because the contract
had not been fully performed on his part. Neither could a recovery
be had upon the basis of an implied contract to pay for the services
2S6. See also Nichols r. Coolaban, ployer. Larkin v. Hecksher, 51 N.
10 Mete. (Mass.) 449; Eldridge v. J. L. 133» 3 L. R. A. 137. See also
Rowe, supra: Rex v. Birdbrooke, 4 Beach v. MuUin, 84 N. J. U 343.
T. R. 245; Dlefenback v. Stark, 56 »» Davis v. Maxwell, 12 Mete
Wis. 462, 43 Am. Rep. 719; Jennings (Mass.) 2S6.
V. Lyons, 39 Wis. 553, 20 Am. Rep. soReab v. Moor, 19 Johns. (N. T.)
57. A contract with a teacher to 337.
teach ten months at a given sum per A contract to teach nine months
month is entire. Wilson v. Board of for a fixed sum, is entire. Hill ▼.
Education, 63 Mo. 137. Balkcom, 79 Qa. 444.
In an action for wages a contract st Woods v. Russell, 5 B. A Aid.
to employ and pay "|200 per month 942; Clarke r. Spence, 4 A. & E. 448;
for one year" was held to he a con* Laidler y. Burlinson, 2 M. A W. 602;
tract for a year with wages payable Cunningham v. Morrell, 10 Johns,
monthly, but not so far entire that (N. Y.) 203, 6 Am. Dec. 332.
performance for a year was a condl- »« Walsh v. New York & Ky. Co., S8
tion precedent to the eniployee's N. Y. App. Div. 477.
right to recover anything, Matthews •• Spain v. Arnott, 2 Stark. 256;
V. Jenkins, 30 Va. 463; while in an Cutter v. Powell, 6 T. R. 320; ElUs
action for wrongful discharge a con- v. Hamlen, 3 Taunt. 51; Sinclair v.
tract for one year with wages pay-. Bowles, 9 B. & C. 92; Waddlngton
able monthly was held to be an en- v. Oliver, 2 B. & P. (N. R.) 61; Knox
tire contract for a year by the em- v. Munro, 13 Manitoba, 16.
I178
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
t§ 1578
actually rendered, because the existence of the express contract left
no room for an implied one. Expressum facit ccssare taciturn was
the maxim applied.®* And this rule has been adopted and still pre-
vails in the majority of the American states.*^
§ 1578. The more liberal rule — Britton v. Turner. — ^This rule, how-
ever, while perhaps strictly and severely just, as a principle of re-
tributive justice has not met wtih universal approval, and a strong
tendency has been manifested in many cases to mitigate its severity
by the application of a more liberal and equitable principle, and to
allow the agent, though in default, to recover the actual value of his
services to the principal.
The principles adopted in such cases are most fully enunicated in
the celebrated case of Britton v. Turner,** decided by the supreme
court of New Hampshire in 1834.
Concisely stated, the doctrine of this case may be said to be that,
where a party fails to comply substantially with his agreement, he can
not, unless it is apportionable, sue or recover upon the agreement at all.
But where anything has been done from which the other party has
received substantial benefit and which he has appropriated, a recov-
90 Stark V. Parker, 2 Pick. (Mass.)
267, 13 Am. Dec. 425.
»iLantry v. Parks, 8 Cow. (N. Y.)
63; Smith v. Brady, 17 N. Y. 173, 72
Am. Dec. 442; Olmstead v. Beale, 19
Pick. (Mass.) 528; Thayer v. Wads-
worth, Id. 349; Davis t. Maxwell, 12
Mete. (Mass.) 290; Stark v. Parker, 2
Pick. (Mass.) 267, 13 Am. Dec. 425;
Henson v. Hampton, 32 Mo. 408;
Posey V. Garth, 7 Mo. 96. 37 Am. Dec.
183; Caldwell v. Dickson, 17 Mo. 575;
Schnerr v. Lemp, 19 Mo. 40; Brown
V. Fitch, 33 N. J. L. 418; Natalizzio
V. Valentino, 71 N. J. L. 500; Bragg
V. Bradford, 33 Vt. 35; Patnote v.
Sanders, 41 Vt. 66, 98 Am. Dec. 564;
Ripley V. Chlpman, 13 Vt 268; Mar-
tin V. Schoenberger, 8 W. & S.
(Penn.) 367; Alexander v. Hoffman,
5 Id. 382; Dunn v. Moore, 16 111. 151;
Eldridge v. Rowe, 2 Gilta. (111.) 91,
43 Am. Dec. 41; American Pub. House
V. Wilson, 63 111. App. 413; Hofstet-
ter V. Cash, 104 111. App. 455; Mack
V. Bragg, 30 Vt. 571; Clark v. School
District, 29 Vt. 217; De Camp t.
Stevens, 4 Blackf. (Ind.) 24; Hutch-
I
inson V. Wetmore, 2 Cal. 810, 56 Am.
Dec. 337; Hogan v. Titlow, 14 CJal.
73; Miller v. Goddard, 84 Me. 102, 56
Am. Dec. 688; Green v. Gilbert, 21
Wis. 895; Evans v. Bennett, 7 Wis.
404; Henderson v. Stiles, 14 Ga. 135;
Cody V. Raynaud, 1 Col. 272; Givhan
v. Dalley, 4 Ala. 336; Whitley v. Mur-
ray, 84 Ala. 155; Abernathy v. Black,
2 Cold. (Tenn.) 314; Larkln v. Buck,
11 Ohio St 661; Halloway v. Lacy, 4
Humph. (Tenn.) 468; Clark v. Gil-
bert, 26 N. Y. 279, 84 Am. Dec. 189;
Holmes v. Stummel, 24 111. 370; Jew-
ell V. Thompson, 2 Utt. (Ky.) 52;
Morford v. Ambrose, 3 J. J. Marsh.
(Ky.) 688; Preston v. American
Linen Co., 119 Mass. 400; Byrd v.
Boyd, 4 McCord (S. C), 246, 17 Am.
Dec. 740; Cox v. Adams, 1 N. ik McC.
(a C.) 284; Steamboat Ck). v. Wil-
kins, 8 Vt 54; Sherman v. Transpor-
tation Co., 31 Vt. 162; Dover v. Plem-
mons, 10 Ired. (N. C.) U 23; Angle
v. Hanna, 22 111. 429, 74 Am. Dec,
161.
»2 6 New Hampshire, 481, 26 Am.
Dec. 713.
179
§ 15791
THE LAW OF AG£NCY
[book IV
ery may be had upon a quantum meruit, based upon that benefit. The
basis of this recovery is not the original contract, but a new implied
agreement deducible from the delivery and acceptance of some valu-
able service or thing. The defaulting plaintiff can in no case recover
more than the contract price, and he cannot recover that if his work
is not reasonably worth it, or if, by paying it, the rest of the work will
cost the defendant more than if the whole had been comfdeted tmder
the contract.
Notwithstanding much opposition, tfiis rule has gradually worked
its way into considerable judicial favor and is now adopted and en-
forced in Indiana,** Iowa,** Kansas,** Kentucky,** Michigan,*^ Mis-
souri,*' Nebraska,** North Carolina ^ and Texas.* After some lean-
ing in favor of it, it has been finally denied in Mississippi,* Oregon *
and Wisconsin.*
§ 1579. Recovery for services imder contract imenforceable under
Statute of Frauds. — ^Where services have been rendered under a con*
••Ck>e T. Smith, 4 Ind. 82, 58 Am.
Dec. 618; Ricks y. Yates, 5 Ind. 115.
•4 Plxler v. Nichols, 8 Iowa, 106, 74
Am. Dec. 298; McCay ▼. Hedge, 18
Id. 66; McAirerty v. Hale, 24 Id. 356;
Byerlee v. Mendell 39 Id. 382; Wolf
V. Gerr, 43 Id. 339. In McClay v.
Hedge. Judge Dillon says: "This
question was settled in this State by
the case of Pixler ▼. Nichols, 8 Iowa,
106, which distinctly recognized and
expressly followed Britton v. Turner,
6 N. H. 481, 26 Am. Dec. 713. That
celebrated case has been oriticised,
doubted, and denied to be sound. It
is frequently said to be good equity
but bad law; yet its principles are
gradually winning their way into
professional and Judicial favor. It is
bottomed on justice and is right upon
principle, however it may be upon
the technical and more illiberal rules
of the common law as found in the
older cases/'
OB Duncan v. Baker, 21 Kan. 99;
also reported In note to 81 Am. Rep.
at p. 102.
•• Apparently, see Foster v. Watson,
56 Ky. (16 B. Monroe) 877.
0T Allen V. McKibben, 6 Mich. 449.
99jjee V. Ashbrook, 14 Mo. 378, 55
Am. Dec. 110; Downey v. Burke, 23
Mo. 228; Lowe ▼. Sinklear, 27 Mo.
308. But the application of the rule
is confined to building and similar
contracts, and does not extend to con-
tracts for personal service. Earp v.
Tyler, 73 Mo. 617; Banse v. Tate, 62
Mo. App. 150; Paul v. Minneapolis
Thresher Co., 87 Mo. App. 647.
»• Parcell v. McComber, 11 Neb. 209,
38 Am. Rep. 366; also reported In
note to 35 Am. Rep. 476.
1 Apparently, see Chamblee v.
Baker, 95 N. C. 98.
2 Riggs v. Horde, 25 Tex. Supp. 456^
78 Am. Dec. 584; Carroll v. Welch,
26 Tex. 147.
sTimberlake v. Thayer, 71 Miss.
279, 24 L. R. A. 231.
^ Steeples v. Newton, 7 Ore. 110, 33
Am. Rep. 705.
« Dlefenback v. Stark, 56 Wis. 462,
43 Am. Rep. 719. But in Hildebrand
V. Amer. Fine Art Co., 109 Wis. 171,
53 Li. R. a. 826, the servant was al-
lowed to recover for services actually
rendered, he being juatiftably dis-
charged, the court distinguishing the
case of the servant who voluntarily
abandons his employment, when he
is not allowed to recover, and the
case where he gives cause for his dls-
chargeb when he may recover.
II80
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§ 1580
tract not enforceable under the Statute of Frauds, as, for example,
^Lii oral contract not to be performed within one year, no recovery can
be had upon the contract, but, where the employer has made default
in performance at least, the employee may recover upon an implied
■contract for the reasonable value of the services so rendered.' Whether
such a recovery may be had where the employee himself is the one
who makes default and abandons performance is not entirely agreed
upon by the authorities. It is held in several cases that the employer
can base no defence upon the non-performance of a contract which he
could not have affirmatively enforced, and that therefore the em-
ployee may recover quantum meruit, unaffected by the fact that he
lias not performed the contract under which the service was begun.''
A few cases hold that the employee who voluntarily fails to perform
the contract, though unenforceable, may not recover anything — the
oral contract is not void and the law will not imply a new contract in
the face of the other one.®
Where the employee fails to perform the oral contract because of
illness, the courts which would not allow a recovery where he volun-
tarily abandons the service permit a recovery m this event.*
§ 1580. Brief absences as abandonment. — The question of what
«hall be deemed to be an abandonment of the service, is one to be de-
termined by the facts and circumstances of each case. There are un-
«In the following cases where the llngame v. Burlingame, 7 Cow. (N.
defendant had refused to perform ac- T.) 92; Rosepaugh v. Vredenburgh, 16
wording to the tenor of the contract Hun (N. Y.), 60; Carter v. Brown,
within the statute of frauds the 3 S. C. 298; Stevens v. Lee. 70 Tex.
plaintifF was allowed to recover on 279; McCrowell v. Bunion, 79 Va. 290;
quantum meruit for services ren- Miller v. Wisener, 45 W. Va. 59; Salb
tiered. Sims v. McEwen, 27 Ala. 184; v. Campbell, 65 Wis. 405; Koch v.
Patten v. Hicks, 43 Cal. 509; Mills v. Williams, 82 Wis. 186.
Joiner, 20 Pla. 479; William Butcher ^See Comes v. Lamson, 16 Conn.
Steel Works v. Atkinson, 68 111. 421, 246; Clark v. Terry, 25 Conn. 395;
«6 Am. Rep. 560; Frazer v. Howe, Bernier v. Cabot Mfg. Co., 71 Me. 506,
106 HI. 563; WaUace v. Long, 105 Ind. 36 Am. Rep. 343; Freeman v. Foss,
522, 55 Am. Rep. 222; Bonnon v. Ur- 145 Mass. 361, 1 Am. St Rep. 467;
ton, 3 Green (Iowa), 228; Wonsettler Crawford v. Parsons, 18 N. H. 293;
V. Lee, 40 Kan. 367; Myers v. Korb, Hartwell v. Young, 67 Hun (N. Y.),
21 Ky. L. R. 163, 50 S. W. 1108; Lap- 472.
ham v. Osborne, 20 Nev. 168; Ham v. « See Swanzey v. Moore, 22 111. 63,
Goodrich, 37 N. H. 185; Emery v. 74 Am. Dec. 134; Kriger v. Leppel,
Smith, 46 N. H. 151; McElroy v. Lud- 42 Minn. 6; Mack v. Bragg, 30 Vt.
lum, 32 N. J. B. 828; Buckingham v. 571; Collins v. Smith, 11 Ont. W. R.
Ludlum, 37 N. J. B. 137; Eaton v. 350.
Eaton, 35 N. J. L. 290; Jones ▼. Hay, » La Du-Klng Mfg. Co. v. La Du, 36
52 Barb. (N. Y.) 501; Springer v. Minn. 473.
Bien, 16 Daly (N. Y.), 275; Bur-
I181
§ i58i]
THE LAW OF AGENCY
[book IV
doubtedly cases in which instant and constant attention and care are
required, where any absence from the post of duty might occasion
serious if not irreparable loss. In such cases a wilful absence of an
hour might be deemed to be an abandonment or furnish good cause
for the dismissal of the agent. But in other cases an absence for a
day or more might result in no loss and ought reasonably to be con-
sidered neither ground for dismissal nor an abandonment of the serv-
ice.*® The nature of the employment, the necessities of the case, the
probability of loss, the reason of the absence, are all to be taken into
consideration, and it is for the jury to say, under all of the circum-
stances, whether there was an abandonment in fact, or whether the
principal was justified in treating it as such.** Thus where the fore-
man of a fruit package factory, employed for a year, was absent upon
necessary and reasonable business for less than a day, his absence in-
volving no serious loss, it was held that this was neither an abandon-
ment of the service nor a good ground for his dismissal;** so in an-
other case, the absence of a school teacher for four days, it not
appearing that there was any serious loss occasioned, or that the busi-
ness of the school had been impeded a single hour thereby, was held
to be not a sufficient reason for a discharge.** On the other hand, the
absence of a plantation overseer for a single day was held to be a suf-
ficient reason for his dismissal, it appearing that the absence was for
the purpose of provoking a discharge in order to create a cause of
action.**
§ 1581. Condonation of abandonment. — Even if the agent has
been absent without authority, yet if the principal subsequently re-
ceive him back and permit him to continue the performance with no
notice that a forfeiture has been incurred, or would be insisted upon,
a condonation will be presumed. It is certainly equitable and in ac-
cordance with well established principles, to hold that where an em-
i« See cases cited in following notes.
See also Wood, Master ft Seryant,
Second Sd., p. 219.
11 Shaver ▼. InRham, 58 Mich. 649,
56 Am. Rep. 712; Lakeman v. Pol-
lard, 43 Me. 463, 69 Am. Dec. 77;
Partington v. Wamsutta Mills, 110
Mass. 467: Heber v. United States
Flax Mfg. Co., 13 R. I. 303; Nayler v.
Fan River Iron Works, 118 Mass. 317.
See also McCormack v. Henderson,
100 Mo. App. 647: Fisher T. Monroe,
11 N. Y. Supp. 207.
x3 Shaver ▼. Ingham, supra. In
Shoemaker y. Acker, 116 Cal. 239, the
manager of a fruit farm who had
agreed to "deyote his whole time and
attention" to it, occasionally, when
no work was pressing, and no harm
resulted, would absent himself from
Saturday until Monday. Held, no
ground for discharging him.
i< Fillieul ▼. Armstrong, 7 Ad. k
El. 557.
14 Ford V. Banks, 16 La. Ann. 119.
See Edwards ▼. Levy, 2 Fost & Fin.
94; Wright v. Gihon, 3 C. & P. 583.
1 182
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1582
ployee for a fixed period, without any fault of the employer, absents
himself for a short time, and then the employer, with knowledge of
the facts, receives him back into his service without objection, and
retains him until the termination of the contract, he thereby waives
the right to declare the contract forfeited as to the services actually
rendered."
§ 1582. What will excuse abandonme'^t — Sickness — ^Epidemic —
Ph3fsical violence. — ^Where sickness or other physical incapacity
which could not be foreseen, renders the temporary or permanent
cessation from service imperative, the agent cannot be deemed to
have voluntarily abandoned the service.^* Such misfortunes are classed
among other acts of God for which the individual cannot be held re-
sponsible. So an agent is under no obligation to imperil his life by
remaining at his post in the vicinity of a prevailing epidemic so dan-
gerous in its character as to justify a man of ordinary care and pru-
dence in refusing to remain, nor does it make any difference that
subsequent developments demonstrate that he was actually in no dan-
ger.*^ And the same thing is doubtless trie of a threatened physical
"Bast V. Byrne, 51 Wis. 531. 37
Am. Rep. 841; Rldgway v. Hunger-
ford Market Co., 3 Ad. & EL 171;
PrentlBg v. Ledyard, 28 Wis. 131;
McGrath v. Bell. 33 N. Y. Super. 195.
In Bast v. Byrne the agent agreed to
work a y^ar for a fixed price. He
worked up to the end of the year hut
was absent at different times, nine
days and a half In all, hut he was
held entitled to full pay.
Where an employee hired for a year,
In November, quit in the following
June, and about a week later wrote
to his employer demanding payment
for work done, and the employer re-
plied that he "would not pay him any
more until the year of the hiring had
expired" he was held to have assented
to the plaintiff's leaving and must
pay him wages for the time he
wprked. "An offer to pay for serv-
ices performed at the contract price,
in case the laborer has left the em-
ployer's service, is a waiver of the
forfeiture of the wages, if there was
one." Merrill v. Fish, 68 Vt. 475.
To voluntarily keep in the service
an employee, after he had been so in-
toxicated that he might have been
I
properly discharged, was held to be
a condonation of that act where he
was subsequently discharged for an-
other reason. Dunkell v. Simons, 5
N. Y. Supp. 417.
See also. Daniel! v. Boston, etc., R.
R., 184 Mass. 337; Tickler v. Andrae
Mfg. Co., 95 Wis. 352; Nichols &
Shepard Co. v. Bachant, 45 111. App.
497.
16 Lakeman v. Pollard. 43 Me. 463. '
69 Am. Dec. 77; Jennings v. Lyons.
39 Wis. 557, 20 Am. Rep. 57; Ryan v.
Dayton. 25 Conn. 188. 65 Am. Dec.
560; Greene v. Linton. 7 Port (Ala.)
133, 31 Am. Dec. 707; Wolfe v. Howes,
20 N. Y. 197, 75 Am. Dec. 388; Dickey
V. Linscott, 20 Me. 453, 37 Am. Dec.
66; Leopold v. Salkey, 89 111. 412, 31
Am. Rep. 93; Harrington v. Fall
River Iron Works, 119 Mass. 82; Cal-
lahan V. Shotwell, 60 Mo. 398; Hub-
bard V. Belden, 27 Vt. 645; Smith v.
Hill, 13 Ark. 173; Hunter v. Waldron,
7 Ala. 753; Moulton v. Trask, 9 Mete.
(Mass.) 677; Parker v. Macomber, 17
R. I. 674, 16 L. R. A. 858; McClellan
v. Harris. 7 S. Dak. 447.
17 Lakeman v. Pollard, supra.
183
§§ I583> 1584]
THE LAW OF AGENCY
[book IV
injury.** The propriety of his conduct is for the jury to determine
from the facts as they were presented to him.
§ 1583- Recovery for services actually rendered. — An agent
therefore who is tlius compelled by a vis major to suspend or discon-
tinue the service, although undertaken for a definite time by an entire
contract, may recover upon a quantum meruit for the value of the
services actually performed."
§ 1 584. Recovery of wages during illness. — Where, though
the agent employed in a general or continuing service is unable, on
account of sickness, to render the agreed service, for a temporary in-
terval during a stated period, he does not abandon the service and the
principal does not terminate it, the question of his right to compensa-
tion for the period of his illness is not free from doubt. As is said in
one case, "There is a singular dearth of clear authority respecting the
eflFect of the disability of an employee arising from illness upon the
right to wages ;*' but while the English and some American cases seem
in general to uphold his right to compensation,*® the tendency of the
American cases seems to be to deny it.
i» Walsh V. Fisher, 102 Wis. 172, 72
Am. St. Rep. 865, 43 L. R. A. 810.
!• Laketnan v. Pollard, supra : Ryan
V. Dayton, supra; Greene v. Linton,
supra; Wolfe v. Howes, supra; Walsh
V. Fisher, supra.
-MK V. Raschen, 38 L. T. Rep.
N. S. 38; Patten v. Wood, 51 J. P.
549; Carr v. Hadrlll, 39 J. P. 246;
CuclcBon V. Stones, 1 E. 6 E. 248; Mott
V. Baxter, 13 Colo. App. 63; Relter v.
Standard Scale Co., 141 111. App. 427,
alTd, 237 111. 374 (though here he per-
formed some service while ill at
home); Miller v. Gidlere, 36 La. Ann.
201.
In K V. Raschen, supra, this
was held to he true even though the
disease was one attrlbutahle to his
own Imprudence. Same: McDougal
V. Van Allen Co., 19 Ont. L. R. 351.
But contra, see Adlets v. Progres-
sive Shoe Co., 84 Mo. App. 288, where
a salesman employed at so much per
week was confined to a hospital for
about four months. Myers v. Sierad-
zki. [1910] Transv. L. R. S. C. 869,
where a saleswoman was absent six
weeks out of a period of two months.
In MacFarlane v. Allan-Pfelffer
Chem. Co., 59 Wash. 154, Ann. Cas.
II
1912 A. 1180, 28 L. R. A. (N. S.) 314,
where a traveling salesman, employed
by the month, lost about ten days out
of a month by illness, it was held
that he could not recover for lost
time. The court, referring to the cases
cited, ante, § 1583, said, "The same
reasoning which protects the servant
in permitting him to recover for serv-
ice actually performed, protects the
master in not holding him liable ex-
cept for services actually performed;
and the servant cannot recover for
time lost through his own illness or
other inability to perform the re-
quired service." Most of the cases
cited, however, are only negatively In
point. Orpin v. Westmacott Gas Fur-
nace Co., (R. I.) 74 Atl. 481, a per
cvriam opinion not reported in the
official reports, is to same efPect So
Shaw V. Deal (No. 2), 7 Pa. Co. Ct.
379; Hughes v. Toledo, etc., Cash
Reg. Co., 112 Mo. App. 91.
Where a servant hired by the week
is absent on account of illness for six
or seven weelcs, he is not entitled to
be paid for the time he was so absent.
Miller V. Morton, 8 Manitoba, 1.
In Marks v. Dartmouth Ferry Co.^
36 Nov. SCO. 158, the court was evenlj
84
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§. 1585
§ 1585.
Principal's right to tenninate employment.*^Bttt
though brief and temporary absences, on account of ilhiess, do not
of themselves constitute an abandonment of the service under a con-
tract for a fixed term, nor justify the employer in regarding it as
such,^^ ail absence, even though because of sickness, may be of such
a nature and go so much to the root of the whole consideration, as to
justify the employer in deeming the contract at an end.** A con-
tinuous illness for seven weeks in the case of a yearly employee was
held by the court in Massachusetts to be such a radical and serious
failure to perform as would, as matter of law, justify the employer m-
treating the employment as terminated. In a recent English case,*^
the test w^as said to be whether the illness was so long continued that:
it "would put an end, in a business sense, to their business engagement
and would frustrate the object of that engagement," — a rule obvioudy.
not very definite but perhaps sufficient to enable the decision of a case.-
as a question of fact. ' " '-^/i
ance, talten seriously in with an ill-
neu apparently not temporary (anfl
which in fact continued until thtt
opera had run for five days) and her
place could only be supplied by the
etigagetnent of another singer (who
happened to be available) for a defi-
nite time and at a larger salary, it
was heM that the employer was Justi-
fied in treating the contract as ter-
minated. Poussard v. Spiers, 1 Q. B.
Div. 410.
The same thing was held where an
employee under a contract for a
year's time, was absent seven weeks
on account of illness. No notice to
the employee was necessary. Johnson
V. Walker, 156 Mass. 253, 31 Am. St.
R. 550. Two of the four Judges in
Marks v. Dartmouth Ferry Co., 36
Nov. SCO. 158, were of like opinion
and Johnson y. Walker was cited.
Here the absence was seven months
and until the employee's death.
Johnson ▼. Walker was also cited
and followed in Myers v. Sieradzki»
[19101 Transv. L. R. S. C. 869, where
an absence, by reason of illness, for
six weeks out of a period of two
meofths was held to Justify the em-
ployer in. refusing to take the em*
ployee back upon recovery.
28 Storey V. Fulham Steel Works
Co., 24 T. L. R. (Ct of Ap.) 89.
divided In opinion, but two Judges of
the four held that a servant who was
continuously ill and absent for seven
months and until his death was en-
titled to his wages during that time,
the employer having done nothing to
in<i irate that the absence was re-
garded as other than temporary.
But this case was reversed in 34
Can. Sup. Ct 366, where the court
held that a permanent incapacity of
itself terminated the service; and the
court found that the employee had
assented to a rule that employees
should be paid only for- services ac-
tually rendered.
A servant who leaves his service
uncompleted because of illness can
get no compensation for the uncom-
pleted part. Patrick v. Putnam, 27
Vt. 759t Hughes v. Toledo, etc.. Cash
Reg. Co., 112 Mo. App. 91.
21 See ante, § 1580, and cases cited
in preceding note.
in McDougal V. Van Allen Co., 19
Ont. L. R. 851, an illness of five weeks
in the case of a traveling salesman
employed for three years was held
not to Justify the employer in ter-
minating the contract
22 Thus where the prima donna of a
new opera about to be put upon the
stage for an indefinite period, was,
a few days before the first perform-
75 "
85
§ 1586]
THE LAW OF AGENCY
[book IV
§ 1586. Contracts not to terminate without notice — Forfeiture
for breach. — It is not uncommon to provide that the agency, though
otherwise at will, shall not be terminated by one or either party with-
out notice to the other, either fixed or reasonable. Such agreements
are valid, and, if violated, will furnish ground for an action for the
damages sustained. They will not, however, work a forfeiture of
wages, unless it is expressly so stipulated.'* The law abhors for-
feitures, and will not lightly imply them.
It is, therefore, common to provide that, if the agent terminates the
relation without giving the specified notice, he shall forfeit to Ihe
principal either all, or a certain portion, of the compensation then
earned but unpaid. Such stipulations, when fairly made and not un-
reasonable or oppressive in their effects, will be enforced by the law.**
It would not be reasonable, however, to make the forfeiture cover a
very long period,-** or be entirely out of proportion to the principal's
loss,^^
It is not necessary that the stipulation should take the form of .i
written contract betweerjthe parties. If the agent has notice of such
a regulation at the time he enters upon performance, and accepts the
agency under it ; or if he has notice at any subsequent time during the
Here the occasional absence, (be<
cause of Illness, of an employee under
a five year contract), in a period ex-
tending from August to the following
January, and his complete absence
from January 5 to the middle of May
when he offered to return, was held
not sufficient to justify the employer
in giving notice of termination in
April.
24 Hunt V. Otis, 4 Mete. (Mass.) 46a.
26 Richardson v. Woehler, 26 Mich.
90; Harmon v. SaUuon Palls Mfg. Co.,
35 Me. 447, 58 Am. Dec. 718; Walsh
V. Walley, L. R. 9 Q. B. 3«7.
28 Richardson v. Woehler, supra.
27 Basye v. Ambrose, 28 Mo. 39.
In Schimpf v. Tennessee Mfg. Co*,
86 Tenn. 219, 6 Am. St Rep. 832, it
was held that a clause in the contract
whereby, if the servant left without
giving notice, he agreed to forfeit
whatever might be due him from the
company at the time of leaving, was
void as being unreasonable and os>-
pressive.
But In Tennessee Mfg» Co. v. James,
91 Tenn. 154, 30 Am. 8t. Rep. 865, 15
L. R. A. 211, the contract was that if
a servant quit without giving notice,
he was to forfeit a certain amount.
jETraduated in proportion to the wages
paid him, — the forfeiture for wages
from fifty cents up to one dollar a
day being ten dollars, — and it was
upheld as reasonable.
A stipulation in a contract between
a conductor and a tram-ways company
that the manager for the time being
may fix the damages occasioned by
the employee's breach of duty, and
that the manager's certificate shall be
conclusive in all courts, etc., will not
justify the manager in decreeing a
forfeiture of all the wages due, after
an action brought by the discharged
employee to recover the same, with-
out giving the employee notice and
an opportunity to be heard on the
question of forfeiture. Armstrong v.
South London Tramways Co., 64 L.
T. R. (N. S.) 96.
1 186
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ I587, J 588
service and continues to serve under it, he will be bound.^® He cannot
be bound, however, by a regulation or usage of which he had no no-
tice,^** and he mav alwavs show that as a matter of fact he had none*
§ 1587. What works a forfeiture. — Here, too, as in other
cases, a mere temporary absence will hot work a forfeiture, nor will
it result from absence on account of sickness, severe bodily injury, or
other unforeseen emergency. To work a forfeiture, said a learned
judge,'*^ "the abandonment of the employer's service must be the di-
rect, voluntary act, or the natural and necessary consequence of some
voluntary act, of the person employed, or the result of some act com~
mitted by him with a design to terminate the contract or employment,,
or render the further prosecution impossible. But a forfeiture of
wages is not incurred, where the abandonment is immediately caused
by acts or occurrences not foreseen or anticipated, over which the per-
son emplo3'ed had no control, and the natural and necessary conse-
quence of which was not to cause the termination of the employment
of a party under a contract for services or labor."
5, Effect of Agenfs Disloyalty upon Compensation,
§ 1588. Disloyal agent cannot recover compensation.— As has
been already seen, it is often said that the first duty of the agent is
to be loyal to his trust, and a number of rules have been already stated
whose purpose is to insure the performance of that duty. Certain of
these rules have been designed, not merely to give a remedy for actual
wrongdoing, but to remove as far as possible all temptation to wrong-
doing. This duty of loyalty, as has been seen, imposes upon the agent
the obligation to protect the interests of his principal, to see to it that
his own interests or the interests of any one else whom he represents,
shall not conflict with his principal's interests, to make no profit for
himself at his principal's expense, to render true and honest accounts,
to disclose all information coming to him and seeming to be necessary
for his principal's protection, and, generally, to render to his prin-
28 Harmon v. Salmon Falls Mfg. 201, in which case It was held that
Co., supra; Bradley v. Salmon Falls such an unexpected and unforeseen
Mfg. Co., 30 N. H. 487; Collins v. event as the arrest of the servant.
New England Iron Co., 115 Mass. 23; and his conviction and imprisonment
Pottsvllle Iron and Steel Co. v. Good, for crime, would exonerate the serv-
116 Pa. 385, 2 Am. St. Rep. 614. ant from the duty of giving two
20 Stevens v. Reeves, 9 Pick, weeks' notice before leaving the serv-
(Mass.) 198. ice, under a contract by which he
3oBlgelow, C. J., In Hughes v. agreed to give such notice or not
Wamsutta Mills, 11 Allen (Mass.), claim any wages due.
I187
§ 1588]
THE LAW OF AGENCY
[book IV
cipal a disinterested and loyal service. Among the other measures
designed to secure the performance of this duty is the denial of com-
pensation where the duty has not been observed ; it is 6ften said that
a loyal performance is a condition precedent to the right to recover
compensation, and it has been held in many cases that, where the agent
is unfaithful to his trust and abuses the confidence reposed in him, he
will not be entitled to any compensation for his services.**
SI Agent sells to himself, or to com-
pany in which he Is interested, with-
out principal's knowledge and con-
sent Salomons v. Pender, 3 H. 4k
C. 639. Buys principal's property
through a confederate or "dummy."
Witte y. Storm. 236 Mo. 470. Falsely
reports to principal price at which he
buys or sells in order to make secret
profit or to accomplish some other il-
legitimate purpose. Martin v. Bliss,
67 Hun (N. Y.), 157; Vennum v.
Gregory, 21 Iowa, 828; Hale v. Kel-
logg (Tex. Civ. App.), 94 S. W. 389;
Collins V. McClurg, 1 Colo. App. 348;
Schaeffer v. Blair, 149 U. S. 248, 37 L.
Ed. 721; Jeffries v. Rohbins, 66 Kan.
427; Jackson t. Pleasanton, 101 Va.
. 282; Harrjsdn v.' Craven, 188 Mo. 590;
; Hutchinso|^ V. Fl^nin& 40 Can. Sup.
Ct, 134; Lichtexistein v. Mott, 99 N.
Y. App biv. 670. Conceals important
. Information, or misrepresents the
facts, In. order to make profit for him-
self, etc. Wads worth v. Adams, 138
U. S. 380, 34 L. Ed. 984: Wilkinson v.
McCullough. 196 Pa 205, 79 Am. St.
Rep. 702; Jansen v. Williams, 36 Neb.
869, 20 L. .R. A. 207: Whaples v.
Fahys, 87 N. Y. App. Div. 518: Ringo
V. Potts, 36 New Bruns. 42; Price r.
Metropolitan, etc., Co., 23 Times U
Rpp. 630; Ranney v, Henry, 160 Mich.
S97; Pratt v. Patterson, 112 Pa. 475;
Young V. Hughes, 32 N. J. Eq. 372;
Cleveland, etc., R. Co. v. Pattlson, 15
Ind. 70: Quinn v. Le Due (N. J. Eq.),
51 Atl. 199. But not where the in-
formation, e. g., as to the identity of
the purchaser, was not material.
Veasey v. Carson, 177 Mass. 117, 53 L.
R A. '241. Makes false reports about
his expenseiB, surcharges hid accounts.
etc. Little T. Phipps, 208 Mass. 331«
34 L. R. A. (N. S.) 1046; Hobson ▼.
Peake, 44 La. 383: Paul ▼. Minneap-
olis Ttiresher Co., 87 Mo. App. 647;
Stubbs V. SUter, [1910] 1 Ch. 196;
Doss V. Board, 96 Ark. 451. Takes se-
cret commissions on dealings had for
his principal. Murray v. Beard, 102
N. Y. 505; Boston Deep Sea Fishing
Co. Y. Ansell, 39 Ch. Div. 339: Mani-
toba, etc., Co. V. Davidson, 34 Can.
Sup. Ct. 255. Refuses to account,
converts proceeds, etc. Brannon v.
Strauss, 75 111. 234; Meyers v. Walker,
31 111. 353. Keeps jnoney paid to him,
reporting debt unpaid, etc. Sid way v.
American Mtg. Co., 119 {11. App. 502,
222 111. 270. Keeps no proper ac-
counts, mixes part of his prtneipal's
pjioBey -with his own, aad converts
same to his own use. Quirk v. Quirk,
,155 Fed. 199. Undermines his princi-
pal, tries to get latter's business for
himself, makes no effort to promote
latter's interest, etc. Bilz v. Powell,
50 Colo. 482, 38 L. R. A. (N. S.) 847.
Secures the cancellation of orders
taken by him, in order to place them
with another company in which the
agent is interested. Gibson v. Bailey
Co., 114 Mo. App. 350. Acts in such
bad faith and disregard of authority
that principal is justified in repudiat-
ing his acts. Alta Investment Co. y.
Worden, 25 Colo. 215.
See also^ Sumner v. Reicheniker,
9 Kan. 320; Porfer v. Silvers, 35 Ind.
296: Spain v. Arnott, 2 Starkle. 256;
Hall V. GambriU, 34 C. C. A. 190, 92
Fed. 82; Hafner v. Herron, 165 111.
242; Hofflln v. Moss, 14 C. C. A. 459,
67 Fed. 440; Phlnney v. Hall. 101
Mich. 451; Sch^elfenbaum ▼. Rund-
Il88
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL. [§§ . I589, I59O
§ 1589. Good faith docs not save — ^Nor custom— Divisible
transajctiotis. — It is not an excuse in these cases that the disloyal
agent was not really acting in actual bad faith, or that the principal
has not been injured. The rule rests, as has often been pointed out,
not upon injury to the principal, but upon the paramount policy of
removing the danger of temptation from the pathway of the agent.
It may often operate- to give to the principal the benefit of the agent's
service without any compensation, but the agent has only himself to
blam^ if that result ensues. It may seem at times that the penalty
is harsher than the actual pffense justifies, but the answer which is
given is that the law is not aiming at the particular case but is striking
indifferently at. the whole class.
Any custom or usage that the agent shall take a secret profit or
surcharge his account or conceal information, or otherwise be disloyal
to his principal, is, of course, bad, unless the principal's knowledge
and assent can be shown.'*
Where the transaction for which compensation is claimed is one
and entire, the whole compensatibn is forfeited ;•• but where there
were, separate and distinct transactions commissions as to one have
been held not to be forfeited by misconduct as to another.^*
If forfeitable commissions have been paid in ignorance of the mis-
conduct, they may, upon discovery, be recovered back."^
§ 1590. Double ageiiC7--*Agent camiot recover compensation from
either party when double agency imknovm. — As has been seen the
law will not permit the agent to put himself in such a situation that
baken, 81 Conn. 623; Audubon Bldg. to pay was held to have forfeited both
Co. V. Andrews, 111 C. C. A. 92, 187 hig fixed commission and a conting-
Fed. 254: Witte r. Storm, 236 Mo. ent interest).
470. 3^Tbia distinction was made in
S2 See Little v. PhlppB, 208 Mass. Hlpplsley v. Knee, [1905] % K. B. 1,
331, 34 L. R. A. (N. S.) 1046. and has been foljLowed in some other
38 Little v. PhippB, Bupra (here be- cases (though it is g^iestioned in Lit-
cause the agent charged the princi- tie v, Phipps, supra}; e. g., Nitedals
pal with a |50 attorney fee when he Taendstikfabrik v, Bruster, [1906] 2
had actually paid only $25, the whole Ch. 671; Herzfelder y« HcArthur,
interest of the agent in the trans- [190S] Transv. L. R. S. C. 382 (where
action was held forfeited). Price v. It was held that breach of trust In a
Metropolitan, etc., Co., 23 Times L. few separable matters by an agent
Rep. 630 (a case of concealing infor- employed In a long series of trans-
matlon). Stubbs v. Shiter, [1910] 1 actions did ..not . dei^eat his right to
Ch. 195 (a case of secret excessive commissions In transactions in
charging). Braden v. Randies, 128 which he had performed faithfully).
Iowa, 653 (where sales agent falsely ^6 Andrews v. Ramsay, [ld03] 2 K.
reporting offer received and conceal- . B. 635.
ing amount which buyer was ready
I189
§ I590]
THE LAW OF AGENCY
[book IV
his own interests will conflict with those of the principal. The latter
is entitled to the disinterested skill, diligence and zeal of the agent
for his own exclusive benefit, and unless the principal knowingly con-
sents to it, the agent cannot divide this duty and give a part to an-
other. Hence it is the rule of the law that, except with the free and
intelligent consent of his principal, given after full knowledge of all
of the circumstances, the agent cannot in the same transaction, act
both for the principal and the adverse party.**
If, therefore, without such consent, the agent undertakes to also serve
the other party in the same transaction, he commits such a breach of his
duty to his own principal, and so violates the rules of sound policy
and morality, that he forfeits all right to compensation from the prin-
cipal who first employed him.'^ And for the same reason, he cannot
88 See antCy §S 176-180.
»T Green v. Southern States Lbr.
Co., 141 Ala. 680; Berlin v. FarweU
(Cal.), 31 Pac. 527; Alta Inv. Co. v.
Worden, 25 Colo. 215; Deutach v.
Baxter, 9 Colo. App. 58; Bollman v.
Loomis, 41 Conn. 581; Birnn v. Keach,
214 lU. 259; Kronenberger v. Fricke,
22 in. App. 550; Boyd v. Dullaghan,
33 111. App. 266; Hampton v. Lack-
en8» 72 111. App. 442; Van Vliasingen
V. Blum, 92 111. App. 145; Lloyd v.
Colston, 5 Bush (Ky.), 587; Raisin
V. Clark, 41 Md. 158, 20 Am. Rep. 66;
Rice V. Wood, 113 Mass. 133, 18 Am.
Rep. 459; Walker v. Osgood, 98 Mass.
348, 93 Am. Dee. 168; Famsworth v.
Hemmer, 1 Allen (Mass.), 494, 79
Am. Dec. 756; Scrlbner v. Collar, 40
Mich. 875, 29 Am. Rep. 541; Leathers
V. Canfield, 117 Mich. 277. 6 L. R. A.
661; McDonald v. Malts, 94 Mich.
172, 84 Am. St R. 831; Webb v. Pax-
ton, 36 Minn. 532; De Steiger v. Hol-
lington, 17 Mo. App. 382; Rosenthal
v. Drake, 82 Mo. App. 358; Stripling
V. Maguire, 108 Mo. App. 694; Hark-
ness V. Briscoe, 47 Mo. App. 196;
Campbell ▼. Baxter, 41 Neb. 729;
Strawbridge y. Swan, 48 Neb. 781;
Watkins ▼. Cousall, 1 E. D. Smith
(N. Y.), 65; Vanderpoel ▼. Kearns,
2 E. D. Smith (N. Y.), 170; Carman
V. Beach, 63 N. Y. 97; Lamb ▼. Bax-
ter, 130 N. C. 67; Bell v. McConnell,
37 Ohio St. 396, 41 Am. Rep. 528;
Bverhart ▼. Searle, 71 Pa. 256;
Lynch t. Fallon, 11 R. I. 811, 28 Am.
Rep. 458; Lemon ▼. Little, 21 S. D.
628; Armstrong v. O'Brien, 83 T€X.
635; Tlnsley v. Penniman, 12 Tex.
Civ. App. 591; Shepard v. Hill, 6
Wash. 605; Meyer v. Hanchett, 89
Wis. 419, B. c. 43 Wis. 246; Morison
y. Thompson, L. R. 9 Q. B. 480: Bart-
ram V. Lloyd, 88 L. T. 286; Andrews
▼. Ramsay, [1903] 2 K. B. 635.
The "knowledge of the duplicate
character should be established, not
upon mere inference, but upon a full
disclosure or positive proof of knowl-
edge, 80 that the seller or the buyer,
as the case may be, may be advised
of the exact relation of the agent to
the parties conducting the negotia-
tion." Brady, J., in Frankel ▼. War
then, 58 Hun, 543.
The principal may recover back
from the agent commissiona paid to
him before learning of the double
agency. Cannell ▼. Smith, 142 Pa.
25. 12 L. R. A. 395.
An agent who aecreUy receives a
oommlssion from the opposite party
in the same transaction, forfeits his
right to compensation from his prin-
cipal. Brlerly r. Connelly, 31 N. Y.
Misc. 268.
The mere fact that, after the trans-
action was ended, the other party
made a gift to the agent, without any
previous agreement to do so, and
1 190
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1590
recover compensation from the second employer, who was ignorant of
the first engagement.**
there being no bad faith charged, is
held not enough to defeat the right
to compensation. Campbell v. Yager,
32 Neb. 266. To same effect: Carr v.
Ubsdell. 97 Mo. App. 326.
The mere fact that the agent of
the ^seller rendered some aid to the
buyer without compensation and
without fraud does not disentitle him
to compensation from the seller.
Donohue y. Padden, 98 Wis. 20.
Dividing comini9Sion9 xoith agent
of other party. — ^A secret and equivo-
cal agreement to divide commissions
with the agent of the other party
will defeat the right to them. Ho-
bart V. Sherburne, 66 Minn. 171. And
a secret agreement between the
agents of the respective parties to
"pool" their commissions has been
held to destroy the right of either
to recover. Norman v. Roseman, 59
Mo. App. 682. See also, Brokers.
But in Alvord v. Cook, 174 Mass.
120, It was held that the mere fact
that the agents were to divide their
Joint commissions was not enough to
defeat the broker's recovery. The
court said that while it was easy to
conceive that an arrangement be-
tween brokers for the division of
their commissions might put one of
them under a temptation to act ad-
versely to his principal, they would
not say this would be necessarily so.
But see Qulnn v. Burton, 195 Mass.
277.
Dividing commissions with pur-
chaser.— An agent to sell does not
lose his right to commissions be-
cause he has agreed to divide those
commissions with the purchaser he
has procured. They are his, and he
may do what he pleases with them,
said the court. Scott v. Lloyd, 19
Colo. 401; Chase v. Veal, 88 Tex. 333;
LAWler V. Armstrong, 53 Nash. 664.
Agent also having option, — ^An
agent to sell land, may also be given
an option to buy it; and where such
an agent, having produced a pur-
chaser, ready, able and willing to buy
on the terms proposed, to whom thL
owner wrongfully refused to convey,
then exercised his option in order
to complete the sale to the buyer, he
was held to be entitled to his com-
mission. Rlemer v. Rice, 88 Wis. 16.
A person who has had an option
for the purchase of land, which he
has elected not to exercise has no
such Interest as will disqualify him
from becoming the broker of another
person to buy the land, nor which he
owes any duty to disclose to the lat-
ter, and he may recover a commis-
sion from such purchaser. Carpen-
ter v. Fisher, 175 Mass. 9.
Agent joining in the purchase. —
Where an agent, who has been in-
formed by his principal of the low-
est price for land, made a secret
agreement with a purchaser to buy
the land, with the agent Jointly, — the
agent to apply his commissions in
part payment for his share, — the
agent was held not entitled to com-
missions. Finch V. Conrade, 154 Pa.
326.
Under similar circumstances,
where the agent so manipulated
that he was enabled to Join In the
purchase at the lowest price the prin-
cipal would sell for, the agent falsely
representing to the principal that
the sale could not be consummated
unless he bought an Interest, he was
not permitted to recover. Smith y.
88 Bell V. McConnell, 37 Ohio St.
396, 41 Am. Rep. 528; Rice v. Wood,
113 Mass. 133, 18 Am. Rep. 459; Rai-
sin V. Clark, 41 Md. 158, 20 Am. Rep.
66; Lynch v. Fallon, 11 R. I. 311,
23 Am. Rep. 458; Bollman v. Loom Is,
41 Conn. 581; Farnsworth v. Hem-
mer, 1 Alien (Mass.), 494, 79 Am.
Dec. 756; Barr v. Hall, 26 New Zeal.
L. R. 222.
1 191
§ 1591]
THE LAW OF AGENCY
[book IV
And if the second employer has knowledge of the first engagement,
then both he and the agent are guilty of the wrong committed against
the first employer, and the law will not enforce an executory contract
entered into in fraud of his rights.
It is no answer to say that the second employer, having knowledge
of the first employment, should be held liable on his promise because
he could not be defrauded in the transaction. The contract itself is
void as against public policy and good morals, and both parties thereto
being in pari delicto the law will leave them as it finds them. Ex dolo
malo non oritur actio is the maxim of the law. The result in such
cases is therefore that the agent can recover from neither party unless
his double employment was known and assented to by both.'*
§ 1591. How when agent mere middleman. — As has been
seen in an earlier section,*® and as will be more fully discussed under
the head of Brokers,*^ it is possible that the agent, instead of being
one in whom any particular trust and confidence is reposed, or upon
whom either party relies for the protection of his interests, may be a
Tripis, 2 Tez. CiT. App. 267. See
also, to the effect that where the
broker who was employed to sell
land for a commission, unites with
others to buy it, even with the con-
sent of the principal, no compensa-
tion is due him unless there is a
new undertaking, after his relation
is changed, to pay him. Hammond
▼. Bookwalter, 12 Ind. App. 177.
Even although the double agency
is known to both principals, — even
if he be a mere middleman — the
agent, while acting for both, must
deal fairly by both; and the conceal-
ment of material facts from either
(principal with a view to making
profit for himself, will destroy all
right to compensation from thatprin-
cipaL "He cannot be allowed to at-
tempt to extort a price from one
principal not demanded or required
by the other, and then be entitled to
a commission as for a service." Phin-
ney v. Hall, 101 Mich. 451. See also.
Carpenter v. Fisher, 175 Mass. 9.
39 Bell V. McConnell, 87 Ohio St
396, 41 Am. Rep. 528: Farnsworth
V. Hemmer, 1 Allen (Mass.), 494, 79
Am. Dec. 756: Walker v. Osgood, 98
Mass. 848, 93 Am. Dec. 168; Smith
I
V. Townsend, 109 Mass. 600; mce v.
Wood, 118 Mass. 133, 18 Am. Rep.
459; Sullivan v. Tufts, 203 Mass. 155;
Bollman v. Loomis, 41 Conn. 581;
Bverhart v. Searle, 71 Pa. 256; Penn.
Ry. Co. V. Flanigan, 112 Pa. 558;
Rice V. Davis, 136 Pa. 439, 20 Am. St.
Rep. 931.
In a number of cases in the lower
courts of New York, it seems .to be
held that it is enough if the defend-
ant, at the time he employed the
agent, knew of the latter's previous
employment by the other party,
without requiring that it shall ap-
pear that the other party, consented
to the agent's employment by the de-
fendant See Lansing y. Bliss, 86
Hun (N. Y.), 206; Geery v. Pollock.
16 N. Y. App. Div. 321; Whiting v.
Saunders, 22 N. Y. Miac. 589.
But all of these cases expressly go
back for authority to Rowe v. Stev-
ens, 53 N. Y. 621, in which it appears
that each party bad notice that the
agent was employed by the other,
and with such notice agreed to pay
him his compensation. See also, Jar-
vis V. Scbaefer, 105 N. Y. 289.
«o See ante, { 178.
41 See pott, Book V, Chap. III.
192
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ isp^
mere "middleman," whose undertaking it is merely to bring the par-
ties in interest together and then leave them to conduct their own ne-
gotiations. In such cases, it is said that inasmuch as neither party
relies upon the judgment or fidelity of ti^ agent, he violates no duty
in undertaking to perform this service for both" and therefore may
properly have compensation from both.
§ 159a. ■ May recover when dout^le agency was fully known
and assented to. — There is some conflict in the decisions upon the
question of the agent's right to recover compensation from both par-
ties, even when the double employment is fully knpwn and assented to.
It is said, and with no little reason, that even in this case the contract
is opposed to public policy on account of the natural and legitimate
tendency of such emplo)anents.** But while all such transactions are
properly viewed with suspicion, the weight of reason and authority is
in favor of their validity when fairly made.** The agent may not be
able to serve each of his principals with all his skill, energy or ability.
He may not be able to obtain for a selling principal the highest price
which could be obtained, nor for a purchasing principal the lowest
price for which the property could have been purchased. But he can
render to each a service entirely free from falsehood and fraud ; a
fair and valuable Service in which his best judgment and soundest dis-
cretion are fully and freely exercised. And such a service is all that
either of his principals contracted for, or had reason to expect.**
«Oreen v. Robertson, 64 Cal. 75;
Clark V. Allen, 125 Cal. 276; Man-
dera v. Craft, 3 Colo. App. 286: Cox
V. Haun, 127 Ind. 325: Montross v.
Eddy, 94 Mich. 100, 34 Am. St. Rep.
323; Chllds v. Ptom^y, 17 Mont. 502;
KnauBS v. Gottfried Brewing Co., 142
N. Y. 70; Gracie v. Stevdns, 56 App.
BIT. 203; affirmed, 171 N. Y. 658:
Norton V. Loan Asa'n, 57 App. Dlv.
520; Bonwell v. Auld, 9 N. Y. Ml0c.
65: SOQthaek y. Lane. 82 Misc. 141.
Same case. 23 Misc. 515.
In Casady v. Carraher, 119 Iowa,
500, it is said that In order to oc-
cupy the position of middleman, it
is necessary that the agent "should
have limited his exertions to such
service. If, in addition thereto, the
middleman assists either In effecting
a trade, he becomes to that extent a
partisan agent, and the obllgatioi|.
immediately devolves upon him to
»»
disclose his agency to the other.
*» See Meyer v. Hanchett, 43 Wis.
246.
44 Bell V. McOonnell, 37 Ohio St.
396, 41 Am. Rep. 528: Adams Min-
ing Co. V. Senter, 26 Mich. 78; Fltz-
simmons v. Southern EJxpress Co.,
40 Ga. 380, 2 Am. Rep. 577; Alex-
ander V. University, 57 Ind. 466;
Joslin v. Cowee, 56 N. Y. 626; Roll-
ing Stock Co. V. Railroad, 34 Ohio
St. 450; Atterbury v. Hopkins, 122
Mo. App. 172; Fryer v. Marker, 142
Iowa, 708, 23 L. R. A. (N. S.) 477.
45 In Adams' Mining Co. t. Senter,
26 Mich, at p. 77, Campbell, J., in
speaking of the acts of an agent act-
ing for each of two mining compan-
ies, says: "It is claimed that upon
the principle that a man cannot con-
tract with himself, and cannot oc-
oupy positions Involving a conflict of
duties, all of his dealings whereby
1 193
§ 1593]
THE LAW OF AGENCY
[book IV
6, Effect of Agent's Wilful Disobedience.
§ i593« Forfeiture by wilful disobedience. — The same result of
forfeiture will, as has been seen, flow from such wilful and persistent
disobedience of lawful and reasonable instructions as shows a com-
plete disregard of the fundamental obligations of the relation, and a
practical disloyalty to the principars interests." Less than this, and
the agent's negligence, will be ground for damages, or, perhaps, for
a discharge, but will not ordinarily work a total forfeiture of the
agent's right to compensation.*'
the property of one company was 6 L. R. A. (N. S.) 524. See also, Je-
transferred to, or used for the other,
should be held unlawful. There is
no Talldtty in such a proposition.
The authority of agents may, where
no law is violated, be as large as
their employers may choosa to make
It. There are multitudes of cases
where the same person acts under
power from different principals in
their mutual transactions. Every
partnership involves such double re-
lations. Every survey of boundaries,
by a surveyor jointly a^eed upon,
would come within situilar difficul-
ties. It is only where the agent has
personal interests conflicting with
those of his principal, that the law
requires peculiar safeguards against
his acts. There can be no presump-
tion that the agent of the two parties
will deal unfairly with either. And
when they both deliberately put him
in charge of their separate concerns,
and there is any likelihood that he
may have to deal with the rights of
both in the same transactions, instead
of lessening his powers, it may be-
come necessary to enlarge them far
enough to dispense with such for-
malities as one man would use with
another, but which could not be pos-
sible for a single person to go
through alone."
40 See a striking illustration in
Von Heyne v. Tompkins, 89 Minn. 77,
rome v. Cycle Co., 163 N. Y. 361;
Penis ton v. Huber Co., 196 Pa. 580;
ConneH v. Gisborne Times Co., 28
New Zeal. L. R. 299; Howell v. Den-
ton (Tex. Civ. App.), 68 8. W. 1002.
In Macnamara v. Martin, 7 Com.
L. R. (Australia) 699, an agent to
sell land found a purchaser upon
terms proposed by principal. The
principal thereupon changed his
terms and instructed the agent to go
no further. Nevertheless the agent,
feeling that the principal was not
dealing fairly with the purchaser so
produced, undertook to make a writ-
ten contract with him binding the
principal to convey. This contract,
however, would not bind the princi-
pal. The agent sued for the com-
mission originally agreed upon,
which it was agreed he had earned,
but which it was urged had been for-
feited by his disobedience. Held,
that the agent's alleged misconduct
after producing the purchaser did no
harm to the principal and did not
defeat the agent's right to commis-
sions.
47 Thus the mere failure of a work-
man to obey a rule to "punch*' a
time clock, will not cause a forfeit-
ure of his wages for time which it is
conceded that he worked. Mathewa
v. Industrial Lumber Co., 91 S. Car.
568.
1 194
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ IS94
Where, however, the agent's default amounts to a complete failure
to perform the act in consideration of which only the compensation
was to be paid, the agent cannot recover because he has not performed."
7. PrincipaVs Right of Recoupment.
§ 1594. Principal may recoup damages. — Instead of resorting to
an independent action for the recovery of the damages he may have
sustained by reason of the agent's failure to perform his undertaking,
the principal may recoup them in an action brought against him by the
agent to recover his compensation.**
This defense is distinguishable from set-off in three important par-
ticulars: I. The claim sought to be taken advantage of by recoupment
must be confined to matters arising out of, and connected with, the
transaction or contract upon which the suit is brought. The claims
and demands of both parties must spring out of the same contract or
transaction, and not out of separate and different transactions. 2. It
is immaterial whether the damages sought to be recouped are liqui-
dated or unliquidated,. it being well settled that unliquidated damages
growing out of the same transaction from which the plaintiff's cause of
action arises, may be recouped. 3. The remedy is conferred and regu-
lated by common-law rules and does not depend upon statutory crea-
tion, although in many states it is regulated or enlarged by statute.*'*
The occasion for the resort to recoupment may arise under one of
U\o states of fact: a. Where the agent sues upon the contract itself;
and b. where he sues upon a quantum meruit. In the first case, the
*8 Thus, for example, if a broker Is
to be paid for sellin^r goods accord-
ing to a certain sample, and he
makes a sale by substituting a bet-
ter sample* ^thereby fastening upon
his employer an unprofitable sale, a
finding that no commissions wore
earned is justified "because the sales
were not made in conformity with
the terms upon which the broker was
employed to effect them." Schreiner
V. Kissock, 91 N. Y. Supp. 28.
49Blodgett V. Berlin Mills Co., 52
N. H. 215; Mobile, etc., R. R. Co. v.
Clanton, 59 Ala. 392, 31 Am. Rep.
15; Wilson v. Smith, 111 Ala. 170;
Brunson v. Martin, 17 Ark. 270; Lee
V. Clements, 48 Ga. 128; Houston v.
Young, 7 Ind. 200; Stoddard v.
Tread well, 26 Cal. 294; Still v. Hall.
20 Wend. (N. Y.) 51; Phelpa v. Paris,
39 Vt. 511; Cilley v. Tenny, 31 Vt.
401; DeWitt v. Cullings. 32 Wis. 298;
Harper v. Ray, 27 Miss. 622; Dunlap
V. Hand, 26 Id. 460; Runyan v.
Nichols, 11 Johns. (N. Y.) 547; Swift
V. Ilarriman, 30 Vt. 607; Marshall v.
Hann, 17 N. J. L. 425; Johnson v.
White Mt. Creamery Ass'n, 68 N. H,
437, 73 Am. St Rep. 610; McEwen ▼.
Kerfoot, 37 111. 530; Evans v. Hug-
hey, 76 HI. 115; Harvey v. Cook, 24
111. App. 134.
80 Ward V. Fellers, 3 Mich. 281;
Wheat V. Dotson, 12 Ark. 699; Bal-
timore & Ohio R. R. Co. V. Jameson,
13 W. Va. 833, 31 Am. Rep. 775;
Myers v. Estell, 47 Misa. 4.
"95
§ 1595] THE LAW OF AGENCY [bOOK IV
agent treats the contract as being substantially performed, and bases
his action upon it. It therefore becomes an essential portion of his
case to show what the contract was, and that its performance has been
such as to entitle him to the stipulated compensation. In the second
case, the agent disregards the contract and sues for the value of his
services as though no special contract existed. In this case it be-
comes necessary for the principal to set up the contract and its breach
in his defense.
§ 1595- What damages may be recouped. — It is indispen-
sable that the loss for which damages are sought to be recouped should
grow out of the same contract or transaction as that upon which the
plaintiff's action is based.''^ The principal can not therefore recoup
for a wrong or injury done by the agent outside of, and disconnected
with, the scope of his employment.'* But, within this limit, damages
for the losses which the principal may have sustained by reason of the
agent's inefficiency, negligence, misconduct, or failure to perform the
express or implied covenants, agreements or conditions of his under-
taking, and which would furnish the basis of an action by the prin-
cipal against the agent, may be recouped by the principal in the action
brought by the agent.*'
Thus in an action by a railway conductor for his wages, the com-
pany may recoup for loss resulting to it from a collision caused by his
negligence;** so in an action by an agent to recover his wages, the
principal may recoup the damages he has sustained by reason of the
seduction of his daughter by the agent;" so where a mill operative
left his employment without having given the previous notice of his
intention to leave which the contract required, in consequence of which
the work at the mill was hindered and delayed, it was held that the
damages thereby occasioned to the mill owner might be recouped
against the claim for wages.**
81 Lufburrow v, Henderson, 3^ Ga, b2 Nashville, etc., R. Co. v. Chumley^
482; Mayberry v. Leech, 58 Ala. 339; 6 Heigk. (Tenn.) 827.
Desha v. Robinson, 17 Ark. 288; Hart ^s See cases cited in preceding sec-
V. Francis, 2 Col. 719; Sanger v. tion, note 1.
Fincher, 27 111. 346; Evans v. Hug- •* Mobile, etc., Ry. Co. v. Clanton,.
hey, 76 111. 115; Waterman v. Clark, 59 Ala. 392, 31 Am. Relp. 15; South
76 111. 428; Fessenden v. Forest Pa- Chicago City Ry. Co. v. Workman,
per Co., 63 Me. 175; Bartlett v. Far- 64 111. App. 383.
rington, 120 Mass. 284; Hulme v. »Bixby y. Parsons, 49 Conn. 483,
Brown, 3 Heisk. (Tenn.) 679; Ward 44 Am. Rep. 246.
V. Wilson, 3 Mich. 1; Allen v. Mc- B«Satchwell v. Williams* 40 Conn.
Kibbin, 5 Mich. 449; Hill v. South- 371. Principal may recoup for losa
wick, 9 R. I. 299, 11 Am. Rep. 250; of time by agent Wilson 7. Smithy
Harris v. Gamble, 6 Ch. Dlv. 748. Ill Ala. 170.
II96
CHAP. IV] DUTIES AND UABILITIES OF PRINCIPAL [§§ 1596/1597
f 1596* -i— — So in such an action, the principal may show ii*
his- defense that the qgent embezzled or wasted the gxx>ds or money
committed to his care ; "' that the agent wilfully destroyed the princi-
pal's property ; *■ that by the agent's negHgence the property was lost,
destroyed or injured;** that the agent failed to furnish certain ma*
terials whioh he had agreed to furnish, whereby the principal was
compelled to furnish them ; •^ that the agent failed to pay certain dam-
ages which he had agreed to pay, by reason of which the principal
was obliged to pay them.**
So the principal may recoup for the damagtes which he has incurred
to third petSons by reason of the agent's misconduct or neglect, or his
failure to observe arfd perform the principal's instructions.*'
§ 1597. — Limit of recovery. — Damages, however, in the ab-
sence of a statute enlarging the remedy, can be recouped by way of
mitigation only, and can not be made the basis of a recovery of the
excess." And having once offered and used them in recoupment, the
principal can not afterwards bring an action for the excess.** If,
therefore, the principal's damages exceed the plaintiff's claim, he should .
bring an independent action for them in the first instance.
The measure of damages is, also, substantially the same as though
an independent action were brought to recover them.** The limit of
the recoupment must, therefore, be the actual damages which directly
and proximately result from the negligence, default or misconduct of.
the agent, and must not exceed the amount claimed by him.^ Indi-
rect, remote or speculative damages, except in case of fraud where a
more liberal rule prevails, are no more to be recovered by recoupment
than by an independent action.*^
87 Heck V. Shener, 4 Serg. ft R. "Ward v. Fellers, 8 Mich. 281;
(Penn.) 249, 8 Am. Dec. 700; Brun- Bennett v. Kupfer, 213 Mass. 218,
son V. Martin, 17 Ark. 270; Allaire 100 N. E. 332; Britton v. Turner, 6
Works V. Guion, 10 Barb. (N. Y.) 55. N. H. 481, 26 Am. Dec. 713: Fowler
B8 Allaire Worka v. Guion, 10 Barb. v. Payne, 62 J^iss. 210; Streeter v.
(N. Y.) 55. See also, Brigham v. Streeter, 43 lU. 156; Holcraft v. Mel-
Hawley, 17 111. 38; Lee v. Clementfi, lott, 57 Ind. 539; Brunson v. Martin,
48 Ga. 128; Fowler v. Payne, 49 Miss. 17 Ark. 270. But Sj-e. Johnson v.
321; Sanger v, Fincher, 27 lU. 347; White Mt. Creamery Ass'n, 68 N. HL
Wilder V. Stanley, 49 Vt. 105. 437, 73 Am. St. Rep. 610.
80 Allaire Works v. Guion. supra, e4Ward v. Fellers, 3 Mich. 281.
60 Newton v, Forster, 12 M. & W. w Meyers v. Estell, 47 Miss. 4; Eb-
772. ten V. Myers. 54 Id. 147.
•1 Barker v. Troy, etc., R. R. Co., «« Satchwell v. Williams, 40 Conn.
27 Vt. 766. 371.
MMcEwen v. Kerfoot, 37 IH. 530; o? Blanchard v. Ely, 21 Wend. (N.
Campbell v. Somerville, 114 Mass. Y.) 342, 34 Am. Dec. 250: Finney v.
334. Cadwallader, 55 Ga. 75; Pettee ▼.
II97
§§ I598-I600]
THE LAW OF AGENCY
[book IV
§ 1598.
Right not cut off by assignment. — The right of
recoupment, it is said, attaches to the contract and goes with it into
whosesoever hands the right niay come to sue upon it." The prin-
cipal may, therefore, avail himself of this defense against the assignee
of the agent, even though he be a bona fide transferee.**
§ 1599* No recoupment against an infant — Where, however, the
agent is an infslnt, no recoupment can be had against him, of damages
arising from his failure to perform the express or implied duties im-
posed upon him by the contract of agency .^^ "Recoupment is, in sub-
stance and eflfect, a cross-action, and unless the party whom it is at-
tempted to subject to it could be compelled to respond for the damages
by an independent action against him, he cannot be reached by recoup-
ment." ^^
III.
THE agent's right to reimbursement.
§ 1600. What here included. — In the course of the execution of
the agency, the agent may not infrequently pay out his own money, or
become liable to pay it, in meeting the expenses which arise in the per-
formance of the agency. The agent may also, in executing the prin-
cipal's commands, expose himself to leg^l claims, or incur legal ob-
ligations to third persons who are injured by the fact or the manner
of the agent's execution of the principal's directions. In either case,
the agent may have a claim against his principal by reason of the ex-
pense or liability thus incurred. These claims are in substance very
much alike, but, for convenience sake, will here be considered under
the two heads of Reimbursement for money expended, and Indemnity
against liability incurred.''^
Tennessee Mfg. Co., 1 Sneed (Tenn.),
381.
«8 Bixby V. Parsons, 49' Conn. 483,
44 Am. Rep. 246.
«» Blxby V. Parsons, supra.
Towidrlg V. Taggart, 51 Mich. 103;
Whltmarsh v. Hall, 3 Denlo (N. Y.),
376; Derocher v. Continental Mills,
58 Me. 217, 4 Am. Rep. 286; Robin-
son v. Weeks, 56 Me. 102; Vent v.
Osgood, 19 Pick. (Mass.) 575; Gaff-
ney v. Hayden, 110 Mass. 137, 14 Am.
Rep. 580; Meeker v. Hurd, 31 Vt. 642;
Dallas y. Holllngsworth, 3 Ind. 537;
Meredith v. Crawford, 34 Ind. 399;
Ray V. Haines, 52 111. 485.
Ti Graves, C. J., in Widrig v. Tag-
gart, supra.
72 Bvhrogation. — There are also
cases In which the agent will be en-
titled to subrogation, or something
akin to it. Thus where an agent,
acting in good faith, and for the
benefit of the principal, but without
authority^ has made himself liable
to third persons upon acts or con-
tracts for the principal, and upon
which the principal has received the
IigS
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 160I
§ 160Z. Agent must be reimbursed for proper outlay8.-«The per-
formance of the agency is undertaken for the benefit of the principal.
To him belong all the profits and advantages resulting from its execu-
tion. He is also entitled to all of the profits and advantages acquired
by the agent during the course of the performance. It is eminently
just and proper, therefore, that the principal should bear the natural
and legitimate burdens of the transaction, and that the agent should
not be called upon to suffer loss or injury for his acts done in the
proper discharge of his duties. And such is the rule of law.
The agent is entitled to be reimbursed by the principal for all of
his advances, expenses and disbursements, made in the course of his
agency, on account of or for the benefit of his principal, when such
advances, expenses and disbursements have been properly incurred,
and reasonably and in good faith paid, without any default on the
part of the agent.^^
benefit, as, for example, where by
this means valid debts against the
principal have been discharged by
the agent, the latter standing In
equity in the right of those whose
claims have been so paid, may often
recover from the principal to the ex-
tent that such debts have been so
discharged. See McLaughlin v.
Daily Telegraph Co., 1 Commonw. L.
R. (Australia) 243.
In Chandler v. Green, 101 111. App.
•109, it is said, "An agent who uses
his private means to protect the es-
tate of his principal is entitled to be
subrogated to the position and rights
of his principal. Curry v. Curry, 87
Ky. 667. 12 Am. St. Rep. 504; Gillett
v. Insurance Co. of North America,
39 111. App. 284-286; see also, Slacl: v.
Kirk, 67 Penn. St. 380."
For the right of the third person
to recover in such a case, see Banna-
tyne v. Maclver, [1906] 1 K. B. 103,
2 Br. Rul. Caa. 735; McLaughlin v.
City Bank, 9 N. S. Wales St. Rep. 319
73 Clifton V. Ross, 60 Ark. 97; Arn-
old y. Arnold, 83 Kan. 539 (agent to
buy goods must be reimbursed for
price properly paid); Blazo v. Gill,
143 N. Y. 232 (an agent to supervise
the construction of a house reimbursed
for money paid for work and mater-
ials); Monnet v. Metz. 127 N. Y. 151
(agent reimbursed for counsel fees in-
curred in a litigation); Lyon v. Swee-
ney, 91 Mich. 478 (agent to foreclose
mortgage entitled to expenses of adver-
tising and attorney fees) ; Perin v.
Parker, 126 111. 201, 9 Am. St. Rep.
571, 2 L. R. A. 336 (broker recovered
for advances made in payment of
grain bought for his principal); Kel-
ley V. Maguire, 99 111. App. 317 (fac-
tor reimbursed for money advanced);
Ward v. Tucker, 7 Wash. 399 (broker
effecting insurance entitled to reim-
bursement for premiums); Schaefer
V. Sherwood, 61 N. Y. Misc. 642
(agent to rent premises may be re-
imbursed for expenditures on neces-
sary repairs) ; Gardner v. Kinney, 60
Ore. 292 (a surveyor reimbursed for
necessary boat hire); Bayley v. Wil-
kins, 7 Com. B. 886 (a broker au-
thorized to buy stock reiml'ursed for
a call paid thereon); Ellis v. Pond,
[18981 1 Q. B. D. 426 (broker reim-
bursed for advances made in pur-
chase of stock); Baker v. Wain-
wright, 36 Md. 336, 11 Am. Rep. 495
(an agent who has purchased land in
his own name at princlpars request
entitled to reimbursement, although
there was no written evidence of
the agency to satisfy the Statute
1 199
§ l602]
THE LAW OF AGENCY
[book IV
§ 1602.
When not entitled. — The agent cannot, however,
claim to be reimbursed for expenses or disbai^ements 'wbi6h have been
rendered necessary by his own neglect to use reasonable care and dili-
gence, or which have been incurred in violation of the express or im-
plied conditions of the agency, or in opposition to the instructions of
his principal. If such expenses are incurred, the agent must bear theih
himself.^* The right to reimbursement extendis only to such expenses
as are properly incurred by the agent in the honest managemoit of
the business, and without default on his part.'* The right to reim-
bursement does not extend to expenses which were officiously assumed
Iby the agent,'^® nor, obviously, to those which, by the terms of the con^
tract, were to be borne by the agent himself J'
The agent will also not be entitled 'to reimbursement for expenses
incurred in promoting an enterprise which he knows to be unlawful.
This question has frequently arisen with reference to the right of
brokers and other agents for compensation and reimbursement with
reference to dealings in "futures," stock gambling, and other forbidden
t)f Frauds); Mitchell's Adm'r v.
Sproul, 5 J. J. Marsh. (Ky.) ^64
(agent authorized to hire aa at-
torney may have reimbursement
from his principals although the
agent, without sealed authority, made
the contract with the attorney un-
der seal, and in other respects in-
advertently exceeded his authority) ;
Taylor v, St. Claire. 79 Vt. 536 (an
agent entitled to reimbursement for
money spent on lunches, may have it,
although they were not bought at
the restaurant provided by the prin-
cipals for other employes). To same
effect: Ruffner v. Hewitt, 7 W. Va.
585; Warren v. Hewitt, 45 Ga. 501;
Maitland v. Martin, 86 Pa. 120;
Beach v. Branch, 57 Ga. 362; Sear-
ing v. Butler, 69 111. 575; Elliott v.
Walker, 1 Rawle (Penn.), 126; A. B.
Frank Co. v, Waldrup (Tex. Civ.
App.), 71 S. W, 298; Western Assur,
Co. v. Uhlhorn, 41 La. Ann. 385;
Parker v. Moore, 53 C. C. A. 369, 1,
115 Fed. 799; Willingham v. Rushing,
105 Ga. 72; Bush v. Froelich, 14 S.
D. 62; Kelly v. Board of Pub. Works,
76 Va, 263; Johnston v. Gerry, 34
Wash. 524; Waters v. Davies, 55 N.
Y. Super. 39; Nagle v. Richards, 134
N. Y. App. Div. 29.
Interest may be allowed upon dis-
bursements made. Kimball v. Ran-
ney, 122 Mich. 160, 80 Am. St Rep.
548, 46 L. R. A. 403; Perin v. Parker,
126 in. 201, 2 L. R. A. 336, 9 Am. St
Rep. 671.
T4Godman v. Meixsel, 65 Ind. 62;
Veltum V. Koehler. 85 Minn. 126;
Dodge V. Tileston, 12 Pick. (Mass.)
328; Bally v. Burgess, 48 N. J. Ea-
411; Ellis v. Pond, [1898] 1 Q. B. D.
426; In xe Overweg, [1900] 1 Ch. D.
209.
No reimbursement for the price of
goods which, by reason of the agent's
misconduct, never reach the princi-
pal. Hurst V. Holding, 3 Taunt 32.
T5 Maitland v. Martin, 86 Pa. 120.
No reimbursement for expenses in-
curred in schemes designed to de-
fraud the principal. Kenyan v.
Trevlno, Tex. Civ. App. — , 137
S. W. 458.
7« Child V. Morley, 8 T. R. 610.
T7 Champion Machine Co. v. Ervay
(Tex. Civ. App.), 16 S. W. 172.
1200
•w ^
CHAP. IV] DUTIES AND LIABILITIES OF PMNCIPAL [§ 1603
or unlawful transactions.^* As pointed out in an earlier section/*
however, it is not enough to defeat the agent's claim that the transac-
tion, so far as the principal is concerned, is an unlawful one ; to pre-
vent the agent's recovery, he must have been cognizant of the unlawful
purpose and have taken some direct part in its execution.®^
Obviously no duty to reimburse arises where there exists no founda-
tion of agency."
IV.
THE agent's right TO INDEMNITY.
§ 1603. Agent must be indemnified against consequences of law^
ful acts. — ^The agent has the right to assume that the principal will
not call upon him to perform any duty which would render him liable
in damages to third persons* Having no personal interest in the act,
other than the performance of his duty, the agent should not be re-
quired to suffer loss from the doing of an act, apparently lawful in
itself, and which he has undertaken to do by the direction, and for the
benefit and advantage, of his principal. If in the direct performance
of such an act, therefore, the agent invades the rights of third persons
and incurs liability to them^ the loss should fall rather upon him for
whose benefit and by whose direction it was done, than upon him whose
only intention was to do his duty to his principal. Wherever, then,
the agent is called upon by his principal to do an act which is not mani-
festly illegal, and which he does not know to be wrong, the law im-
plies a promise on the part of the principal to indemnify the agent for
such losses as flow directly and immediately from the very execution
of the agency.**
78 See Samuels v. Oliver, 130 IlL son, 182 U. S. 461, 46 L. Ed. 1183;
73; Mohr v. Mieaen, 47 Minn. 228; Parker ▼. Moore, 53 C. O. A. 869, 115
Mixon v. Walker, 9 Oa. App. 610; Fed. 799; Lehman v. Peld, 87 Fed.
Raymond v. Parker, 84 Conn. 694; 852; Bnnls v. Edgar, 164 111. App.
Wilson V. Nat. Fowler Bank, 47 Ind. 643; Marengo Co. v. Hooper (Ala.),
App. 689; Riordan v. Doty, 60 S. C. 66 So. 680; Harvey A Go. r. Doty, 50
537; Wagner v. Hlldebrand, 187 Pa. S. C. 548, and many other cases cited
136; Dows ft Co. T. Olaspel, 4 N. D. in § 121, ante,
251; Bartlett v. Collins, 109 Wis. 477; »i Joseph ▼. Sulsberger, 136 N. Y.
Barnes v. Smith, 159 Mass. 844; App. I>iv. 499.
Sprague v. Warren, 26 Neb. 826, 3 as Moore r. Appleton, 26 Ala.
L. R, A. 679. 633, a. c. 34 Ala. 147, 78 Am. Dec.
79 See ante, 8 121. 448; Ramsay v. Gardner, 11 Johns.
80 Irwin v. WllUar, 110 U. 8. 499, (N. T.) 439; Stocking ▼. Sage, 1
28 L. Ed. 225; Bibb v. Allen, 149 U. Oonn> 519; Greene v. Goddard, 9
S. 481, 37 L. Bd. 819; Clews ▼. Jamie- Mete. (Mass.) 212; Powel! v. New-
76 I20I
§ i6o4]
THE LAW OF AGENCY
[book IV
§ 1604. Liability must be a direct consequence o{ the execution
of the agency. — It is, of course, not enough, to entitle the agent to
burgh, 19 Johns. (N. Y.) 284; Malt-
land y. Martin, 86 Pa. 120; Beach v.
Branch, 57 Ga. 362; Searin«r v. But-
ler, 69 111. 575; Elliott v. Walker, 1
Rawle (Penn.), 126; Otter Creek Lbr.
Co. V. McElwee, 37 111. App. 285; Selz
v. Guthman, 62 111. App. 624; First
Nat Bank v. Tenney, 43 III. App.
544; Denney v. Wheelwright, 60 Miss.
733: Castle v. Noyes, 14 N. Y. 329;
Brown v. Mechanics Bank, 43 N. Y.
App. Div. 173; Gulrney v. St. Paul,
etc., Ry. Co., 43 Minn. 486. 19 Am. St.
Rep. 256; Henderson v. Eckern, 115
Minn. 410, Ann. Gas. 1912 D. 989;
Hoggan V. Cahoon, 26 UUh, 444, 99
Am, St. Rep. 837; Dugdale v. Lever-
ing, L. R. 10 C. P. 196.
No indemnity against any but the
direct and natural consequences of
the act. People v. Town Auditors, 74
N. Y. 310.
In First National Bank v, Tenney,
43 111. App. 544, it appeared that
Tenney, acting as attorney for the
bank, which was creditor of a certain
debtor in failing circumstances, at
the request of the bank, took a Judg-
ment upon the bank's claim in his
own name, and proceeded to enforce
it by a sale of the debtor's goods
which he bought in in his own name
for the benefit of the bank. The
debtor then brought action against
Tenney, the bank and others, charg-
ing them with fraudulent collusion to
defraud the debtor and other credit-
ors. A Judgment was rendered in
this action against the defendants,
from which the bank declined to ap-
peal. Tenney appealed for his Own
protection and reversed the judg-
ment. He then brought action
against the bank to recover for serv-
ices and expenses in securing a re-
versal of the judgment against him-
self. Held, that he was entitled to
recover. The court said: "The prin-
cipal is not bound to appeal from a
decree rendered against his agent;
he may submit to it, but he is bound
to indemnify his agent, and this
means something more than that af-
ter the agent has paid the judgment,
or under it been stripped of his
goods by due process of law, that the
principal will then afford remunera-
tion. The principal may pay if he will,
but he cannot lie supinely by and let
his agent suffer the consequences of a
decree which, he, as principal, is
legally and morally bound to pay.
Neither is the agent bound to wait
indefinitely before he takes measures
to protect himself; having notified, if
practicable, the principal of the sita-
ation, he may proceed to measures
for his own and his principars re-
lief, measures which, in the case of
an appeal taken, are necessarily in
the interest of the principal and tend
to his exoneration. When sued for
an act done In pursuance of his em-
plo3rment, he is not obliged to let
judgment go against him, but may
defend and recover the expenses of
a defense bona fide made."
In Gulrney v. St. Paul, etc., R. Co.,
43 Minn. 496, 19 Am. St Rep. 256, the
defendant, its agents and servants,
had been enjoined from molesting
the Fargo railroad in constructing a
crossing over the defendant's road-
bed. The plaintiff was foreman of
construction for the defendant, and
had not heard of the injunction. Tho
defendant directed the plaintiff to
prevent the Fargo company from in-
terfering with the defendant's tracks,
which order the plaintiff obeyed and
thereby unwittingly violated the in-
junction. He was arrested for con-
tempt of court, and brings this action
to recover damages occasioned there-
by, and it was held that he could
recover.
In a great variety of cases sheriffs,
constables, and similar officers, who
have, at the specific direction of a
party or his attorney, levied upon
1202
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1604
indemnity, that the loss or injury happened while he was acting as
agent : it must be a direct and natural consequence of the execution of
the agency.*' Thus for an injury caused by the wrongful or negligent
act of a third person, for which the execution of the authority gave,
perhaps, the opportunity, but of which it was not the legal cause, the
principal would not be responsible. If, for example, a broker while
going upon his principal's business, should be way-laid by a robber, or
if a traveling salesman, going from town to town, should be injured
by the negligence of a carrier, the principal would not be liable,** any
more than he would be if the agent, during the existence of the agency,
should contract a contagious disease or be struck by lightning. As has
been already stated, the injury for which indemnity is sought, must
be the direct and natural consequence of the doing of that which the
principal directed to be done.
or seized particular goods pointed
out to them, — as distinguished from
the mere obedience to a general writ
or the ordinary performance of their
official duty, — have been held entitled
to indemnity if those specific instruc-
tions prove unauthorized and Involve
the officer in liability. See Selz v.
Guthman, 62 111. App. 624; Grimes y.
Taylor, 93 III App. 494; Gower v.
Emery, 18 Me. 79; Henderson v.
Eckern, 115 Minn. 410, Ann. Cas.
1912 D. 989; Ranlett v. Blodgett, 17
N. H. 298, 43 Am. Dec. 603.
In Denney v. Wheelwright, 60
Miss. 733, Wheelwright, as agent for
Denney, bargained for the shipment
of lumber, upon consignment, and
procured an advance from the con-
signee and turned the amount over
to Denney. The venture resulted in
loss, and the consignee sued Wheel-
wright to recover the advances.
Wheelwright notified Denney of the
action and gave him an opportunity
to defend, but the latter made no de-
fense and judgment was rendered
against Wheelwright. Having satis-
fied this Judgment, Wheelwright sued
Denney to recover the amount of the
Judgment with attorney's fees and
costs. Held, that he was entitled to
recover.
The right to indemnity covers at-
torney's fees necessarily incurred.
In re Wells, 15 The Rep. 169.
83 The defendants instructed the
plaintiff, an auctioneer in Paris, to
advertise for sale a mare which they
represented to him to be a thorough-
bred, and registered in the English
Stud Book under the name of Pente-
cost. The plaintiff complied. A
Frenchman, the owner of a thorough-
bred mare also called Pentecost, sued
the plaintiff in France, alleging that
he had suffered damage through the
defendant's mare being advertised
for sale under that name» and re-
covered. Plaintiff then sued defend-
ants for indemnity. It being shown
that the representation made by the
defendants concerning their mare
was true. Held, that the defendants
were not liable, the damages re-
covered from the plaintiff not being
due to any wrongful act on their
part. Halbronn v. International
Horse Agency, [1903] 1 K. B. 270;
Frlxione v. Tagliaferro, 10 Moore P.
C. 175, was distinguished.
84 Unless, of course, the principal
had reason to anticipate danger to
the agent in the employment and
failed to warn him. Baxter v. Rob-
erts, 44 Cal. 187, 13 Am. Rep. 160.
1203
§§ i6o5, 1606]
THE LAW OF AGENCY
[book IV
§ 1605.
Illustrations. — ^Within the rule that the principal
must protect the agent against the direct and natural consequences of
the execution of the agency, an agent is entitled to be indemnified
when he is compelled to pay damages for taking personal property by
direction of his principal, which, though claimed adversely by another,
he had reasonable ground for believing to belong to his principal."
So an agent, who, acting under the direction of his principal, cuts
timber by mistake partly upon the land of another, which timber is
received and used by th^ principal is entitled to recover of his prin-
cipal what he has been compelled to pay as damages for the trespass.**
And an agent, who, having recovered upon a claim due to his prin-
cipal, and having paid the proceeds to him^ is compelled, upon a re-
versal of the judgment, in accordance with the forms of law and
through no fault of his own, to refund the amount previously collected,
is entitled to be indemnified by the principal against the consequences
of such reversal.*^
§ 1606. So where a person is employed in the usual course
of his business as an auctioneer or warehouseman to sell or deliver
goods, by one who claims to have a right to do so, the law will imply
a promise from the latter to indemnify him if he be compelled to pay
damages to another who establishes a superior right to the goods.**
And so when a railroad conductor, who had acted under express in-
structions from the company, was charged in damages to one whom he
had ejected from the train for not producing such a ticket as he had
been directed, though unlawfully, to insist upon, it was held that he
was entitled to be indemnified by the company.** So where an agent,
who had purchased and shipped property for his principal and which
the principal failed to pay for, was sued and arrested for the price and
was compelled to pay it, it was held that the principal was bound to
reimburse him for the amount paid and for his costs and attorney's
fees.*^ In these cases the agent need not wait to be sued by the third
8B Moore t. Appleton, 26 Ala. 633,
s. c. 34 Ala. 147, 73 Am. Dec 44£;
Avery v. Halsey, 14 Pick. (Mass.)
174; Hoggan v. Gaboon, 26 Utah, 444,
99 Am. St Rep. S37.
86 Drummond v. Humphreys, 39 Me.
347.
87 D'Arcy v. Lyle, 5 Binaey (Pa.),
441, Ist Am. Leading Cases, S§6.
This case is one of the most remark-
able in the books.
Compare Frixione v. Tagliafem;,
10 Moore P. C. 175, where U is
said that the Question whether the
decision was legally right or wrong
is immaterial if it be one which the
agent is bound to recognize.
88 Nelson V. Cook, 17 111. 448; Ad-
amson v. Jarvls, 4 Bing. 66; Butts
v. Gibbons, 2 Ad. ft BU. 57.
80 Howe y. Buffalo, etc., R. R. Co.,
87 N. Y. 297.
80 Clark v. Jones, 84 Tonn. (1&
Lea) 351. This was true, said the
court, however wrongful might be
the recovery against the agent.
1204
CHAP. IV]
DUTIES AND UABILITIES OF PRINCIPAL [§§ 1607, 1608
party for damages, but may pay at once and thereupon recover frpro
the principal."^ Where, however, he thus pays, without the protec-
tion of a judgment which will bind th^ principal, he can recover from
the principal only to the extent of the injury actually sustained by the
third person, though he may, in fact, have paid him more.**
It is immaterial whether the agent be sued alone or jointly with the
principal. The right to indemnity exists in either case.^
§ 1607. Right to indemnity extends to contractual obligations
properly incurred. — The agent's right to indemnity is not confined
to cases, — which happen to be those thus far chiefly referred to, —
wherein a tort obligation has been incurred to a third person by reason
of the agent's acts, but it extends also to contractual obligations prop-
erly incurred in the execution of the agency and on the principars ac-
cotmt. Thus where an agent authorized to contract for the use of a
vessel of the principal's, and who did so in his own name, was com-
pelled to pay damages because the principal refused to furnish the
vessel according to the agreement, it was held that he could recover
from the principal.** Neither is the right confined to contractual ob-
ligations expressly authorized, but will extend to those which may
fairly be deemed to have been contemplated when the execution of the
authority was directed. Within the operation of this principle would
be included obligations imposed by custom, either generally operative
or prevailing in the markets or upon the exchanges in which the agent
was expected to deal.*"
§ 1608. No indemnity where loss caused by agent's default— The
agent obviously can have no claim against his principal for indemnity
01 Saveland v. Green, se Wis. 612.
"Saveland v. Green, 36 Wis. 612.
oa Moore v. Appleton, 26 Ala. 683,
8. c. 34 Ala. 147, 73 Am.. Dec. 448.
MSaveland v. Green, 36 Wis. 612.
To the eame effect, where principal
induced his agent to undertake in
his own name to sell a certain num-
ber of bales of cotton which the prin-
cipal agreed to furnish to him, but
did not Dozier y. Davison, 138 Ga.
190.
In Haskin v. Haskin, 41 111. 197,
the plaintiff, agent, while carrying
on in his own name» the warehouse
business of defendant, Issued a ware-
house receipt in his own name,
which was outstanding when the
agency ceased. Defendant refused to
honor this receipt, and plaintiff was
compelled to protect it. Held, that
defendant must Indemnify the plain-
tiff. Held, also that the fact that
the plaintiff had not entgred the
transaction upon the books, did not
defeat his right to recover, if the
defendant was not injured thereby.
86 In Bayliffe v. Butterworth, 1
Exch. 425, a liability incurred by the
broker in accordance with the known
Liverpool usage, was held to be
within the rule. In Whitehead v.
Izod, L. R. 2 C. P. 228, a similar lia-
bility imposed by the rules of the
stock exchange was included* To
same effect: Tiiylor v. Stray > 2 C. B.
N. S. 175; Stray v. Russell. 1 E. A E.
888; Ulster Co. Sav. Inst v. Fourth
Nat. Bank, 8 N. Y. Supp. 162.
1205
§ 1609] THE LAW OF AGENCY [bOOK IV
as to losses caused by the agent's own misconduct or default.** And
where the principal is not in default in meeting his obligations, it is
held that the agent can have no claim for indemnity against losses
caused by his financial inabiHt>' to meet the obligations which he has
voluntarily incurred on the principal's account in the execution of the
agency. Thus, for example, where brokers who were carrying stocks
for their principal became, by reason of a general failure of their
clients to meet their obligations to them, unable to meet their own en-
gagements, and by reason of this were declared defaulters by the stock
exchange and subjected to certain liabilities according to its rules, it
was held that the principal was not obliged to indemnify his brokers
against those liabilities. The court agreed, "that where the agent is
subjected to loss, not by reason of his having entered into the con-
tracts into which he was authorized to enter by his principal, but by
reason of a default of his own, that is to say, as in this case, by reason
of his insolvency, brought on by want of means to meet his other pri-
mary obligations, it cannot be said that he has suffered loss by reason
of his having entered into the contracts made by him on behalf of his
principal, and consequently there is no promise which can be implied
on the part of his principal to indemnify him." ^"^
But it will be otherwise where the agent's failure is caused solely
and directly by the principal's failure to meet his obligations to the
agent.'®
§ 1609. No indemnity where obligation incurred in excess of au-
thority.— It is equally obvious that the agent can have no claim for
indemnity against obligations, contractual or otherwise, which he in-
curred in excess of his authority, not justified by any emergency or
exigency which might condone it.®* "In order to entitle an agent to
recover from his principal," it is said in a leading case,^ "he must show,
first, that the loss arose from the fact of his agency ; secondly, that he
was acting within the scope of his authority; and, thirdly, that the
loss was not attributable to any default or laches on his part."
But though the act was. at the time in excess of his authority, the
principal may afterward ratify it as in other cases, and if he does so
unconditionally and with full knowledge of the facts, the agent will
be entitled to indemnity, as though the act had been originally author-
ized.^
e« Hurst V. Holding, 3 Taunt. 32. P. C. 175; J. T. Case Thresh. Mach.
»7 Duncan v. HiU, L. R. 8 Ex. 242. Co. v. Gardner, 24 Ky. Law Rep. 63.
•8 Lacey v. Hill, L. R. 18 Bq. 182. 1 Frlxlone v. Tagllaferro, suprct,
»» Frixione v. Tagllaferro, 10 Moore 2 Frlxlone v. Tagllaferro, supra,
1206
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ 161O, 161I
§ 1 6 10. Unless lack of authority attributable to principalis
default. — But where the agent's lack of authority was owing to the
principal's default the agent would not be denied indemnity. Where
the principal undertakes to direct what he himself has no authority to
perform, the case is clear, as has been seen in the foregoing sections.
But the agent would also be entitled to indemnity where the principal,
having conferred authority, allowed the agent to go on in ignorance
that the authority so conferred had been terminated by events within
the peculiar knowledge of the principal but not of the agent, or by the
revocation by the principal himself of which he had given the agent no
notice where notice was due.
Of course, however, there would be no duty to indemnify tlie agent
against the termination of his authority where it was terminable with-
out notice, or where it was terminated by acts or events of which the
agent was bound to take notice.
§ 161 1. No indemnity where act is unlavirful. — ^The principal can-
not, however, require the agent to perform an unlawful act, and if the
agent performs an act which he knows to be such, or which he must
be presumed to have known was unlawful, he must answer for it like
any other wrong doer, and like other wrong doers he is entitled neither
to indemnity nor contribution.^ And in such a case not only does the
law not imply a promise to indemnify, but it will not enforce even an
express promise to that effect.
. An express bond, therefore, or other formal written agreement to
indemnify the agent against consequences of a proposed act known,
or which he must be presumed to have known, to be unlawful, is void,
as against the policy of the law. But this rule does not extend to cases
wherein parties, in the prosecution of their legal rights, in good faith,
have committed an unintentional wrong against another, but is lim-
ited to those cases wherein the intention is to commit a trespass; it
does not include cases wherein the parties are actuated by honest mo-
tives in the assertion of what they believe to be their rights under the
law, although it should subsequently transpire that they were not jus-
tified in doing the acts contemplated by them when the bond was ex-
ecuted.*
8 Coventry v. Barton, 17 Johns. (N. Moore v. Appleton, 26 Ala. 633; Ives
Y.) 142. 8 Am. Dec, 376. v. Jones, 3 Iredell's (N. Car.) L.
* Coventry v. Barton, supra ; Al- 538, 40 Am. Dec. 421; Holman v.
laire v. Ouland, 2 Johns. (N. Y.) Johnson, 1 Cowp. 341; Howe v. Buf-
Oas. 54; Castle v. Noyes, 14 N. Y. falo, etc., R. R., 37 N. Y. 299; Stone
332; Nelson v. Cook, 17 III. 449; v. Hooker, 9 Cow. (N. Y.) 154;
Stanton v. McMullen, 7 HI. App. 326; Jacobs v. Pollard, 10 Cush. (Mass.)
1207
§§ l6l2, 1613] THE LAW OF AGENCY [BOOK IV
But where the act, though unlawful, has already been committed, a
bond or other agreement based upon sufficient consideration to in-
demnify the agent against the consequences of it is valid.'
§ 1612. But the doctrine of the preceding section was held
not applicable where the business in which the principal was employed
was not actually illegal, but merely one concerning which no action at
law could be maintained. Thus the defendant had employed the plain-
tiff, who was a turf commission agent, to make bets for him upon
horse races, and the bets were made in the plaintiff's name and lost,
after which the defendant forbade the plaintiff to pay the debts. The
agent however paid them, and brought action for indemnity. It ap-
peared that if such an agent did not pay a debt so made, he was liable
to be turned out of the horse exchange, and thereby prevented from
going on with his business. It was held that the plaintiff was entitled
to recover. Bowen, L. J., said : "I feel the force of the point that the
obligation to pay a lost bet relied upon by the plaintiff is not recog-
nized by law; but the plaintiff has placed himself in a position of
pecuniary difficulty at the defendant's request, who impliedly con-
tracted, I think, to indemnify him from the consequences which would
ensue in the ordinary course of his business from the step which he had
taken." •
§ 161 3. Agent indemnified only against loss, not mere liability. —
In accordance with what is probably the general rule, as a matter of
legal liability at any rate, although the rule in equity may be different,
it is said that the implied obligation of the principal to indemnify, is
an obligation to indemnify against loss and not merely against liabil-
ity.^ The agent would therefore be compelled to show that he has
actually sustained loss, although, as has been already seen,' where his
liability is fixed, he need not wait until he has been sued by the other
party, but may discharge the liability and recover indemnity from the
principal.
287, 57 Am. Dec. 105; Shotwell v. » Racket v. Tllley, 11 Mod. 93;
Hamblln, 28 Miss. 156, 55 Am. Dec. Kneeland v. Rogers, 2 Hall (N. Y.
83; Forniquet v. Tegarden, 24 Miss. Sup. Ct.). 579; Hall r. Huntoon, 17
96; Cumpston v. Lambert, 18 Ohio, Vt 244, 44 Am. Dec. 332; Knight v.
81. 51 Am. Dec. 442; Jamelson v. Nelson, 117 Mass. 458; Griffiths v.
Calhoun, 2 Speer (S. Car.). 19; Kem- Hardenbergh, 41 N. Y. 464; Doty t.
per v. Kemper, 3 Rand. (Va.) 8; Wilson, 14 Johns. (N. Y.) 378.
Davis V. Arledge, 3 Hill (3. Car.), U ^Read v. Anderson, 13 Q. B. Div.
170, 30 Am. Dec 360; Atkins ▼. 779.
Johnson, 43 Vt 78, 5 Am. Rep. 260; 7 Brown v. Mechanic's Bank, 48 N.
Armstrong y. Clarion Co., 66 Pa. Y. App. Div. 173. See also. Otter
218, 6 Am. Rep. 368; Arnold v. Glif- Greek Lbr. Co. v. McBlwee* 87 IIL
ford, 2 Sumner (U. S. C. C.)» 238. App. 285.
8 See ante, i 1606.
1208
CHAP. IVj.
DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1614, 1615
V.
THE agent's right TO PROTECTION FROM INJURY.
I 1614- In generaL — It is not within the scope of this work to
enter into a minute discussion of the liability of the employer for in-
juries happening to his employee in the course of his employment,
either through the negligence of the employer or of a fellow-employee.
These questions belong more appropriately to treatises on the subjects
of Employer's Liability, Master and Servant, Torts, or Negligence.
A general statement of the more important rules which govern in these
cases is all which is deemed pertinent and will be gfiven. Nothing
like a full collection of the cases has been attempted. They are now
so numerous as to be wholly beyond the range of a discussion which
must be confined to a few pages.
1. Risks Incident to the Business.
§ 1615. General rule— Master not liable. — Every undertaking for
the rendition of services is attended with more or less of risk incident
to the business itself. Risks of this nature are as much within the
knowledge and control of the servant or agent as of the master, and
are presumably contemplated and considered by the servant when he
accepts the imdertaking. They result from no fault or neglect of the
master, but arise from the very nature of the thing to be done, or from
the circumstances under which it must be done. With reference to
these, it is the rule of the law that the master is not responsible to the
servant for injuries received in the execution of the undertaking and
which result from the natural and ordinary risks and perils which are
incident to the performance of such services including, as will be
seen, the risk of the negligence of fellow servants.*
9 AsBumption of Risk. Sweeney v.
Central Pac. R. R. Co., 57 Cal.
15; Onnan v. Aianniz, 17 Cal. 564,
81 Am. St Rep. 840, 17 L. R. A.
602; Hayden v. Smlthvllle Mfg. Co.,
29 Conn. 548; Bell y. Western, etc.,
R. R. Co., 70 Oa. 566; Prather v.
Richmond. eta» R. R. Co., 80 Ga. 427,
12 Am. St. Rep. 263; Mlnty v. Union
Pacific Ry. Co., 2 Idaho, 471, 4 L. R.
A, 409; Bryant v. Burlington, etc,
Ry. Co., 66 Iowa, 305, 65 Am. Rep.
275; Dowell v. Burlington, etc., Ry.
Co., 62 Iowa, 629; Penn. R. R. Co. v.
Wachter, 60 Md. 395; Wonder v.
Baltimore, etc., R. R. Co., 32 Md. 411.
3 Am. Rep. 143; South Baltimore
Car Works v. Schaefer, 96 Md, 88,
94 Am. St. Rep. 560; Consolidated
Gas Co. v. Chambers, 112 Md. 324, 26
L. R. A. (N. S.) 509; Farwell v.
Boston & Worcester R. R., 4 Mete.
(Mass.) 49, 38 Am. Dec. 339; Yeaton
T. Boston, etc., R. R. Co., 135 Mass.
418; Monlton ▼. Gage, 138 Mass. 390;
Ft. Wayne, etc., R. R. Co. v. Gilder-
sleeve, 33 Mich. 133; Hathaway v.
Michigan Cent. R. R. Co., 51 Mich.
1209
§ i6i5]
THE LAW OF AGENCY
[book IV
This rule has usually been founded upon two reasons. One is that
above mentioned, that the servant knowing that he will be exposed to
incidental risks, and having made no provision in the contract that
they shall be otherwise borae, must be supposed to have contracted
upon the basis that, as between himself and the master, he would as-
sume the responsibility of the result.^* The other is that this rule best
subserves and promotes the public interests. If the servant is to take
the risks himself, he will naturally be more careful and prudent than
if he could demand indemnity from his master. The result of this
care and prudence is, not only that injuries are less liable to occur to
the servant himself, but that they are also much less liable to happen
to third persons, with the care of whose persons or property the serv-
ant may be intrusted.*^
The real foundation of the rule, however, is not either one of these,
but the following: Under the law of life as well as under the law of
the land, a loss must rest upon him on whom it falls unless there is
some reason and opportunity to shift it to some one else. Under the
law of justice, and, notwithstanding some notable exceptions, under
the common law, a person can not be held liable for an injury for
which he is in no wise at fault. With reference to the risks here con-
cerned, they inhere in the business and are not attributable to the neg-
ligence of the master. Not being attributable to the fault of the mas-
263, 47 Am. Rep. 569; Schroeder v.
C. & A. Ry. Co., 108 Mo. 322, 18 L.
R. A. 827; Coyle v. Griffing Iron Co.,
63 N. J. L. 609, 47 L. R. A. 147;
Gibson V. Brie Ry. Co., 63 N. Y. 449.
20 Am. Rep. 562; Lanlng v. N. Y.
Cent. R. R. Co., 49 N. Y. 521, 10 Am.
Rep. 417; Sweeney v. Berlin, etc., Co.,
101 N. Y. 520, 54 Am. Rep. 722; Lewis
V. Selfert. 116 Pa. 628, 2 Am. St. Rep.
631; Watson v. Ry. Co., 58 Tex. 434;
Nordstrom v. Spokane, etc., R. Co., 55
Wash. 521, 25 L. R. A. (N. S.) 364;
Bormann v. Milwaukee, 93 Wis. 522,
33 L. R. A. 652; Kohn v. McNulta,
147 U. S. 238, 37 L. Ed. 150; South-
ern Pac. Co. V. Seley, 152 U. S. 145,
38 L. Ed. 391; Texas & Pacific Ry.
Co. V. Archibald, 170 U. S. 665, 42
L. Ed. 1188; Clarke y. Holmes, 7 H.
ft N. 937.
10 Hutchinson v. Railway Co., 5
Exch. 343; Far well v. Boston, etc., R.
Co., 4 Mete. (Mass.) 49, 38 Am. Dec.
339.
It is, indeed, true that judges of-
ten declare that the assumption of
the inherent risks is not a matter of
express or implied agreement at all
but a mere matter of law; and that
the only risks to which the doctrine
of assumption can apply are the ex-
traordinary ones which arise from
the negligence of the master. See
Bria v. Westinghouse, 133 N. Y. App.
Div. 346; Mansell v. Conrad, 125 N.
Y. App. Div. 634. See also, Denver,
etc., R. Co. V. Norgate, 72 C. C. A.
365, 141 Fed. 247, 6 L. R. A. (N. S.)
981, and cases cited.
iiTuttle V. Milwaukee R. Co., 122
U. S. 189. 30 L. Ed. 1114; Priestley v.
Fowler, 3 Mees & Wels. 1; Illinois
Central R. R. Co. v. Cox, 21 111. 20,
71 Am. Dec 291; Lawler v. Andros-
coggin R. R. Co., 62 Me. 463, 16 Am.
Rep. 492; Hanrathy v. Northern, etc.,
R. R. Co., 46 Md. 280.
I2I0
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1616, 1617
ler, they can not be shifted upon him under the common law, but only
by some statute or by contract. There being, by the hypothesis, no
statute and no contract, the loss remains where it fell, upon the serv-
ant. It is not strictly accurate to say that he assumed it : he could not
escape it. To say that he assumed the risk, however, would not be
objectionable if it did not lead to confusion with another situation,
hereafter to be considered, wherein there is room to escape, namely,
where the master has been negligent, and the question arises whether
the servant has assumed the risk of it in such wise as to relieve the
master from a liability which would otherwise have fallen upon him.
§ 1616. This "assumption" of the ordinary and inherent
risks, by the mere fact of accepting the employment, of course pre-
supposes, in the ordinary case, that the master has not negligently
done and will not negligently do anything by which these ordinary
and inherent risks will be extended or enlarged; in other words, that
the master will perform his ordinary duties for the protection of the
servant. There is, by the mere fact of entering upon the employment,
no assumption of risks arising from the negligence of the master.
A known and existing conditon, however, contemplated at the time
of the employment may also be assumed thereby, under rules hereafter
to be considered, although resulting from the negligent manner in
which the master carries on his business.
2, Negligence of the Master.
§ 1617. Master responsible for his own negligence. — But although
the servant must thus bear the responsibility of the risks which are
incident to his employment, he has, as has been stated, a right to ex-
pect that the master will not add to or increase these risks or create
others by his own personal negligence. It has been seen that the fact
of the agency is no excuse to the agent for injuries resulting to others
by his own neglect. No man can relieve himself from the responsi-
bilities which rest alike upon all persons by becoming an agent or
servant and the same rule applies to the principal or master.
If, therefore, injury results to the servant from the personal negli-
gence of the master, the master is liable in the same manner and to
the same extent as though the relation did not exist " unless he can
m
izRhoades v. Varney, 91 Me. 222; Fellow servant doctrine does not
Chicago A N. W. Ry. Co. v. Bayfield, apply to negligence of the master
87 Mich. 205; Quincy Mining Co. v. where master is working with serv-
Kitts, 42 Mich. 84; Johnson v. Bos- ant. Ash worth v. Stanwlx, 3 j51. &
ton Tow Boat Co., 135 Mass. 215, 46 El. 701; Rhoades v. Varney, supra.
Am. Rep. 458.
I2II
§ i6i8]
THE LAW OF AGENCY
[book IV
escape upon the ground of contributory negligence or assumption of
the risk. The fact that the negligence of a fellow servant contributed
with the master's negligence to cause the injury does not relieve the
master.^^
This negligence of the master may consist in his failure to observe
one or more of several duties which he owes to the servant, the more
important of which deserve specific mention.
§ 1618. I. For dangerous premises. — The master may incur lia-
bility to the servant for injuries received by the latter from the perils
or dangers of the master's premises, of which the servant had no knowl-
edge or notice and which he had no reason to expect, but of which the
master knew, or by the exercise of reasonable care and diligence might
have known. It is the general rule of the law that the owner or oc-
cupant of land or other premises is liable in damages to those coming
to it, using due care, at his invitation or inducement, express or im-
plied, on any business to be there transacted or permitted by him, for
an injury there occasioned by the unsafe condition of the land or other
premises, or of the access to it, which is known to him and not to them,
and which he has negligently suflFered to exist and of which he has given
no notice. And this rule, applies for the protection of the servant as
well as of a stranger. Where the service is to be performed upon the
principal's premises, it is the duty of the principal to exercise reason-
able care to provide a reasonably suitable place in which the agent,
exercising due care, can perform his duty without exposure to dangers
that do not ordinarily come within the scope of such employments, as
usually carried on, and having provided it, to keep the same in a rea-
sonable state of repair.^* The principal or master is not a guarantor in
"Kennedy v. Swift, 234 111. 606,
123 Am. St. Rep. 113.
1* Louisville, etc., R. R. Co. v.
Stutts, 105 Ala. 868, 63 Am. St. Rep.
127; EUedgo v. Ry. Co., 100 Cal. 282,
38 Am. St. Rep. 290; Kennedy v.
Chase, 119 Cal. 637, 63 Am. St. Rep.
153; WlllIamB v. Sleepy Hollow Min.
Co., 37 Colo. 62, 7 L. R. A. (N. S.)
1170, 11 A. & E. Ann. Cas. Ill;
Burnside v. Peterson, 43 Colo. 382,
17 L. R. A. (N. S.) 76; McEllIgott v.
Randolph, 61 Conn. 157, 29 Am. St.
Rep. 181; Szymanski v. Blumenthal,
4 Penne. (Del.) 511, 103 Am. St. Rep.
132; Super. Coal & Mining Co. v.
Kaiser, 229 HI. 29, 120 Am. St. Rep.
233; Rogers v. Cleveland, etc., Ry.
Co., 211 111. 126, 103 Am. St. Rep.
185; Western Stone Co. v. Muscial,
196 111. 282. 89 Am. St. Rep. 325;
Morris & Co. v. Malone, 200 111. 132,
93 Am. St Rep. 180; McKee v. Chi-
cago, etc., R. R. Co., 83 Iowa, 616,
18 L. R. A. 817; Barto v. Iowa Tele-
phone Co., 128 Iowa, 241, 106 Am. 8L
Rep. 347; Schmalstleg v. Leaven-
worth Coal Co., 65 Kan. 753, 59 L. R.
A. 707; Tradewater Coal Co. v. John-
son, 24 Ky. L. Rep. 1777, 61 L. R. A.
161; Bowdto V. Derby, 97 Me. 536,
94 Am. St Rep. 516, 63 U R. A. 223;
1212
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1619
this respect, nor is it his duty to aim at perfection ; reasonable care to
provide and maintain a reasonably safe place is the measure of the
principal's or master's obligation.*^ Failing in this, he will, subject to
the doctrine of assumption of risks hereafter considered, be liable for
an injury resulting therefrom.
§ 1619. Warning. — Since the servant is presumed to know
the usual and ordinary risks incident to the business itself, the master
owes the servant no duty to warn him against them. This is true,
also, of obvious and open dangers.** But, on the other hand, the
servant has a reasonable right to expect that if the lands and premises
of the master, where it is the express or implied right or duty of tho
servant to go or to be, in the performance of his undertaking, contain
unusual or hidden dangers from which he may suffer injury and which
exist to the knowledge of the master, but of which the servant is igno-
Coomb8 V. New Bedford Cordage Co.,
102 Maas. 672, 3 Am. Rep. 506; Flynn
V. Prince Collins Co., 198 Mass. 224,
17 L. R. A. (N. S.) 56S; Swoboda v.
Ward, 40 Mich. 420; Dayharsh v.
Hannibal, etc., R. R. Co., 103 Mo.
570, 23 Am. St Rep. 900; Burdlot v.
Missouri Pac. R. R. Co., 123 Mo. 221,
45 Am. St. Rep. 528, 26 L. R. A. 384;
Saunders v. Eastern Hydraulic, etc.,
Co., 63 N. J. L. 554. 76 Am. St. Rep.
222; Burns v. Delaware, etc., Tel.
Co., 70 N. J. L. 745, 67 L. R. A. 956;
Donnegan v. Erbardt, 119 N. Y. 468,
7 L. R. A. 527; WeUston Coal Co. v.
Smith, 65 Ohio St. 70, 87 Am. St
Rep. 547, 55 L. R. A. 99; Anderson
V. Bennett, 16 Ore. 515. 8 Am. St
Rep. 311; Collins t. Harrison, 25 R.
I. 489, 64 L. R. A. 156; Downey v.
Gemini Mining Co., 24 Utah. 431, 91
Am. St. Rep. 798; Fisher v. Chesa-
peake, etc., Ry. Co., 104 Va. 635, 2
L. R. A. (N. S.) 954; McMillan v.
North Star MIn. Co., 32 Wash. 579,
98 Am. St Rep. 908; Portance v.
Lehigh Valley Co., 101 Wis. 574, 70
Am. St Rep. 932; McMahon v. Ida
Mining Co., 95 Wis. 308, 60 Am. St
Rep. 117; Johnson v. First Nat
Bank, 79 Wis. 414, 24 Am. St. Rep.
722; Armour & Co. v. Russell, 144 Fed.
614, 75 C. C. A. 416. 6 L. R. A. (N.
S.) 602.
15 See Galveston, etc., Ry. Co. v.
Gormley, 91 Tex. 393, 66 Am. St Rep.
894; Little Rock, etc., Ry. Co. v.
Eubanks, 48 Ark. 460, 3 Am. St Rep.
245.
19 Xo duty to warn where ol)viou8.
— Hagins V. Bell Telephone Co., 134
Ga. 641, 137 Am. St Rep. 270; Has-
kell V. PrzezdziankowBki, 170 Ind. 1,
127 Am. St Rep. 352, 19 L. R. A. (N.
S.) 972; Podvln v. Pepperell Mfg. Co.,
104 Me. 561« 129 Am. St Rep. 411;
Hardy v. Chicago, R. L, etc., R, Co.,
13a Iowa, 314, 19 L. R, A. (N. S.)
997; Cooper v. Cashman, 190 Mass.
75, 3 L. R. A. (N. S.) 209; Anderson
V. Columbia ImproTement Co., 41
Wash. 83, 2 L. R. A. (N. S.) 840;
BoUington v. Louisville, etc.» R. Co.,
125 Ky. 186, 8 L. R. A. (N. 3.) 1045;
Ford V. Pulp Co.. 172 Mass. 544, 48
L. R. A. 96; Louisville, etc., R. Co.
V. Boland, 96 Ala. 626, 18 L. R. A.
260; McLalne v. Head & D. Co., 71
N. H. 294, 93 Am. St. Rep. 522, 68
L. R. A. 462; Rahles v. Thompson,
137 Wis. 506. 23 L. R. A. (N. S.)
296; Nelson-Bethel Ca v. Pitts, 131
Ky. 65, 23 L. R. A. (N. S.) 1013;
Nordstrom v. Spokane R. Co., 55
Wash. 521, 25 L. R. A. (N. S.) 364.)
No duty to warn even a minor em-
ployee of dangers obvious to one of
hlB years and discretion. Cronin v.
1213
§ i6i9]
THE LAW OF AGENCY
[book IV
rant, he will receive notice of them so as to be upon his guard.^^ This
duty of warning would be increased if the servant were, to the knowl-
edge of the master, so young or ignorant or inexperienced as to be
less likely to anticipate dangers from the employment than a person of
greater age, knowledge or experience.*®
Columbian Mfg. Co.. 75 N. H. 319. 29
L. R. A. (N. S.) Ill; Beghold v.
Auto Body Co., 149 Mich. 14, 14 L.
R. A. (N. S.) 609; Whalen v. Ros-
nosky, 195 Mass. 545. 122 Am. St
Rep. 271.
IT Louisville, etc.. R. Co. v. Hall,
87 Ala. 70S, 13 Am. St. Rep. S4, 4 L.
R. A. 710; West. Ry. v. Russell, 144
Ala. 142, 113 Am. St. Rep. 24; Burn-
side V. Peterson, 43 Colo. 382. 96
Pac. 256. 17 L. R. A. (N. S.) 76;
Consolidated Coal Co. v. Wombacher,
134 111. 57; Louisville, etc.. Ry. Co.
V. Wright, 115 Ind. 378. 7 Am. St.
Rep. 432; Pittsburg, etc.. Ry. Co. v.
Adams, 105 Ind. 151; Salem Stone ft
Lime Co. v. Griffin, 139 Ind. 141;
Christopherson v. Chicago, etc., Ry.,
135 Iowa. 409, 124 Am. St. Rep. 284;
Brice-Nash v. Barton Salt Co., 79
Kan. 110. 131 Am. St. Rep. 284, 19
L. R. A. (N. S.) 749; Myhan v.
Louisiana, etc., Co.. 41 La. Ann.
964. 17 Am. St. Rep. 486, 7 L. R. A.
172; Faren v. Sellers & Co., 39 La.
Ann. 1011, 4 Am. St. Rep. 256;
Hume V. Fort Halifax Power Co., 106
Me. 78, 138 Am. St. Rep. 332; Crim-
mins y. Booth. 202 Mass. 17. 132 Am.
St. Rep. 468; Ribich v. Lake Su-
perior Smelting Co.. 123 Mich. 401,
81 Am. St. Rep. 215, 48 L. R. A. 649;
Parkhurst v. Johnson. 50 Mich. 70.
45 Am. Rep. 28; McDonald v. Chi-
cago, etc.. Ry. Co., 41 Minn. 439. 16
Am. St. Rep. 711; Hewett v. Wom-
an's Hospital, 73 N. H. 556, 7 L. R.
A. (N. S.) 496; Willis v. Plymouth
Telephone Co., 75 N. H. 453, 30 L.
R. A. (N. S.) 477; Blaisdale v. Davis
Paper Co., 75 N. H. 497. 139 Am. St.
Rep. 735; Western Union Tel. Co. v.
McMullen, 58 N. J. L. 155. 32 L. R.
A. 351; Cetofone v. Camden Coke
Co., 78 N. J. L. 662, 27 L. R. A. 1058;
Brennan v. Gordon, 118 N. Y. 489,
16 Am. St. Rep. 775, 8 L. R. A. 818;
Wagner v. Jayne Chemical Co., 147
Pa. 475, 30 Am. St. Rep. 745; Gal-
veston, etc., Ry. Co. v. Garrett, 73
Tex. 262, 15 Am. St. Rep. 781; Mis-
souri Pacific Ry. Co. v. White. 76
Tex. 102, 18 Am. St. Rep. 33; Michael
V. Roanoke Machine Works, 90 Va.
492, 44 Am. St. Rep. 927; Miner v.
Franklin County Tel. Co., 83 Vt. 311,
26 L. R. A. (N. S.) 1195; KUegel v.
Aitken, 94 Wis. 432, 35 L. R. A. 249;
Cincinnati, etc., R. Co. v. Gray, 41
C. C. A. 535. 101 Fed. 623, 50 L. R.
A. 47.
In Dougherty v. Dobson, 214 Pa.
252, 8 L. R, A. (N. S.) 90, it was
held that the master, owing such a
duty to a minor, could not discharge
it by placards, warning employees of
the danger, posted around the room,
when the foreman expressly directed
the doing of the act warned against.
But in Shuster v. Philadelphia,
etc., R. Co., 6 Penne. (Del.) 4, 4
L. R. A. (N. S.) 407. it was held
that a placard posted on a freight
car. notifying employees that it was
"crippled" and dangerous, was a suf-
ficient discharge of his duty to warn.
Duty to warn, when it exists, is
non-delegable: Brice-Nash v. Barton
Salt Co.. 79 Kan. 110, 131 Am. St.
Rep. 284, 19 L. R. A. (N. S.) 749;
Koerner v. St. Louis Car Co.. 209
Mo. 141, 17 L. R. A. (N. S.) 292; An-
derson V. Pittsburg Coal Co., 108
Minn. 455. 26 L. R. A. (N. S.) 624.
i^Tedford v. Los Angeles Blec. Co.,
134 Cal. 76, 54 U R. A. 85; Inger-
man v. Moore, 90 Cal. 410, 25 Am. St.
Rep. 138; May v. Smith, 92 Oa. 95,
44 Am. St. Rep. 84; Hinckley v.
Horazdowsky, 133 111. 359. 23 Am.
St. Rep. 618. 8 L. R, A. 490; Norton
I2I4
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1620
§ 1620.
Unsaf eness where servant had no business to be.
Rut this rule respecting a safe place does not apply to dangers in places
where the servant has no express or implied right or duty to be. If
the agent impelled by mere idle curiosity or some other motive having
no relation to the service, goes into a place of danger, into which the
master had no reasonable ground to anticipate that he might go, the
master would not be liable ; ^* but the master must take into his con-
sideration the age, habits and instincts of his servants, and will be
liable if he fails to warn them of dangers known to him in places
V. Volzke, 158 111. 402, 49 Am. St.
Rep. 167; Newbury v. Getchel. etc.,
Mfg, Co., 100 Iowa, 441, 62 Am. St.
Rep 582; Meier v. Way, Johnson Co.,
136 Iowa, 302, 125 Am. St. Rep. 254;
Taylor v. Wootan, 1 Ind. App. 188, 50
Am. St Rep. 200; Hill v. Gust, 55
Ind. 45; St. Louis, etc., R. Co. v.
Valirius, 56 Ind. 511; Chambers v.
Woodbury Mfg. Co., 106 Md. 496, 14
U R. A. (N. S.) 383; Clriack v. Mer-
chants' Woolen Co., 151 Mass. 152,
21 Am. St. Rep. 438, 6 L. R. A. 733;
Parkhurst v. Johnson, 50 Mich. 70,
46 Am. Rep. 28; Coombs v. New Bed-
ford Cordage Co., 102 Mass. 570, 8
Am. Rep. 506; Sullivan v. India, etc,
Co., 113 Mass. 396; Anderson ?. Mor-
rison, 22 Minn. 274; Adams v. Grand
Rapids Refrigerator Co., 160 Mich.
590, 136 Am. St. Rep. 454, 27 L. R.
A. (N. S.) 953, 19 Ann. Cas. 1152;
Norfolk Beet-Sugar Co. v. Hight, 56
Neb. 162; Omaha Bottling Co. v.
Theiler, 59 Neb. 257, 80 Am. St Rep.
673; Smith v. Oxford Iron Co., 42 N.
J. L. 467, 36 Am. Rep. 585; Addlcks
V. Christoph, 62 N. J. L. 786, 72 Am.
St Rep. 687; Brennan v. Gordon,
118 N. Y. 489, 16 Am. St Rep. 775,
8 L. R. A. 818; Turner v. Goldsboro
Libr. Co., 119 N. C. 387; Cleveland
Rolling Mill Co. v. Corrigan. 46 Ohio
St. 283, 15 Am. St Rep. 596, 3 L. R.
A. 385; Rummel v. Dilworth, Porter
ft Co., 131 Pa. 509. 17 Am. St Rep.
827; Ross v. Walker, 139 Pa. 42, 23
Am, St Rep. 160; Tagg v. McGeorge,
155. Pa. 368, 35 Am. St Rep. 889;
Baker v. Alleghany, etc., R. B. Co.,
95 Pa. 211, 40 Am. Rep. 634; Ewing
V. Lanark Fuel Co., 65 W. Va. 726,
29 L. R. A, (N. S.) 487; High tower
V. Bamberg Cotton Mills, 48 S. C.
190; Reynolds v. Boston & Maine R.
R., 64 Vt. 66, 33 Am. St. Rep. 908;
Nadau v. White River Lbr. Co., 76
Wis. 120, 20 Am. St Rep. 29; Jones
v. Florence Mining Co., 66 Wis. 268,
57 Am. Rep. 269; Greenberg v. Whit-
comb Lbr. Co., 90 Wis. 225, 48 Am.
St Rep. 911, 28 L. R. A. 439; Union
Pacific Railroad Co. v. Fort. 17 Wall.
(U. S. Sup. Ct) 553, 21 L. Ed. 739.
i» Severy v. Nickereon, 120 Mass.
306, 21 Am. Rep. 514; Pierce v.
Whitcomb, 48 Vt. 127, 21 Am. Rep.
120; Wright v. Rawson, 52 Iowa, 829,
35 Am. Rep. 275; Pittsburgh, etc., R.
Co. V. Sentmeyer, 92 Pa. 276, 37 Am.
Rep. 684; Doggett v. Illinois Cent.
R. Co., 34 Iowa, 284; McCann v. At-
lantic Mills, 20 R. I. 566; Olson v.
Minneapolis, etc., R. Co., 76 Minn.
149, 48 L. R. A. 796: Kennedy v.
Chase, 119 Cal. 637, 68 Am. St. Rep.
153; Stodden v. Anderson Mfg. Co.,
138 Iowa, 398, 16 L. R. A. (N. S.)
614; Louisville, etc., R. Co. v. Hock-
er, 23 Ky. L. Rep. 982, 64 S. W.
638; Ellsworth v. Metheney, 44 C. C.
A. 484. 104 Fed. 119, 51 L. R. A. 389;
Pioneer Mln. ft Mfg. Co. v. Talley,
152 Ala. 162, 12 L. R. A. (N. S.)
861. See also, O'Brien v. Western
Steel Co., 100 Mo. 182, 18 Am. St
Rep. 536; Sievers v. Peters Box Co.,
151 Ind. 642; Wise v. Ackerman, 76
Md. 375; Hoftard v. lUinois Central
Ry., 138 Iowa, 643, 16 L. R. A. (N.
S.) 797.
I215
§ l62l]
THE LAW OF AGENCY
[book IV
where he ought reasonably to have anticipated that their natural in-
stincts or curiosity would lead them.*^
§ 1621. Unsafeness resulting from doing erf the work it-
self.— The doctrine of the safe place also does not apply for obvious
reasons to cases in which the unsafeness arises wholly in and from the
ordinary doing of the work itself, as where employees must make their
own place to work as they go along and the unsafeness arises from that
fact ; ^^ or where the conditions of the work are necessarily and con-
stantly shifting and changing as the work progresses, as in work of
construction, excavation, demolition, and the like, and the unsafeness
arises from that fact and not from an>i:hing inherent in the place it-
self; ^^ or where the work itself is to correct or remove the unsafeness
30 Atlanta Cotton Factory Co. y.
Speer, 69 Ga. 137, 47 Am. Rep. 750.
Compare Bllsvorth v. Metheny, 44
C. C. A- 484, 104 Fed. 119, 51 L. R. A.
389; and Terre Haute, etc., R. Co. r.
Fowler. 154 Ind. 682, 48 L. R. A. 531.
21 See Peschel v. Chicago, etc., R.
Co., 62 Wis. 338; Walaszewski v.
Schoknecht, 127 Wis. 376; Miller t.
Centralia Pulp Co., 134 Wis. 316, 18
L. R. A. (N. S.) 742; Knudson ▼. La
CroBSe Stone Co., 145 Wis. 894, 33 I*.
R. A. (N. S.) 223; Carlson ▼. Oregon
Short Line, 21 Oreg. 450.
BcaffoldB^ etc. —The decisioiks re-
specting scaffolds, staging, and the
like are conflicting; but in general
if the master undertakes to furnish
the scaffold, he is under the same ob-
ligation as to this as to any other
appliance. See McBeath v. Rawle,
192 111. 626, 69 L. R. A. 697; Cheath-
am T. Hogan, 50 Wash. 465, 22 L. R.
A. (N. S.) 951; Blomquist v. Chicago,
etc., Ry. Co., 60 Minn. 426.
But where the workmen are to
build their own scaffolds and the
master furnishes reasonably ade>
quate and suitable material, he is
not liable for negligent defects in
construction. The servants who
build the scaffolds are fellow serv-
ants with those who use them. See
Channon v. Sanford Co., 70 Conn. 573,
66 Am. St Rep. 133, 41 L. R. A. 200;
Beesley v. Wheeler, 103 Mich. 196, 27
L. R. A. 266; Gombert v. McKay, 201
N. Y. 27, 42 L. R. A. (N. 8.) 1234;
Kimmer v. Weber, 151 N. Y. 417, 66
Am. St. Rep. 630; Lambert v. Pulp
Co., 72 Vt 278; Raakensen v. Fibre
Co., 76 N. H. 448, Ann. Cas. 1918 B.
1122; Ross v. Walker, 139 Pa. 42. 28
Am. St Rep. 160; Leishman v. Union
Iron Works, 148 Cal. 274, 3 L. R. A.
(N. S.) 660; Kennedy v. Spring, 160
Maes. 203; Callahan v. Phillips
Academy, 180 Mass. 18S; Olsen t»
Nixon, 61 N. J. L. 671.
Reasonable care in selection of ma-
terial not zeroised. Farrell v. Bast-
ern Mach. Co., 77 Conn. 494, 68 L. R.
A. 239; Donahue v. Buck, 197 Mass.
550, 18 L. R. A. (N. S.) 476.
These general conclusions how-
ever, are likely to be affected by the
"departmental rule." See Sims v.
American Steel Barge Co., 56 Minn.
68, 45 Am. St Rep. 451; Cadden v.
American Steel Barge Co., 88 Wis.
409.
By the "association" or "consoci-
ation" theory. See Chicago, etc., Ry.
Co. V. Maroney, 170 111. 520, 62 Am.
St Rep. 396. And by the vice-prin-
cipal doctrine. See Blomquist v.
Chicago, etc., Ry. Co., 60 Minn. 426;
McNamara v. MacDonough, 102 Cal.
575.
2« Maloney v. Florence, etc., Ry., 39
Colo. 384, 121 Am. St Rep. 180, 12
Ann. Cas. 621, 19 L. R. A. (N. S.)
348; Citrone v. O'Rourke Eng. Co.,
188 N. Y. 339, 19 U R. A. (N. S.)
I216
.C;HA.P. IV] duties and LIABIUTIB§ pF PRINCIPAL [§§ l6^2, l6^3
pa^^^ed by some unusual occurrence or emergency, and the inj'iiry
arises from th^t very condition.^'
, § 1622. UAsafeii,esj5 caused, by conditionfi upon adjacent
premise8.-T-The master is, of course, not responsible dSrectly tor
that which takes place upon the premises of others over whom he has
no control. He has ordinarily neither the power nor the duty to pre-
^yent or abate that which the owners may lawfully do upon adjacent
premises.'* But where what is or has been done upon the adjacent
premises directly causes the master's premises to be or to become an
unsafe place in which his servants pr agents are to perform their duties,
the master may owe to his servants or agents a duty to warn, and even
to reconstruct or rearrange his own premises so that they shall, satisfy
the legal requirement of a reasonably safe place in which to woric.^
Dangers of this sort also may be assumed by the servant, so as to re-
lease the master from liability, either by entering into or remaining in
the employment with knowledge of their existence and without exact-
ing from the master an undertaking to remedy the difficulty.** The
servant's contributory negligence may also bar recovery as in other
ca^s,*^
§ 1623. ' Liability for places and instruments used, but not
owned, by the master. — It follows, and for the same reason, that th^
master should be under the same duty to the servant, to use reason-
340; RusseU v. Lehigh Valley R. Co., Ann. Cas. 621; Neagle ▼. Syracuse,
188 N. Y. 844, 19 U R. A. (N. S.)
344; Oleson v. Maple Grove Ck>., 115
Iowa, 74; Beique v. Hosmer, 169
Mass. 541; Moore y. Penn. R. Co.,
167 Pa. 495; McBlwalne-RlchaTds Co.
V. WaU, 166 Ind. 267; Grayson-Mc-
Leod Lumber Co. y. Carter, 76 Ark.
69; Richards v. Riverside Iron
Worka, 66 W. Va. 510; Christlenson
V. Rio Grande West. R. Co., 27 Utah,
182, 101 Am. St. Rep. 945; Miller v.
Monut Co., 89 Wash. 631, 109 Am. St.
Rep. 917, 1 L. R. A. (N. S.) 283;
Armour v. Hahn, 111 U. S. 813, 28
L Bd. 440; Omaha Packing 60. v.
Sanduski, 84 C. C. A. 89, 155 Fed.
897, 19 L. R. A. (N. S.) 355; West-
Inghouse Co. y. Callaghan, 83 C. C.
A. 669, 156 Fed. 397, 19 L. R. A. (N.
S.) 361.
M Maloney v. Florence, etc., R Co.,
39 Colo. 384, 121 Am. St Rep. 180,
19 L. R. A. (N. S.) 348, 12 A. A B.
etc., R. Co., 185 N. Y. 270, 25 L. R.
A. (N. S.) 821; Vaughn v. Cal. Cent.
R. Co., 83 Cal. 18; Martin v. Dea
Moines Bl. L. Co., 131 Iowa, 724;
Kletschka v. Minneapolis, etc., R.
Co., 80 Minn. 238.
24 Electric Ry. Co. v. Moore, 118
Tenn. 631; Moore v. Electric Ry. Co.,
119 Tenn. 710, 16 L. R. A. (N. 8.)
978.
*8 South Side'BIev. Ry. v. Nesvig,
214 111. 463; Helfrich v. Ogden City
Ry., 7 Utah, 186; Indianapolis Trac-!
tion Co. y. Holtsclaw, 41 Ind. App.
520.
2«Hall v. Wakefield, etc., Ry., 173
Mass. 98; Drake v. Auburn City Ry.,
173 N. Y. 466; Indianapolis Tractloot
Co. y. Holtsclaw, 41 Ind. App. 520.
aT Helfrich v. Ogden City Ry., 7
Utah, 186; Savage v. Rhode Wand
Co., 28 R. I. 891.
77
1217
§ 1623]
THE LAW OF AGENCY
[book IV
able care in seeing that reasonably safe appliances and a reasonably
safe place are furnished the servant for use in his employment, whether
the master is the owner of the premises or appliances or is merely a
lessee or a licensee.'* It has accordingly been held that a railroad
company must use the same care in maintaining a track leased and
used by it as one owned by it ; *• and that it owes the same duty in
regard to cars belonging to another company used by it as it does in
regard to its own cars.'** But in Massachusetts the rule has been ap-
plied that a company is not liable for the safety of premises or ap-
pliances used by it unless it had such control over them as to be able
to repair them ;" and it has been held that under a statute requiring
companies to keep their "ways" in proper condition, a railroad could
not be held for the unsafe condition of a track used by it as a mere
licensee for the purpose of delivering freight.**
This question should not be confused with the liability of a master
who has hired his servant to another. It has been held, and it would
seem properly, that the general master in such a case is not liable for
"McGuire v. Bell Telephone Co.,
167 N. Y. 208, 52 U R. A. 437; Miner
V. Franklin County Tel. Co., 83 Vt
311, 26 L. R. A. (N. S.) 1195.
2»Wi8consin Central R. R. v. Robs,
142 111. 9, 34 Am. St. Rep. 49.
80 Gottlieb v. N. Y., etc., R. R. Co.,
100 N. Y. 462: Budge v. Railroad lb
Steamship Co., 108 La. 349.
But see McMullen y. Carnegie Co.,
158 Pa. 518, 23 L. R. A. 448, where
the court admitted the doctrine as
to railroads but refused to extend it
to the steel company which was
owner and user of miles of side-
tracks, and employed the plaintiff, as
brakeman on cars run on such side-
tracks, but which belonged to the
railroads. For the unsafe condition
of these cars the court refused to
hold the steel company liable.
And so where a shed built over a
raflroad track by a third party was
allowed to become unsafe. Doyle t.
Toledo, etc., R. R. Co., 127 Mich. 94,
89 Am. St. Rep. 456, 54 L. R. A. 461;
and where railroad scales on the
track of a railroad were in an un-
safe condition, the same result was
reached, the scales being owned by a
coal company. Liittle Rock« etc., R.
R. Co. V. Cagle, 53 Ark. 347.
But a different result was reached
where an employee was injured by
reason of a third party's carelessness
in piling up boxes on a wharf tan-
mediately adjacent to the company's
tracks. Carolan v. Southern Pac. Co.,
84 Fed. 84.
stTrask v. Old Colony Railroad,
156 Mass. 298; Dunn t. Boston, etc
St. Ry. Co., 189 Mass. 62, 109 Am.
St. Rep. 601.
In Robinson t. St. Johnsbury, etc.,
R. R. Co.. 80 Vt. 129, 9 L. R. A. (N.
S.) 1249, 12 Ann. Cas. 1060, it was
held that an express company owed
no duty to see that the cars fnrnished
by the railroad company for the use
of express messengers were in a rea-
sonably safe condition, the expreaa
company not being in the possession
or control of the cars. Citing Chan*
non ▼. Sanford Co., referred to in the
second note hereafter.
ssEngel V. N. Y., etc., R. R. Co.,
160 Mass. 260, 22 U R. A. 233.
1218
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1624
the lack of care exercised by the one to whom the servant was hired in
constructing or maintaining a reasonably safe place for his use.^'
§ 1624. II. For dangerous appliances, tools and machinery. — The
same general rules apply to the appliances, tools and machinery, which
the master has expressly or impliedly undertaken to furnish. The
master owes a duty to exercise ordinary and reasonable care in view
of the nature of the employment to provide and maintain reasonably
safe appliances, tools and machinery,** but he is under no obligation to
provide the newest, latest or best machinery, tools or appliances, or to
adopt every new improvement ; he may conduct his business with such
machiner}', tools and appliances as he deems best adapted to his pur-
poses and means, provided he uses reasonable prudence and care in the
selection of such as are reasonably safe and proper for use, and keeps
them in a reasonable state of repair.** The use of any machinery in-
as Channon v. Sanford Co., 70 Conn.
673, 66 Am. St. Rep. 133, 41 L. R. A.
200; Hardy T. Bhedden Co., 24 C. C.
A. 261, 78 Fed. 610, 37 U R. A. 38.
**Duty OS to inatrumentalities, —
LouisTlUe, etc., R. R. Co. v. Stutts,
105 Ala. 368, 53 Am. St. Rep. 127;
Last Chance M. lb M. Co. v. Ames, 23
Colo. 167; Brazil Block Coal Co. v.
Gibson, 160 Ind. 319, 98 Am. St. Rep.
281; Hannibal, etc., R. R. Co. ▼.
Kanaley, 39 Kan. 1; Fuller ▼. Tre^
mont Lrbr. Co., 114 La. 266, 108 Am.
St Rep. 348; Cowett ▼. American
Woolen Co., 97 Me. 543; Grlffln v.
Boston, etc., R. R. Co., 148 Mam. 148,
12 Am. St. Rep. 626, 1 L. R. A. 698;
Johnson v. Spear, 76 Mich. 139, 15 Am.
St Rep. 298; McDonald ▼. Michigan
Cent R. R. Co., 132 Mich. 372, 102
Am. St Rep. 426; Nutt v. Southern
Pacific Ry. Co., 26 Ore. 291; Serv-
ice y. Shoneman, 196 Pa. 63, 79 Am.
St Rep. 689, 69 L. R. A. 792; Purdy
V. WeBtinghouse, etc., Co., 197 Pa. 257,
SO Am. St Rep. 816, 51 L. R. A. 881;
International, etc., Ry. Co. v. Ker-
nan, 78 Tex. 294, 22 Am. St Rep.
6%, 9 L. R. A. 703; Texas A Pacific
Ry. Co. ▼. Huffman, 83 Tex. 286;
Bertha Zinc Co. t. Martin, 93 Va.
791, 70 L. R. A. 999; Richmond, etc.,
Ry. Co. V. Williams, 86 Va. 165, 19
Am. St Rep. 876; Sroufe y. Moran
Bros. Co., 28 Wash. 381, 92 Am. St
Rep. 847, 58 L. R. A. 313; Texas A
Pacific Ry. Co. y. Barrett 166 U. S.
617, 41 U E3d. 1186; American Bridge
Co. V. Seeds, 75 C. C. A. 407, 144
Fed. 605, 11 U R. A. (N. &) 1041.
In Mather v. Rlllston, 156 U. 8.
391, 89 L. Ed. 464, it is said: "We
think it may be laid down as a
legal principle that in all occupies
tions which are attended with great
and unusual danger there must be
used all appliances readily attainable
known to science for the preyention
of accidents, and that the neglect to
proyide such readily attainable ap-
pliances will be regarded as proof of
culpable negligence."
As to ntaterialSf the same general
rule applies as to tools, machinery,
etc. See Drew v. Western Steel
Car Co., 616 Ala. 174, 40 L. R, A. (N.
S.) 890; Neyeu v. Sears, 155 Mass.
303; Mooney y. Beattie, 180 Mass. 451,
70 L. R. A. 831.
»» Dayis y. Augusta Factory, 92 Ga.
712; Western, etc., R. R. Co. y.
Bishop, 50 6a. 466; Chicago, etc., R.
Co. y. Driscoll, 176 111. 330; Mon-
mouth Mining Co. y. Brling, 148 111.
521, 89 Am. St Rep. 187; Louisyllle,
etc., R. Co. y. Orr, 84 Ind. 50; Lake
Shore, 'etc., Ry. Co. y. McCormick,
74 Ind. 440; Burns y. Chicago, etc.,
Ry. Co., 69 Iowa, 450, 58 Am. Rep.
227; Brann y. Chicago, etc., R. Co*
1219
.§^ 1624]
THE LAW OF AGENCY
[book IV
Tolves more or less of risk, and in many cases the degree of risk in
very great. This risk, however, is a risk incident to the business, and
^ Iowa, 595, 86 Am. Rep. 243; Won-
«der y. Baltimore, etc., R. Co., 32 Md.
411, 8 Am. Rep. 143; Wormell v.
Maine Central Rr. Co., 79 Me. 397,
1 Am. St Rep. 321; Roes v. Pearson
Cordage Co., 164 Mass. 257, 49 Am.
St Rep. 459; Goldthwait v. Ha verm,
etc., St Ry. Co., 160 Mass. 554; Thain
▼. Old Colony R. Co., 161 Mass. 353;
Coombs v. New Bedford Cordage Co.,
102 Mass. 572, 3 Am. Rep. 506; Ford
V. Pltchburg R. R. Co., 110 Mass.
240, 14 Am. Rep. 598; Jones v.
Granite Mills, 126 Mass. 84, 30 Am.
Rep. 661; Shadford v. Ann Arbor St.
Ey. Co., Ill Mich. 390; Hewitt ▼.
Flint, etc., R. Co., 67 Mich. 61;
Michigan Cent R. Co. t. Smithson,
45 Mich. 212; Ft Wayne, etc., R, Co.
v. Gilders lee ve, 33 Mich. 133; Grattls
T. Kansas City, etc, R. Co., 153 Mo.
380, 77 Am. St Rep. 721, 48 L. R.
A. 399; Brands y. St Louis Car Co.,
218 Mo. 698, 18 L. R. A. (N. S.)
^01; Vanderpool v. Partridge, 79 Neb.
105, 13 L. R. A. (N. S.) 668; Harley
-r. Buffalo Car Mfg. Co., Ut N. Y. 31;
'Sweeney v. Berlin A Jones Envelope
Co., 101 N. Y. 520. 54 Am. Rep. 722;
Corcoran v. Holbrook, 59 N. Y. 517,
17 Am. Rep. 869; Augerstein v. Jones,
139 Pa. 183, 23 Am. St Rep. 174;
Keenan v. Waters, 181 Pa. 247; Payne
V. Reese, 100 Pa. 301; Philadelphia,
etc, R. Co. T. Keenan, 103 Pa. 124;
McCann v. Atlantic Mills, 20 R. I.
566; Darracott v. Chesapeake, etc.. R.
Co., 83 Va. 288. 5 Am. St Rep. 266.
In Alabama, however, it is held to
be the duty of the employer to keep
^reasonably abreast with improved
tnethods;" that while it was not the
duty of the employer to adopt every
new invention which might lessen
danger, "but it is their duty tq dis-
continue old methods which are in«
Becure, and to adopt such improve-
ments and advancements as are in
ordinary use by prudently conducted
roads engaged in like businesa, and
surrounded by like drcamstances."
Richmond, etc., R. R. Co. v. Jones, 92
Ala. 218; Georgia Pac. Ry. Co. v.
Propst 83 Ala. 518; Louisville, etc..
Ry. Co. v. Allen, 78 Ala. 494.
The North Carolina court in hold-
ing that failure of a railroad com-
'pany to equip its cars with a safety
coupler was negligence per se, adopt-
ed practioally the same rale. Lloyd
V. Hanes, 126 N. C. 359; Troxler v.
Southern Ry. Co., 124 N. C. 189, 70
Am. St Rep. 580, 44 L. R. A. 313;
Greenlee v. Southern By. Co., 122 N.
C. 977, 65 Am. St Rep. 734. 41 L. R.
A. 399. See also, Galveston, etc., Ry.
Go. V. Gormley (Tex. Ctv. App.).
27 S. W. 1061; Gulf, etc., R. Co. v,
Warner (Tex. Civ. App.), 36 S. W.
118; France ▼. Rome, etc., 0>., 88
Hun, 318; Burke v. Wltherbee, 98 N.
Y. 562.
By what standard the reasonable
safeness of appliances is to be de-
termined Is more or less in dispute.
A majority of the courts apparently
consider that "reasonably safe"
means in compliance with the ordi-
nary usages and customs which pre-
vail in like businesses. See Titus v.
Bradford, etc, Co., 13B Pa. 618. 20
Am. St Rep. 944; Briggs v. Chicago
ft N. W. Ry., 60 C. C, A. 513. 125 Fed.
746; Burke v. Witherbee. 98 N. Y.
562; Kehler v. Schwenk, 144 Pa. 348,
27 Am, St Rep. 633, 18 L. R. A. 374;
Roberts v. Port Blakely Mil! Co., 80
Wash. 25; Troxler v. So. Ry., 124
N. C. 189. 70 Am. St Rep. 580, 44
L. R. A. 313; Mississippi Logging Co.
V. Schneider. 20 C. C. A. 390. 74 Fed.
195; Ship Bldg. Works v. Nuttal!,
119 Pa. 149. Other courts do not
make custom conclusive, but admit It
as evidence only of what Is reason-
ably safe under all the ciroumstances
of the case. See Geno v. Fall Moun-
tain Paper Co.. 68 Vt 5«8; Wlita v.
Interstate Iron Co.. lOS Minn. 803, 16
L. R..A. (N. S.) 128; Crok«r ▼. Posey
1220
CHAP. IV]
DUTIES AND LLABILITIES OF PRINCIPAL
[§ i6as
if the servant, being of sufficient age and experience to appreciate the
dangers accepts the em{rfoyinent/* or continues in it,'^ knowing, or
having full opportunity to know, of the dangers, he assumes the re-
sponsibility of injury.
§ 1625. ■ Warning. — But even in this case, a duty of warn-
ing may attach to the master. If there are concealed dangers known
to the master, but of which the servant is ignorant, it is the duty of
the master to warn the servant of their existence.'* So if, by reason
Co., 8 Penne, (Del.) 1; Going v. Ala-
bama Steel Co., 141 Ala. 537; .Wash-
ington etc., Co. y. McDade, 186 *U. S.
554, 34 L. Ed. 235; Barclay v. Puget
Sound Lumber Co., 48 Wash. 241, 16
U R. A. (N. S.) 140; McCormIck
Harvesting Co. v. Burandt, 136 IIJ.
170; Wheeler v. Wason Mfg. Co., 136
Mass. 294.
Furnishing better or safer appli-
ances than the law would otherwise
require will impose an obligation on
the master to maintain them in good
condition where the servant has been
Induced to rely thereon for protec-
tion. See Scheurer v. Banner Rubber
Co., 227 Mo. 347, 28 L. R. A. (N. S.)
1207.
MDowling V. Allen, 74 Mo. 13, 41
Am. Rep. 298; Smith v. St Louis,
etc., Ry. Co., 69 Mo. 32, 33 Am. Rep.
484; Porter v. Hannibal, etc., R. Ca,
71 Mo. 66, 36 Am. Rep. 454; Coombs
V. New Bedford Cord. Co., 102 Mass.
.672, 3 Am. Rep. 506; Sweeney v.
Central Pac. R. Co., 57 Cal. 15; Hay-
den y. Smlthsville Mfg. Co., 29 Conn.
584; Bell v. Western, etc., R. Co., 70
Ga. 566; Dowell v. Burlington, etc.,
R. Co., 62 Iowa, 629; Yeaton v. Bos-
ton, etc, R. Co., 135 Mass. 418; Fort
Wayne, etc., R. Co. v. Glldersleeve,
33 Mich. 133; Hathaway v. Michigan
Cent. R. Co., 51 Mich. 253, 47 Am.
Rep. 569; Richards v. Rough, 53
Mich. 212; Gibson y. Erie Ry. Co.,
63 N. Y. 449, 20 Am. Rep. 552; Lan-
ing y. New York Cent. R. Co., 49 N.
Y. 621, 10 Am. Rep. 417; Watson v.
Railway Co., 58 Tex. 434; Wonder v.
Baltimore, etc., R. Co., 32 Md. 411,
3 Am. Rep. 143.
87 Swoboda v. Ward, 40 Mich, 420
Richards y. Rough, 53 Mich. 212
Pingree y. Leyland, 135 Mass. 398
Hnddleston y. Lowell Machine Shop,
106 Mass. 282; Umback y. Lake
Shore, etc., Ry. Co., 83 Ind. 191; Bell
V. Western, etc., R. Co., 70 Ga. 566;
McGlynn v. Brodie. 31 Cal. 376; Sow-
den y. Idaho Mining Co., 55 Cal. 443;
Camp Point Mfg. Co. v. Ballou, 71
111. 417; Kroy y. Chicago, etc., R,
Co., 32 Iowa, 357; Behm v. Armour,
58 Wis. 1; Sullivan v. Louisville
Bridge Co., 9 Bush (Ky.), 81; Porter
y. Hannibal, etc., R. Co., 71 Mo. 66,
36 Am. Rep. 454.
88 Many cases involving the duty to
warn are collected in the note to the
preceding section and the citation
will not be repeated here. See also,
Polaski y. Pittsburg Coal Co., 134
Wis. 259, 14 L. R. A. (N. S.) 952;
Fleming v. Northern Paper Mill, 135
Wis. 157, 15 L. R. A. (N. S.) 701;
Dowling y. Allen, 74 Mo. 13, 41 Am.
Rep. 298; Nickel v. Columbia Paper
Co., 95 Mo. App. 226; Baxter v. Rob-
erts, 44 Cal. 187, 13 Am. Rep. 160;
Ford y. Fitchburg R. R. Co., 110 Mass.
240, 14 Am. Rep. 598; Texas, etc., Ry.
Co. v. McAtee, 61 Tex. 695; Ryan v.
Fowler, 24 N. Y. 410, 82 Am. Dec.
815; Atchison, etc., R. R. Co. v. Holt,
29 Kan. 149; Malone v. Hawley, 4G
Cal. 409; Hayden v. Smithville Mfg.
Co., 29 Conn. 548.
There is no duty to warn the serv-
ant of that which he knew as well
as the master possibly could know.
Beghold y. Auto Body Co., 149 Mich.
14, 14 L. R. A. (N. S.) 609.
In Smith v. Peninsular Car Works,
I22I
§• 1626]
THE LAW OF AGENCY
[book XV
of the youth or inexperience of the servant, he is not aware of the
dangers involved, it is the duty of the master to inform the servant of
them if they are known to him." It is not enough in these cases tijat
the dangerous parts of the machinery should be visible, because the
servant, though knowing the fact, may be utterly ignorant of the
risks.*® There can however be no duty to warn against that of which
the master himself was ignorant and which he was not bound to know.**
§ 1626. — Inspection-^Maintenance. — ^The duty of the ma*;-
ter, as has been stated, is not merely to exercise reasonable care to
furnish, but also to reasonably maintain, renew or repair. This in-
volves the duty of reasonable inspection,** where that is necessary to
enable the main duty to be performed.**
60 Mich. 501, 1 Am. St. Rep. 542, the
plaintiff an emplcxyee of defendant was
engaged In carrying molten Iron over
a passage-way that was covered with
ice. He slipped and the molten iron
overturned on the ice, and an ex-
plosion followed which injured the
plaintiff. The defendant was held
liable; the court held it was under a
duty to inform plaintiff of unusual
or latent dangers; that the plaintiCT
could not be presumed to have sci-
entific knowledge enough to under-
stand the danger of an explosion un-
der such circumstances; that being
so inexperienced, a duty to warn him
arose which was not discharged by a
general statement to him that the
work was dangerous.
But to the effect that a master need
not warn a nineteen year old boy of
the effect of mixing lime and water,
see BoUington v. Louisville, etc., R.
Co., 125 Ky. 186, 8 L. R. A. (N. S.)
1045.
3»Many cases involving the duty
to warn inexperienced or ignorant
employees are collected in a note to
the preceding section. See also,
Mather v. Rillston. 156 U. 8. 391, 39
L. Ed. 464; Welch v, Bath Iron
Works, 98 Me. 361; Smith v. Penin-
sular Car Works, 60 Mich. 501, 1 Am.
St Rep. 542; Coombs v. New Bedford
Cordage Co.. 102 Mass. 572, 3 Am.
Rep. 506; Grizzle v. Frost, 3 Post, ft
Pin. 622; Swoboda v. Ward. 40 Mich
420; Hill V. Gust, 55 Ind. 45; Sulli-
van V. India Mfg. Co., 113 Mass.
396; St. Louis, etc., Ry. Co. v. Va-
lirius. 56 Ind. 511; Dowllng ▼. Al-
len, 74 Mo. 13, 41 Am. Rep. 298.
But even as to infanta there can
be no duty to warn of that which the
servant already knows and appreci-
ates. Cronin v. Columbian Mfg. Co.,
75 N. H. 319, 29 L. R. A. (N. S.) 111.
*o Chicago, etc., R. R. Co. v. Knapp,
176 111. 127; Coombs v. New Bedford
Cordage Co., 102 Mass. 572, 3 Am.
Rep. 506; Kann v. Meyer, 88 Md.
641; Dowling v. Allen. 74 Mo. 13, 41
Am. Rep. 298; Mather v. Rillston,
156 n. S. 391, 39 L. Ed. 464.
41 As where there is nothing In
the history, construction or opera-
tion of a machine to suggest snch an
injury as actually occurred. Conkey
Oo. V. iPTsen. 173 Ind. 585, 29 L. R.
A, (N. S.) 116.
4i! Armour v. Brazeau, 191 IlL 117;
Brann v. Chicago, etc., R. Co., 53
Iowa, 595, 36 Am. Rep. 243; Balti-
more B. ft S. Co. V. Jamar, 93 Md.
404, 86 Am. St. R. 428; Munch ▼.
Great Northern R. Co., 75 Minn. 61;
Parker v. Wood Lumber Co., 98
Miss. 750, 40 L. R. A. (N. S.) 832;
Comben v. Stone Co., 59 N. J. L. 226;
Young T. Mason Stable Co.. 193 N.
Y. 188, 127 Am. St. Rep. 939, 21 Ll
R. A. (N. S.) 592; Richmond, etc.
R. Co. V. Burnett, 88 Va. 638.
43 No duty rests upon an employer
1222
CHAP. IV]
DUTIES AND LIABILITIES OP PRINCIPAL [§§ 1627-I629
§ X627.
Repairing defective tools, etc. — For reasons sim*
liar to those referred to in the section respecting places to work, a
servant whose undertalcing it is to repair, restore or correct defective
tools, appliances or machinery can not demand that, as to those par-
ticular things, the duty of furnishing safe tools and appliances shall
be at the same time performed. There is an inherent inconsistency.*^
§ i6a8. Servants having no business to use— Using for
unexpected purposes.— •The duty with respect of tools and appli-
ances, like the duty with respect of place, does not extend to tools, ap-
pliances, etc., which the servant injured had no business or occasion
to use or to come into contact with in the course of his service, and
the use of which by the servant injured involved a departure from his
service which the master was not obliged to anticipate or guard
against.** Neither does it apply to injuries received while the serv-
ant was voluntarily using or attempting to use the tools, appliances,
etc., even though defective, for a purpose for which they were not de-
signed or intended, and for which the master had no reason to suppose
the servant would attempt to put them in the course of the service.**
§ 1629. Dangers arising from dangerous use of proper
appliances, etc. — Obviously a master who has performed his duty
to Inspect simple and common tools,
Buch as a ladder or a hammer.
Meador r. Lake Shore, etc., Ry. Co.,
138 Ind. 290, 46 Am. St. R. 384;
Stirling Coal Co. y. Fork, 141 K7.
40, 40 L. R. A. (N. S.) 837; Kosch-
man y. Ash, 98 Minn. 312, 116 Am.
St R. 373; Wachsmuth y. Shaw
Electric Crane Co., 118 Mich. 275;
Vanderpool y. Partridge, 79 Neb.
165, 13 L. R. A. (N. S.) 668; Miller
y. Brie R. Co., 21 N. Y. App. Div.
45; Marsh y. Chlckering, 101 N. Y.
396; Martin y. Highland Park Mfg.
Co., 128 N. Car. 264, 83 Am. St. R.
671 [compare Mercer v. Atlantic C. I*
R. Co.. 154 N. Car. 399, Ann. Cas.
1912 A. 1002]; Sheridan y. Gorham
Mfg. Co., 28 R. I. 256, 13 U R. A.
(N. S.) 687; Gulf, etc.. Ry. y. Lar-
kin, 98 Tex. 225. 1 L. R. A. (N. S.)
944; O'Brien y. Missouri, K, ft T. R.
Co., 36 Tex. Ciy. App. 628; Williams
y. Kimberly ft Clark Co., 131 Wis.
303. 120 Am. St Rep. 1049, 10 L. R.
A. (N. S.) 1043, 11 Ann. Cas. 622;
Meyer t. Ladewig, 130 Wis. 566, 13
L. R. A. (N. S.) 684; Garnett y.
Phoenix Bridge Co., 98 Fed. 192.
44 «The physician might as well in-
sist on haying a well patient to be
treated and cured, as the machinist
to haye sound and safe machinery to
be repaired." Dartmouth Spinning
Co. y. Achord, 84 Ga. 14, 6 L. R. A. 190.
Same effect: Green y. Babcock Lum-
ber Co., 130 Ga. 469; Martineau y.
National, etc., Co., 166 Mass. 4; Reed
y. Moore, 82 C. C. A. 434, 163 Fed.
358, 25 L. R. A. (N. S.) 331.
Same rule where seryantfl are en-
gaged in getting defectiye tools, etc.,
to the place of repair. Southern Ry.
Co. y. Lyons. 95 C. C. A. 55, 169 Fed.
557, 25 L. R. A. (N. S.) 335.
M Stodden y. Anderson Mfg. Co.,
138 Iowa. 398, 16 L. R. A. (N. S.)
614.
«4Felch y. Allen, 98 Mass. 572;
KaufTman y. Maier, 94 CaL 269, 18 L.
R. A. 124; Morrison y. Burgess Fibre
Co., 70 N. H. 406, 86 Am. St Rep.
634; Saunders y. Eastern Brick Co.,
63 N. J. L. 554, 76 Am. St Rep. 222.
1223
§ 1630]
THE LAW OF AGENCY
[book IV
in respect of the appUances, tools, etc., furnished to -his servants, is
not liable to one servant for dangers arising from the negligent use of
them by fellow servants. That the servants in using the appUances,
tools, etc., do not carefully adjust them or secure them or otherwise
manage or handle them in the shifting exigencies of the work, is not
ordinarily one of the dangers against which the master is bound to
furnish protection,*''
§ 1630. III. For injuries resulting from failure to repair as agreed.
Should the servant discover that the service has become more hazard-
ous than usual, or than he had reasonably anticipated, by reason of
defective machinery, the retaining of unfaithful fellow-servants, or
other similar cause, the general rule, as will be more fully seen here-
after, is that he must quit the service, as he may, or assume the extra
risks to which he is so exposed.** But this general rule is subject to
certain exceptions. The servant has a right to expect that, if die de-
fect were brought to the knowledge of the master, he would remedy
or remove it. On the other hand, the servant has no right to complain
of dangers or defects known to him but which he fails to communicate
to the master, so as to giv^ the latter an opportunity to remove them.
Where, therefore, the servant discovers defects in machinery, or other
similar thing that renders the service more hazardous, he should at
once report the same to the master or to the person who is authorized
to represent him in that respect,*^ and unless he does so, he cannot
recover from the master for injuries occasioned by extra perils which
he thus voluntarily encounters without notice to the master. The re-
« See Loud v. Lane. 103 Me. 309,
19 L. R. A. (N. S.) 680; Brown v.
People's Gas L. Co.. 81 Vt 477, 22
L. R. A. (N. S.) 738.
Putting In fresh pieces or parts, as
needed, from a proper supply fur-
nished for that purpose by the mas-
ter, to replace those necessarily and
ordinarily worn out or consumed In
the work, is part of the work and not
the master's duty. Johnson ▼. Boston
Tow Boat Co., 135 Mass. 209, 46 Am.
Rep. 458.
48 See postf §9 1659-1661.
Missouri Furnace Co. v. Abend.
107 111. 44, 47 Am. Rep. 425; Eureka
Co. v. Bass. 81 Ala. 200. 60 Am. Rep.
152.
•*• Complaint must be made to, and
promise to repair obtained from,
some one who represented the mas-
ter in that behalf. Weber Wagon Co.
v. Kehl, 139 III 644; Pieart v. Chi-
cago, etc., R. Co., 82 Iowa, 148; PoU
V. Numa Coal Co.. 149 Iowa, 104, 38
L. R. A. (N. S.) 646; Atchison, etc..
R. Co. V. Sadler, 38 Kan. 128, 5 Am.
St. Rep. 729; Ehmcke v. Porter, 46
Minn. 338; LyUle ▼. Chicago, etc., R.
Co., 84 Mich. 289; Wust v. Erie Iron
Works, 149 Pa. 263; HollU t. Widen-
er, 228 Pa. 466, 139 Am. St Rep.
1010; Jones v. File Co., 21 R. I. 126;
Utah Consol. Min. Co. v. Paxton, 80
C. C. A. 68, 150 Fed. 114.
Where mere notice is involved, the
ordinary rules of notice to an agent
apply. Baldwin v. St. Louis, etc.,
Ry. Co., 75 Iowa, 297, 9 Am. St Rep.
479; Wellston Coal Co. v. Smith, 66
Ohio St 70. 87 Am. St Rep. 647, 66
L. R. A. 99.
1224
.^HAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
:{ii63o
Jation of principal and agnent, or of master and servant, imposes no
obltgatioa <m. the principal or master to take more care of the agent
€ir servant than the latter is willing to observe for his own safety.'*
But where the master, on being notified by the servant of defects that
render the service he is engaged in negligently hazardous, expressly
.proQiises to make the necessary repairs, the servant may continue in
the employment for a reasonable time to permit the performance of
th^ promise, without being guilty of negligence, and if any injury re-
sults therefrom during that time he may recover,'* unless the danger
were so imminent that no prudent person would undertake to perform
the service.** The reason upon which the rule is said to rest is that
M Missouri IMrnace Co. ▼. Abend,
9upra; India&apoHB, etc., R. Co. v.
Flanigan, 77 111. 365; Pennsylvania
Ck>. y. hyndb^ 90 lU. 334; Columbus,
etc, Ry. Go. y. Troesch, 68 IlL 545,
18 Am. Rep. 578.
61 Eureka Co. y. Bass, 81 Ala. 200,
60 Am. Rep. 152; Cheeney v. Ocean
ateamship Co., 92 Qa. 726, 44 Am. St
Rep. 118; Morden Frog A Crossing
Works y. Fries, 228 111. 246, 119 Am.
St. Rep. 428; Missouri Furnaoe Ck). y«
Abend, 107 111. 44, 47 Am. Rep. 425;
Indianapolis, etc, Ry. Co. y. Watson,
114 Ind. 20, 6 Am. St Rep. 678;
Meador y. Lake Shore, etc., Ry. Co.,
138 Ind. 290, 46 Am. St Rep. 384
(restricting the operation of the rule
to machinery or instrumentalities
more complicated than such ordinary
tools as a shoyel or a ladder) ; Bueh-
ner v. Creamery Pkg. Mfg. Co., 124
Iowa, 445, 104 Am. St Rep. 354;
Southern Kansas Ry. Co. y. Croker,
41 Kan. 747, 13 Am. St Rep. 320;
Breckenridge y. Hicks, 94 Ky. 362,
42 Am. St Repw 361; Dempsey y.
Sawyer, 95 Me. 295; Roux y. Blodgett
4b Dayis Lbr. Co., 85 Mich. 619, 24
Am. St. Rep. 102, 18 L. R. A. 728;
Greene y. Minneapolis & St XiOuis
Ry. Co., 31 Minn. 248, 47 Am. Rep.
786; Le Clair y. Railroad Co., 20
Minn. 1; Conroy y. Vulcan Iron
Works, 62 Mo. 35; Rice y. Eureka
Paper Co., 174 N. T. .385, 96 Am. St
Rep. 585, 62 Ii. R. A. 611; Union
Manufacturing Co. y. Morrlsaey, 40
Ohio St 148. 48 Am. Rep. 669; Pat-
terson y. Pittsburg, etc., R. R. Co.,
76 Pa. 389, 18 Am. Rep. 412; Brown-
field y. Hughes, 128 Pa. 194, 15 Am.
St Rep. 667; Galveston, etc., Ry.Co.
v. Drew, 69 T«z. 10, 46 Am. Rep.
261; Gulf, etc.» Ry. Co. v. Donnelly,
70 Tex. 371. 8 Am. St Rep. 608; Gulf,
etc, Ry. Co. y. Brentford, 79 Tex.
619, 23 Am. St Rep. 377; Brabbits y.
Ry. Co., 38 Wis. 289; Maitland v. Gil-
bert Paper Co., 97 Wis. 476, 65 Am.
St. Rep. 137; Terkes y. Northern Pa-
cific Ry. Co., 112 Wis. 184, 88 Am. St.
Rep. 961; Hough y. Railway Co., 100
U. S. 213, 25 L. Ed. 612; Holmes v.
Clarke, 6 H. ft N. 349; Clarke y.
Holmes, 7 H. ft N. 937. And for a
case where the promise was to dis-
charge an incompetent seryant, see
Williams y. Klmberly ft Clark Co.,
131 Wis. 303, 120 Am. St Rep. 1049..
10 L. R A. (N. S.) 1048, 11 Ann. Cas.
622. See also, Cheeney y. Ocean
Steamship Co., 92 Ga. 726, 44 Am. St
Rep. 113. But see Sweeney y. Berlin,
etc., Co., 101 N. T. 520, 54 Am. Rep.
722.
03 McKelyey y. Ghes. ft O* R. Co., 35
W. Ya. 600; Indianapolis ft St Louts
R. Co. y. Watson, 114 Ind. 20, 5 Am.
St Rep. 678; Brdman y. Illinois
Steel Co., 95 Wis. 6, 60 Am. St. Rep.
66; Anderson y. Fielding, 92 Minn.
42, 104 Am. St Rep. 665; North
Chicago St R. Co. y. Aufmann, 22]
!U. 614. 112 AUL St Rep. 207; Dlst
of Columbia y: McElligott, 117 U. S
1225
§ i63il
THE LAW OF AGENCY
[book IV
the promise of the master to repair defects relieves the servant from
the conclusion of assumption or the charge of negligence in continu-
ing in the service after the discovery of the extra perils to which he
would be exposed.*'
Notwithstanding the promise to repair, the servant may lose his
right of recovery by his own contributory negligence in conduct not
relating to his mere reliance upon the promise.**
§ 1631. The mere fact that the servant has complained of
the defect will not entitle him to recover. There must, in addition,
by the weight of authority, be shown a promise to repair upon which
the servant has relied, and which has induced him to continue in the
service.** And if he continues to serve without further assurances
621, 29 L. Ed. 946; Hough ▼. Ran-
way Co., 100 U. S. 218, 26 L. Bd.
612; Miller v. Bnllion-Beck, etc.,
Min. Co., 18 UUh, 358; Smith ▼.
E. W. Backus Lumber Co., 64 Minn.
447; Brewer v. Tennessee Coal, etc.,
Co., 97 Tenn. 615; Schigltsso v.
Dunn, 211 Pa. 258, 107 Am. St Rep.
567; Williams v. Rlmberly A Clark
Co., 131 Wis. 303, 120 Am. St Rep.
1049, 10 L. R. A. (N. S.) 1043, 11
Ann. Cas. 622; Comer v. Meyer, 78
N. J. L. 464, 29 L. R. A. (N. S.) 697.
Where the tool, etc., is a simple
and ordinary one, and Ib openly de-
fective and dangerouB, it is held in
many cases that the servant who
continues to use it assumes the risk,
notwithstanding a promise to repair.
McGill ▼. Cleveland, etc., Co., 79 Ohio
St 203, 128 Am. St Rep. 705, 19
U R. A. (N. S.) 793; St Louis, etc.,
Ry. Co. V. Kelton, 55 Ark. 483; Webster
Mfg. Co. V. Nlsbett, 205 111. 273; Con-
ley V. American Exp. Co., 87 Me. 852;
Erdman v. Illinois Steel Co., 95 Wis.
6, 60 Am. St. Rep. 66; Gulf, etc., Ry.
Co. V. Brentford, 79 Tex. 619, 23 Am.
St Rep. 377. But many other cases
repudiate this distinction, and hold
that there is no distinction between
simple tools and others, unless the
danger of continued use is so great
and obvious that no reasonable man
would undertake it Brousean v. Kel-
logg Switchboard Co., 158 Mich. 312,
27 L. R. A. (N. S.) 1052; Southern
Kan. R. Co. v. Croker, 41 Kan. 747, IS
Am. St Rep. 320, in which many
other cases will be found cited.
•'Missouri Pnmace Co. v. Abend*
supra; Clarke v. Holmes, $ui^ra;
Hough V. Railway Co., Mupra; Demp-
sey V. Sawyer, gupra,
B4See Miller v. White Bronse M.
Co., 141 Iowa, 701, 18 Ann. Gas. 957;
Levesque v. Janson, 165 Mass. 16;
Trudeau v. American Mill Co., 41
Wash. 465; Erdman v. Illinois Steel
Co., 96 Wis. 6, 60 Am. St Rep. 66;
Crookston Lumber Co. v. Boutin, 79
C. C. A. 368, 149 Fed. 680.
B5 Indianapolis, etc., R. Co. v. Wat-
son, 114 Ind. 20, 6 Am. St Rep. 578;
East Tenn., etc., R. Co. v. Duffleld*
12 Lea (Tenn.), 68, 47 Am. Rep. 319;
Galveston, etc.,* R. Co. T. Drew, 59
Tex. 10, 46 Am. Rep. 261; Pieart v.
Chicago, etc., R. Co., 82 Iowa. 148;
Showalter v. Fairbanks, etc., Co., 88
Wis. 376; Erdman v. HI. Steel Co.,
95 Wis. 6, 60 Am. St Rep. 66; Bod-
well V. Nashua Mfg. Co., 70 N. H.
890; Hayball v. Detroit etc, Co..
114 Mich. 135; Rothenberger v.
Northwestern Consol. Mill. Co., 57
Minn. 461; Union Mfg. Co. v. Morris-
sey, 40 Ohio St 148, 48 Am. Rep.
669; Lewis v. New York, etc., R. Co.,
158 Mass. 73, 10 L. R. A. 513; Mc>
Farlan Carriage Co. v. Potter, 153
Ind. 107; Brewer v. Tennessee CoaU
etc., Co., 97 Tenn. 615.
1226
CHAP. IV]
DUTIES AND LIABILITIES OP PRINCIPAL
[§ 1632
after the expiration of a reasonable time from the date of the promise
to repair, which has not been kept, he will, ordinarily, be deemed to
have accepted the riak of the dangers, and the master will not be lia-
ble.** Whether under the circumstances and in view of the promise
to repair, the servant exercised due care in continuing to use the de-
fective machinery, is a question for the jury to determine.*^
This question most frequently occurs in those cases in which the
defects or dangers arise after the servant has entered upon his service,
and not in those in which he was fully aware of the dangers when he
accepted the employment, but even in such cases the agent has a right
to rely upon the master's promise that he will repair.
But the rule now under consideration presupposes that there are
defects in the tools, machinery or appliances furnished. If, on the
other hand, those furnished by the master are reasonably safe and
proper for use, although not the best possible, or of the latest design,
the master has done his duty and the servant assumes the risk. In
such a case, not even the express promise of the master that he will
furnish new or better ones, or will take greater precautions for the
servant's safety, will give the servant a right of action for an injury
received from the old."
§ 1632. IV. For employment of incon:^>etent servants^ — ^It is the
duty of the principal or master to use reasonable care and prudence in
56 Eureka Co. v. Bass, 81 Ala. 200,
60 Am. Rep. 152; Woodward Iron Co.
V. Jones, 80 Ala. 123; Missouri Fur-
nace Co. V. Abend, 107 111. 44, 47 Am.
Rep. 425; Greene v. Minn, lb St. Louis
R. Co., 31 Minn. 248, 47 Am. Rep.
785; Union Mfg. Co. v. Morrlssey,
40 Ohio St. 148, 48 Am. Rep. 669;
Patterson v. Pittsburg, etc., R. R.
Co., 76 Pa. 389. 18 Am. Rep. 412;
Lansing v. N. Y. Cent. R. R. Co., 49
N. Y. 512, 10 Am. Rep. 417; East Ten-
nessee, etc., R. Co. y. Duffield, 12
Lea (Tenn.), 63, 47 Am. Rep. 319;
Galveston, etc., Ry. Co. v. Drew, 59
Tex. 10, 46 Am. Rep. 261; Conroy y.
Vulcan Iron Works, 62 Mo. 35, s. c.
6 Mo. App. 102; Crutchfield v. Rail-
road Co., 78 N. C. 300; Albrecht v.
Chicago, etc., R. Co., 108 Wis. 530,
53 L. R. A. 653; Holmes y. Clarke, 6
H. A N. 349.
In Albrecht y. Chicago, etc., R. Co.,
supra, a period of about two hours in
which to make the needed repairs.
which were very simple, was held to
be reasonable, and after that the
servant^ who knew they had not been
made, assumed the risk.
5T Hough V. Railway Co., 100 U. S.
213, 25 L. Ed. 612; Ford v. Fltchburg
R. R. Co., 110 Mass. 261, 14 Am. Rep.
598; Lanlng v. New York Cent, R. R.
Co., 49 N. Y. 521. 10 Am. Rep. 417;
Snow y. Housatonlc R. R. Co., 8 Al-
len (Mass.), 441, 82 Am. Dec 720.
«8 Marsh y. Chlckering. 101 N. Y.
356 (reported also in note to 54 Am.
Rep. at p. 727); Sweeney y. Berlin,
etc., Enyelope Co., 101 N. Y. 520, 54
Am. Rep. 722; Nealand y. Lynn, etc.,
R. Ca, 173 Mass. '42; Coin y. Talge
Lounge Co., 222 Mo. 488, 26 L. R. A.
(N. S.) 1179, 17 Ann. Cas. 888; Hlg-
glns y. Fanning, 195 Pa. 599; Leonard
y. Herrmann, 195 Pa. 222; Branstra-
tor y. Keokuk, etc., R. Co., 108 Iowa,
877; Jones ▼. Yaaoo, etc., R. Ck)., 90
MUs. 547.
1227
§ 1632]
THE LAW OF AGENCY
[book IV
the selection and employment of his agents and servants, and for a
want of such care and prudence, he is liable to all of his (>ther servants
and agents who directly and proximately suffer injury therefrom.**
This being his duty as to the selection and employment, he is under a
like duty as to the retention of his servants and agents. If having re-
ceived knowledge of their incompetence or unfitness, he still retains
them in his employ, he must re^)ond in damages to others who are in-
jured thereby.*®
B» Southern P. Co. v. Hetzer, 135
Fed. 272, 68 C. C. A. 26, 1 L. R. A.
(N. S.) 288; First Nat. Bank v.
Chandler, 144 Ala. 286, 113 Am. St.
Rep. 39; Tyson v. Railroad Co., 61
Ala. 554; Still v. San Francisco, etc.,
Ry. Co., 154 Cal. 559, 129 Am. St.
Rep. 177, 20 L. R. A. 322; Western
Stone Co. v. Whalen, 151 111. 472, 42
Am. St. Rep. 244; Columbus, etc, R.
Rep. 578; Indianapolis, etc., R. Co.
R. Co. V. Troesch, 68 111. 545, 18 Am.
V. Foreman, 162 Ind. 85, 102 Am. St
Rep. 185; EvanBYille & Terre Haute
R. R. Co. V. Qeyton, 115 Ind. 450, 7
Am. St Rep. 458; Chicago, etc., R. R.
Co. V. Harney, 28 Ind. 28, 92 Am.
Dec. 282; Norfolk & Western R. R. Co.
Y. Hoover, 79 Md. 258, 25 L. R. A.
710, 47 Am. St Rep. 392; Blake t.
Maine Cent R. R. Co., 70 Me. 60, 35
Am. Rep. 297; Oilman v. Eastern R.
R. Co., 13 Allen (Mass.), 433, 90 Am.
Dec. 210; Beers v. Prouty Co., 200
Mass. 19, 128 Am. St. Rep. 374, 20 L.
R. A. (N. 8.) 39 (ability to speak
English required) ; Friberg v. Build-
ers, etc., Co., 201 Mass. 461, 131 Am.
St Rep. 412 (same not required);
Kean v. Rolling Mills, 66 Mich. 277,
11 Am. St Rep. 492; Walkowskl r.
Penokee Mines, 115 Mich. 629, 41 L.
R. A. 33; Davis v. Detroit, etc, R. R.
Co., 20 Mich. 105, 4 Am. Rep. 364;
Smith V. St. Louis, etc., R. R. Ck>.,
151 Mo. 391, 48 U R. A. 368; MoBs
V. Pacific R. R. Co., 49 Mo. 167, 8 Am.
Rep. 126; Harper v. Indianapolis, etc.,
R. R. Co., 47 Mo. 567, 4 Am. Rep. 353;
Bunnell v. St Paul, etc., Ry. Co., 29
Minn. 305; New Orleans, etc, R. R.
Co. T. Hughea» 49 Miss. 268; En-
right ▼. Oliver, 69 N. J. L. 367, 101
Am. St. Rep. 710; Rosenstiel v. Pitts-
burg Rys. (3o., 230 Pa. 273, 33 L. R. A.
(N. 6.) 751; Mexican Nat R. R. Co.
V. Mu80ette^ 86 Tex. 708, 24 L. R. A.
642; South West Improv. 06. r.
Smith, 85 Va. 306, 17 Am. St Rep.
59; Conover v. Neher-Ross (3o., 88
Wash. 172, 107 Am. St Rep. 841;
Pearson v. Alaska Pac. 8. Co.» 61
Wash. 560, 130 Am. St. Rep. 1117;
Williams V. Kimberly, 131 Wis. 308,
120 Am. St Rep. 1049, 10 U R. A.
(N. a) 1043, n Ann. Oaa ft22.
80 First Nat. Bank y. Chandler, 144
Ala. 286. 113 Am. St Rep. 89; In-
dianapolis Rapid Transit Co. v. Fore-
man, 162 Ind. 86, 102 Am. St Rep.
185: Pittsburg, etc., R. R. Co. v. Ruhy,
38 Ind. 294, 10 Am. Rep. Ill; Robbins
V. Lewiston, etc, Ry. CJo.. 107 Me. 42,
30 L. R. A. (N. S.) 109; Norfolk ft
Western R. R. Co. v. Hoover, 79 Md.
253, 25 L. R. A. 710, 47 Am. St Rep.
392; Kean v. Rolling Mills, 66 Mich.
277. 11 Am. St Rep. 492; Walkowskl
V. Penokee Mines, 116 Mich. 629, 41
L. R. A. 33; Davis v. Detroit etc, R.
R. Co., 20 Mich. 105, 4 Am. Rep. 364;
Coppins V. N. Y., etc, R. R. Co., 122
N. Y. 557, 19 Am: St Rep. 523; Park
V. N. Y., etc, R. R. Co., 155 N. Y. 215,
63 Am. St Rep. 663; Laning v. N. Y.
Cent. R. R. Co., 49 N. Y. 521, 10 Am.
Rep. 417; Baulee v. N. Y., etc., R. R.
Co., 59 N. Y. 356, 17 Am. Rep. 325;
Chapman v. Brie Ry. Co., 55 N. Y.
579; Handley v. Daly Mining Co., 16
Utah, 176, 62 Am. St Rep. 916; Wil-
liams V. Kimberly Clark Co., 131 Wis.
803, 120 Am. St Rep. 1049; 10 L. R.
A. (N. S.) 1048, 11 Ann. C^. 622;
1228
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 163^
He is not a guarantor, however, of the fitness or competence of tBose
whom he employs, and it is not enough to show the fact of the income
petence, but it must also be shown, in the one daSe that he might by
exercise of reasonable care and diligence have discovered the incom-
petence at the time of the employment,*^ and in the other case that
knowledge, or facts sufficient to have led to knowledge, of the in*
competency had been brought home to him, and that he nevertheless
continued them in the service."*
8 1633. * Sufficient number. — ^This duty to furnish compe-
tent servants may include the question of number as well as of }ftn:ess,
and it is the duty of the master in those cases in which he 1ms under-
taken, or in which reasonable care imposes upon him the duty, io fur-
nish assistants, to exercise reasonable care to provide a sufficient num^-
ber of other servants to enable the work to be performed with reasonable
safety.**
Southern P. Co. v. Hetzer, 135 Fed.
272, 68 C. C. A. 26, 1 L. R. A. (N. S.)
2S8.
•1 First Nat Bank v. Chandler. 144
Ala. 286, 118 Am. St. Rep. 39; West-
ern Stone Co. y. Whalen, 151 lU. 472,
42 Am. St. Rep. 244; Norfolk ft
Western R. R. Co. v. Hoover, 79 Md.
263, 25 L. R. A. 710, 47 Am. St. Rep.
892; Conover v. Neher-Ross Co., 38
Wash. 172, 107 Am. St. Rep. 841.
«2 Southern P. Co. v. Hetzer, 135
Fed. 272, 68 C. C. A. 26, 1 L. R. A.
(N. S.) 288; Alabama, etc., R. R. Co.
V. Waller, 48 Ala. 459; Indianapolis
Rapid Transit Co. v. Foreman, 162
Ind. 85, 102 Am. St. Rep. 185; Ohio,
etc., Ry. Co. v. Collarn, 73 Tnd. 261,
88 Am. Rep. 134; Chicago, etc., R. R.
Co. V. Doyle, 18 Kan. 58; Kcan T.
Rolling Mills, 66 Mich. 277, 11 Am.
St. Rep. 492; Walkowslrl v. Penokee
Mines, 115 Mich. 629, 41 L.. R. A. 33;
Huffman v. Chicago, etc., R. R. Co., 78
Mo. 50; Kersey v. Kansas City, etc.,
R. R. Co., 79 Mo. 362; Copplns v. N;
y., etc., R. R. Co., 122 N. Y. 557,
19 Am. St. Rep. 523; Park v. N. Y.
etc., R. R. Co., 156 N. Y. 215, 63 Am.
St. Rep. 663; Huntingdon, etc., R. R.
Co. V. Decker, 84 Pa. 419; East Ten-
nessee, etc., R. R. Go. V. Ourley, 12
Lea (Tenn.), 46; Walton v. Burchel,
121 Tenn. 715, 130 Am. St. Rep. 788;
Handley v. Daly Mining Co., 15 Utah,
176. 62 Am. at Rep. 916; WilliazHtt
V. Kimberly, etc., Co.. 131 Wis. 303,
120 Am. St. Rep. 1049, 10 L. R. A.
(N. S.) 1043, 11 Ann. Cas. 622. See
also, oases in preceding note.
•^Flike ▼. Boston A A. R. Co., 53
N. Y. 549, 13 Am. Rep. 545; Supple
V. Agneu, 191 111. 439; Jones v. Cotton
Mills, 82 Va. 140, 8 Am. St. Rep. 92;
South West Improv. Go. v. Smith,
85 Va. 306, 17 Am. St. Rep. 59; John-
son V. Ashland Water Co., 71 Wis.
558, 5 Am. St. Rep. 243; Cheeney v.
Steamship Co., 92 Ga. 726, 44 Am. St.
Rep. 113.
This, of course, means something
more than merely that the work is
hard or heavy or pressing. The mas-
ter must either hate agreed to fur-
nish help or it must he negligence not
to do 80. Where the servant con-
tinue» to do heavy work without ob-
jection and is later injured, he can-
not recover merely on this ground. See
Skipp V. Bastern Counties Ry. Co., 9
Excfa. 223.
Where the master has furnished a
sufficient number, he is not liable
where the foreman in charge of the
work improperly distributes them on
the work. Dair v. New York, etc., 8.
8. Co., 204 N. Y. 341, 40 L. R. A. (ri.
S.) 938.
1229
§§ 1634,1635]
THE LAW OF AGENCY
[book IV
§ 1634.
The risks resulting from the non-performance of
the duty of the master, in these respects as in others already referred
to, may be assumed by the servant under substantially the same con-
ditions as in other cases. If a servant discovers that incompetent or
insufficient servants have been employed or are being retained, he
should notify the master and may rely for a reasonable period upon
the latter's promise to remedy the difficulty. If he makes no such
complaint or if he continues in the service after the force of the mas-
ter's promise is spent, he will be deemed to have assumed the ride.**
§ 1635. V. For not making and enforcing rules. — ^Where the busi-
ness to be carried on is complex and dangerous, as usually in the case
of railroads, mines, and the like, it is the duty of the principal or mas-
ter to exercise reasonable care and prudence in making and promulgat-
ing such necessary and proper rules and regulations as may be re-
quired to enable the business to be carried on with reasonable safety ; •*
and then to exercise like care and prudence to see that such rules and
regulations are enforced and obeyed.**
As in the case of tools and appliances, however, the master is not
obliged to adopt any particular system, or to ensure either the best
possible rules or the strictest possible observance : reasonable care and
prudence is the measure of his duty.*^
Moreover, the duty to make and enforce rules applies only in those
kinds of business or in those kinds of work whose complexity or dan-
ger makes such rules reasonably necessary. There is, for example, no
M Williams ▼. Kimberly ft Clark thai, 4 Penne. (Del.) 511, 103 Am.
Co., 181 Wis. 303, 120 Am. St. Rep.
1049, 10 L. R. A. (N. S.) 1043. 11
Ann. Cas. 622; Cheeney y. Ocean
Steamship Co., 92 Oa. 726, 44 Am.
St Rep. 113.
M Abel y. Delaware, etc., C. Co., 128
N. y. 662; Merrill y. Oregon Short
Line, 29 UUh, 264, 110 Am. St. Rep.
695; Reagan v. St. Louis, etc., R. Co.,
93 Mo. 348, 8 Am. St. Rep. 542; Fitz-
gerald y. Worcester, etc., St. Ry. Co.,
200 Mass. 106, 19 L. R. A. (N. S.)
289; Richlands Iron Co. y. Elkins, 90
Va. 249; Moore Lime Co. y. Richard-
son, 95 Va. 326, 64 Am. St. Rep. 785;
Pittsburg, etc., R. Co. y. Powers, 74
in. 841; ByansylUe, etc., R. Co. y.
Tohlll, 143 Ind. 49; Sprague y. New
York, etc., R. Co., 68 Conn. 345, 37
L. R. A. 638; Szymanskl y. Blumen-
St. Rep. 182.
The giying of warning oi occasion-
al dangers may fall within this prin-
ciple. Polaski y. Pittsburg Coal Co.,
134 Wis. 259, 14 L. R. A. (N. S.) 958.
But there is no such duty where the
general situation is well known, and
the master does not know and has
no reason to expect the particular
danger. Ahem y. Amoskeal Mfg.
Co., 76 N. H. 99, 21 L. R. A. (N. B.)
89.
«• Doing y. New York, etc., R. Co.,
X51 N. Y. 579; Merrill y. Oregon
Short Line, 29 Utah, 264, 110 Am. St.
Rep. 696; St. Louis, etc., R. Co. y.
Triplett, 54 Ark. 289, 11 L. R. A. 773.
•7 Hannibal, eta, R. Go. t. Kanaier»
39 Kan. V
1230
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1636, 1637
duty to prescribe rules for the performance of simple and ordinary
operations where the nature of the operation or the circumstances of
its performance sufficiently indicate the course of conduct which ought
to be pursued.** ^^*J
§ i636, VI. For not furnishing necessary superintendence. — For
similar reasons, where the work which the servant is called upon to
perform is complicated or difficult, requiring the co-operation of sev-
eral servants at once or at intervals, under circumstances in which
they can not properly control themselves, involving the jaecessity of
signals or warnings, needing expert advice or instructions for its
proper performance, and the like, it is the duty of the master to exer-
cise reasonable care to see that suitable superintendence and direction
are supplied, and for a breach of this duty he will be liable if injury
results.**
But this rule, like the one in the preceding section, depends upon
exceptional facts. If the work is simple and ordinary, such as a group
of men or a single man can usually perform in safety with no outside
direction, no superintendence would be required. The master is not
bound to watch over the details of ordinary work or direct its per-
formance or constantly follow after his servants to see that his proper
directions are strictly obeyed.'*
g 1637. V^^- ^^ injuries outside of emptoymtnt — It is those
risks only which are incident to the undertaking of the servant or
agent, which he is ordinarily deemed to have assumed, and not those
tJf some other or different duty or employment.'^ Hence, if the prin-
cipal or master requires of the servant the performance of an act out-
side of the scope of his employment, the servant is under no obligation
to perform it. If, however, he does consent to perform it, a situation
not unlike the ordinary one presents itself. It is not per sc wrongful
«8 Morgan y. Hudson River, etc.,
Co., 133 N. Y. 666; Voss v. Delaware,
etc., R. Co., 62 N. J. L. 59; Texas, etc.,
R. Co. V. Echols, 87 Tex. 339; Moore
Lime Co. v. Richardson, 95 Va. 326,
64 Am. St. Rep. 785; Norfolk, etc.,
R. Co. y. Graham, 96 Va. 430.
•BEngelking y. Spokane, 59 Wash.
446, 29 L. R. A. (N. S.) 481 ("the
duty of superintendence is not a
fixed legal duty, but may arise from
the facts of any given case"); Train-
er y. Philadelphia, etc., R. Co., 137
Pa. 148; HiU y. Big Creek Lumber
Co., 108 La, 162, 68 L. R. A. 846; Mc-
Elligott V. Randolph, 61 Conn. 157,
29 Am. St Rep. 181.
7« See Anderson y. Oregon R. ft N.
Co.. 28 Wash. 467; Central R. Co. y.
Keegan, 160 U. S. 257, 40 L. Ed. 418.
71 Chicago, etc., Ry. Co. y. Bay-
field, 37 Mich. '205; Railroad Co. y.
Fort, 17 Wall. (U. S.) 563 Fed. Cas.
No. 4,952; Lalor y. Chicago, etc., R.
R. Co., 52 111. 401, 4 Am. Rep. 616;
Dallemand y. Saalfeldt, 175 111. 310,
67 Am. St. Rep. 214, 48 L. R. A. 753.
1231
•1 1638]
u
THE LAW OF AQBN€¥
j BOOK 1 IV
for the master to give such instruotioiis,'? feind if tlie servant undar-
takes to obey them he will ordinarily be deemed to have assumed ^he
risks so far as they were open and obvious to him.^* Where the risks
are not obvious and are known to the master, but not to the servant,
.it is the master's duty to fully inform the servant of the perils of the
undertaking and warn him against them. If he fails in this duty and
the servant thereby suffers injury, the master as liable.'*
This is particularly true where the servant is young or inexperi-
enced, and not likely to anticipate or guard himself s^gainst in jury J*
§ 1638^ It is, of course, true as has been stated that the
servant would be. under no obligation to obey instructions which re-
quired of him the performance of a duty beyond the scope of his un-
dertaking, but, as bearing upon the questioa whether the situation
presented itself to the servant as one within, or without his undertak-
ing, and therefore as involving unfamiliar risks, it has been w^U said
that where one contracts to submit himself to the orders of another,
there must be some presumption that the orders he receives arc law-
ful. The giving of the orders is, of itself, an assumption that they
are lawful, and the servant or agent who refused to obey, would take
upon himself the burden of showing a lawful reason for the refusal,
and in case of a failure so to do, he would incur the double risk 6f
losing. his employment and being compelled to pay damages. These
7i Anderson v. Morrison, 22 Minn.
274.
T8 Richmond, eta, R. Co. v. Pinley.
i2 C. C. A. 595, 63 Fed. 228; Cole v.
Chicago, etc., R. Co., 71 WIb. 114. 5
Am. St. Rep. 201; Oavigan v. Lake
Shore, etc., R. Co., 110 Mich. 71;
Maltble v. Belden, 167 N. Y. 807, 54
L. R. A. 52; Chicago, etc., R. Co. v.
Crotty, 73 C. C. A. 147, 141 Fed. 913;
Dougherty v. West Superior Iron Co.,
88 W1& 343.
^* Chicago, etc., Ry. Co. v. Bay-
field, 87 Mich. 205; Brown v. Ann
Arbor R. Co., 118 Mich. 205; Lalor v.
Chicago, etc.. R. R. Co., 52 fll. 401,
4 Am. Rep. 616; Wheeler v. Wason
Mfg. Co., 185 Maes. 294; Thompson y.
Hermann, 47 WIb. 602, 32 Am. Rep.
784; O'Connor v. Adams, 120 Mass.
427; Jones v. Lake 'Shore, etc., Ry.
€k)., 49 Mich. 673; Broderlck v. De-
troit Union Depot Co., 66 Mich. 261,
56 Am. Rep. 382; Kennedy v. Swift,
284 111. 606, 123 Am. St Rep. 113.
TsQuinn r. Johnson Forge Co., 9
Houst. (Del.) 388; Camp v. Hall. 39
Fla. 685; Meier t. Way, 186 lo^av
302, 125 Am. St. Rep. 254; Newbury
V. Getchel, etc., Mfg. Co., 100 Iowa,
441, 62 Am. St. Rep. 582; Vohs v.
Shorthlll, 180 Iowa. 538; Dallemand
V. Saalfeldt, 175 IlL 810, 67 Am. St
Rep. 214, 48 L. R. A. 753; James y.
Rapides Lbr. Co., 50 La. Ann. 717, 44
L. R. A. 33; Bourg v. Brownell Lum-
ber Co., 120 La. 1009. 124 Am. St Rep.
448; Brown v. Ann Arbor R. Co.. 118
Mich. 205; Brennan ▼. Gordon, 118
N. Y. 489, 8 L. R. A. 818; Lofrano v.
New York ft M. V. Walter Co., 55 Hun
(N. Y.), 452; Kehler v. Schwenk. 151
Pa. 505, 31 Am. St Rep. 777; Tex-
arkana, etc., Ry. Co. v. Prcachef
(Tex. dr. App.), 59 S. W. 593; Gulf,
etc., Ry. Co. v. Newman, 27 Tex. Civ.
App. 77; Michael v. Roanoke Mach.
Works, 90 Va. 492. 44 Am. dt Re^
927.
123a
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1639/ 164O
are sufficient reasons for excusing him if he declines to take thi* responf-
sibility in any case in which doubts can fairly exist ; he should as**
sume that the order is given in good faith and in the belief that it is
rightful, and if in his own judgment it is unwarranted, it is not for
the principal to insist that he was wrong* in not refusing obedience,'*
unless the danger is so extreme and obvious that no reasonable man
would, under the circumstances, expose himself to if^
5. Negligence of his General Superintendent or other Representative.
g 1639. Principal can not relieve himself by delegating duties.—
It has been seen in the preceding sections that the master undertakes
that reasonable care shall be exercised for the protection of the serv-
ant in a number of particulars, as, for example, in the furnishing and
mauitaining of a reasonably safe place to work; in supplying and
keeping in repair reasonably safe appliances, tools and machinery;
in employing and retaining reasonably competent servants ; in making
and enforcing reasonable rules and regulations, and the like. It is
part of the undertaking of the master that these duties shall be per-
formed, and it fe entirely immaterial, so far as the responsibility of
the master is concerned, whether he undertakes to perform them in
person or confides the performance to some representative or sub-
stitute. Whoever undertakes to act for the master in this particular,
whether he be a general superintendent, a general manager, or a per-
son exercising sinnilar duties by whatever name, is the representative
of the master, charged with the performance of the master's duties,
and the master must answer for the way in which they are performed.
In the sense that the master cannot escape responsibility by delegating
the performance of these duties to another, these duties are often
called non-delegable or non-assignable ones.
§ 1640. Liable for negligence of general agent or superintendent-*-
Vice-principaL — It is therefore well settled that where the princi-
pal or master entrusts to a general agent — often called a vice-princi-
7«Per Cooley, C. J., in Chicago,
etc.. By. Co. v. Bayfield, 37 Mich. 204.
^ Chicago, etc., Ry. Co. v. Bay-
field, 37 Mich. 205; Thompson v. Her-
mann, 47 Wis. 602, 32 Am. Rep. 784;
Michael v. Roanoke Mach. Works,
90 Va. 492, 44 Am. St. R«p. 927; Helm
V. O'Rourke, 46 La. Ann. 178; North-
ern Pac. Coal Co. v. Richmond, 7
C. 0. A. 486, 68 Fed. 766; Louisville*
etc., R. Co. V. Hanning, 181 Ind. 628.
31 Am. St. Rep. 443; Pittsburg, etc,
R. Co. V. Adamg, 105 Ind. 151; Brazil
Coal Co. V. Hoodlet, 129 Ind. 327;
Taylor v. Evansvine R. Co., 121 Ind.
124, 16 Am. St. Rep. 372, <f L. R. A.
684; Consolidated Coal Co. v. Haennl,
146 111. 614; Chicago, etc., Ry. Co. V.
McCarty, 49 Neb. 476; Fox v. Chica-
go, etc., R. Co., 86 Iowa, 368, 17 L. R.
A. 289; English v. Chicago, etc., Ry.
Co., 24 Fed. 906.
78
1233
§ 1640]
THE LAW OF AGENCY
[book IV
pal because for the time being he is performing a master's or prin-
cipal's duties — the power and the duty to purchase, control or keep
in repair the implements or machinery to be used; or the power and
duty to employ, regulate and discharge on his account the agents or
servants to be employed, and the like, the principal is liable to an
agent or servant for a neglect in the performance of these duties by
such general agent, in the same manner and to the same extent as
though the neglect had been that of the principal himself were he per-
sonally managing and controlling the business.^^ The fact that the
principal has exercised due care in his selection does not alter the re-
sult, if the superintendent, however carefully chosen, has not per-
formed the master's duty.
Such a general agent or superintendent, called by whatever name^
while engaged in the performance of that class of duties, is not a
fellow-servant or co-employee of the agents or servants employed by
and acting under him. For the time being and as to those duties he
stands in the principal's place, and his neglect is the neglect of the
principal.''* This rule applies alike to corporations and to individuals.
^8 Tyson v. North, etc., Rr. Co., 61
Ala. 564, 32 Am. Rep. 8; Wilson v.
WlUimantic Linen Co., 50 Conn. 433,
47 Am. Rep. 653; Brown v. Sennett,
68 Cal. 225, 58 Am. Rep. 8; Beeaon v.
Green Mountain Co., 57 Cal. 20;
Taylor y. Georgia Marble Co., 99 Ga.
512, 59 Am. St Rep. 238 (but see
Hilton, etc., Lbr. Co. t. Ingram, 119
Ga. 652, 100 Am. St. Rep. 204); Baler
V. Selke, 211 111. 512, 103 Am. St. Rep.
208; Mitebell v. Robinson, 80 Ind.
281, 41 Am. Rep. 812; Brice-Nash y.
Barton Salt Co., 79 Kan. 110, 131 Am.
St Rep. 284. 19 L. R. A. (N. S.) 749;
Ford y. Fitchburg Rr. Co., 110 Mass.
240, 14 Am. Rep. 698; Shanny y. An-
droscoggin Mills, 66 Me. 420; Cum-
berland, etc., R. Co. y. State, 44 Md.
283, 8. c. 46 Md. 229; Brown y. Gil-
christ, 80 Mich. 66, 20 Am. St. Rep.
496; Rick y. Saginaw Bay Towing
Co., 132 Mich. 237, 102 Am. St Rep.
422; Ryan y. Bagaley, 60 Mich. 179,
46 Am. Rep. 35; Harper y. Indian-
apolis, etc., R. Co., 47 Mo. 667, 4 Am.
Rep. 353; Qormley y. Vulcan Iron
Works, 61 Mo. 492; Dowling y. Allen,
74 Mo. 13, 41 Am. Rep. 298; Brothers
y. Cartter, 52 Mo. 373, 14 Am. Rep.
424; Bushby y. N. Y., etc.. R. R. Co.,
107 N. Y. 374, 1 Am. St. Rep. 844;
Flike y. Boston, etc., R. R. Co., 53
N. Y. 549, 18 Am. Rep. 545; Corcoran
V. Holbrook, 59 N. Y. 517, 17 Am. Rep.
369; Malone y. Hathaway, 64 N. Y.
6, 21 Am. Rep. 573; Fuller y. Janett,
80 N. Y. 46, 36 Am. Rep. 576; Cowlos
y. Richmond, etc., R. Co., 84 N. C.
309, 37 Am. Rep. 620; Kelly Island,
etc., Co. y. Pachuta, 69 Ohio St 462»
100 Am. St. Rep. 706; Medra's Admr.
y. Holbrook, 20 Ohio St. 137, 6 Am.
Rep. 633; Schiglizzo y. Dunn, 211 Pa.
253, 107 Am. St Rep. 567; Mullan y.
Philadelphia, etc.. Steamship Co., 78
Pa. 26, 21 Am. Rep. 2; Clayln y.
Tinkham Co., 29 R. I. 599, 132 Am.
St Rep. 836; Gunter y. Graniteyille
Mfg. Co., 18 S. C. 262, 44 Am. Rep.
673; East Tennessee, etc., R. Co. y.
Duffield, 12 Lea (Tenn.), 63, 47 Am.
Rep. 319; SulUyan y. Wood & Co., 43
Wash. 259, 117 Am. St Rep. 1047;
Massy y. Milwaukee El. Ry. Co., 143
Wi€i.. 220, 139 Am. St Rep. 1096;
Johnson y. First Nat Bank, 79 WIA.
414, 24 Am. St Rep. 722; BrabbiU y.
Chicago, etc, Ry. Co., 38 Wis. 289.
79 See cases, 9upra.
1234
CHAP. IV]
DUTIES AND LIABILITIES QF PRINCIPAL
[§ 164I
although from the very nature of the case, the occasions or necessities
for the employment of such a general agent are much greater in the
ca»e of corporations than in that of individuals.^^
Where, however, the agent or servant in question not only performs
the duty of management or direction, but also, at times, joins with the
other servants in the performance of the service, he is, by the weight
of authority and reason, as to the latter class of duties to be regarded
not as a representative of the master but as a fellow servant.**
4. Negligence of Independent Contractor Performing Master's Duties.
§ 1641. Liable for negligence of independent contractor perform-
ing master's duties. — For similar reasons the same result should
follow where the master, instead of performing in person his duties
of furnishing a safe place to work, supplying proper tools and appli-
ances, and the like, makes a contract with one carrying on an inde-
pendent calling to perform them for him : he should still be held liable
if they are not performed, even though he has exercised due care in
the selection of the contractor. That is to say, reasonable care must
be exercised in furnishing a reasonably safe place, reasonably safe
tools and appliances, etc. If the master does not perform this duty
in person, his delegate must perform it. It must be performed by one
or the other. If either one performs it, the master is not liable,
though injury results. If neither one performs it, the master is lia-
ble, even though he selected his del^ate with due care. To this ef-
fect is the weight of authority,** though there are a few cases not
easily to be reconciled with this conclusion.*'
wSee cases, supra,
n See post, $ 1654.
See also, Crispin v. Babbitt. 81 N.
T. 616, 37 Am. Rep. 521; Madlgan ▼.
Oceanic Steam Navigation Co., 17S
N. Y. 242, 102 Am. St. Rep. 495:
Baler v. Selke, 211 111. 512, 103 Am.
St. Rep. 208.
«« Pullman Palace Car Co. v, Laack,
143 111. 242, 18 L. R. A. 215; Bern-
heimer v. Bager, 108 Md. 551, 129 Am.
St. Rep. 458; Sweat ▼. Boston & Al-
bany Rr. Co., 156 Mass. 284; Morton
▼. Detroit, etc., R. Co., 81 Mich. 423;
Burnes v. Kansas City, etc., R. Co.,
129 Mo. 41; Herdler v. Buck's Stove
Co., 136 Mo. 8; Story v. Concord Ifc
Montreal R., 70 N. H. 364; Trainor
V. Philadelphia ft Reading R. Co.,
137 Pa. 148 (but see Ardesco Oil Co.
V. Ollflon, 63 Pa. St. 146); OrtUp ▼.
Philadelphia, etc., Trac. Co., 198 Pa.
586; Moran v. Corliss Steam Engine
Co., 21 R. J. 386, 45 L. R. A. 267;
Gulf, Colo., etc., R. Co. v. Delaney,
22 Tex. Civ. App. 427; Walton v.
Miller. 109 Va. 210, 132 Am. St Rep.
908; Vickers v. Kanawha, etc., Ry.
64 W. Va. 474. 131 Am. St. Rep. 929,
20 L. R. A. (N. S.) 793; Toledo
Brewing & Malting Co. v. Bosch, 101
Fed. 530, 41 C. C. A. 482; MacdoQald
V. Wyllie ft Son, 1 Scotch Sess. Cases,
6th Ser., 339.
«« Devlin v. Smith, 89 N. Y. 470, 42
Am. Rep. 311. See also, Stourbridge
1235
^ X642]
THE LAW OF AGENCY
[book IV
§ Z643. When liable to agents of contractor.— Care should be
taken, however, to distinguish between the case considered in the last
section, and that of the servant of an independent contractor who has
.undertaken to perform certain services for the principal, and to fur-
nish the necessary machinery, appliances and labor. The agent or
servant of such a contractor could not be considered to be the agent or
servant of the principal, nor could the contractor himself be consid-
ered such an cuter ego of the principal as to render the latter liable,
to a servant or agent of the contractor, for an injury occasioned by
the neglect of the contractor in furnishing and keeping in repair the
necessary machinery, or in employing or retaining incompetent serv-
ants.** The principal would, however, be liable to the servant or agent
of the contractor for an injury received from perils or dangers in the
principal's premises, where such servant or agent had a right to be.
V. Brooklyn City R. Co., 9 App. Dlv.
(N. T.) 129; Kaye t. Rob Roy Hos-
iery Co., 51 Hun (N. y.), 619; Carl-
son V. Phoenix Bridge Co.. 55 Hun
(N. Y.), 485; Butler v. Townsend,
126 N. Y. 106; Norfolk, etc., R. Co. v.
Stevens, 97 Va. 631. 46 L. R. A. 367
(distinguished in Walton v. Miller,
109 Va. 210 cited in the following
note).
Kiddle V. Lovett, 16 Q. B. DIY. 606.
Buying from reputable manufac*
turers. — It is held in a number of cases
that where the master buys tools, ma-
chinery, supplies, etc., of a reputable
manufacturer by whom they have
been tested, and himself subjects
them to such inspection or examina*
tion as is usual and practicable in
such cases, he has exercised due care
and is not liable for latent defects.
He is not obliged to tear it to pieces
or destroy it in search for latent de-
fects. See Taylor v. Centralla Coal
Co., 155 111. App. 324; Kansas City,
etc.. R. Co. V. Ryan. 52 Kan. 637; Shea
V. Wellington, 163 Mass. 364; Reyn-
olds V. Merchants* Woolen Co., 16S
Mass. 501; Fuller v. New York, etc.,
R. Co., 175 Mass. 424; Mooney v.
Bcattie. 180 Mass. 451, 70 L. R. A.
831; but not if he was not a manu*
facturer of that sort of article. Mur-
phy V. Huber-Hodgman Printing Press
Co., 203 Mass. 549; Grand Rapids,
etc.. R. Co. V. Huntley, 38 Mich. 637;
Dompier v. Lewis, ISl Mich. 144;
Jenkins v. St Paul R. Co. 106 Minn.
604, 20 L. R. A. (N. 8.) 401; Tall-
man y. Nelson, 141 Mo. App. 478 (es-
pecially In the case of simple and
familiar articles, like a delivery
wagon); Carlson v. Phoenix Bridge
Co.. 132 N. Y. 273.
Master owes no duty of inspecting
befc^e delivering to the servant far
use where the servant who uses it
is in the best situation to inspect it
before he uses it. Gibson v. Milwau-
kee Light, etc., Co., 144 Wis. 140.
.See also, Wachsmuth v. Shaw Blec-
tric Crane Co., 118 Mich. 276; Long-
pre V. Big Blackfoot MilL Co., 38
Mont 99; Gulf, etc., R. Co. v« Lar-
kin, 98 Tex. 225. 1 L. R. A. (N. S.)
944.
But in Hailey-Ola Coal Co. v. Park-
er, 32 Okla. 642. 40 L. R. A. (N. S.)
1120 it is said 4Jiat it is not enough
to buy of a reputable manufacturer,
but that the master, before starting
the use of the new article, is bound
to submit it to reasonable inspection,
and of this the Jury is the Jadge.
•4KnoxviIle Iron Co. ▼. Dobson, 7
Lea (Tenn.), 367; King v. New York,
etc., R. R. Co., 66 N. Y. 181, 28 Am.
Rep. 37.
1236
.CHAP. JV]
DUTIES A^0 LIABILITIES OF PRINCIPAL
[§ 1642
of which the principal had knowledge but of which the agent or serv-
ant was left in ignorance. This liability does not rest upon the rela-
tion of principal and agent, or of master and servant, but upon the
broad and familiar principle that every man who expressly or by im-
plication invites others to come upon his premises, assumes to all who
accept the invitation, the duty of warning them of any danger in com-
ing, which he knows of or ought to know of, and of which they are
not aware.*" So if the principal was by the terms of the contract un-
der obligation to the contractor to furnish the necessary machinery or
appliances, or to supply a portion of the labor, it is held that he will
be liable to the agent or servant of the contractor for an injury sus-
tained by reason of his neglect to use due and reasonable care in select-
ing and keeping in repair the proper machinery or appliances, or in em-
ploying and retaining competent servants, not upon the ground of any
contractual relation between himself and the person injured, but, ac-
cording to some cases, upon the inherently dangerous character of the
thing he furnishes," and, according to others, **upon a failure to per-
M SamuelBon v. Cleveland Iron
Mining Co., 49 Mich. 164» 43 Am. Rep.
456; Southcote v. SUnley, 1 H. & N.
247; Indermaur v. Dames, L. R. 1 C.
P. 274, B. c. 2 Id. 811; Francis ▼.
Cockrell. L. R. 5 Q. B. 184; Elliott v.
Pray, 10 Allen (Mass.), 378, 87 Am.
Dec. 6S3; Coughtry v. Woolen Co., 56
N. Y. 124, 15 Am. Rep. 387; Tobln v.
Portland, etc., R. R. Co., 59 Me. 183,
8 Am. Rep. 415; Latham v. Roach, 72
111. 179; Gillis v. Pennsylvania R. R.
Co., 59 Pa. 129, 98 Am. Dee. 317;
Malone v. Hawley, 46 Cal. 409; De-
ford V. Keyser, 30 Md. 179; Pierce v.
Whitcomb, 48 Vt. 127. 21 Am. Rep.
120; Pugmire v. Oregon Short Line
Ry., 33 Utah. 27, 13 L, R. A. (N. a)
565, 14 Ann. Cas. 384.
88 Coughtry v. Globe Woolen Co., 56
N. Y. 124, 15 Am. Rep. 387, is the
leading case. In this case, 0 con-
tracted to put a cornice on defend-
ant's mill, defendant agreeing to
erect the necessary scaffolding free
of cost to O. Defendant erected the
scaffolding so negligently that it fell,
killing a servant of O, who was at
work upon it. It was held that de-
fendant was liable. The court dis-
tinguished the case from Winterbot-
tom V. Wright, 10 M, A W. 109; Long-
meld ▼. Halliday, 6 Eng. Law & £4.
761; Loop V. Litchfield, 42 N. Y. 351.
1 Am. Rep. 543; Losee v. Clute, 61 N.
Y. 494, 10 Am. Rep. 638. The scaf-
folding here was fifty feet high, ''and
unless properly constructed would
be a most dangerous trap, imperilling
the life of any person who might go
upon it."
The same principle was announced
in Devlin v. Smith, 89 N. Y. 470, 42
Am. Rep. 311, in holding liable the
contractor who defectively construct-
ed a scaffold about ninety feet higb.
The caae was said to fall within the
principle of Thomas v. Winchester, 6
N. Y. 897, 57 Am. Dec. 455 (the case
of a druggist who carelessly labeled
a deadly poison as a harmless drug
and was held liable to one with
whom there was no privity of con-
tract).
In Kahner v. Otis Elevator Co., 96 N.
Y. App. Div. 169, the case is put upoiB
the ground that, though the machine
may not be inherently dangerous, yet
if it is made so by the neglect of the
manufacturer, having notice and
knowledge that it is to be used by
1237
§' i643]
THE LAW OF AGENCY
[book IV
form a duty assumed by one which results in injury to another/' " a
principle so broadly stated as to be of doubtful accuracy.
5. Negligence of FeUow-servant.
§ 1643. Master not liable to one servant for negligence of a fel-
low-servant.— The liability of the master to third persons for the neg-
ligence or misconduct of his servant is discussed in another chapter.
As will there be seen, the master is held liable to third persons in
many cases even though he is not personally at fault, and has done all
that could reasonably be done to prevent the causing of injury. This
rule imposing liability where there is no blame, is, in itself, an excep-
tion to a wider principle that every person shall answer for his own
misconduct only ; it often works great hardship upon innocent masters,
and is difficult to account for except upon considerations of expe-
diency rather than natural justice. Nevertheless it had become firmly
established in our law for many years before the question arose
whether the same exceptional rule should be extended to cases in which
the person injured was not a stranger but a fellow-servant working
for the same master and engaged in furthering the same general enter-
prise. The question was first suggested in an English case *' arising
in 1837, and was first maturely considered in an American case** de-
cided in 1842, which has since been regarded both in England and
America as the leading case upon the subject. It was urged that the
established rule was that the master should answer, and therefore he
should be made answerable here. But it was pointed out by Chief
Justice Shaw that the rule of respondeat superior was a rule applicable
to the case in which the person injured was a stranger, and that the
others than the purchaser, he wHl
be liable to such user.
S7 This is the language used in Mo*
Mullen V. New York, 110 N. Y. App.
Dlv. 117, followed in Dougherty v.
Weeks, 126 N. Y. App. Div. 786. See
also, Jewell v. Kansas City Bolt Co.,
231 Mo. 176, 140 Am. St. Rep. 515.
88 Priestly ▼. Fowler, 8 M. & W. 1.
8BFarwell v. Boston ft Worcester
R. Co., 4 Mete. (Mass.) 49, 38 Am.
Dec. 339.
The case of Murray ▼. South Caro-
lina R. Co., 1 McMull. L. (S. Car.) 385,
36 Am. Dec. 268, was decided a year
before the Farwell case and reached
the same result, though the court was
divided in opinion. The great repu-
tation of Chief Justice Shaw, the
standing of the court, and the unani-
mity of opinion of the Judges* as
well as the careful consideration be-
stowed upon the case, have operated
to make the Farwell case the lead-
ing case upon the subject, both
American and English courts having
accepted its reasoning as conclusive.
The Farwell case has often been re-
ferred to in the English cases and is
reprinted in 8 Macq. 316. See Bar-
tonshill Coal Co. v. Reid, 3 Macq.
266; Coldrick ▼. Partridge, [1909] 1
K. B. 530.
1238
CHAP. IV]
DUTIES AND LIABIUTIES OF PRINCIPAL
IS 1644
considerations which support the rule have no application to the case
of a fellow-servant. There being, then, no established rule for such
a case, it must be decided in contemplation of the contract between
the parties and such considerations of policy as should be thought to
be applicable. Considerations of policy were thought to lead to the
conclusion that the safety of the servants and the public would be pro-
moted if the servants were left with no other remedy for an injury
than recourse to the fellow-servant who caused it, thus making each
solicitous for the safety of all. From the standpoint of the contract,
it was held that inasmuch as the servant presumptively knew, at the
time he entered upon the employment, what the ordinary risks and
perils of the business were, and that this was one of them, and had
not stipulated for protection by the master, and was, further, at liberty
to insist upon a compensation commensurate with the risks, it was
fair to presume that he had assumed this risk along with the other
risks of the business, in consideration of the compensation paid to
him. It was therefore held that the servant could not recover, where
the master had been guilty of no fault in selecting or retaining the
servant or otherwise.
§ 1644. Although sometimes dissented from, this doctrine
has been generally adopted, and the principle is now firmly established,
both in England and the United States, that a master is not liable to
one servant for an injury received by the latter, resulting from the
negligence, carelessness or misconduct of a fellow-servant engaged
in the same general business.*** As has been stated, it is inevitable in
«oThe cases upon this point are
exceedingly numerous, and no at-
tempt will be made to cite them all.
But the following are among the
number: Priestly v. Fowler, 3 M. &
W, 1; Hutchinson v. York, etc., Ry.
Co., 5 Ex. 343; Wigmore v. Jay, 5 Ex.
354; Clarke v. Holmes, 7 H. & N. 937;
Wlggett V. Fox, 11 Ex. 832; Degg v.
Midland Ry. Co., 1 H. & N. 773; Bar-
tonshlll Coal Co. v. Reid, 3 Macq. 266;
Bartonshill Coal Co. v. McGuire, 8
Macq. 300; Coldrick v. Partridge,
[1909] 1 K. B. 530; Burr v. Theatre
Royal, [1907] 1 K. B. 544; Tenn.,
etc.. R. Co. V. Bridges, 144 Ala. 229,
113 Am. St Rep. 35; Southern Pa-
cific Co. V. McOiU, 6 Ariz. 36; St.
Louis, etc.. Rr. Co. v. Triplett, 54
Ark. 289, U U R. A. 773;Beeson v.
Green Mountain G. M. Co., 57 Cal. 20;
Novelty Theater Co. v. Whitcomb, 47
Cal. 110, 37 U R. A. <N. S.) 514;
Colorado, etc., R. Co. v. Ogden, 3 Colo.
499; Peterson v. New York, etc., Rr.
Co., 77 Conn. 351; Taylor v. Bush,
etc., Co. 5 Pennewill (Del.), 378;
Hughson V. Richmond, etc R. Co..
2 App. Cases (Dist. of Cal.) 98; Par-
rish v. Pensacola R. Co., 28 Fla. 251;
Shields v. Tonge, 15 Ga. 349, 60 Am.
Dec. 698; Larsen v. Le Doux, 11
Idaho, 49; Hlinois, etc., R. R. v. Cox, il
ni. 20; Chicago, etc., R. v. Keefe, 47
Id. 108; Columbus, etc., Ry. v.
Troesch, 68 Id. 545, 18 Am. Rep. 578;
Indianapolis, etc.. Transit Co. v. Fore*
man, 162 Ind. 85, 102 Am. St. Rep.
185; Ohio, etc., R, R. v. Tindall, 13 Ind.
366; Wilson v. Madison, etc., R. Co.»
1239
i I6441
THE 1.AW OP AGENCY
['BOOK 'IV
those employments in which the servant is liable to oome^ contact
with other servants, engaged in the same general business, that he
will incur more or less of risk from their negligence or default, but
18 Id. 226; Gormley v. Ohio, etc., R7.
Co., 72 Id. 31; Ohio, etc., Ry. Co. v.
Collarn, 73 Id. 261, 3S Am. Rep. 134;
Robertson v. Terra Haute, etc.> R. Co.,
78 Ind. 77, 41 Am. Rep. 652; Helf-
rich T. Williams, 84 Ind. 553; CoUing-
wood V. Illinois, etc.. Fuel Co., 125
Iowa, 537; Atchison ft E* Bridge Co.
V. MiUer. 71 Kan. 13, 1 L. R. A. (N,
8.) 682; Ft. Hill Stone Co. v. Orm. 84
Ky. 183; Louisville, etc., R. Co. v.
Collins, 2 Duv. 114; Hubgh v. N. O.
ftC. R. Co., 6 La. Ann. 495, 54 Am.
Dec. 565; Satterly v. Morgan. 35 La.
Ann. 1166; Osborne v. Knox, etc., R.
R., 68 Me. 49; Blake y. Maine Central
R. Co., 70 Id. 60, 35 Am. Rep. 297;
(yConnell v. Baltimore, etc., R. Co.,
20 Md. 212; Shauck v. Northern, etc.,
Ry. Co., 25 Id. 462; Cumberland Coal
Co. r. Scally, 27 Id. 589; Hanrathy
y. Northern, etc., Ry. Ca, 46 Id, 280;
Pennsylvania R. Co. y. Wacht^r, 60
Id. 395; Kelley v. Norcross, 121 Mass.
508; Harkins y. Standard Sugar Re-
finery, 122 Id. 400; Colton y. Richards,
123 Id. 484; Kelley y. Boston Lead
Co., 128 Id. 456; Curran v. Merchant's
Mfg. Co., 130 Id. 374. 39 Am. Rep.
457; McDermott y. City of Boston,
183 Mass. 849; Flynn y. City of Sa-
lem, 184 Id. 351; Floyd y. Sudgen, Id.
563; Day v. Toledo, etc., Ry. Co., 42
Mich. 523; Smith v. Flint, etc., Ry.
Co., 46 Id. 258, 41 Am. Rep. 161;
Greenwald y. Marquette, etc., R. Co.,
49 Mich. 197; Brown v. Winona, etc.,
R« Co., 27 Minn. 162, 38 Am. Rep. 285;
Collins v. St. Paul, etc., R. Co., 30
Minn. 31; Brown y. Minneapolis, etc.,
Ry. Co., 31 Id. 553; McMaster y. IHi-
nois Cent. R. Co., 65 Miss. 264, 7 Am.
St Rep. 653; Chicago, etc., R. Co. y.
Doyle, 60 Miss. 977; Parker y. Han-
nibal, etc., R. Co., 109 Mo. 862, 18 U
R. A. 802; Brothers y. Cartter, 52 Mo.
373, 14 Am. Rep. 424; Conner y. Chi-
oago, etc., R. Co., 59 Mo. 286; Hast-
ings T. Montana Union R; Co., 18
Mont. 493; Chicago, etc, R. Co. r,
Sullivan, 27 Neb. 673; Manning y.
Manchester Mills, 70 N. H. 582; Mc-
AndrewB v. Burns, 89 N. J. L. 117;
Bnrlght y. Olfyer, 69 N. J. L. 867, 101
Am. St. Rep. 710; Lnts y. Atlantic;
etc., R. Co.. 6 N. M. 496, 16 L. R.
A. 819; Sherman y. Rochester, 6tc.,
R. Co., 17 N. Y. 163; Laning y. N. Y.
Cent R. Co., 49 Id. 621, 10 Am, Rep.
417; Crispin y. Babbitt 31 N. Y. 516,
37 Am. Rep. 521; McCosker y. Long
Island R. R. Co., 84 N* Y. 77; Harvey
y. N. Y. Cent., etc., R. Ca, 88 Id. 481;
Young y. N. Y., etc., R. Co., 30 Barb.
229; Marvin y. Muller, 25 Hun, 163;
Cowles y. Richmond, etc., R. Co., 84
N. C. 809, 87 Am. Rep. 620; Bll y.
Northern Pac. R. Co., 1 N. D. 336, 26
Am. St. Rep. 621, 12 L. R. A. 97;
Kelly Island Lime, etc.. Co. v. Pach-
nta, 69 Ohio St 462, 100 Am. St Rep.
706; Columbus, etc., R. Co. y. Webb,
12* Ohio St 475; Pittsburg, etc., Ry.
Co. v. Devlnney, 17 Id. 197; Lake
Shore, etc., Ry. Co. y. Knittal, 33 Id.
468; Railway Oa y« Ranney, 37 Id.
665; McCabe y. Wilson, 17 Okla. 355;
Knahtla y. Oregon Short Line Rr, Co.,
21 Ore. 136; Wniis y. Oregon, etc.,
R. R., 8 West Coast R^p. 240 (Or.);
Weger y. Pennsylvania R. Co., 55 Pa.
St. 460; Lehigh Valley Coal Co. y.
Jones, 86 Id. 432: Delaware, etc.,
Canal Co. v. Carroll, 89 Pa. St 374:
Keystone Bridge Co. y. Newberry. 96
Id. 246, 42 Am. Rep. 543; Mann y.
Oriental Print Works, 11 R. I. 152;
Lasure y. Graniteville Mfg. Co., 18 S.
C. 275; Cuntir y. Graniteville Mfg.
Co., Id. 262, 44 Am. Rep. 573; Gates
y. Chicago, etc., Ry. Co., 45 D. 433;
Ragsdale y. Memphis, etc., R. R., 3
Baxt (Tenn.) 426; Nashville, etc., R.
R. y. Wheless, 10 Lea (Tenn.), 741,
43 Am. Rep. 317; Houston, etc., R.
Co. y. Myers, 55 Tex. 110; Texas
Mexican Ry. Co. y. Whitmore, 68 Id.
276; Pool y. Southern Pacific 60i, 99
1240
,CHAP. IV]
DUTIES i^ND LIABILITIES OP PRINCIPAL
1§'I^
.this is oueof the. risks incident to the business, and, by accepting^, the
employment, the servant assunies this with the others.
. The servant, ?it the same time, has a right to rely upon the prind-
pal's performance of his duty to use due and reasonable care and dili-
gence tp select and retain none but reasonably competent, and careful
servants. If, therefore, as has been seen, the servant receives injury
by reason of the employment of a iellow servant, who was employed,
or who has been retained, in violation of this duty of the master's,
th^ master, subject to the further doctrine of the assumption of risks,
is liable.** -
Utah, 210; Davis V. Central Vermont
R. Co., 56 Vt. 84; 45 Am. Rep. 590;
Norfolk, etc., Rr. Co. v. Nuckola, 91
Va. 193; Metzler v. McKenzie, 34
Wash. 470; Cochran v. Shanahan, 51
W. Va. 137; Brabbits v. Chicago, etc.,
R. Co.. IS WlB. 2S9; Naylor v. Chi-
cago, ete., Ry. Co., 58 Id. 6«1; How-
land V. Mi)watike€, etc., Ry. Co., 54 Id.
226; Hotfa V. Poters. 55 Id. 405; Whit-
nam t. Wlsconsint etc., R. Co., 68 Id.
408; Heine v. Chicago, etc., Ry. Co.,
Id. 626; McBrlde ▼. Union Pac. Ry.
Co., 3 Wyo. 248; Northern Pacific Rr.
Co. T. Peterson, 162 U. S. 346, 40 L.
Ed. 994; Baltimore ft Ohio R. Co. v.
Baugh, 149 U. S. 868, 37 L. Ed. 772;
Chicago, etc., Ry. Co. r. Ross, 112 U.
S. 877, 28 L. Ed. 787; Randall v. Balti-
more A Ohio R. Co., 109 U. S. 478, 27
L, Ed. 1003; New England R. Co. ▼.
Conroy, 176 U. S. 323. 44 L. Ed. 181;
Hough V. Railway Co., 100 U. S. 213,
26 h. Ed. 612; Halverson v. Nisen, 3
Saw. <U. 8. C. C.) 662; Melville ▼.
Mlssonri River, etc., R. R., 4 McCrary
(U* S. 0. O.), 194; Yager v. Atlantic,
etc.. R. Co., 4 Hnghes (U. S. C. C),
192; Jordan v. Wells, 3 Woods (U. S.
C. C). 527; Thompson t. Chicago,
etc.. Ky. Co., 18 Fed. Rep. 239; Crew
T. St. Louis, etc., Ry. Co., 20 Id. 87.
in/ant».— The fact that the servant
injured was an infant (unless where
be was a child too young to have re-
sponsibility imputed to him), does
not affect tho rule. Houston, etc.. R.
Co. V. Miller, 61 Tex. 270; Pisk y.
Central Pac R. Co., 72 Cal. 38, 1 Am.
St Rep. 22; King v. Boston, etc., R.
Co., 9 Cush. (Mass.) 112.
•1 First Nat. Bk. v. Chandler. 144
Ala. 286, 113 Am. St Rep. 39; Daves
V. Southern Pacific Co.. 98 Cal. 19. 35
Am, St, Rep. 133; Keith t. Walker
Iron & Coal C^.. 81 Ga. 49. 12 Am. St
Rep. 296; Western Stone Co. v.
Whalen. 151 HI. 472. 42 Am. St Rep.
244; Hinckley v. Horazdowsky, 133
111. 369, 23 Am. St Rep. 618, 8 L. R.
A. 490; Illinois Cent R. CJo. v. Jew-
ell. 46 111. 99, 92 Am. Dec. 240; lu-
dlanapolis. etc.. Transit Co. v. Fore-
man. 162 Ind. 85. 102 Am. St Rep.
185; New Pittsburg Coal A Coke C!o.
T. Peterson, 136 Ind. 398, 43 Am. St
Rep. 327; Norfolk, etc., R. Co. v.
Hoover, 79 Md. 253, 47 Am. St Rep.
892, 25 L. R. A. 710; Snow v. Housa-
tonic, etc., R. Co., 8 Allen (Mass.),
441. 85 Am. Dec. 720; Walkowski v.
Consolidated Mines, 115 Mich. 629, 41
L. R. A. 33; McMaster v. Illinois Cent
R. Co., 65 Miss. 264, 7 Am. St Rep.
653; Smith v. St Louis, etc., R. Co.,
151 Mo. 391, 48 L. R. A. 368; Harper
V. Indianapolis, etc., R. Co., 47 Mo.
567, 4 Am. Rep. 353; Enright v. Oli-
ver, 69 N. J. Ia 357, 101 Am. St Rep.
710; Wright v, N. Y. Cent R. Co.. 25
N. Y. 562; Handley v. Daly Mining
Co., 15 Utah, 176, 62 Am. St Rep. 916;
Noyes v. Smith. 28 Vt 63, 65 Am.
Dec. 222; Big Stone Gap Iron Co. v.
Ketron, 102 Va. 23, 102 Am. St Rep.
839; Maitland v. Gilbert Paper Ca,
97 Wis. 476. 65 Am. St Rep. 137;
Zabawa v. Oberbeck Mfg. Co., 146 Wis.
1241
§§ 1645-1647]
THE LAW OF AGENCY
[book Vf
§ 1645-
- So, too, as it is those risks only which are incident
to his employment, which the servant assumes, he does not assume the
responsibility for negligence or misconduct of other servants engaged
in another and different employment.**
g 1646. Moreover, if the master has been guilty of action-
able negligence, the fact that the negligence of a fellow servant con-
tributed will not defeat the servant's right of recovery against the mas-
ter.*»
g 1647. — — Of course, the doctrines here considered do not
affect the liability of the servant, whose negligence caused the injury,
to the servant injured. As has been pointed out in other sections, the
servant is usually liable for his own negligence, even though the law
makes the master liable also, and there is nothing in the fellow servant
situation to change that liability.**
621, Ann. Caa. 1912 C. 419; Southern
Pacific Co. V. Hetzer, 68 C. C. A. 26,
1 L. R. A. (N. S.) 288; Baltimore,
etc., Rr. Co. v. Baugh, 149 U. S. 368,
37 L. Ed. 772.
>2 This Is, of course, true under the
departmental theory. Pool v. Chica-
go, etc., Ry. Co., 56 Wis. 227; Cum-
berland, etc., R. R. Co. V. State, 44
Md. 283; Green v. Banta, 48 N. Y.
Super. 156, 97 N. Y. 627; Nashville,
etc., R. R. Co. v. Jones, 9 Heisk.
(Tenn.) 27; Sheehan v. New York;
etc., R. R. Co., 91 N. Y. 332; Shanny
r. Androscoggin Mills. 66 Me. 420.
But the same rule applies where,
though the master was the same, the
employments were different; Bain v.
Athens Foundry, etc., Works, 75 Ga.
718; McTaggart v. Eastman's Co., 27
N. Y. Misc. 184; Connolly v. Davidson,
15 Minn. 519. 2 Am. Rep. 154; Indi-
ana Pipe Line Co. v. Neusbaum, 21
Tnd. App. 361; Sell v. Lumber Co., 70
Mich. 479.
»8 Flsk V. Central Pac. Ry. Co., 72
Cal. 38, 1 Am. St. Rep. 22; Farrell v.
Eastern Mach. Co., 77 Conn. 484, 107
Am. St. Rep. 45, 68 L. R. A. 239; Love-
less V. Standard Gold Min. Co., 116
Ga. 427, 59 L. R. A. 596; Slegel-Cooper
ft Co. V. Trcka, 218 111. 559, 109 Am.
St. Rep. 302, 2 L. R. A. (N. S.) 647;
Illinois, etc., R. Co. v. Marshall, 210
111. 562, 66 L. R. A. 297; Eureka
Block Co. V. Wells, 29 Ind. App. 1, 94
Am. St. Rep. 259; Schwansschlld, etc,
Co. V. Weeks, 72 Kan. 190, 4 Lu R. A.
(N. S.) 515; Fuller v. Tranont Lbr.
Co., 114 La. 266, 108 Am. St Rep. 348;
Noble V. Bessemer S. S. Co., 127 Mich.
103, 54 L. R. A. 456; Franklin y.
Winona, etc., R. Co., 37 Minn. 409, 5
Am. St. Rep. 856; Root v. Kansas City,
etc., R. Co., 195 Mo. 348, 6 L. R. A.
212; Copi^inB ▼. N. Y., etc., R. Co.,
122 N. Y. 557, 19 Am. St. Rep. 623;
Railroad Co. v. Spence, 93 Tenn. 173,
42 Am. St. Rep. 907; Merrill v. Ore-
gon Short Line R. Co., 29 Utah, 264,
110 Am. St. Rep. 695; Norfolk, etc.,
R. Co. V. Thomas, 90 Va. 205, 44 Am.
St. Rep. 906; Howe v. Northern Pac.
R. Co., 80 Wash. 569, 60 L. R .A. 949;
Grant v. Keystone Lbr. Co., 119 Wis.
229, 100 Am. St. Rep. 888; Chicago
Junction Ry. Co. v. King, 169 Fed.
372, 94 C. C. A« 652.
The same result would follow where
there was negligence of a servant,
not a fellow servant, though the neg-
ligence of a fellow servant also con-
tributed. Kansas City, etc, R. Co. v.
Becker, 67 Ark. 1, 77 Am. St. Rep.
78, 46 L. R. A. 814.
B4 Osborne v. Morgan, 130. Mass. 102,
39 Am. Rep. 437; Hinds v. Overacker,
66 Ind. 547, 32 Am. Rep. 114; Rogers
1243
CHAP. IV]
DUTIES A1«ID LIABILITIES OF FRINCIPAL [§§ 1648-I65O
§ 1648.
The fact that the servant injured is a superior
servant, who might not be regarded in ^11 states as a fellow servant of
a servant injured by his negligence,®'* does not af{ect the master's ex-
emption from liability under the general rule. The negligent servant is
a fellow servant of the superior servant for this purpose, even if the
superior servant might not be deemed a f eUow servant if the other serv-
ant had been injured by the superior servant's negligence.*'
§ 1649. Who is a fellow-servant? — Although it is thus firmly es-
tablished in English law, where not changed by statute, that the mas-
ter is not liable to one servant for injuries caused by the negligence of
a fellow servant, the principles upon which it shall be determined who
is a fellow servant within this rule have not been everywhere agreed
upon. Among the reasons given for the rule in the leading American
case •^ was that the servants, because of their association in the labor,
were so situated that each could be an observer of the conduct of the
others, could exert influence over the others for securing his own safety
and could give notice to the master of any misconduct, incapacity or
neglect of duty on the part of his fellow servant,
§ 1650. Association rule. — Seizing upon this theory, as
the leading argument in support of the rule, the courts in several of the
states, notably in Illinois,** have adopted what is sometimes called the
consociation or association rule, which limits the application of the
general rule to those servants "who are co-operating at the time of the
injury in the particular business in hand, or whose' usual duties are of
the nature to bring them into habitual association or into such rela-
tions that they can exercise an influence upon each other promotive of
proper caution/' ••
T. Overton, 87 Ind. 410; Hare v. Mc-
Intlre, 82 Me. 240, 17 Am. St. Rep.
476, 8 L. R. A. 450; Griffiths v. Wolf-
ram, 22 Minn. 185; Durkin v. Kings-
ton Coal Co., 171 Pa. 193, 50 Am. St.
Rep. 801, 29 L. R. A. 808; Lawton v.
Waite, 103 Wis. 244, 45 L. R. A. 616.
»fi See post, S 1652.
••McGrory v. Ultima Thule, etc.,
Ry. Co., 90 Ark. 210, 134 Am. St. Rep.
24, 23 L. R. A. (N. S.) 301.
97 Farwell v. Boston, etc, R. Co.,
4 Mete. (Mass.) 49, 38 Am. Dec. 339.
M Chicago, etc., R. Co. v. Moranda,
93 111. 302, 84 Am. Rep. 168; Illinois
Steel Co. y. Ziemkowski, 220 111. 324,
4 L. R. A. (N. S.) 1161; Chicago Citj
Ry. Co. V. Leach, 208 Uh 198, 100 Am.
St. Rep. 216; Illinois Steel Co. v. Ban-
man, 178 111. 351, 69 Am. St. Rep. 816;
Aldrich v. Illinois Cent R. Co., 241
III 402, 132 Am. St Rep. 220.
(This list does not purport to be
complete.)
99 A number of states are often
cited as those in which the associa-
tion rule prevails, but in several of
them it is certain that if the rule
ever prevailed, it no longer does so or
is treated as part of the departmental
rule.
See St Louis, etc, R. Co. v. Weav-
er, 35 Kan. 412, 57 Am. Rep. 176.
Compare Atchison A H Bridge Co. v.
1^3
§§ 1651,1652]
THE LAW OF AGENCY
[SCX>K IV
§ 165I.
Departmental rule. — It was also contended in the
leading case referred to that where the master's business was an ex-
tensive one the rule should only apply to those servants who were
working tc^ether in the same general department. This rule was re-
jected in that case as impracticable of application, but a number of
courts have made it the basis of a distinction.^
§ 1652. Superior servant distinction. — It has further been
held that where one servant, who might otherwise be regarded as a
fellow servant, was given the power of direction and control over other
servants, while engaged in the performance of the work, even though
the nature of his duties did not bring him within the field of the gen-
eral manager or the vice-principal, he was, by reason of such power of
control, distinguishable from the other servants working under him
sund was not to be regarded as a fellow servant with them when one of
them is injured by his negligence."
MiUer, 71 Kan. 13, 1 L. R. A. (N. a) ruled. See Oolumbus, etc., Ry. Co
682.
In Kentucky, see Louisville, etc.,
Ry. Co. V. Edmund's Admr., 23 Ky.
Law Rep. 1049; LouisYllle, ete., Ry.
Co. V. Hibbltt, 139 Ky. 43, 139 Am.
St. Rep. 464; Louisville, etc., Ry. Co.
V. Brown, 127 Ky. 782, 13 L. R. A.
(N. S.) 1135.
In Utah, see Dryburg v. Mercur
Gold Mining Co., 18 Utah, 410; though
this case was largely affected by the
Utah statute. Compare Stephanl v.
Southern Pacific Ry., 19 Utah, 196;
Pool V. Southern Pacific Co., 20 Utah,
210.
In Missouri, compare Relyea t.
Kansas City, etc., Ry. Co., 112 Mo. 86,
18 L. R. A. 817, with Grattls v.
Kansas City, etc., Ry. Co.» 153 Mo. 380,
77 Am. St. Rep. 721, 48 L. R. A. 399.
la Nebraska, see Union Pacific Ry.
Co. V. Erickson. 41 Neb. 1. 29 L. R.
A. 187.
(No attempt has been made to col-
lect all of the cases.) *
1 See Leouls v. Bancroft, 114 La.
105; Louisville, etc., R. Co. v. Lome,
118 Ky. 260, 65 L. R. A. 122; Pool
V. Southern Pacific Co., 20 Utah, 210.
In Indiana the earlier cases so held.
See Fitzpatrlck ▼. N. A., etc., R. Co.,
7 Ind. 486. But they were soon over^
v. Arnold, 31 Ind. 174, 99. Am. Dec.
615; Gormley t. Ohio, etc., Ry. Co.,
72 Ind. 31.
In Missouri, see Grattls v. Kansas
City, etc.. Ry. Co., 153 Mo. 380, 77
Am. St. Rep. 721, 48 L. R. A. 399;
Koemer v. St. Louis Car Co., 209 Mo.
141. 17 L. R. A. (N. S.) 292.
In Tennessee the rule is restricted
to railroads. See Coal Creek Mining
Co. V. Davis, 90 Tenn. 711; Louisville,
etc., Rr. Co. v. Dillard. 114 Tenn. 240,
108 Am. St Rep. 894, 69 L. R. A. 746.
The California statute of 1907
adopts this distinction. Judd v. Letts,
158 Cal. 359, 41 L. R. A. (N. S.) 156.
> The superior servant doctrine was
early announced in Ohio in Little
Miami R. Co. v. Stevens (1851), 20
Ohio, 416, and was followed in that
state and others, several of which
have since repudiated it. In Ohio,
see Cleveland, etc., R.-Co. v. Keary. 8
Ohio St. 201; Pittsburgh, etc., Railway
Co. V. Ranney, 37 Ohio St. 665; Cleve-
land, etc., R. Co. V. Shanower, 70
Ohio St. 166; Berea Stone Co. v.
Kraft, 31 Ohio St. 287, 27 Am, Rep.
510.
The most potent influence, however,
in spreading this doctrine was un-
doubtedly the case of Chicago, etc..
1244
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
t§ 1653
§ 1653.
The general rule. — ^The departmental rule and the
consociation rule have been found difficult of application* and have
not been generally followed. The superior servant rule, so far as it is
based on the mere fact that one servant is given the power to control
or direct the performance of the work, fails to recognize that Che giving
of such directions may be as essential and inseparable a part of the
work as the obedience to them, and it therefore rests on no logical dis-
tinction.*
The great weight of authority in the United States ignores these dis-
tinctions and holds all to be fellow servants who are in the employment
of the same master, engaged in the same general business and employed
in furthering the same general purpose.
Ry. Co. v. Rofls (1884), 112 U. S. 377,
as U Ed. 787, overruled in fact In
BalUxEKwe, etc.» R. Co. v. Baugh, 149
U. S. 368, 87 L. Ed. 772, and formally
in New England R. Co. v. Conroy, 176
U. S. 323, 44 U Ed. 181.
Some state courts which followed
the Robs case have since overruled
their own holdings to conform with
the Baugh and Conroy cases. Wis-
consin has applied much the same
rule in cases involving the use of
electrical current. Massy v. Milwau-
kee Electric Ry. Co., 143 Wis. 220,
30 L. R. A. (N. S.) 814.
For the general doctrine, see Con*
solidated Coal Co. v. Wombacher, 134
lU. 57; Chicago ft Alton R» Co. v.
May, 108 111. 288; Spencer v. Brooks,
97 Ga. 681; Walker v. Gillett, 59 Kan.
214; Illinois Cent. R. Co. v. Josey,
110 Ky. 342, 96 Am. St. Rep. 465, 54
U R. A. 78; Bloyd v. St Louis, etc,
Ry. Co., 58 Ark. 66, 41 Am. St. Rep.
85; Bonnin v. Crowley, 112 La. 1025;
Wilson V. Banner Lhr. Co., 108 La.
590; Williams v. Lumber Co., 126 La.
1087, 136 Am. St. Rep. 365, 19 Ann.
Cas. 1244; Purcell v. Southern Ry.
Co., 119 N. C. 728; New Omaha, etc..
Light Co. V. Baldwin, 62 Neb. 180;
Bell V. Rocheford, 78 Neb. 304, 126 Am.
St. Rep. 595; Ft. Worth, etc., Ry. Co.
V. Peters, 87 Tex. 222; Pittsburg, etc.,
R. Co. V. Lewis, 33 Ohio St 196;
Andreson v. Ogden Union Ry. Co., S
Utah, 128; Sherrin v. St. Joseph, etc..
Ry. Co., 103 Mo. 378, 28 Am. St Rep.
881; Taylor v. Georgia Marble Co., 99
Ga. 512, 69 Am. St. Rep. 238; Louis-
ville, etc., R. Co. V. Dillard, 114
Tenn. 240, 108 Am. St Rep. 894, 69
L. R. A. 746; Electric Ry. Co. v. Law-
son, 101 Tenn. 406; Lontavllle ft N.
Ry. Co. V. Lahr, 86 Tenn 335 (dis-
tinguishing between "personal" and
"official" neglect of superior servant).
See also, Daniel's Admr. v. Chesa-
peake, etc., Ry. Co.,-86 W. Va. 397, 32
Am. St Rep. 870, 16 L. R. A. 383
(overruled in Jackson v. Norfolk, etc.,
R. Co., 43 W. Va. 380, 46 L. R. A.
337); Flannegan v. Chesapeake, etc.,
Ry. Co., 40 W. Va. 436, 62 Am. St.
Rep. 896. See also. Miller v. Mis-
souri Pacific Ry. Co., 109 Mo. 350, 32
Am. St Rep. 673.
(No attempt is made in these notes
to collect all of the cases.)
s See Grattis v. Kansas City, etc.,
Ry. Co., 153 Mo. 380, 77 Am. St Rep.
721, 48 L. R. A. 399; Atchison, etc..
Bridge Co. v. Miller, 71 Kan. 18, 1 L.
R. A. (N. S.) 682.
*As pointed out by Brewer, J., in
Baltimore, etc., R. Co. v. Baugh, 149
U. S. 368, 37 L. Ed. 772, "The truth
is, the various employes of one of
. these large corporations are not grad-
ed like steps in a stair case, — those
on each step being as to those on the
step below in the relation of masters
and not of fellow servants, and only
those on the same steps fellow serv-
1245
§ i6s4l
THE LAW OF AGENCY
[book IV
§ 1654-
According to the general rule it is well settled that
where there is one general object, in attaining or furtberii^ which all
the servants are engaged, the rule applies although the servant in-
jured and the servant through whose negligence he was injured, were
not engaged in doing the same kind of work.' Nor is the liability of
the master enlarged where the servant who has sustained tlie injury
is of a grade inferior to that of the servant or agent whose negligence,
carelessness or misconduct has caused the injury, if the services of each,
in his particular labor, are directed to the same general end.* Nor does
ants because not subject to any con-
trol by one over the other. Prima
facie, all who enter into the employ of
a single master are engaged in a com-
mon service and are fellow servants,
and some other line of demarcation
than that of control must exist to des-
troy the relation of fellow servants.
All enter into the service of the same
master to further his interests in the
one enterprise; each knows when en-
tering into that service that there is
some risk of injury through the neg-
ligence of other employes, and that
risk, which he knows exists, he as-
sumes in entering into the employ-
ment . . . But the danger from the
negligence of one specially In charge
of the particular work is as obvious
and as great as* from that of those
who are simply co-workers with him
in it Each is equally with the other
an ordinary risk of the employment
If he Is paid for the one, he is paid
for the other; if he assumes the one,
he assumes the other. Therefore, so
far as the matter of the master's ex-
emption from liability depends upon
whether the negligence is one of the
ordinary risks of the employment,
and thus assumed by the employee, it
Includes all co-workers to the same
end, whether in control or not."
Giving warning of dangers as they
arise in the ordinary progress of the
work is not usually a master's duty,
but the circumstances may make It
such. See Anderson v. Pittsburg Coal
Co., 108 Minn. 455, 26 U R. A. (N.
S.) 624.
B Mann v. O'SulUvan, 126 Cal. 61, 77
I
Am. St Rep. 149; Livingstone v. Ko-
diak Packing Co., 103 Cal. 25S; Ameri-
can Bridge Co. v. Valente, 7 Pen.
(Del.) 370, Ann. Cas. 1912 D. 69;
Fagundes v. Cent. Pac R. Co., 79
Gal. 97, 3 L. R. A. 824; Georgia Coal
Co. V. Bradford, 131 Qa. 289, €2 S.
E. 192, 127 Am. St. Rep. 228; Chicago
City Ry. Co. v. Leach, 208 IlL 198,
100 Am. St Rep. 216; Blake v. Maine
Cent. R. Co., 70 Me. 60, 85 Am. Rep.
297; Wonder v. Baltimore, etc., R.
Co., 82 Md. 411, 8 Am. Rep. 143; Seav^
er V. Boston, etc., R. Co., 14 Gray
(Mass.), 467; Adams v. Iron Cliffs
Co., 78 Mich. 271, 18 Am. St Rep. 441;
LouisvlUe, etc., Ry. Co. v. Petty, 67
Miss. 255, 19 Am. St Rep. 304; Lan^
ing V. N. Y. Cent R. Co., 49 N. Y.
521, 10 Am. Rep. 417; Pleasants v.
Raleigh, etc., R. Co., 121 N. C. 492,
61 Am. St Rep. 674; 8pees v. Boggs,
198 Pa. 112, 82 Am. St Rep. 792, 52
L. R. A. 998; Lewis v. Seifert, 116
Pa. 628, 2 Am. St Rep. 631; Gnint
V. Keystone Lbr. Co., 119 Wis. 229,
100 Am. St Rep. 888; New England
Rr. Co. V. Conroy, 175 U. S. 323, 44
L. Ed. 181; Nortiiem Pac. R. 0>. v.
Hambly, 154 U. S. 349, 38 L. Ed. 1009;
Charles v. Taylor, L. R. 3 C. P. D.
492; Lovell v. Howell, 1 Id. 161; Tun-
ney v. Midland Ry. Co., L. R. 1 C. P.
291.
• Laning v. New York Central R.
R. Co., 49 N. Y. 521, 10 Am. Rep. 417;
Lawler v. Androscoggin R. R. Co.,
62 Me. 463, 16 Am. Rep. 492; Brown
V. Winona, etc., R R. Ck>., 27 Minn.
162, 38 Am. Rep. 285; Thayer v. St
Louis, etc., R. R. Co., 22 Ind. 26, 85
246
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
l§ 1654
it make any difference that the servant guilty of the negligence is a
servant of superior authority, whose lawful directions given while all
are engaged in the doing of the work the servant injured was bound to
obey/ unless such superior servant arises to the grade of the vice-
principal of the principal."
Am. Dec. 409; Columbus, etc., R. R.
Co. V. Arnold. 31 Ind. 174, 99 Am.
Dec. 615; Peterson v. Whitebreast, 50
Iowa, 673. 32 Am. Rep. 143; Shauctc
v. Northern, etc., R. R. Co., 25 Md.
462; Hard v. Vermont, etc., R. R. Co.,
32 Vt. 473; Pittsburg, etc., Ry. Co. v.
Jjewis, 33 Ohio St 196; Warner v.
Erie Ry. Co.. 39 N. Y 468; Wood v.
New Bedford Coal Co.. 121 Mass. 252;
Malone v. Hathaway, 64 N. T. 5. 21
Am. Rep. 673; Pittsburg, etc., R. R.
Co. V. Devinney. 17 Ohio St. 197; St.
Louis, etc., R. R. Co. v. Britz, 72 111.
256.
^ Georgia Pac. Ry. Co. v. Davis, 92
Ala. 300, 25 Am. St. Rep. 47; Living-
stone T. Kodiak Packing Co., 103 Cal.
258; ColUer v. Steinhart, 51 Cal. 116;
McLean v. Mining Co., Id. 255; New
Pittsburg Coal & Coke Co. v. Peter-
son, 136 Ind. 398, 43 Am. St. Rep. 327;
Taylor v. Bvansville, etc., R. Co., 121
Ind. 124, 16 Am. St. Rep. 372, 6 L. R.
A. 584; Indianapolis Trac. Co. v. Kin-
ney, 171 Ind. 612, 23 L. R. A. (N. S.)
711; Lawler v. Androscoggin R. Co.,
62 Me. 463, 16 Am. Rep. 492; Blake v.
Maine Cent R. Co., 70 Me. 60, 35 Am.
Rep. 297; Beaulieu v. Portland Co.,
48 Me. 291; Conley ▼. Portland, 78
Me. 217; Gillshannon v. Stony Brook
R, Co., 10 Cush. (Mass.) 228; Ken-
ney v. Shaw, 133 Mass. 501; O'Connor
V. Roberts, 120 Mass. 227; Floyd v.
Sugden, 134 Mass. 563; Avikainen v.
Baltic Min. Co., 160 Mich. 375, 186
Am. St Rep. 443; Brown v. Winona,
etc., R. Co., 27 Minn. 162. 38 Am.
Rep. 285; Gonstor v. Minneapolis, etc.,
Ry. Co.. 36 Minn. 385; Pasco v. Min-
neapolis Steel Co., 105 Minn. 132, 18
L. R. A. (N. S.) 153; Marshall v.
Schricker, 63 Mo. 308; Enright v.
Oliver, 69 N. J. L. 357, lai Am. St
Rep. 107; Keenan v. N. Y., etc., R.
Co., 145 N. Y. 190, 45 Am. St Rep.
604; Laning v. N. Y., etc., R. Co., 49
N. Y. 521, 10 Am. Rep. 417; Malone
V. Hathaway, 64 N. Y. 5, 21 Am. Rep.
573; Ell V. Northern Pacific R. Co.^
1 N. D. 336, 26 Am. St Rep. 621, 12
L. R. A. 97; Lewis v. Selfert 116 Pa.
628, 2 Am. St Rep. 631; Keystone
Bridge Co. v. Newberry, 96 Pa. 246.
42 Am. Rep. 543; Reese v. Biddle, 112
Pa. 72; Jenkins v. Richmond, etc., R.
Co., 89 S. C. 507. 39 Am. St. Rep. 750;
Hard v. Vermont Cent. R. Co., 32
Vt 473; Lane Bros, ft Co. v. Bauser-
man, 103 Va. 146, 106 Am. St Rep.
872; Knudsen v. La Crosse Stone Co..
145 Wis. 394, 33 L. R. A. (N. S.) 223;
Gereg v. Milwaukee Gaslight Co., 128
Wis. 35, 7 L. R. A. (N. S.) 367; Hoth
v. Peters, 55 Wis. 405; Dwyer v.
American Express Co., Id. 453; North-
ern Pac. R. Co. V. Hambly, 154 U. S.
349, 38 L. Ed. 1009; Northern Pac. R.
Co. V. Peterson. 162 U. S. 346, 40 L.
Ed. 994; New England R. Co. v.
Conroy, 175 U. S. 323, 44 L. Ed. 181.
8 See ante, § 1640. Alabama, etc.,
R. Co. V. Vail, 142 Ala. 134, 110 Am.
St Rep. 23; Tyson v. North, etc., R.
Co., 61 Ala. 554, 32 Am. Rep. 8;
Daves v. Southern Pacific Co.. 98 Cal.
19, 35 Am. St. Rep. 133; Brown v.
Sennett, 68 Cal. 225. 58 Am. Rep. 8;
Beeson v. Green Mt Mining Co.. 57
Cal. 20; Colorado Midland Ry. Co. v.
Naylon. 17 Colo. 501, 31 Am. St Rep.
335; McBlligott v. Randolph, 61 Conn.
157, 29 Am. St Rep. 181; Wilson v.
Willimantic Co., 50 Conn. 433, 47 Am.
Rep. 653; Cheeney v. Ocean Steam-
ship Co., 92 Ga. 726, 44 Am. St Rep.
113; Moore v. Dublin Cotton Mills,
127 Ga. 609, 10 L. R. A. (N. S.) 772;
Illinois Steel Co. v. Ziemkowski. 220
111. 324, 4 L. R. A. (N. S.) 1161;
Chicago, etc., R. Co. t. Kneirim, 152
1247
51 i655, 1656]
THE LAW OF AGENCY
[book IV
§ 1655.
It is immaterial, also^ that the service was an oc-
casional or job service. It is the quality, and not die length of time,
or Extent of the work, which fixes, in this respect, the character of the
servant and the service. The servant may be engaged by the day,
week or year, or by piece-work, yet if his employment is in the way of
accomplishing a result which the other employees are also working to
bring about, their service is common.*
§ 1656. Servants employed by different masters engaged
in independent pursuits, though working together at the same time
and place and for the general accomplishment of the same end, are not
usually fellow servants within the rule.^' To make them such there
must be a common employment or the general servant of one master
111. 458, 43 Am. St Rep. 259; Chicago,
etc.. R. Co. y. Eaton, 194 111. 441, 88
Am. St. Rep. 161; Chicago, etc., R.
Co. y. May, 108 111. 288; Chicago
Union Traction Co. v. Sawusch, 218
111. 130, 1 L. R. A. (N. S.) 610; New
Pittsburg Coal Co. y. Peterson, 136
Ind. 398, 43 Am. St. Rep. 327; Mitchell
y. Robinson, 80 Ind. 281, 41 Am. Rep.
812; Taylor y. Evanayille, etc, R,
Co.. 121 Ind. 124, 16 Am. St Rep. 372,
6 L. R. A. 584; Newbury v. Gechtel,
etc., Mfg. Co., 100 Iowa 441, 62 Am.
St. Rep. 582; Harrison y. Detroit, etc.,
R. Co., 79 Mich. 409, 19 Am. St Rep.
180, 7 L. R. A. 623; Ryan y. Bagaley,
50 Mich. 179, 45 Am. Rep. 85; I>ay-
harsh v. Hannibal, etc., R. Co., 103
Mo. 570, 23 Am. St. Rep. 900; Gormley
y. Vulcan Iron Works, 61 Mo. 492;
Brothers y. Cartter, 52 Mo. 373, 14
Am. Rep. 424; McLaine v. Head A
Dowst Co., 71 N. H. 294, 93 Am. St
Rep. 522, 58 L. R. A. 462; Knutter y.
N. Y., etc., Teleph. Co., 67 N. J. L.
646, 58 U R. A. 808; Haukins v. N.
Y., etc., R. Co., 142 N. Y. 416. 40 Am.
St Rep. 616, 25 L. K A. 396; Corw
coran y. Holbrook, 59 N. Y. 517, 17
Am. Rep. 369; Madigan y. Oceanio
Steam Nayigation Co.. 178 N. Y. 242,
102 Am. St. Rep. 495; Ell v. Northern
Pacific R. Co., 1 N. D. 336, 26 Am. St
Rep. 621^ 12 U R. A« 97; Mast y.
Kern, 34 Ore. 247. 76 Am. St Rep.
580; Anderson y. Bennett 16 Ore.
515. 8 Am. St Rep. 811; Mullan ▼.
Philadelphia Steamship Co., 78 Penn.
26, 21 Am. Rep. 2; Jenkins y. Rich-
mond, etc., R. Co.. 39 S. C. 507. 39
Am. St Rep. 760; Gunter t. Granite-
TiUe Mfg. Co.. 18 a C. 262, 44 Am.
Rep. 573; Galveston, etc., Ry. Co. v.
SnUth, 76 Tex. 611, 18 Am. St Rep.
78; Lane Bros. v. Banserman, 103 Ya.
146, 106 Am. St. Rep. 872; Norfolk,
etc, R. Co. y. Houchins^ 96 Va. 398.
64 Am. St. Rep. 791; Sronfe y. Moran
Bros. Co., 28 Wash. 881. 92 Am. St
Rep. 847. 58 L. R. A. 318; Jackson
y. Norfolk, etc. R. Co., 43 W. Va. 380.
46 I4. R. A. 387; Daniels' Admr. ▼.
Chesapeake A Ohio R. Co., 36 W. Va.
397, 32 Am. St Rep. 870, 16 L. R. A.
883; Wisfcie y. Montello Granite Co.,
lU Wis. 443. 87 Am. St Rep. 886;
Mulcairns y. Janesyille, 67 Wis. 24;
Northern Paciflo R. Co. y. Peterson.
162 U. 8. 846. 40 L. Ed. 994.
»Ewan y. Llppincott, 47 N. J. U
192, 54 Am. Rep. 148.
loSwainson y. Northeastern Ry.
Co., 3 Ex. D. 341; Morgan y. Smith.
159 Mbbb. 570; Kelly y. Tyra. 108
Minn. 176, 17 L. R. A. (N. S.) 334;
Murray ▼. Dwight 161 N. Y. 301, 48
L. R. A. 673; Coatee y. Chapman, 196
Pa. 109.
1248
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ i6s7
must for the time being have become the special servant of the other
in whose service the injury occurred."
§ 1:657. What risks within the rule. — ^The risks which are ordi-
narily affected by the fellow servant rule are the risks of the service
as they must have been fairly contemplated at the time the service
was entered upon,^^ but additional risks may also be included under
the theory of the assumption of risks.** They usually are risks of
personal injury, but may extend also to property used in or connected
with the service. In order to make the rule applicable, the servant
must have been in the service. Ordinarily the risks will be those aris-
ing upon the master's premises, but they are not confined to those ; as
where the servants of a contractor are working upon the premises of
a third person, or the servants of a truckman are wcwking in the high-
way. Ordinarily, also, the risks will be those of injury to the servant
himself, and will not extend to injuries to the members of his family
for example, unless they were associated with and for him in the serv-
ice. Usually the risks will be those incurred while the servant is actu-
ally at work, but they are not confined to those, but may include in-
juries received while he is temporarily suspending work or going to
or from some place in pursuance of the service."
11 Delory v. Blodgett, 186 Mass. 126,
102 Am. St. Rep. 328, 64 L. R. A. 114;
Hasty y. Sears, 157 Mass. 123, 34 Am.
St. Rep. 267.
i< In Oannan y. Housatonlc R. Co.,
112 Mass. 234, 17 Am. Rep. 82, a track
employee was held entitled to recover
for an Injury to his wife caused by
the negligence of a switchman of the
same company caused while she was
riding as a passenger upon a train.
"The implied contract on the part of
the servant hy which he assumes the
risk of the negligence of others, has
reference to those direct injuries to
which he Is exposed in the course of
hi^ employment."
18 See ante, 9 1651; post, § 1660.
14 In the following cases it was held
that an employee, while on his em-
ployer's premises on his way to work,
was then in the service of the em-
ployer and cannot recover if injured
by the negligence of a feliow servant.
Olsen y. Andrews, 168 Mass. 261;
Ewald v. Chicago, etc., Ry. Co., 70
Wis. 420, 5 Am. St Rep. 178; Boldt
V. New York Cent R. Co., 18 N. Y,
432. So, while going from one part
of the building to another to eat his
lunch. Boyle v. Columbian Fire
Proofing Co., 182 Mass. 93; 4)r to
change his clothes before leaving for
the day; Willmarth v. Cardoza, 99 0.
a A. 475, 176 Fed. 1.
In the following cases the employee
was held not to be in the service of
his employer. Savannah, etc., Ry,
Co. Y. FJannagan, 82 Oa. 579, 14 Am*
St Rep. 183 (flagman injured as he
was returning home from work);
Baird v. Pettit 70 Pa. 477 (olflce-
man injured as he was leaving the of-
fice) ; C. N. 0. Sl T. p. Ry. Co. v. Con-
ley, 14 Ky. Law Rep. 568 (section
hand injured while he was taking a
day off).
In St Louis, etc, R. Co. v. Welch,
72 Tex. 298, 2 L. R. A. 839, an em-
ployee who was asleep jn a "bunk-
car" on a side-track, but liable to be
called for duty at any time, was held
79
1249
§ 16581
THE LAW OP AGENCY
[book IV
§ 1658. Volunteer asaisting servant can not recover^-— It is well
settled that a person who, without any employment and without any
interest in the performance or result of the service, voluntarily under-
takes to perform service for another, or to assist the servants of another
in the service of their master, either at the request or without the re*
quest of such servants, who have no authority to employ other servants,
stands in no better situation, for the time being, than that of a fellow
servant with those whom he undertakes to assist and is to be regarded
as assuming all the risks incident to the business. If he is injured by
the negligence of such servants, he has, therefore, no recourse to the
principal.**
to be in the service of the company
and a fellow senrant of train hands
of a passing freight train.
An employee, while being trans-
ported in the master's vehicles to and
from work according to agreement
with employer, and as part of the
service is in the service of his em-
ployer while so being carried. In-
dianapolis, etc* Transit Co. v. Fore-
man, 162 Ind. 85, 102 Am. St. Rep.
185; Ellington v. Beaver Dam Co., 93
Ga. 53; Roland v. Tift, 131 Ga. 683,
20 L. R. A. (N. S.) 854; McGuirk v.
Shattuck, 160 Mass. 45, 39 Am. St.
Rep. 454; Gillshannon v. Stony Brook
R. Co., 10 Cush. (Mass.) 228; Kil-
dn(f V. Boston El. Ry. Co., 195 Mass.
307, 9 L. R. A. (N. S.) 873; Louis-
ville, etc., R. Co. V. Stuber, 48 C. C.
A. 149, 54 L. R. A. 696; Dayton Coal
Co. V. Dodd, 110 C. C. A. 395, 188
Fed. B97, 37 L. R. A. (N. S.) 456;
Coldrick V. Partridge, etc., [1909] 1
K. B. 530, [1910] App. Cas. 77; lon-
none ▼. N. Y., etc., R. Co., 21 R. I.
452, 79 Am. St. Rep. 812; Abend v.
Terre Haute, etc., R. Co., Ill 111.
202, 53 Am. Rep. 616; Ross v. New
York, etc., R. Co., 5 Hun, 488, af-
firmed 74 N. T. 617; Wright v. North-
ampton, etc., R. Co., 122 N. C. 852.
A fortiori^ it is held that an em-
ployee engaged in ballasting a track
or removing obstructions therefrom,
whose duty requires constant trans-
porting from one point to another, is,
while so being transported as a part
of his work, in the service of his em-
ployer. Kumler v. Junction, etc., R.
Co., 88 Ohio St 150; Knahtla v. Ore-
gon Short Line R. Co., 21 Ore. 136;
Heine v. Chicago, etc., R. Co., 68
Wis. 525.
In Enos v. Rhode Island, etc., Ry.
Co., 28 R. I. 291, 12 L. R. A. (N. S.)
244, a flagman was furnished with
tickets to be used in going to and
from work, and the court held him
not to be la the service of the com-
pany while returning from work.
Peterson v. Seattle Traction Co., 23
Wash. 615, 53 L. R. A. 586, was simi-
lar.
In Dickinson v. West End St. Ry.
Co., 177 Mass. 365, 83 Am. St Rep.
284, 52 L. R. A. 326, an employee
while ott. duty but exercising the
privileges accorded him by his em-
ployer of free transportation, was
held not to be In the service of the
employer. See, to like efTect, State,
use of Abell v. Western Md. Ry. Co.,
63 Md. 433; Harris v. City R, Co.,
69 W. Va. 65, Ann. Cas, 1912 D. 59.
In Williams v. Oregon Short L. R.
Co., 18 Utah, 210, 72 Am. St Rep.
777, a person going on a free pass to
a distant point on the road at which
he was to be given employment, was
held not to be in the service. Soc
also, Chattanooga Rapid Transit Co.
V. Venable, 105 Tenn. 460, 51 L. R. A.
886; Simmons v. Oregon R. Co., 41
Oreg. 151.
18 Flower v. Pennsylvania R. Co.,
69 Penn. St. 210, 8 Am. Rep. 261;
New Orleans, etc., R. Co. v. Harrison,
1250
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1659
But the rule is otherwise where the person injured, is not a mere
volunteer, but assists for the purpose of aiding or advancing his own,
or his own master's, business. Though performing a service which
may be beneficial to both parties, he is doing so in his own behalf, or in
the behalf of his own master, and not as if he were the servant of the
master whose servants he assists. Their request or acquiescence may
give him the right to assist, but the fact that he does so in his own be-
half, or in behalf of his own master, however beneficial may be his as-
sistance to the master of the other servants, gives him the right to be
protected against their negligence.** The act done by him, should,
however, be a prudent and reasonable one, and not a wrongful inter-
ference and intermeddling with business in which he had no concern.*^
6. Assumption of Risks.
§ 1659. In general. — It has been seen in an earlier section that
the master is not liable to the servant for injuries received by the latter
by reason of the natural and ordinary dangers which inhere in the busi-
ness itself and for which the master is not at fault. These dangers
48 Miss. 112, 12 Am. Rep. 356; Ob-
borne v. Knox, etc., R. R., 68 Me. 49, 28
Am. Rep. 16; May ton v. Texas, etc., R.
Co., 68 Tex. 77, 51 Am. Rep. 637;
Street Railway Co. v. Bolton, 43 Ohio
St. 224, 54 Am. Rep. 803; Eason v.
a ft R T. Ry. Co., 65 Tex. 577, 57
Am. Rep. 606; Welch v. Maine Cent.
R. Co., 86 Me. 552, 25 L. R. A. 658;
Wischam v. Rickards, 136 Pa. 109, 20
Am. St. Rep. 900, 10 L. R. A. 97; Cin-
cinnati, etc., Co. V. Finnell, 108 Ky.
135, 57 L. R. A. 266; Railroad Co. v.
Ward, 98 Tenn. 123, 60 Am. St Rep.
848; Bonner v. Bryant, 79 Tex. 540,
23 Am. St. Rep. 361; Johnson T. Ash-
land Water Co., 71 Wis. 653, 5 Am.
St. Rep. 243; Knlcely v. West Va. R.
Co., 64 W. Va. 278, 17 L. R. A. (N.
S.) 370; Degg v. Midland Ry. Co., 1
H. ft N. 773; Potter v. Faulkner, 1
Best ft S. 800. But see Rhodes v.
Georgia, etc., R. Co., 84 Ga. 320, 20
Am. St.. Rep. 362.
Where a servant is loaned or hired
to one who assumes control over him,
such servant becomes the fellow-
servant of the employees of the bor-
rower or hirer. DeLory v. Blodgett,
185 Mass. 126, 102 Am. St. Rep. 328,
64 L. R. A. 114; Hasty v. Sears, 157
Mass. 123, 34 Am. St Rep. 267;
Brooks V. Central Sainte Jeane, 228
U. S. 688.
i« Street Railway Co. v. Bolton, 43
Ohio St 224, 54 Am. Rep. 803; Ea-
son V. S. ft E. T. Ry. Co., 9upra; Mur-
ray V. Dwlght. 161 N. Y. 301. 48 L.
R. A. 673; Welch v. Maine Cent. R.
Co., 86 Me. 552, 25 L. R. A. 658; Jones
V. St Liouis, etc., Ry. Co., 125 "Mo.
666, 46 Am. St Rep. 514, 26 L. R. A.
718; Bonner v. Bryant, 79 Tex. 540,
28 Am. St Rep. 361; Railroad Co. v.
Ward, 98 Tenn. 123, 60 Am. St Rep.
848; Sanford v. Standard Oil Co.,
118 N. Y. 571, 16 Am. St Rep. 787;
Kelly V. Tyra, 103 Minn. 176, 17 L.
R. A. (N. S.) 384; Miner v. Frank-
lin County Tel. Co., 83 Vt 311, 26 L.
R. A. (N. S.) 1195; Wright v. Lon-
don, etc., Ry. Co., 1 Q. B. Div. 252;
Holmes v. North Eastern Ry. Co., L.
R. 4 Ex. 254.
17 Street Railway Co. v. Bolton, 48
Ohio St 224, 54 Am. Rep. 803.
1251
§ l66o] THE LAW OF AGENCY [bOOK IV
presumptively are as well known to the servant as to the master, and
the servant, who, with this knowledge, seeks and accepts service in the
business, is commonly said to assume the risks by the mere fact o£ ac-
cepting the emplyoment
There is, however, another aspect of the doctrine of the assumptioa
of risks, radically different from the foregoing one and of very great
significance, which must be separately considered.
g 1660. Assumption of risks resulting from master's neg-
ligence.— ^As has been stated, the risks referred to in the earlier sec-
tion are those which naturally and ordinarily inhere in the business
itself, when carried on in the usual manner and under ordinary ccmdi-
tions. These risks, however, may be greatly added to or increased by
the actual methods or conditions under which the particular business
was carried on. (i) These methods or conditions may be purely local
or accidental and not attributable to the act or omission of any one and
especially not to any act or omission of the employer. (2) They may
be owing to the act or omission of the employer and yet not impute to
him any legal or moral fault ; as where, for example, he carries on his
business, as he lawfully may, with other than the latest and most im-
proved appliances or equipment, provided they are still reasonably safe.
The first two of these classes usually fall within the same legal rules
as those which ordinarily inhere in the business itself. They are not
attributable t6 the legal fault of the master, and he is not legally re-
sponsible to the servant, except, perhaps, in cases in which he would
owe the servant a duty to warn him of unusual dangers, known to the
master (though not attributable to his fault) but not known to the
servant. (3) On the other hand, the risks may be increased because
the employer, through heedlessness, indifference or positive disregard,
either of ordinary legal duties or of express statutory requirements,
carries on his business in such a way as to subject his employees to un-
necessary or unjustifiable perils. These last named risks lie outside the
range of those which ordinarily and necessarily inhere in the business
and continuance, being due to the master's breach of duty, would justify
ing out of the mere fact of accepting the employment ; their existence
itself ; they are not covered by any implied agreement or consent grow-
the employee, even if he had made a contact for a definite term, in
refusing to go on with the service ; if he were immediately injured by
them he could recover damages of the master ; he may lawfully quit if
they are not corrected. Suppose, however, that without protesting
against them and exacting a promise to remove them, he continues,
after the unusual perils become fully obvious to him, to perform the
1252
CHAP. IV]
DUTIES AND UABIUTIES OP PRINCIPAL
[§ i66x
service M the midst of these perils and is ultimately injured because of
thetiL May he now recover damages from the employer? He cer-
tainly may unless he has lost his right by some conduct of his own.
Has he lost it ? He may usually lose it in but one of two ways : either
by his contributory negligence, or by some undertaking to assume the
risk himself. The defence of contributory negligence will be later con-
sidered. The remaining defence that he has assumed the risk of the
master's negligence is here to be dealt with. At this point we are
confronted with a unique and difficult situation, though the legal solu-
tion seems in general to be well established.
§ i66i> ' With reference to such of these perils as do not
involve a violation of express statutory requirement (which will be
considered later), the answer given to the question by the weight of
authority is that the servant has lost his right and may not recover.^*
19 Birmingham, etc., R. Co. v. Allen,
99 Ala. 859, 20 L. R. A. 457; ChocUw,
etc., R, Co. V. Jones, 77 Ark. 367, 4
L. R. A. (N. S.) 837, 7 Ann. Cas.
430; LImberg v. Qlenwood Lbr. Co.,
127 CaL 698, 49 L. R. A. 33; Illinois
Central R. Co. v. Fltzpatrlck, 227 111.
478, 118 Am. St Rep. 280; Martin y.
Chicago, etc., R. Co., 118 Iowa, 14S,
96 Am. St Rep. 871, 59 L. R. A. 698;
Buehner v. Creamery Package Mfg.
Co., 124 Iowa, 445, 104 Am. St Rep.
354; St. Louis, etc., R. Co. v. Irwin,
37 Kan. 701, 1 Am. St Rep. 266; Con*
solidated Gas. Co. ▼. Chambers, 112
Md. 324, 26 L. R. A. (N. S.) 609;
Baltimore, etc., R. Co. t. State, 75
Md. 152, 32 Am. St Rep. 372; Lam-
son y. American Axe Co», 177 Mass.
144, 83 Am. St Rep. 267; Lewis y.
New York, etc., R. Co., 153 Mass. 73,
10 L. R. A. 513; Lynch v. Saginaw
VaL Tr. Co., 158 Mich. 174, 21 L. R.
A. (N. &) 774; Reberk ▼. Home, eta,
Co., 85 Minn. 326; Chicago, etc., R.
Co. y. Curtis, 51 Neb. 442, 66 Am. St
Rep. 456; Jobxison y. Deyoe Snnfl Co.,
62 N. J. L. 417; Odell y. N. Y., etc.,
R. Co., 120 N. Y. 323, 17 Am. St Rep.
660; Knlsley y. Pratt, 148 N. Y. a72,
32 L. R. A. 367 (oyerruled In Fits-
water y. Warren, 206 N. Y. 855);
Smith y. WlUnlpgton, etc., R. Co., 129
N. C. 173, 85 Am. St Rep. 740; Con-
solidated Coal, etc., Co. y. Floyd, 51
Ohio St 542, 25 L. R. A. 848; Bross-
man y. Railroad Co., 113 Pa. 490, 57
Am. Rep. 479; Gann y. Railroad, 101
Tenn. 380, 70 Am. St Rep. 687;
Leach y. Oregon Short Line R. Co.,
29 Utah, 285, 110 Am. St Rep. 708;
McDuffee y. Boston ft M. R. Co., 81
Vt 52, 130 Am. St Rep. 1019; John-
son V. Boston, etc., R. Co., 78 Vt 344,
4 L. R. A. (N. S.) 866; SeidomrldgB
y. Railroad Co., 46 W. Va. 569; San*
derson y. Panther Lbr. Co., 50 W. Va.
42, 88 Am. St. Rep. 841, 65 L. R. A.^
908; Sweet y. Ohio Coal Co., 78 Wis.
127, 9 Ia R. A. 861; Mielke v. Chica^
go, etc., Ry. Co., 103 Wis. 1, 74 Am.
St Rep. 834; Brotzki y. Wisconsin
Qranlte Co., 142 Wis. 880, 27 U R. A.
(N. S.) 982; Butler v. Frazee, 211 U.
S. 459, 58 L. Ed. 281; Utah Consoli-
dated Mining Co. y. Bateman, 99 C.
C. A. 865, 176 Fed. 57, 27 L. R. A.
(N. S.) 958; St Louis Cordage Co. y.
Miller, 61 C. C. A. 477, 126 Fed. 495,
68 L. R. A. 561.
In Missouri, this form of the doc-
trine does not seem to be recognized.
Jewell y. Kansas City Bolt Co., 231
Mo. 176, 140 Am. St Rep. 515. The
seryant may recover unless he has
been guilty of contributory negli-
gence; and it is held that continu-
ance after knowledge ' of the defeet
1253
§ i662]
THE LAW OF AGENCY
[book IV
In the language of the courts, he is said to have assumed the risks.
The employee is said to have assumed the risks which are inherent in
the business because he presumptively knows them and accepts the
employment in view of that knowledge. The assumption of these un-
usual risks caused by the master's negligence cannot be put upon that
ground. The servant was not bound to anticipate them, but he learned
before he was injured that they were present. He was not obliged to
assume them ; he might have quit, but with knowledge of the situation
and the danger he continued in the service without objection. By do-
ing so he is ordinarily held to have assumed these risks also. That he
was induced by economic necessity is usually held not to affect the
result.**
§ i66a. ' "The doctrine of assumption of risk," it is said in
a leading case,*® "is placed by the authorities and sustained upon two
grounds. That doctrine is that, while it is the duty of the master to
exercise ordinary care to provide a reasonably safe place for the serv-
ant to work and reasonably safe appliances for him to use, and while,
unless he knows or by the exercise of reasonable care would have known
that this duty has not been discharged by the master, he may assume
that it has been, and may recover for any injury resulting from the
cannot, as a matter of law, be said
to be negligence on the part of the
Bertant, unless It is so glaringly un-
safe as to threaten Immediate Injury;
or, as it is often put, it is not neg-
ligence, as a matter of law. If it was
reasonable to suppose that the place
or instrument might be safely used
by the exercise of care and precau-
tion. Clippard V. St. Louis Transit
Co., 202 Mo. 432; Curtis v. McNair,
173 Mo. 270; Doyle v. M. K. & T.
Trust Co., 140 Mo. 1; Seeder v. St.
Louis, etc., Ry. Co., 100 Mo. 673, 18
Am. St. Rep. 724; 0*Mellia v. Kansas
City, etc., R. Co., 115 Mo. 206; Set-
tle V. St Louis, etc., R. Co., 127 Mo.
336, 48 Am. St Rep. 633; Huhn v.
Missouri Pacific Ry. Co., 92 Mo. 440.
In North Carolina, also, a similar
rule seems to prevail. Thus in Russ
V. Harper, 166 N. Car. 444, it is said:
"Whatever may be the ruling in
other Jurisdictions, it is now very
well established in this State that
this doctrine of assumption of risk,
in its proper acceptation, does not ap-
ply to conditions caused or created
by the employer's negligence, or, in
such case, if it exists in name, it is
to be determined on the principles
applicable to contributory negli-
gence."
In Virginia, see Richmond, etc., Ry.
Co. V. Norment, 84 Va. 167, 10 Am.
St Rep. 827.
i» Thus in Lamson v. American Axe
Co., 177 Mass. 144, 83 Am. St Rep.
267, it Is said per Holmes, J.: "He
stayed and took the risk. He did so
none the less that the fear of losing
his place was one of his motives."
Same: Wescott v. New York, etc., R.
Co., 153 Mass. 460; Leary t. Boston
& Albany R., 139 Mass. 680, 52 Am.
Rep. 733; Haley v. Case, 142 Mass.
316; Burke t. Davis, 191 Mass. 20,
114 Am. St Rep. 691, 4 U R. A. (N.
S.) 971.
20 St Louis Cordage Co. v. Miller,
61 C, C. A. 477, 63 L. R. A, 561.
1254
CUAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§ I663
failure to discharge it, yet he assumes all the ordinary risks and dan-
gers incident to the employment upon which he enters and in which
he continues, including those resulting from the negligence of his mas-
ter which are known to him, or which would have been known to a
person of ordinary prudence and care in his situation by tfie exercise
of ordinary diligence. The first ground upon which this rule of law
rests is the maxim. Volenti non fit injuria. A servant is not compelled
to begin or ccHitinue to work for his master. Ordinarily, he does not
work for him under a contract for a stated time. He is at liberty to
retire from his employment, and his master is free to discharge him,
at any time. The latter constantly offers him day by day his wages,
his place to work, and the appliances which he is to use. The former
day by day voluntarily accepts them. By the continuing acceptance
of the work and the wages he voluntarily accepts and assumes the risk
of the defects and dangers which a person of ordinary prudence in his
place would have known. No one can justly be held liable to another
for an injury resulting from a risk which the latter knowit^ly and
willingly consented to incur.
"The second ground upon which assumption of risk is based is that
every servant who enters or continues in the employment of a master
without complaint thereby either expressly or impliedly agrees with
him to assume the risks and dangers incident to the emplo3mient which
a person of ordinary prudence in his situation would have known by
the exercise of ordinary diligence and care, and to hold his master free
from liability therefor."
§ 1663. ' With reference to the grounds suggested for this
doctrine, however, some distinctions are to be made. So far as the
ordinary and inherent risks of the business are concerned, it may per-
haps be fairly said that the servant assumes these as part of the con-
tract of employment. With reference to the extraordinary and un-
necessary risks caused by the negligence of the master which are sub-
sequently found to exist in the business, the foundation of contract is
not so clear. What is the consideration? Where the employment is
for an indefinite time, as in the above quotation it is said it ordinarily
is, it may be said that continuation in an employment terminable at
pleasure furnishes the consideration. But how in the case of a con-
tract for a definite term? Does retention here furnish a consideration?
Pretty certainly not. Even if a consideration can be found, is the con-
tract a lawful one to make? It is at least questionable.^^ If not,
21 General executory contracts to quences of his own negligence are
release the master from tha conse- usually held to be opposed to public
1255
§§ 1664, 1665J THE LAW OF AGENCY [BOOX IV
wc must here fall back upon consent, or the maxim Volenti nan fit
injuria.
§ 1664. — — -— It has been insisted by other courts that the mat-
ter of assumption of risks was not one of contract at all. Thus in one
case ** it is said : *The law regarding the asstmiption of risk is the law
which governs the relation of master and servant, and is independent
of the will of either. It is not a term of the contract of employment.
If it were, then the master and servant could retain it or abolish it in
each contract of employment. But they can do neither. It is a prin-
ciple of the common law, and must be repealed, if at all, by the law
making power. It is the law of the land governing all persons 'who
assume the relation of master and servant. It is over and above the
contract, and depends in no manner for its existence upon the agree-
ment of the parties. It is founded upon public policy, die status as-
sumed by master and servant, and upon the maxim, Volenti non fit
injuria"
§ 1665. ■ The truth is that the whole matter is in a most
confused and unsatisfactory condition. The assumption of the inherent
risks, which is one thing and not difficult to account for, has been con-
fused with the assumption of the risks caused by the master's negli-
gence, which is quite a different thing and not easy to account for;
and both have been confused with the question of contributory negli-
gence. There is nowhere agreement as to the grounds upon which
assumption of the risks caused by the master's negligence is to be
based.^ It can not be deemed part of the original contract in the or-
dinary case, since undoubtedly that contract ordinarily- is based upon
the assumption that the master will not be negligent. If it be said that
a contract of employment made with knowledge that the master is con-
ducting his business in a negligent way includes by implication a term
releasing the master from the consequences of a possible future injury,
wc are at once confronted by the fact that such general executory
policy and void. See post, S 1681. Rep. 371, 69 U R. A. 698; CMaley t.
A contract to assume in a forbidden Qas L. Co., 158 Mass. 135, 47 L. R.
employment, e. ff. that of a minor A. 161, and other cases); Contrast
under the statntory age, Is said to be Dowd r. N^w York, etc., R. Co., 170
unenXorceable. Berdos v. Tremont, N. T. 459.
etc., Mills, 209 Mass. 489, Ann. Cas. 2s See, for examples of the difficnl-
1912 B. 797. ties such cases as Dowd v. New York,
« Denver, etc., R. Co. -<r. Norgate, etc., R. Co., 170 N. Y. 469; Johnston
72 a C. A. 865, 6 L. R. A. (N. S.) ▼. Fargo. 184 N. Y. 379, « Ann. Cas.
981 (citing Langlois ▼. Dunn Worsted 1, 7 L. R. A. (N. S.) 637; Rase v.
MtUs, 26 R. I. 645; Martin r. Chicago, Minneapolis, etc., R. Co., 107 Minn,
etc, R. Co., 118 Iowa, 148, 96 Am. St 2«0, 21 L. R. A. (N. S.) 188.
1256
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1666
waivers of the consequences of the master's negligence are usually
held in this country to be opposed to public policy.'* There is, of
course, room to distinguish between a general waiver of the conse-
quences of unknown future negligence, and a specific waiver of the
consequences of a particular act with which the servant is unexpectedly
confronted in the course of the employment, but whose dangers he un-
derstands and whose risks he is willing to assume ; and perhaps such
a harrow contract might be upheld. In actual experience, however,
there is doubtless no thought of contract or consideration in these cases
at all, and to set up such an implied contract seems forced. If there
be any principle here applicable it seems to be that already referred to
of Volenti non fit injuria, which has an established place in the law
outside the field of master and servant,^^ and which has in certain cases
an equitable root not substantially different from that which supports
estoppel in pais. No one who reads the cases, however, can escape the
conclusion that it has been greatly overworked in this field.
§ 1666. ■ ■ ■ " Not all courts, moreover, accept this doctrine of
the assumption of risks by knowingly continuing in the employment.
It is urged that, however true it may be in theory that the servant has
an option in the -matter and is free to choose, practically there is an
entire absence of economic freedom. Thus it is said in Virginia,^'
with reference to the refusal of the trial court to instruct that continu-
ance in the work with knowledge of the dangers would release the mas-
ter from liability for injuries caused by defects resulting from his neg-
ligence : "The court did not err in rejecting this instruction. It was
palpably improper. It is sanctioned neither by reason, justice nor law.
The usual and legal duty of every employer is to provide all means and
appliances reasonably necessary for the safety of those in his employ-
ment It is a cruel — ^an inhuman — doctrine that the employer, though
he is aware that his own neglect to furnish the proper safeguards for
the lives and limbs of those in his employment puts them in constant
hazard of injury, is not to be held accountable to those employees who.
" See post, S 1681.
SB See for some account of Its his-
tory and scope, Beven on Negligence
(3d ed.), p. 632 et seq.
s« Richmond, etc^ Ry. Co. v. Nor-
ment, 84 Va. 167, 10 Am. St Rep. 827.
Compare Lord Bramwell, in Smith
V. Baker, [1891] App. Cas. 325, 346:
"It is said that to hold the plaintiff
is not to recover is to hold that a
master may carry on his work in a
dangerous way and damage his serv-
ants. I do 80 hold, if the servant is
foolish enough to agree to it This
sounds very cruel. But do not peo-
ple go to see dangerous sports. Acro-
bats dally incur fearful dangers, as
do Hon tamers and the like. Let us
hold to the law. If we want to be
charitable, gratify ourselves out of
our own pockets."
"57
§ i667]
THE LAW OF AGENCY
[book IV
serving him under such circumstances, arc injured by his negligent acts
and omissions, if the injured parties, after themselves becoming cog-
nizant of the peril occasioned by their employer's negligent way of con-
ducting his business, continue in his employment and receive his pay,
though they may be virtually compelled to remain by the sterti neces-
sity of earning the daily food essential to keep away starvation itself."
Other courts have been reluctant to draw the inference of assump-
tion where the servant was young or inexperienced and therefor not
likely to really appreciate the situation.*'
§ 1667. Obviousness of risk. — In order to make this doctrine of as-
sumption of risks applicable, it is essential that the risks shall either
have been in fact known to the servant or so open and obvious that they
must be deemed to have been within the contemplation of an ordinarily
prudent man exercising reasonable care for his own safety. The serv-
ant is not bound to suspect defects. He is not bound to make critical
inspection : that is the master's duty. Neither is the servant bound to
go in search of defects where there is nothing to suggest their exist-
ence. He assumes that only which can reasonably be said to be either
known or obvious.^
On the other hand, the servant may not close his eyes to the obvious,
and thereby escape the consequences of an assumption of the risk.'*
And not only must the defect be obvious, but it must appear that the
ST See, tor example, the dissenting
opinion of Thayer, J., In St. Louis
Cordage Co. v. Miller, supra; Mansell
v. Conrad, 125 N. Y. App. Dir. 634.
In Owens v. Cotton Mills, 83 S. Car.
19, it is held that the presumption is
that an infant employee under 14
years of age is incapable of assuming
the risks of danger. See also. Bare
v. Crane Creek Coal Co., 61 W. Va.
28, 123 Am. St. Rep. 966, 8 L. R. A.
(N. S.) 284.
2« Texas ft Pacific Ry. v. Swearing-
en, 196 U. S. 61, 49 L. Ed. 382; Choc-
taw Ry. V. McDade, 191 U. S. 64, 48
L. Ed. 96; St Louis Cordage Co. v.
Miller, 66 C. C. A. 477, 63 L. R. A,
551; St Loui8» etc., Ry. Co. v. Birch,
89 Ark. 424, 28 L. R. A. (N. S.) 1250;
Rase V. Minneapolis St Paul Ry., 107
Minn. 260, 21 L. R. A. (N. S.) 138;
St. Louis Southwestern Ry. v. Hyn-
Bon, 101 Texas, 543; Dowd v. New
York, etc, R Co., 170 N. Y, 459;
Davidson v. Cornell, 132 N. Y. 228;
Alton Paving Co. v. Hudson, 176 111.
270; Postal Teleg. Co. v. Likes, 225
111. 249; Bowen y. Penn. Ry., 219 Pa.
405; Laughy v. Bird Lumber Co., 136
Wis. 301; Bumside T. Peterson, 43
Colo. 382, 17 L. R, A. (N. S.) 76;
McDuflee y. Boston ft M. R. Co., 81
Vt 52, 130 Am. St Rep. 1019; Flnne-
gan V. Wlnslow Skate Co., 189 Mass.
580; Young v. Snell, 200 Mass. 242,
19 L. R. A. (N. S.) 242.
29 "Of course, a servant is bound to
use his senses, and cannot be heard
to plead ignorance of a danger that
was obvious to any one on inspec-
tion." Mitchell, J., In Wuotilla v.
Duluth Lumber Co., 87 Minn. 153.
The same idea is present in various
forms in most of the cases cited in
this section.
1258
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1668
risk was either actually appreciated or so patent as to warrant the as-
sumption that it was appreciated,**^
§ 1668. Voluntary action — Coercion — Command. — If assumption
of risk in these cases rests upon the maxim Volenti non fit injuria, the
servant must not only have knowledge of the risk but he must volun-
tarily assume it. As is pointed out by the English judges in several
cases, the maxim is not Scienti but Volenti. When, however, we come
to inquire closely as to whether one is volens or not, we are confronted
with very great difficulties, and, if we seek to determine it by other
than the ordinary external standards of conduct, we may easily be led
into metaphysical discussions which are too refined for practical ap-
plication. The English courts have pursued the matter further than
is commonly done in the Anxerican courts; thus, it has been said in
several of the English cases that a servant who knowingly continues in
a risky service because he is directed to do so by his master, or for fear
of losing his employment, cannot necessarily be said to have done so
voluntarily.** On the other hand, the current American view seems
to be that continuing to serve with knowledge, even under such cir-
cumstances, is sufficient evidence of voluntary action.*' Thus, it was
said of the servant in one such case in Massachusetts by Holmes, C. J.,
30 Brown v. West Riverside Coal
Co., 143 Iowa. 662, 28 L. R, A. (N.
S.) 1260; Seeds r. Amer. Bridge Co.,
68 Kan. 522; Myers v. Iron Co., 150
Mass. 125. 15 Am. St. Rep. 176; Fer-
ren v. Railroad Co., 143 Mass. 197;
Fitzgerald v. Connecticut River Pa-
per Co.. 155 Mass. 155, 31 Am. St.
Rep. 537; Wuotllla v. Lumber Co., 37
Minn. 153, 5 Am. St. Rep. 832; Peter-
son V. Merchants' Elev. Co., Ill Minn.
105, 137 Am. St. Rep. 537, 27 L. R,
A. (N. S.) 816; Hamilton v. Mining
Co., 108 Mo. 364; Rogers v. Roe, 74
N. J. L. 615, 13 L. R. A. (N. S.) 691;
Tuckett V. Am. Steam Laundry, 30
Utah, 273, 116 Am. St. Rep. 832, 4
L. R. A. (N. S.) 990; Kreigh v. West-
inghouse, etc., Co., 214 U. S. 249.
81 See Smith v. Baker, [1891] App.
Cas. 325; Baddeley v. Granville, 19
Q. B. Dlv, 423; Yarmouth v. France,
19 Q. B. Dlv. 647; Thomas v. Quar-
termalne, 18 Q. B. Dlv. 685. See
also, Choctaw, etc., R. Co. v. Jones,
77 Ark. 367, 7 Ann. Cas. 430; Lloyd
V. Hanes, 126 N. C. 859. But see,
Brazil Block Coal Co. t. Hoodlet, 129
Ind. 327.
32 Thus In Massachusetts, see Leary
V. Boston ft Albany Ry., 139 Mass.
580, 52 Am. Rep. 733; Haley v. Case,
142 Mass. 816; Westcott ▼. New York
& New England R. R. Co., 153 Mass.
460; Lamson v. American Axe Co.»
177 Mass. 144, 83 Am. St. Rep. 267;
Burke t. Davis, 191 Mass. 20, 4 L. R.
A. (N. S.) 971, 114 Am. St. Rep. 591.
In the last case it was said: '*The fact
that she [the servant] consented to
undertake the work only reluctantly,
and under a threat of dismissal, if
she should refuse to do it, will not
save her from being held to have as-
sumed all the obvious risks of her
undertaking.'* See also, Mllby Goal
Co. V. Balla, 7 Ind. Terr. 629, 18 L.
R. A. (N. €.) 695; Atchison, Topeka
Ry. V. Schroeder, 47 Kan. 315; Malt-
ble ▼. Belden, 167 N. Y. 807, 54 L. R.
A. 52; Reed v. Stockmeyer, 20 0. C.
A. 881, 74 Fed. 186; Brastl Block
I2S9
§ 1669]
THE LAW OJ AGENCY
[book IV
'^e complained and was notified that he could go if he would not face
the chance. He stayed and took the risk* He did so none the less
that the fear of losing his place was one of his motives." '*
Many cases, however, give more effect to the master's orders than
those above referred to."*
§ 1669. Emergencies — ^Assurances of safety. — But even
though continuing to serve in the face of risks, although because of
commands or the fear of losing employment, may be regarded as evi-
dence of assumption in the ordinary case in which there is time and
opportunity to deliberate, there are many cases of baste or emergency
or necessary absorption in the work where this would not necessarily
be true, and in which the question whether the servant, who had obeyed
commands or directions imder the circumstances, had thereby assumed
the risks, would fairly be an open one to be decided by a jury in view
of all of the facts."
So, too, continuing at the work under assurances of safety, given by
the master or his proper representative, where the danger is not ob-
vious, and the master may reasonably be supposed to have superior
knowledge, is not necessarily an assumption of the risks,'*
Coal Co. V. Hoodlet, 129 Ind. 327;
BradshaWs Adm'r v. Louisville, etc.,
Ry., 14 Ky. L. R. 688, 21 S. W. 346;
Dougherty v. West Superior Iron Co.,
88 Wis. 343; Hencke v. Ellis, 110 Wis.
582.
That the master's direction or com-
mand to do the work does not ordi-
narily alter the situation, see Briggs
V. Tennessee Coal Co., 163 Ala. 237;
Southern Cotton Oil Ca v. Walker, 164
Ala. 83; Worlds y. Georgia R. Ca 99
Oa. 283; Hanson v. Hammeil, 107 Iowa,
171; Cunningham v. Lynn R. Co., 170
Mass. 298; Bier ▼. Hosford, 35 Wash.
644.
*«In Burke ▼• Davis, auj^n,
8« See Zearfosa v. Norway Iron Co.,
218 Pa. 594; Kansas City, etc, R. Co.
V. ThomhiU, 141 Ala. 215; Jelinek v.
St. Paul, etc., Ry. Co., 104 Minn. 249;
DaUemand v. SaaUeldt, 175 lU. 310,
67 Am. St. Rep. 214, 48 L. R. A. 753.
»» Thus in Perrier v. Dunn Worsted
Mills, 29 R. I. 396, it was said, per
Parkhurst J.: "The question, whether
an employee has assumed the risk or
has been guilty of contributory neg*
ligence, in a case where he is re-
quired to do his work in haste, either
under orders of his superior, or by
reason of the exigency of his posi-
tion or because of an emergency, and
where his whole energy and attention
are absorbed In his work; or whether
he may be excused from the degree
of care ordinarily required or for
temporary forget! ulness of a risk pre-
viously known to him, or of a risk
which he might under other circum-
stances have remembered or appre-
ciated, have been generally held to be
questions for the Jury under all the
facts of the particular case" citing
many cases.
««See McKee v. Tourtellotte, 167
Mass. 69, 48 L. R. A. 542; Lord T.
Wakefield, 185 Mass. 214; Brown v.
Lennane, 155 Mich. 686, 30 L. R. A.
(N. S.) 453; Burkhard v. Leschen
Rope Co., 217 Mo. 466; Anderson v.
Pitt Min. Co., 103 Minn. 252; Mo-
Kane V. Marr, 79 Vt 13; Sullivan T.
Wood, 43 Wash. 259« 117 Am. St Rep.
Z260
CHAP. IV] DUTIES AND LIABIUTIES OF PRINCIPAL [§§ 167O, 167I
Where the command and the assurances of safety are combinedi the
case against assumption is, of course, still stronger.
§ 1670. — Inexperience — ^Youth, etc- — ^Where the servant is
young, inejKperienced or ignorant, and especially where there was an
unperformed duty to warn, the inference of assumption of risk is re-
luctantly drawn, and it is usually a question for the jury whether, un-
der all the circumstances, there was an intelligent appreciation of the
risk and a voluntary assumption of it.'^
§ 1671. ' Assumption of risks existing in violation of stat-
ute.— ^Whcre the peril is increased by reason of the failure of the
employer to do some act, or to take some precaution, expressly re-
quired by statute, a somewhat different question arises. Until it is
obvious that it has not been or will not be done, the employee has a
right to assume that the employer has complied or will comply with the
statute, and during that interval he does not assume the added risk.
When, however^ it becomes obvious to him that the statute has not been
or will not be complied with, the question whether, by continuing in the
service without objection, he assumes the risk, is one upon which the
1047. See also, Owensboro ▼. Qab-
bsrt, 135 Ky. 346, 136 Am. St Rep.
462.
^1 MinoTB. See Owens v. Laorens
Cotton Mills» 8S 8. C. 19; Shirley ▼.
Abbeville Fum. Co.. 76 S. Car. 452,
121 Am. St. Rep. 952; Tucker v. Baf
falo Cotton Mills, 76 S. Car. 539, 121
Am. St. Rep. 967; Lowe v. Southern
Ry. Co., 86 S. Car. 863, 137 Am. St
Rep. 904; Stuier v. Hart, 66 Mich.
644; Ewlng v. Lanark Fuel Co., 66
W. Va. 726, 29 L. R. A. (N. S.) 487;
Bare v. Crane Creek Coal Co., 61 W.
Va. ZS, 123 Am. St Rep. 966, 8 L. R.
A (N. &,) 284; Walton v. Burchel,
121 Tenn. 716, 130 Am. St Rep. 788;
O'Connor v. Golden Qate Mfg. Co.,
136 Cal. 637, 87 Am. St. Rep. 127;
Omaha Bottling Co. v. Theiler, 59
Neb. 267, 80 Am. St Rep. 678; Dalle-
mand v. Saalfeldt, 175 111. 310, 67 Am.
St Rep. 214, 48 L. R. A. 753; Siegel,
Cooper & Co. v. Trcka, 218 111. 559, 109
Am. St Rep. 302, 2 L. R. A. (N. S.)
647; Addlcks v. Christopb, 62 N. J.
L. 786, 72 Am. St Rep. 687; Sailer v.
Freedman Bros. Shoe Co., 130 Mo.
App. 712; Chambers v. Woodbury
Mfg. Co., 106 Md. 496, 14 L. R. A.
(N. S.) 388; Magone y. Portland
Mfg. Co., 51 Ore. 21.
Child labor statutes are usually
eonatrued to deprive the master of
the defense of assumption of risk if
the injury occurred In an employ-
ment in violation of them. Inland
Steel Co. V. Yedinak, 172 Ind. 428»
139 Am. St Rep. 389; Madden v.
Wilcox, 174 Ind. 667; Stehle v. Jae-
ger Machine Co., 225 Pa. 348, 183 Am.
St Rep. 884, 14 Ann. Ca& 122; Lena-
han V. Plttston Coal Co., 218 Pa. 311,
120 Am. St Rep. 885, 12 L. R. A. (N.
S.) 461; Strafford v. Republic Iron
Co., 238 IlL 371. 20 U R. A. (N. S.)
876; Berdos v. Tremont ft Suffolk
Mills, 209 Mass. 489, Ann. Cas. 1912
B. 797; aiucina v. Goes Brick Co., 68
Wash. 401; Norman v. Virginia Poca-
hontas Coal, 68 W. Va. 405, 31 U R.
A. (N. S.) 504.
Inexperienced persona, — See Di
Bari V. Bighop Co., 199 Mass. 254, 127
Am. St Rep. 497, 17 U R. A. (N. S.)
773; Republic Iron Co. v. Ohler, 161
Ind. 393; Fletcher Bros. ▼. Hyde^
86 Ind. App. 96.
1261
i 1671]
THE LAW OF AGENCT
[book IV
authorities arc in conflict The statute may, indeed, and sometimes
does, expressly provide that an assumption of the risk shall not be
permitted." Where there is no such provision, it is held by some courts
to be contrary to sound policy to permit an assumption of the risk to
be inferred.** Other courts hold, on the contrary, that there is no
«• Johnson v. Southern Pac. R. R.
t3o., 196 U. S. 1. 49 U Ed. 363;
Schlemmer v. Buffalo, etc., Ry. Co.,
2(» U. S. 1, 51 L. Ed. 681; KaiUHU
City, etc., R. R. Co. v. Flippo, 138
Ala. 487 (referring to the federal
act in regard to automatic couplers
for railroads); Luken v. Lakeshore,
etc., Ry. Co., 248 UL 377, 140 Am. St.
Rep. 220 (same).
In North Carolina, see Coley v. N.
C. R. Co., 128 N. C. 534, 67 L. R. A.
817; Mott ▼. Southern Ry. Co., 131 N.
C. 234; Thomas ▼. Raleigh, etc., R.
R. Co., 129 N. C. 392: Cogdell v.
Southern R. R. Co., 129 N. C. 398.
See also, Coley v. N. C. R. Co., 129
N. C. 407, 67 L. R. A. 817.
For constitutional provisions, see
Buckner v. Richmond, etc., R. Co.,
72 Miss. 873; Youngblood v. S. C,
etc., R. Co., 60 S. C. 9. 85 Am. St
Rep. 824; Carson v. Southern Ry. Co.,
68 S. C. 55; Norfolk, etc., R. R. Co.
V. Cheatwood, 103 Va. 856.
»• Narramore y. Cleveland, etc., Ry.
Co., 87 C. C. A. 499, 48 L. R. A. 68;
St. Louis, etc., R. Co. v. White, 93
Ark. 368; Johnson v. Mammoth Vein
Coal Co., 88 Ark. 243, 19 L. R. A. (N.
S.) 646; Streeter v. Western Wheeled
Scraper Co., 254 IH. 244, 41 L. R. A.
(N. S.) 628; Waschow v. Kelley Coal
Co., 245 111. 516; Peebles v. O'Gara
Coal Co., 239 111. 370; Spring Valley
Coal Co. V. PatUng, 210 111. 342; Spring
Valley Coal Co. t. Rowatt, 196 111.
156; Catlett v. Young, 143 IlL 74.
See also, Browne v. Slegel Cooper ft
Co., 191 in. 226; Landgraf v. Kuh,
188 lU. 484; United States Cement
Co. V. Cooper, 172 Ind. 599; Davis v.
Mercer Lbr. Co., 164 Ind. 413; Green
V, American Car ft Foundry Co., 163
Ind. 135; Davis Coal Co. v. PoUand,
158 Ind. 607, 92 Am. St. Rep. 319;
Monteith v. Kokomo, etc., Co., 159
Ind. 149, 58 L. R. A. 944; Indiana,
etc.. Coal Co. v. Neal, 166 Ind. 458,
9 Ann. Cas. 424; Bromer ▼. Locke, 81
Ind. App. 353. See also, Aiaeriean
RoHing MiU Co. v. HuUinger, 161 Ind.
673; Poli V. Numa C^al Co., 149 Iowa,
104, 33 L. R. A. (N. S.) 646; Stephen-
son V. SheiBeld Brick Co., 161 Iowa,
371; Western, etc., Mfg. Co. v. Bloom,
76 Kan. 127, 123 Am. St. Rep. 123,
11 L. R. A. (N. S.) 225; Low v. Clear
Creek Coal Co., 140 Ky. 764, 38 L. R.
A. (N. S.) 656; Sipes v. Michigan
Starch Co., 137 Mich. 258; Murphy
V. Grand Rapids Veneer Works, 142
Mich. 677; Rivers v. Bay City Trac
Co., 164 Mich. 696; Kteinf^t v. Som-
ers Oial Co., 156 Kich. 473, 132 Am.
St. Rep. 532; Durant v. Lexington
Coal Min. Co., 97 Mo. 62; McGinnia
y. Printing Co., 122 Mo. App. 227;
Nairn v. National Biscuit Co., 120
Mo. App. 144; Stafford v. Adams, 113
Mo. App. 717 (but see dictum in
Spiva V. Osage Coal ft Min. Co., 88
Mo. 68); Fitzwater v. Warren, 206
N. Y. 355, 42 L. R. A. <N. S.) 1229;
Greenlee v. Southern Ry. Co., 122 N.
C. 977, 65 Am. St. Rep. 784, 41 L. R.
A. 399;. HiU V. Saugestad, 53 Oreg.
178, 22 L. R. A. (N. S.) 634; Solt v.
Williamsport Radiator Co., 231 Pa.
585 (dictum); Kilpatrick v. Grand
Trunk Ry. Co., 74 Vt. 288, 98 Am. St.
Rep. 887; GusUfson v. West Lbr. Co.,
51 Wash. 25; Whelan v. Washington
Lbr. Co., 41 Wash. 158, 111 Am. St
Rep. 1006; Hoveland ▼. Hall Bros,
etc., Co., 41 Wash. 164; Hall v. West,
etc, Mill Co., 39 Wash. 447, 4 Ann.
Cases 587; Johnson ▼. Far West
Lumb. Co., 47 Wash. 492; Anderson
V. Pac. Lumb. Co., 60 Wash. 415;
Dukette T. Northwestern Co., 61
Wash. 95.
1262
CHAP. IV]
DUTIES AND LIABILITIES OP PRINCIPAL [ §§ 1672, 1673
sound reason for a distinction between the employer's common-lavr
duty and such a statutory duty, and that the risk may be assumed in
either case/* If the considerations suggested with reference to the
assumption of the risks caused by the master's failure to perform non-
statutory duties have any weight, a fortiori ought they to operate here
to prevent assumption in the case of statutory duties.
§ 1672. ' Assumption of risk of the sort here in question
as in the case of the non-statutory sort cannot be regarded as a matter
of executory agreement/^ It is a question of conduct in view of an
existing state of facts. Regarded as a matter of executory contract
with reference to future negligence, it would usually be condemned as
opposed to public policy.** New York, for example, which uf^olds
assumption of risk even in the case of statutory duties, declares invalid
an executory agreement to release the master from the consequences
of his negligence.**
§ 1673. Assumption of risk distinguishable from contrib-
utory negligence. — Assumption of risk is a different matter from
contributory negligence.** As has already been pointed out, the term
<oSt. Louia Cordage Co. v. Miller,
61 C. C. A. 477, 63 L. R. A. 551;
Denver, etc., R. R. Co. v. Norgate, 72
C. C. A. 366, 6 L. R. A. (N. S.) 981;
Nottage V. Sawmill Phoenix, 13? Fed.
979; Birmingham R. & Electric Co.
V. Allen, 99 Ala. 359, 20 L. R. A. 457;
Denver, etc., R. Co. v. Gannon, 40
Colo. 195, 11 L.. R. A. (N. S.) 216.
See also, Browne v. Slegel, Cooper &
Co., 191 111. 226; Martin v. C. R. I.
& P. Ry. Co., 118 Iowa, 148, 96 Am.
St. Rep. 371, 59 L. R. A. 698; GUlin
V. Patten & S. R. Co., 93 Me. 80
(probably distinguishable); O'Maley
V. South Boston Gaslight Co., 158
Mass. 135, 47 L. R. A. 161; Keenan
V. Edison, etc., Co., 159 Mass. 379;
Cassady v. Boston ft A. R. R. Co.,
164 Mass. 168; Marshall v. Norcross,
191 Mass. 568; Anderson v. Nelson
Lbr. Co., 67 Minn. 79; Swenson v.
Osgood ft B. Mfg. Co., 91 Minn. 509;
McGlnty V. Waterman, 93 Minn. 242,
3 Ann. Cas. 39; Seely v. Tennant,
104 Minn. 354; Knisley v. Pratt, 148
N. Y. 372, 32 L. R. A. 367; White v.
Witteman Lithographing Co., 131 N.
Y. 631; Jenks v. Thompson, 179 N.
I
Y. 20. But these are now apparent-
ly overruled in Fltzwater v. Warren,
206 N. Y. 355, 42 L. R. A. (N. S.)
1229; Mika v. Passaic Print Works,
76 N. J. L. 561; Hesse v. Columbus,
etc., R. R. Co., 58 Ohio St. 167; Johns
V. Cleveland, etc., R. R. Co., 23 Ohio
Cir. Ct. 442; affirmed without opin-
ion in 69 Ohio St. 532; Cleveland R.
R. Co. V. Somers, 24 Ohio Cir. Ct. 67;
Langlois v. Dunn Worsted Mills, 25
R. I. 645; Holum v. Chicago, etc., R,
R. Co., 80 Wis. 299; Helmke v. ThlK-
many, 107 Wis. 216; Williams r.
Wagner 'Co., 110 Wis. 456.
*i The contrary of this Is, indeed,
stated in the opinion In Dowd v.
New York, etc., R. Co., 170 N. Y. 459.
It must be conceded, however, that
some of the language in that opinion
was unfortunately chosen. See John-
ston V. Fargo, 184 N. Y. 379. 7 L. R.
A. (N. S.) 537. 6 Ann. Cas. 1.
« See po8i, § 1681.
43 Johnston v. Fargo, supra,
*-» Choctaw, etc., R. Co. v. McDade,
191 U. S. 64, 68, 48 L. Ed. 96. (Cf.
Schlemmer v. Buffalo, etc., R. Co., 205
U. S. 1, 51 L. Ed. 681.) St Louis
263
§ 1673] 7HE LAW OF AGENCY [BOOK IV
properly applies, not to the ordinary^ necessary and inherent risks which
usually belong to the business even when carried on under normal cir-
cumstances and with due care, but to those unusual and extraordinary
risks which arise, occasionally because of unusual physical conditions,
but most frequently from the negligent manner in which the master
carries on his business. As has also been pointed out, the time of as-
sumption may be when the servant accepts the employment with full
knowledge of these unusual risks in addition to the ordinary and in-
herent ones, but it is usually when the servant, having entered upon the
service without such knowledge, finds, after he is in it, that they exist,
and then remains in the employment without protesting and obtaining a
promise that the conditions will be changed. Now, remaining in the
service under these circumstances is not per st contributory negli-
gence, though it is usually held to be an assumption of the risk. The
servant finding himself in the midst of unexpected risks decides to re^
main and to try to get along with the situation. If the risks are so ob-
vious and so necessary and immediate that no reasonable man would
so remain, the act of remaining may constitute contributory negligence;
here assumption of risk and contributory negligence are substantially
merged, but it certainly sounds very ill in the mouth of the master to
urge that the act of tlie servant in remaining at his post amid dangers
caused by the master's negligence is to be regarded as contributory
negligence on the part of the servant unless that conclusion is prac-
tically irresistible.
But while remaining in the service is not necessarily contributory
negligence, it is possible that the servant while acting in his perilous
situation, instead of exercising reasonable care not to be injured by
the assumed risks, may so carelessly conduct himself as to receive in-
juries which reasonable care would have prevented. Such a failure to
exercise due care would constitute contributory negligence.
In practical results, the outcome may not be different. The servant's
assumption of the risks would make the defence of contributory negli«
gence unnecessary. If assumption of the risks should not be found,
but contributory negligence existed, that would be a defence. If the
servant had not assumed the risks and had still conducted himself with
due care in his perilous situation, neither defence could be successfully
urged by the master.
Cordage Co. v. Miller, 61 C. C. A. 477, 21 L. R, A. (N. SO 138; Solt t. Will-
63 L. R. A. 651; Bradburn v. Wabash iamsport Radiator Co., 231 Pa. 585;
R. Co., 134 Mich. 575; Rase v. Mln- Johnson v. Mammoth Vein Coal Co.,
neapolis, etc., Ry. Co., 107 Minn. 260, 88 Ark. 243, 19 U R. A. (N. S.) 646.
1264
CHAP. IVj DUTIES AND LIABILITIES OF PRINCIPAL [§ 1674
g 1674. . How determined — Court or jury.— Whether the
question of the assumption of the risk is one of fact to be determined in
each case by the jury, or whether it may be determined by the court is
a question on which there seems to be some difference of opinion. In
the case from which quotation has been already made/' it was said:
"Now, while it is true, as the decisions to which we have adverted de-
clare, that mere knowledge of a defect by a servant who continues in
the employment does not necessarily establish the fact as a matter of
law that he has assumed the risk it entails, and while it is also true that
he does not assume such a risk imless an ordinarily prudent person of
his capacity in his situation would have appreciated the danger from it,
it is eqrrally true that a servant who enters or continues in the employ-
ment of his master in the presence of visible or obvious defects and
plain or apparent dangers from them, which he knows or appreciates,
or which an employee of his intelligence and capacity would by the ex-
ercise of ordinary care and prudence know and appreciate, assumes the
risk of these dangers, and he cannot be heard to say that he did not
appreciate them, and when the uncontradicted evidence establishes
these facts no case arises in his favor, no question remains for the jury,
and it is the duty of the court to peremptorily instruct them to return
a verdict for the master. This is a familiar and well-established rule
of law." *•
In order, to make this rule applicable it should appear, as has been
pointed out, not only that the defect was obvious but that the risk was
either actually appreciated or so patent as to warrant the assumption
that it was appreciated. Where there is room for reasonable difference
of opinion about this, the case should go to the jury.*''
M St Louis Cordage Co. v. Miller, Thomasino, 99 C. C. A. 523, 29 L. R.
«1 C. C. A. 477, 63 L. R. A. 651. A. (N. S.) 606.
46 To same effect: Podvln ▼. Pep- ^^pitzgerald v. Paper Co., 156
perel Mfg. Co., 104 Me. 561, 121 Am. Mass. 155, 81 Am. St. Rep. 537;
St Rep. 411; MUhy Coal Co. v. Balla, 7 Brown v. Coal Co., 143 Iowa, 662, 28
Ind. Ter. 629, 18 L. R. A. (N. S.) L. R. A. (N. S.) 1260; Meier v. Way,
696; Utah Consol. Min. Co. v. Bate- 136 Iowa, 302, 125 Am. St Rep. 254;
man, 99 C. C. A. 865, 27 L. R. A. (N. Browne v. Siegel, 191 111. 226; Choc-
S.) 958; Glenmont Lumber Co. y. taw, etc., Ry. y. McDade, 191 tJ. S. 64,
Roy, 61 C. C. A. 506, 186 Fed. 624; 48 L. Bd. 96; Marshall y. Dalton
Burke y. Union Coal Co., 84 C. C. A. Paper Mills, 82 Vt. 489. 24 U R. A.
626, 157 Fed. 178; Chicago, etc. Ry. (N. S.) 128; Chicago, M. & St P. Ry.
y. Crotty, 73 C. C. A. 147, 4 L. R. A. y. Benton, 65 C. C. A. 660, 132 Fed.
(N. S.) 832; Lamson y. American 460; Mahoney y. Dore, 155 Mass. 513;
Axe Co., 177 Mass. 144, 83 Am. St Hilgar y. Walla, 50 Wash. 470, 19 L.
Rep. 267; RepubUc Iron Co. y. R. A. (N. S.) 367; Rankel y. Buck-
80 1265
§§ 1675,1676]
THE LAW OF AGENCY
[book IV
The English cases, holding as has been seen a more liberal rule re-
specting the voluntary character of the servant's conduct, treat the ques-
tion of assumption as one for the jury in many cases in which the
American courts would direct a verdict.**
§ 1675. ■ Protests against doctrine. — There is undoubtedly a
growing feeling against this doctrine of the assumption of risks.**
The doctrine is based upon our legal conceptions of freedom of con-
tract and freedom to accept or reject risks at pleasure. Practically,
however, it may be urged that while there is theoretic freedom there
is economic dependence. The servant is not free to choose. He must
work and rather than lose his place, he accepts conditions which menace
his safety. Frequently he is so young, inexperienced or immature
that he does not in fact appreciate the danger however much he ought
to have done so. Moreover, his safety alone is not the only interest
involved. The interests of those who are dependent upon him are in-
volved ; and society is interested, because, if the servant or those de-
pendent upon him become derelict, society must assume the burden of
caring for them. In behalf of these latter interests, therefore, it may
be urged that the master ought not to be permitted to throw the burden
of his own failure to perform his legal duties upon the servant, even
though the latter may have been ready to assume it. Certainly no one
can read the cases upon the subject without being forced to believe
at least that assumption of risks is often too easily and readjly found.
7. Contributory Negligence.
§ 1676. Contributory negligence of servant defeats his recovery.^
Notwithstanding the fact of the master's negligence, the servant's right
of recovery may be defeated by his own contributory negligence. The
same rules which govern the question of contributory negligence in
other cases apply here. A servant has no cause of action against his
master for an injury resulting from the negligence of the master, if
Btaff-Edwards Co., 188 Wis. 442, 20
L. R. A. (N. S.) 1180; Burgess v.
Davis Sulphur Ore Co., 165 Mass. 71;
F^rren v. Old Colony Ry., 143 Mass.
197; Choctaw, etc., Ry. v, Craig, 79
Ark. 63; Murphy v. O'Neil, 204 Mass.
42, 26 L. R. A. (N. S.) 146; Crim-
mlns V. Booth, 202 Mass. 17, 132 Am,
St. R. 468; Rase v. Minneapolis St.
P. Ry., 107 Minn. 260. 21 L. R, A. (N.
S.) 138.
«See Smith v. Baker, [18911 App.
Cas. 325; Baddeley y. Granville, 19
Q. B. Div. 423: Thomas v. Quarter-
maine, 18 Q. B. Div. 6S5; Fitzgerald
V. Paper Co., supra,
*» See Johnston v. Fargo, 184 N. Y.
379, 6 Ann. Cas. 1, 7 L. R. A. (N. S.>
537; Butler v. Frazee, 211 U. S. 469;
Richmond, etc, R. Co. v. Norment, 8*
Va. 167, 10 Am. St. Rep. 827.
1266
•CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1676
50
the servant's own negligence directly contributed to cause the injury.
Even though the master's negligence was greater than the servant's,
the common law does not, in general, undertake to compare the de-
grees or to apportion the blame accordingly. Statutes upon the sub-
ject, however, sometimes provide for such an apportionment*^
50 Warden v. Louisville, etc., R.
Co., 94 Ala. 277, 14 L. R. A. 552; St.
Louis, etc., Ry. Co. v. Dupree, 84 Ark.
377, 120 Am. St Rep. 74; St Louis,
etc., Ry. Co. v. Rice, 51 Ark. 467, 4
L. R. A. 173; Victor Coal Co. v. Mulr,
20 Colo. 320, 46 Am. St Rep. 299, 26
Li, R. A. 435; Baker v. Hughes, 2
Colo. 79; Elliott v. Chicago, etc., R.
Co., 5 Dak. 523, 3 L. R. A. 363; Flor-
ida, etc., R. Co. V. Mooney, 45 Fla.
236, 110 Am. St Rep. 78; Carroll v.
East Tenn., etc., R. Co.. 82 Ga. 452,
6 L. R. A. 214; Campbell v. Atlanta,
etc., R. Co., 53 Ga. 488; N. Y., etc.,
R. Co. V. Hamlin, 170 Ind. 20, 15
Ann. Cas. 988, 10 L. R. A. (N. S.)
381; Davis Coal Co. v. PoUand, 158
Ind. 607, 92 Am. St Rep. 319; Muldow-
ney r. Illinois Cent R. Co., 39 Iowa,
<I15; Lancaster's Admr. v. Central
City Light Co., 137 Ky. 355; Potts v.
Shreveport Belt Ry. Co., 110 La. 1,
98 Am. St Rep. 452; Schoultz v.
Eokardt Mfg. Co., 112 La. 568, 104
Am. St Rep. 452; Buzzell y. Laconia
Mfg. Co., 48 Me. 113, 77 Am. Dec. 212;
Wormell v. Maine Cent. R. Co., 79
Me. 397, 1 Am. St Rep. 321; State v.
Malster, 67 Md. 287; Grand v. Michi-
gan, etc., R. Co., 83 Mich. 564, 11 L.
R. A. 402; Vicksburg, etc., R. Co. v.
Wilkins, 47 Miss. 404; Seibert y. Mis-
souri, etc., R. Co., 188 Mo. 657, 70
L. R. A. 72; CHare y. Cocheco Mfg.
Co., 71 N. H. 104, 93 Am. St. Rep.
499; Johnston y. Syracuse Lighting
Co., 193 N. Y. 5«2, 127 Am. St 988;
Bennett v. Northern Pac. R. Co., 2
N. D. 112, 13 L. R. A. 466; Solt V.
Williamsport Radiator Co., 231 Pa.
685; Honor y. Albrighton, 93 Penn.
475; Green, etc., Ry. Co. v. Bresmer,
97 Penn. 103; Houston, etc., Ry. Co.
V. DeWalt, 96 Tex. 121, 97 Am. St
Rep. 877; Darracott y. Chesapeake,
T
etc., R. Co., 83 Va. 288, 5 Am. St.
Rep. 266; Miller y. Moran Bros. Co.,
39 Wash. 631, 109 Am. St Rep. 917.
1 L. R. A. (N. S.) 283; Stratton v.
Nichols Lbr. Co., 39 Wash. 323, 109
Am. St. Rep. 881; Chicago, etc., R.
Co. V. Crotty, 73 C. C. A. 147. 4 L. R.
A. (N. S.) 832; Atchison, etc., R. Co.
. y. Reesman, 19 U. S. App. 596, 9 C. C.
A 20, 23 L. R. A. 768; Cunningham v.
Railway Co., 17 Fed. 882.
Bi The Federal Employers' Liability
Act of 1906 (declared unconstitution-
al on other grounds) provided that
the contributory negligence of the
employee should not bar his recovery
where his negligence was slight and
that of the employer was gross in
comparison, but that the damages
should be diminished accordingly.
The Act of 1908 provides that ''the
fact that the employee may have been
guilty of contributory negligence shall
not bar a recovery, but the damages
shall be diminished by the Jury in
proportion to the amount of negli-
gence attributable to such employee."
Sec. 3.
The Georgia Code (1895, § 2322)
provides that "No person shall re-
cover damages from a railroad com-
pany for injury to himself or his
property where the same is done by
his consent or Is caused by his own
negligence. If the complainant and
the agents of the company are both
at fault, the former may recover, but
the damages shall be diminished by
the jury in proportion to the amount
of default attributable to him."
A doctrine of comparative negli-
gence at one time prevailed in Illi-
nois, but "The doctrine of compara-
tive negligence no longer exists in
this state." Macon v. Holcomb, 205
III. 643.
267
§ I677J
THE LAW OF AGENCY
[book IV
The effect of contributory negligence is, in general, as potent where
the liability is a statutory one as it is where common law liabilities are
concerned."
The fact that the servant is an infant, if old enough to be charged
with the duty of care, does not ordinarily affect the application of the
doctrine of contributory negligence ; but this is not true under many of
the statutes forbidding the employment of minors.'*
§ 1677. ■ As has been already pointed out, contributory neg-
ligence is a different matter from that of assumption of risk. Where
the servant has assumed the risks, either usual or unusual, of the em-
ployment in which he is engaged, and is injured by reason of one of
them (as he may be though in the exercise of due care in the dan-
gerous situation in which he has Consented to work) , the master is not
liable because, by the hypothesis, the servant has taken this risk upon
himself. It is entirely possible, however, that the servant may have
failed to exercise due care and thus have brought upon himself an in-
Comparatiye negligence "was also
thought to be the rule In Tennessee
at one time, but it has been repudi-
ated in the later cases. Railway Co.
V. Hull, 88 Teim. 33; Railway Co. v.
Aiken, 89 Tenn. 245. So, in Kansas:
Atchison, etc., R. Co. v. Henry, 67
Kan. 154.
52 Narramore v. Cleveland, etc., Ry.
Co., 37 C. C. A. 499. 48 L. R. A. 68;
Taylor v. Carew Mfg. Co., 148 Mass.
470; Keenan v. Edison, etc., Co.,
159 Mass. 379; Victor Coal Co. v.
Muir, 20 Colo. 320, 46 Am. St. Rep.
299, 26 L. R. A. 435; Chicago, etc., Ry.
Co. V. Brown, 44 Kan. 384; Grand v.
Michigan Cent. R. Co., 83 Mich. 564;
Farquhar v. Alabama, etc., R. Co.,
78 Miss. 193; Wabash, etc., R. Co. v.
Thompson, 16 111. App. 117; Ford v.
Chicago, etc., R. Co., 91 Iowa, 179, 24
L. R. A. 657; Kilpatrick v. Grand
Trunk Ry. Co., 72 Vt. 263, 82 Am. St.
Rep. 939; Krause v. Morgan, 63 Ohio
St. 26; Queen v. Dayton Coal ft Iron
Co., 95 Tenn. 458, 49 Am. St. Rep.
935, 30 L. R. A. 82; Christner v.
Cumb., etc., Coal Co., 146 Pa. 67;
Graham v. Newbury, etc.. Coke Co.,
38 W. Va. 273; Holum v. Chicago,
etc., R. Co., 80 Wis. 299; Lake Brie,
etc., Ry. Co. v. Craig, 73 Fed. 642;
Anderson v. Lumber Co., 67 Minn.
79; Munn v. Wolff, 94 111. App. 122;
Johnson t. Mammoth Vein Coal Co.,
88 Ark. 243, 19 L. R. A. (N. 3.) 646.
u Where the employment of minora
is expressly forbidden by statute, it
is held by some courts that the de-
fense of contributory negligence can
not be made. See L^iahan v. Pittston
Coal Mining Co., 218 Pa. 811, 120 Am.
St. Rep. 886, 12 L. R. A. (N. S.) 461;
Stehle v. Jaeger Machine Co., 225 Pa.
348, 133 Am. St. Rep. 884, 14 Ann.
Cas. 122; Strafford r. Republic Iron
Co., 238 in. 371, 128 Am. St Rep. 129,
20 L. R. A. (N. S.) 876; Marino v.
Lehmaier, 173 N. T. 630. By other
courts, the effect of the statute is
deemed to be to make the master
liable for all injuries caused by the
service, but not those caused by the
infant's own negligence. Darsam v.
Kohlman, 123 La. 164, 20 L. R. A.
(N. S.) 881; Norman v. Virginia Poca-
hontas Coal Co., 68 W. Va. 405, 31 !•.
R. A. (N. S.) 604; Evans v. Ameri-
can Iron Co.. 42 Fed. 519; Queen v.
Dayton Coal Co., 95 Tenn. 458, 49
Am. St. Rep. 935, 80 L. R. A. 82.
I26S
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§ 1678
jury which, notwithstanding the dangerous situation, would not other-
wise have happened to him. He could not recover for this, primarily
because he had asstuned the entire risk, and, even if he had not, because
of his contributory negligence. If the doctrine of assumption of risks
be not adopted, then the servant's failure to protect himself would have
its usual significance.
§ 1678. Effect of express command of master. — Contribu-
tory negligence is not to be so readily imputed to the servant where he
did the act, alleged to be negligent on his part, as the result of the
express direction or command of the master or of someone who rep-
resented the master in that behalf. Ordinarily it may be presumed
that the master knows better than the servant the dangers of the em-
ployment. There is, too, as has been seen, a presumption that the
master's orders are proper and lawful, and the servant who disobeys
them must take upon himself the burden of showing that they were
otherwise.'* It is to be expected therefore that great weight will be
given by the servant to his master's orders which he has undertaken to
obey, and where the service is continued, or the task undertaken, by
the express order or command of the master or those who represent
him, this fact must be taken into consideration in determining the
question of the servant's contributory negligence. The command of
the master would not justify the servant in going into plain, undoubted
and imminent danger, such as no man of ordinary prudence would
encounter.** But in determining this question, too, regard must be
had to the exigencies of the case. A prudent man even will run more
risks in times of hazard or threatened disaster, than at other times
when there is no pressing need. And so, under such circumstances,
men cannot be expected to weigh the chances with i nice precision.
Each case is left to be judged by its own circumstances and surround-
ings. The rule of contributory negligence is, therefore, to be modified
in this regard, that if the servant incur risk by the express command
of the master or his agent, and the danger was not so inevitable or
imminent that a man of ordinary prudence would not, under the cir-
cumstances, have incurred it, the servant is not to be deemed guilty of
contributory negligence.**
84 See ante, S 1244 et seq. »« Southern Ry. Co. ▼. Shields, 121
8" Mason v. Post, 105 Va. 494; Lowe Ala. 460, 77 Am. St Rep. 66; Choctaw,
Mfg. Co. ▼. Payne, 167 Ala. 245, 30 L. etc., R. Co. v. Jones, 77 Ark. 367, 7
R. A. (N. S.) 436; Roul v. Railway Ann. Cas. 430, 4 L. R. A. (N. S.)
Co., 85 Ga. 197; Shortel v. St. Joseph, 837; Foley v. California Horseshoe
104 Mo. 114. 24 Am. St Rep. 817. Co., 115 Cal. 184, 56 Am. St Rep. 87;
1269
§ i679l
THE LAW OP AGENCY
[book IV
The £act that the senrant was young or inexperienced may also be
ken into account, since he may have neither the judgment to realize
e danger nor the strength of will to resist an unwarranted direction.*^
8, Statutes Changing Common Law Rules.
§ 1679. Statutory changes. — ^Attempts have been made in a number
of instances to change or modify the rules of the common law respect-
ing the master's liability to his servant A detailed statement of these
statutes is not appropriate here, but a general reference to them may
not be out of place. In 1880 the English Parliament passed an em-
ployers' liability act, which, in general terms, made the employer lia-
ble for injuries caused by negligently defective "ways, work, ma-
chinery or plant" or by the negligence of any servant charged with the
power of superintendence or direction or by the negligence of servants
charged with the control of signals, switches, engines and trains. In
1897 a new act was passed, revised and extended in 1906 (and which
did not supersede the act of 1880), which proceeded upon the theory,
then entirely new in English law, of requiring the employer to make
certain fixed compensation, without regard to his negligence, whenever
death or accident occurred in the service, including therein death or
disability from certain occupational diseases. In the United States, a
number of states have abolished the fellow servant rule and made
other changes so far as railroads are concerned," and several states
have adopted employers' liability acts substantially similar to the Eng*
Little V. Southern Ry. Cto., 120 Ga. Co.. 71 N. H. 104, 93 Am. St. Rep. 499;
347, 102 Am. St Rep. 104, 66 L. R.
A. 509; Western Stone Co. v. Musclal,
196 III. 382, S9 Am. St Rep. 325;
Taylor v. Evansville, etc., R. Co.,
121 Ind. 124, 16 Am. St Rep. 372,
6 L. R. A. 5S4; Fraudsen v. Chicago,
etc.. R. Co., 36 Iowa, 372; Fox v. Chu
cago, etc., Ry. Co., 86 Iowa, 368, 17
L. R. A. 289; Shaver v. Home Tele-
phone Co., 36 Ind. App. 233, 114 Am.
St Rep. 373; St Louis, etc., R. Co.
V. Morris, 76 Kan. 836, 18 L. R. A.
(N. S.) 1100; Pullman Co. v. Geller,
128 Ky. 72, 129 Am. St Rep. 295; Mc-
Kee V. Tourtellotte, 167 Mass. 69, 48
L. R. A. 542; Chicago, etc., Ry. Co. v.
Bayfield, 37 Mich. 204; Schroeder ▼.
Chicago, etc., R. Co., 108 Mo. 822, 18
L. R. A. 827; CHare v. Cocheco Mfg.
Mason v. Richmond, etc., R. Co., Ill
N. C. 482, 32 Am. St Rep. 814, IS L.
R. A. 845; Noble v. Roper Lumber
Co., 151 N. Car. 76, 134 Am. St Rep.
974; Schlgllzzo v. Dunn, 211 Pa. 253,
107 Am. St. Rep. 567; Patterson ▼.
Pittsburg, etc., R. Co., 76 Pa. 389,
18 Am. Rep. 412; East Tenn., etc., R.
Co. V. Duffleld, 12 Lea (Tenn.), 63. 47
Am. Rep. 319; Tuckett ▼. American
Steam Laundry Co., 80 Utah, 278, 116
Am. St Rep. 832.
ST Dougherty v. Dobson, 214 Pa.
252, 31 Am. St Rep. 777; Kehler v.
Schwenk, 151 Pa. 505, 18 L. R. A.
374; Lowe y. Southern Ry., 85 S. Car.
863, 137 Am. St Rep. 904.
s^Arkanaas: Acta 1911, p. 66^
1270
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1679
lish employers' liability act of i88o.'^* Recently still more sweeping
legislation, either in the form of liability acts^ compensation acts, or
Florida: Statu, of 1906, § 3150.
Georgia: Code of 1S95, §§ 2610,
2823, 2297. Code of 1911, §§ 2761,
2782-4, 3129, 3602.
Indiana: Buma' Code 1901, § 7083
(limited to railroads by construction.
See Indiana cases cited, post),
Iowa: Snpp. 1907, § 2071; Laws
1909, ch. 124.
Kansas: Qen. Stat. 1901, 8 6312;
Laws of 1905, p. 540: Laws of 1909.
S 6999.
Maine: Laws of 1909, ch. 258.
Minnesota: 1905 Stats. § 2040.
Mississippi: Const^ | 198; Code
1906, § 4056.
Missouri: Rev. Stats. { 2878~4-5-«;
Laws of 1911, p. 157 (as to railroads
and mines).
Montana: 1907 Rer. Stats. § 5261;
Laws of 1911, ch. 29.
Nebraska: Ajin. Stats. 1909, § 2803.
North Carolina: Rev. Stats. 1905,
( 2646.
Oklahoma: Const Art. IX, § 36.
South Carolina: Const Art. IX,
§ 15.
Texas: Laws 1897, p. 14, ch. 6;
Say re's Code, § 4560; Laws 1905, ch.
163; Laws 1909, ch. 10.
Utah: Comp. Laws of 1907, S 1343.
Vermont: Laws 1910, p. 101.
Wisconsin: Stat 1898 S 1816; Laws
of 1908, ch. 448; Laws of 1907, p. 495.
Statutes abolishing the fellow-serv-
ant rule only wfth reference to rail-
roads have been uniformly held con-
stitutional against contentions that
they are founded on an arbitrary
classification, a denial of equal pro-
tection of the laws, etc., on the
ground that it is an occupation that
is peculiarly and inherently hazard-
ous. See Missouri Pac. Ry. Co. v.
Castle, 224 U. S. 541 (upholding the Ne-
braska act); Mobile, etc., R. Co. v.
Tumipseed, 219 U. S. 85 (upholding
Mississippi act) ; Missouri Pacific Ry.
Co. V. Mackey, 127 U. S. 205, 32 U
Ed. 107 (upholding the Kansas law);
Missouri Pacific Ry. Co. y. Haley, 25
Kan. 35; Boggs v. Alabama, etc.. Iron
Co., 167 Ala. 251, 140 Am. St Rep. 28;
Johnson v. St Paul Ry. Co., 43 Minn.
222, 8 L. R. A. 419; Deppe v. Chicago,
etc., R. Co., 36 Iowa, 52; Callahan
V. St Louis, etc., Ry. Co., 170 Mo.
473, 94 Am. St Rep. 746, 60 L. R. A.
249; Swoboda v. Union Pac. R. Co.,
87 Neb. 200, 138 Am. St Rep. 483;
Chesapeake A Ohio Ry. Co. y. Hoff-
man, 109 Va. 44; Schradin v. N. Y.
Gent., etc., R. Co., 103 N. Y. Supp.
73, B. c. 109 N. Y. Supp. 428; Missouri,
etc., R. Co. V. Smith, 45 Tex. Civ.
App. 128, 4 Ann. Cas. 644; Missouri,
etc., R. Co. V. Bailey, 63 Tex. Civ.
App. 295; Mobile, eto., R. Co. v.
Hicks, 91 Miss. 273, 124 Am. St Rep.
679; CJonstruction Co. y. Heflin, 88
Miss. 314; Kiley v. Chicago, etc., R.
Co., 138 Wis. 215; Lewis v. Northern
Pacific Ry. Co., 36 Mont 207; Pitts-
burg V. Leltheiser, 168 Ind. 438; Bed-
ford Quarries Co. y. Bough, 168 Ind.
671, 14 L. R. A, (N. S.) 418; In-
dianapolis, etc., Co. v. Kinney, 171
Ind. 612, 23 L. R. A. (N. S.) 711;
Louisville, etc., R. CJo. v. Melton, 127
Ky. 276; Pitteburg. etc.. Ry. Co. v.
Montgomery, 152 Ind. 1, 71 Am. St
Rep. 301, 69 L. R. A. 875; Hancock r.
Norfolk, etc., R. Co., 124 N. C. 222;
Pierce v. Van Dusen, 78 Fed. 693 (up-
holding the Ohio statute).
(•Alabama: Code of 1907, § 3910.
Indiana: Bums' Code 1901, S 7083.
Massachusetta: Rev. Stats. 1902, p.
932.
New York: Laws 1902, ch. 600, p.
1748.
Virginia: 1904 Stata. I 1294k;
Const. § 162.
See also, Arkansas: Kirby's Digest,
I271
§ i679]
THE LAW OP AGBKCY
[book IV
insurance acts, has been enacted,^ most of which has been upheld by
the courts.*^
1904 ( 6658-60. KlBslflsippi: Const
S 193; Ck>de 1906, 9 4056. South Caro-
lina: Const Art. IX, S 15.
•0 Arfoona— Laws of 1912, Chap.' 89,
p. 491 does away with feUow-serrant
rule and minimizes assumption of
risk. Special Session 1912, Cliap. 14,
p. 28, Workmen's Compensation Act.
Elmployee may refuse benefits of act
and sue. Act compulsory as to rail-
roads, mines, factories, etc., and also
optional where not compulsory.
OaZt/ornio— Statutes of 1911, Chap.
899, p. 796. State Constitution, 1911,
Art. 20, Sec. 21 abolishes contribu-
tory negligence, fellow-servant rule,
assumption of risk as a defense, but
adopts comparative negligence doc-
trine as to assessment of damages.
Employer may escape liability of
suit, by. electing to become subject to
compensation features of the act
(7o2om(fo--Se88ion Laws of 1911,
Chap. 113, p. 294 abolishes fellow-
servant rule.
Jninc49—neY. Stat 1911, pp. 1136-
44, Optional Workmen's Compensation
Act If not accepted, the defenses of
contributory negligence, fellow-serv-
ant, and assumption of risk are
abolished. Election of employer pre-
sumed, unless notice to contrary is
given.
Indianor—Acis of 1911, Chap. 88, p.
145 abolishes fellow-servant rule; and
assumption of risk and contributory
negligence when in obedience to or-
ders of master or where master knew
or should have known of defect, or
where a violation by master of stat-
utory duty places harden of proof on
employer.
iTan^M— Laws of 1911, Chap. 218.
A compulsory Workmen's Compensa-
tion Act, as to railroads, factories, etc.,
emplc^lncr over fifteen. Optional with
others. Abolishes defenses of fellow-
servant, assumption of risk, oontribu-
tory negligence to employers not un-
der it, and allows by employers under
it as against employers who seek to
recover damages.
Maryland— 'lAws of 1912, Chap. 837,
p. 1624. Optional workmen's insur-
ance, under which employer is re-
lieved of common-law liabilities, ex-
cept as to a safe place of work.
MaasachiMetU — ^Acts of 1909, Chap.
514, 9 127; Acts of 1911, Chap. 761;
Acts of 1912, Chaps. 261, 571, 666. By
Act of 1911, an optional workmen's
compensation system was adopted.
For those employers not accepting the
same, the defenses of fellow-servant,
contilbutory negligence, and assump-
tion of risk were abolished.
MicMoanr—HoweWB Rev. Stat 1912,
Chap. 63, SS 3989 to 4008, Chap. 64,
S§ 4110-18. Optional workmen's com-
pensation act. For those employes
not accepting the same, the defenses
of contributory negligence, fellow-
servant, and assumption of risk are
abolished. As to railroads, defenses
of fellow-servants, assuihption of
risk, and contributory negligence are
abolished.
NevadOr—Rer, Laws of 1912, f §
1915-28. Compulsory compensation
act applying to certain hasardous
•iThe New Tork statute of 1910
was declared unconstitutional In Ives
V. South Buffalo Ry. Co., 201 N. T.
271, 34 L. R. A. (N. S.) 162, Ann. Cas.
1912 B. 156. The Wisconsin Compen-
sation Act of 1911 was upheld in
Borgnis v. Falk Co., M7 Wis. 327, 37
L. R. A. (N. S.) 489. The Massachu-
setts Act of 1911, in opinion of Jus-
tices, 209 Mass. 607. The Washington
Act of 1911, in State v. Clausen* 65
Wash. 156, 37 L. R. A. (N. S.) 466.
The Ohio Act of 1911, in SUte v.
Creamer, 86 Ohio. St 849, 89 L. B. A.
(N. S.) 694.
1272
CHAP. IV]
DUTIES AND LIABILITIES OF PKINCIPAL
[§ i68o
§ x68o.
Congress, v^hich of course has jurisdiction in the
matter only so far as it can be deemed a regulation of interstate com*
merce, has manifested considerable activity. A number of statutes
have been enacted designed to secure the adoption of safety appliances.
In 1906 an act was passed imposing liability upon all common carriers
engaged in the commerce over which coi^ress has jurisdiction. This
act was declared unconstitutional because not suflkiently limited in
its terms to persons engaged in the commerce which congress had the
power to regulate.*' In 1908 a new statute was passed affecting all
callings, e. g. railroads, mines, con-
struction work, etc., and abolishing
defenses of fellow-servant, contribu-
tory, negligence, and assumption of
risk under same.
New Hampshire — ^Laws of 1911,
Chap. 163, p. 181. Optional work-
men's compensation act, abolishing
for those employers who do not ac-
cept it the defenses of fellow-servant,
and assumption of risk. Contribu-
tory negligence may be a defense.
New Jersey — Acts of 1911, Chap. 95,
p. 134. Optional compensation act,
abolishing for those employers who
do not elect to come under the act,
the defenses of fellow-servant, and as-
sumption of risk.
New York — Birdseye, Cumming 4b
Gilbert's Consolidated Laws, pp. 3080-
95. Affects common-law remedy to
some extent as regards assumption of
risk, and superintendence. Laws of
1910, Chaps. 352, 674, enacting a work-
men's compensation law, declared un-
constitutional.
OWo— Laws of 1910, pp. 195-9; Laws
of 1911, pp. 524-33. An optional work-
men's Insurance act, abolishing for
employers not complying with act de-
fenses of fellow-servant rule, assump-
tion of risk, and contributory negli-
gence.
Oregon — Lord's Laws 1910, p.
XXX Sec. 5057a abolishes defense
of fellow-servant and contributory
negligence In certain hazardous call-
ings if master or superintendent are
negligent or violate statute.
Pennsylvania — Purdon's Digest*
1910, p. 5464-5 abolishes fellow-serv-
ant rule, when injury is due to de-
fect in plant* negligence of superin-
tendent, or in obedience to oirders of
superior.
Rhode Island — Acts of 1912, pp.
204-228. Optional workmen's compen-
sation act, abolishing defenses of fel*
low servant, contributory negligence
and assumption of risk for those em-
ployers who do not elect to come un-
der provisions of the act,
Washington — ^Laws of 1911, Chap.
74, p, 345. Compulsory workmen's
compensation act on manufacturing,
construction work, mining, etc., and
optional to all others.
Wf«con«in--StatuteB 1911, § ^394.
Sec. 1816 as to railroads, abolishes as-
sumption of risk, fellow-servant doc-
trine, and substitutes comparative for
contributory negllg^ce. An optional,
workmen's compensation act, which
to all employers, who do not accept
the same, denies the common-law de-
fenses of assumption of risk, and of
fellow servant.
United States — Public Laws, VoL
86, Part 1, Chap. 149, pp. 65-66; Vol.
36, part 1, Chap. 143, p. 291; Chap.
160, Sec. 4, p. 299. As to railroads
engaged in Interstate business, abol-
ishes fellow-servant rule, assumption
of risk when due to statutory viola-
tion by employer, and substitutes
comparative for contributory negli-
gence doctrine.
M Employers' Liability Cases» 207
U. S. 463.
1273
§ i68i]
THE LAW OF AGENCY
[book IV
common earners by railroad while engaged in commerce between any
of the several states, etc., and this act has been upheld.^ This act im-
poses liability for death or injury resulting in whole or in part from
the negligence of any officers, agents or emplojrees of the carrier or
by reason of any defect or insufficiency due to its negligence in its
cars, engines, appliances, machinery, track, roadbed, works, boats^
wharves, or other equipment. It provides that the contributory neg-
ligence of the employee shall not bar a recovery but that the damages
shall be diminished by the jury in proportion to the amount of negli-
gence attributable to such employee, but that contributory negligence
shall have no effect where the violation by the carrier of any statute
enacted for the safety of employees, contributed to the injury or death
of the employee, and that the doctrine of assumption of risks shall not
apply in such a case. It declares void any contract or regulation, the
purpose and intent of which shall be to exempt the carrier from the
liability imposed by the act, but provides that any insurance or relief
benefit or indemnity which the carrier shall have paid to the injured
servant shall be deducted from his recovery.
A general compensation act, to supersede this liability act, is now
before congress.
9. Contracts Waiving Master's Liability.
§ x68i. Agreements to waive liability invalid. — It is frequently
attempted by employers to obtain from their employees, at the time of
entering upon the service and in consideration of it, a waiver of the
liability of the master for injuries that may happen through the negli-
gence of the master or of other servants. Such waivers, however, are
quite generally held to be opposed to public policy and void,** though
M Second Employers' Liability
Cases, 223 U. S. 1; Philadelphia, etc.,
R. Co. V. Schubert, 224 U. S. 603.
•♦ Johnston v. Fargo, 184 N. Y. 379,
6 Ann. Cas. 1, 7 U R. A. (N. S.)
537; Little Rock, etc., Ry. Co. v. Eu-
banks, 48 Ark. 460, 3 Am. St Rep.
245; Tarbell t. Rutland, etc., R. Co.,
73 Vt 347, 87 Am. St Rep. 734. 56
L. R. A. 656 (statutory liability);
Kansas Pac. Ry. Co. v. Peavey, 29
Kan. 169, 44 Am. Rep. 630, 11 Am. ft
Eng. Ry. Cases, 260; Atchison, etc.,
R Co. v. Fronk, 74 Kan. 519; Blan«
ton V. Dold, 109 Mo. 64; Railway Co.
V. Spangle, 44 Ohio St 471, 58 Am.
Rep. 833; Roesner v. Hermann, 10
Biss. (U. S. C. C.) 486, 8 Fed. 782;
Purdy V. Rome, etc., Ry. Co., 125 N.
Y. 209, 21 Am. St Rep. 736; Newport
News, etc., Co. v. Eifert 15 Ky. Law
Rep. 575; Johnson v. Richmond, etc.,
R. Co., 86 Va. 975; Loufsville. etc.,
R. Co. V. Orr. 91 Ala. 548: Richmond,
etc., R. Co. V. Jones, 92 Ala. 218;
Ault V. Nebraska Tel. Co., 82 Neb.
434, 130 Am. St Rep. 686; Pugmire
V. Oregon Short Line, 33 Utah, 27,
126 Am. St Rep. 805, 13 L. R. A. (N.
S.) 565.
1274
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1682
they have been sustained in England," and in some of our States, s^s,
for example, in Georgia.**
Even statutory duties have been held in England to be capable of
such waiver. Many of the statutes in the United States have, ex-
pressly forbidden it
VL
agent's right to a lien.
§ 1682. In general. — Having ascertained the rights of the agent
to commissions, reimbursement and indemnity, it becomes material to
determine the means by which those rights may be enforced. The
most important of these is the agent's right of lien.
Liens of various sorts, in recent times, are provided and regulated
by statute, but it is not the intention here to determine how far the
statutes have protected agents. So liens or charges may be created
by the express contract of the parties, but these, also, are not now to
be considered. The lien to be here considered is that which exists by
the common law, as distinguished from statutory liens and those cre-
ated by express contract.
«B Griffiths T. Earl of Dudley, 9 Q.
B. Dlv. 357.
««W€fitern, etc., R. R. Co. v. Bi-
shop, 50 Ga. 465; Western, etc., R. R.
Co. V. Strong, 52 Ga. 461; Galloway v.
Western, etc., R. R. Co., 57 Ga. 512;
New V. Southern Ry. Co., 116 Ga.
147, 59 L. R. A. 115.
It is held, however, that a contract
made between a porter and the Pull-
man company, or a messenger and an
express company, by a term of which
the employee releases all claims*
against the railroad company which
may transport the cars of his employ-
er, is valid, and the railroad company
may use it as a defense to an action
for personal injury. Russell v. Pitts-
burg, etc., Ry. Co., 157 Ind. 305, 87
Am. St Rep. 214, 55 L. R. A. 253;
Pittsburg, etc., Ry. Co. v. Mahoney,
148 Ind. 196. 62 Am. St. Rep. 503, 40
L. R. A. 101; Chicago, etc, R. Co. v.
Hamler, 215 111. 525, 106 Am. St. Rep.
187, 3 Ann. Cas. 42, 1 L. R. A. (N. S.)
674; Denver, etc., R. Co. v. Whan, 89
Colo. 230, 12 Ann. Cas. 732, 11 L. R. A.
(N. S.) 432.
Where an employee participates In
or contributes to a relief department
maintained by his empolyer, an agree-
ment made by him that if he ac-
cepts the benefits thereof he releases
all claims for damages -against the
railroad, and if he prosecutes his ac-
tion against the railroad he releases
all claim to the relief fund, has al-
most uniformly been held valid.
Oyster v. Burlington Relief Dept., 65
Neb. 789, 69 L. R. A. 291; Donald v.
Chicago, etc., R. Co., 93 Iowa, 284,
33 L. R. A. 492; Eckman v. Chicago,
etc., n. Co., 169 111. 312, 38 L. R. A.
750; Johnson v. Charleston, etc.. By.
Co., 55 S. C. 152. 44 L. R. A. 645;
Owens y. Baltimore, etc.. R. Co., 35
Fed. 715, 1 L. R. A. 75. But see Chi-
cago, etc., R. Co. V. Healy, 76 Neb.
783, 124 Am. St. Rep. 830, 10 L. R.
A. (N. S.) 198.
1275
§§ i683, 1684]
THE LAW OF AGENCY
[book IV
S 1683* Lien defined — General and particular liens. — A lien at
common law has been defined to be the right of detaining the property
on which it operates until the claims which are the basis. of the lien
are satisfied.^^ It has also been defined as an obligation which, by
implication of law and not by express contract, binds real or personal
estate for the discharge of a debt or engagement, but does not pass
the property in the subject of the lien."*
The main distinction between common law liens and other liens is
that possession is essential to the former class and not always to the
latter/'
Liens are either general or particular. A general lien is a right to
vetsAn the property of anotlier to cover and secure a general balance
due from the owner to the person who has possession.'® A particular
or specific lien is a right to retain particular property of another for
charges incurred, or trouble undergone, with respect to that property.'^
The former being regarded as an encroachment on the common law,
is not favored by courts of law or equity, and will be strictly construed.
It can, in the absence of an express contract, be claimed only as arising
from dealings in a particular trade or line of business in which the
existence of a general lien has been judicially proved and acknowl-
edged, or upon express evidence being given that, according to the
established custom, a general lien is claimed and allowed.'* Particular
liens on the other hand are favored.'*
§ 1684. Foundation of the claim of lien. — ^The common law Hen
found its origin in principles of natural equity and commercial neces-
sity. Its earliest form was the particular or specific lien, and it was
first applied for the protection of those who were required by law to
render services or to receive goods for all who sought their aid, as in
the case of common carriers and innkeepers.'* Manifest justice re-
«AmeB V. Palmer, 42 Me. 197, 66
Am. Dec. 271; Cakes v. Moore, 24
Me. 214, 41 Am. Dec. 879; Hammonds
T. Barclay, 2 East, 235.
«• PiBher on Mortgages, i 149; EJv-
ans on Agency, 362.
wQHimby r. Hazen, 64 Vt. 132,
ToMcIntyre v. Carver, 2 Watts &
Berg. (Penn.) 392, 37 Am. Dec. 619
and note; Evans on Agency, 368.
71 See cases dted In preceding note.
T2 Mclntyre v. Carver, supra; Rush-
forth V. Hadfleld, 7 East, 229; Bevan
V. Waters, 8 C. & P. 520; Scarfe v.
Morgan, 4 M. & W. 283; Houghton v.
Matthews, 3 Bos. A Pul. 494; Bleaden
V. Hancock, 4 Car. & P. 166.
7< Scarfe v. Morgan, $upra; Bevan
T. Waters, nv^ra; Mclntyre v. Car-
ver, supi-a.
T4 Nay lor v. Mangles, 1 Eap. 109;
Carlisle v. Quattlebaum, 2 Bailey (S.
C), 452; Quimby v. Hazen, 54 Vt.
132; Grlnnell v. Cook, 3 HIU (N. Y.),
485, 38 Am. Dec. 663.
1276
/:hap. iv]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ i68s
quired that those who were thus obliged to serve should have some
compulsory means of obtaining compensation. A lien was also allowed
to those who had, by their own peril, labor and expense, rescued, from
loss or destruction at sea, the goods or property of another who was
unable to protect them. Here, too, obvious equity, as well as com-
mercial necessity, demanded that if the owner would reclaim his goods
he should first pay the reasonable charges of him by whose exertions
they had been preserved^'
It was, however, soon extended to the case of those who, while not
required by law to render service, yet by their skill or labor had im-
parted additional value to the goods or property of another.'* That
these persons, also, should have a lien upon the goods or property for
the reasonable value of their services was obviously just and so plainly
conducive to confidence and security in the transaction of affairs, that
this principle has become firmly established in our law, and has in
modern times been extended by statutory enactments to a great variety
of cases not contemplated by the common law.
§ 1685. Nature of lieiij — ^This lien conferred by the common law
docs not create an estate or title in the property over which it prevails.
It is a simple right of retainer merely, and is neither a jus ad rem nor
a jiis in re.
T8 FMtch V. Newberry, 1 Doug.
(Mich.) 1, 40 Am. Dec. 33. As to
goods lost upon land, see Wood v.
PiersoD, 45 Mich. 313; Preston v.
Neale, 12 Gray (MaM.), 2fi2; Oum-
mings v. Gann, 62 Pa. 484; Went-
worth T. Day, 3 Mete. (Mass.) 352,
37 Am. Dec. 145..
Tt'The right of lien "has always
been admitted where the party was
bound by law to receive the goods;
and In modern times the right has
been extended so far that it may be
laid down as a general rule, that
«very bailef^ for hire, who by his la-
bor and skill has imparted an ad-
ditional value to the goods, has a
lien upon the property for his rea-
sonable charges. This includes all
such mechanics, tradesmen, and la*
borers as receive property for the pur-
pose of repairing or otherwise im-
proving its condition." Bronson, J.,
In Grinnell v. Cook, 3 Hill (N. Y.),
I
485, 38 Am. Dec. 663. To same eflect
are Morgan v. Congdon, 4 N. Y. 551;
Nevan v. Roup, 8 Iowa, 207; Wilson
V. Martin, 40 N. H. 88; Moore v.
Hitchcock. 4 Wend. (N. Y.) 2M;
Gregory v. Stryker, 2 Den. (N. Y.)
628.
But except where there Is an obli-
gation by law to take and care for
property, no lien for simply keepiag
and caring for It exists at common
law, upon the ground that the bailee
has added no value to the property.
Thus agisters and livery stable keep*
ers have no lien for keeping animals
in the absence of a statute or an ex-
press contract to that etfect. Grinnell
v. Cook, supra; Lewis v. Tyler, 28
Cal. 364; Goodrich v. Willard, 7 Gray
(Mass.), 183; Wills v. Barrister, 36
Vt 220; Wallace v. Woodgate, 1 Car.
& P. 575; Be van v. Waters, 3 Car. ft
P. 520; Judson v. Etherldge, 1 Cromp.
ft M. 743; Jackson v. Cummins, 6
277
§§ i686, 1687]
THE LAW OP AGBNCr
[book IV
It is purely personal to the tien holder, and is neither assignable bjr
him. nor can it be attached as personal property or as a chose in action
of the person who is entitled to it^* Being thus a personal privil^e,
no person but the lien holder can airail himself of it. It cannot be set
up by a third person as a defense to an action brought by the owner of
the goods."
§ 1686. Requisites of lien — ^Possession. — ^I'he common law lien
being thus a mere right of retainer, it follows that the exclusive pos-
session of the property by the person claiming the lien, is indispensable
to its existence and continuance.^* If the person holds the property
in subordination to the will and control of another, no right of retainer
attaches. No lien exists, therefore, in favor of the mere workman or
servant of the contractor.** But the possession of such a workman or
servant is the possession of the employer or master, and is sufficient
to maintain the latter's right of lien.*^
§ 1687. Possession must have been lawfully acquired. — ^In order
to sustain the lien, the possession of the property must have been ob*
tained in good faith, and from one having the power and the right ta
confer it. A person can neither acquire a lien by his own wrongful
Mees. ft WelB. 342; Miller ▼. Marston,
35 Me. 153, 66 Am. Dec. 694; McDon-
ald y. Bennett, 45 Iowa, 456; Allen v.
Ham, 63 Me. 632; Mauney v. Ingram,
78 N. C. 96.
But on the ground of increased val-
ue, the horse trainer has a Hen. Har-
ris y. Woodruff, 124 Mass. 206, 26 Am.
Rep. 658; Be van v. Waters, supra;
Towle V. Raymond, 58 N. H. 64; so
has the horse doctor; Lord v. Jones,
24 Me. 439, 41 Am. Dec. 391; so has
the owner oi a stallion for the serv-
ices of the stallion ; Searfe v. Morgan,
4 Mees. A Wels. 270; Sawyer v. Ger-
rish, 70 Me. 254, 35 Am. Rep. 323.
7T Barnes Safe A Lock Co. v. Block
Bros. Tobacco Co., 38 W. Va. 158, 22
L. R. A. 850; Meany v. Head, 1 Mason
(U. S. C. 0, 819, Story, J.; Lovett v.
Brown, 40 N. H. 511; Holly ▼. Hug-
geford, 8 Pick. (Mass.) 72, 19 Am.
Dec. 803; Jones v. Sinclair, 2 N. H.
321, 9 Am. Dec. 75; Daubigny v. Du-
val, 6 T. R. (Durnf. ft E.) 606.
T» Holly V. Huggeford, supra; Jones
V. Sinclair, supra.
TtMcIntyre v. Carver, 2 Watts ft
1278
Serg. (Penn.) 392, 37 Am. Dec. 519;
Jenkins v. Eichelberger, 4 Watts-
(Penn.), 121, 28 Am. Dec. 691;
Tucker v. Taylor, 63 Ind. 93;
Nevan v. Roup, 8 Towa, 207; Cakes v.
Moore, 24 Me. 214, 41 Am. Dec. 879;
Ex parte Foster, 2 Story (0. S. C. CL),.
131; McFarland v. Wheeler, 26 Wend.
(N. Y.) 467; Collins v. Buck, 63 Me.
459; Robinson v. Larrabee, 63 Me.
116; Miller v. Marston, 35 Me. 168, 56^
Am. Dec. 694: Rice ▼. AusHn, 17
Mass. 197; Winter v. Coit, 7 N. Y.
288, 67 Am. Dec. 522; Heard v. Brew-
er, 4 Daly (N. Y.), 136; Sawyer r.
Lorlllard. 48 Ala. 332; Elliott T.
Bradley, 23 Vt. 217; Donald v. Hew-
itt, 33 Ala. 534, 73 Am. Dec. 431;
Peoples* Bank ▼. Frick Co., 13 Ok la.
179.
«> Hollingsworth v. Dow, 19 Pick.
(Mass.) 228; Mclntyre v. Carver,
iupra: Wright v. Terry, 23 Fla. 160.
81 Heard v. Brewer, supra; Elliott
V. Bradley, supra; Wenz v. McBride^
20 Colo. 195; King v. Canal Co., 11
Cush. (Mass.) 231.
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1688
act, nor can he retain one when he obtains possession of the property
without the consent of the owner express or implied.'^
If, therefore, the person claiming a lien acquired possession by mis-
representation or fraud, or from an agent or servant or other person
having no right or power to confer it,'* he cannot maintain the lien
although he might have done so if he had acquired the possession fairly.
§ 1688. Possession must be continuous.— It is also indispensable
that the possession should be continuous.'* A voluntary surrender of
the property, therefore, to the owner or some one on his behalf, termi-
nates the lien, unless it is consistent with the contract, course of busi-
ness or intention of the parties that it should continue." And having
once voluntarily relinquished the property, the party cannot regain his
lien by recovering possession of the goods, without the consent or
agreement of the owner.** If, however, the property be taken from
the possession of the party claiming the lien by fraud or misrepresenta-
tion, the lien is not lost "^ and will revive if his possession be restored."
The lien is not lost by a mere temporary parting with the possession
«» Fitch ▼. Newberry, 1 Doug.
<Mich.) 1, 40 Am. Dec. 33; Madden v.
Kem pater, 1 Camp. 12; Bum v. Brown,
2 Stark N. P. 272; Peoples* Bank v.
Frlck Co., 13 Okla. 179; Randel v.
Brown, 2 How. (U. S.) 406, 11 L. Ed.
318.
X An exception to this general rule
exists in the case of an innkeeper
who is bound to receive the guest and
cannot stop to Inquire whether he Is
the true owner of the property he
brings or not. Yorke v. Grenaugh,
2 Ld. Raym. 867; Johnson ▼. Hill, 3
Stark, 172; Snead v. Watkins, 1 C. B.
(N. S.) 267; Grinnell v. Cook, 3
Hill (N. Y.), 485, 38 Am. Dec. 663;
Jones V. Morrill, 42 Barb. (N. Y.)
626; Turrill v. Crawley, 13 Q. B. 197;
threfall v. Berwick, 26 L. T. Rep. N.
S. 794, affirmed in the Ehcchequer
Chamber, L. R. 10 Q. B. 210; Manning
T. Hallenbeck, 27 Wis. 202.
This exception has not been made
in this country in the case of com-
mon carriers. Pitch t. Newberry, 1
Doug. (Mich.) 1, 40 Am. Dec. 33;
Robinson v. Baker. 5 Cush. (Mass.)
137, 51 Am. Dec. 54; Clark T. Lowell,
etc., R. R. Co., 9 Gray (Mass.), 231;
Gilson V. Gwinn, 107 Mass. 126, 9
Am. Rep. 13; Everett v. Saltus, 15
Wend. (N. Y.) 474; Brower v. Pea-
body, 13 N. Y. 121; Martin v. Smith,
58 N. Y. 672.
M Tucker v. Taylor, 53 Tnd. 93; Ne-
Tan V. Roup, 8 Iowa, 207; Cakes r.
Moore, 24 Me. 214^ 41 Am. Dec. 379;
Ex parte Foster » 2 Story (U. S. C.
C), 144; McFarland v. Wheeler, 26
Wend. (N. Y.) 467; Walcott v. Keith,
22 N. H. 196; Collins v. Buck. 63 Me.
459; Sawyer v. Lorillard, 48 Ala. 332;
Way V. Davidson, 12 Gray (Mass.),
465, 74 Am. Dec. 604; Bowman v. Hil-
ton, 11 Ohio, 303; Sears v. Wills, 4
Allen (Mass.), 212; Rowland v. Dolby,
100 Md. 272, 3 Ann. Cas. 643.
85 Welker v. Appleman, 44 Ind.
App. 699; Robinson v. Larrabee, 63
Me. 116; Spauldlng v. Adams, 32 Me.
212; Nash v. Mosher, 19 Wend. (N.
Y.) 431.
««Nevan v. Roup, supra,
«T Blgelow V. Heaton. 6 Hill (N. Y.),
43; Ash v. Putnam, 1 Id. 302; Wal-
lace V. Woodgate, 1 C. ft P. 575.
8s Wallace y. Woodgate, $upra.
1279
§§ i689, 1690]
THE LAW OF AGENCY
[book IV
for a special purpose, when there was no intention to relinquish or re-
lease the lien.**
§ i68g. Posaession must have been acquired in course of employ-
mentw— In order to maintain the lien upon a specific chattel the pos-
session must have been acquired in the course of the employment in
respect of which the lien is claimed.®® A mere creditor happening to
have the goods of his debtor in his possession has no lien thereon to-
secure payment of the debt.*^ Nor does the mere fact that a person
occupies a position, or pursues a calling, in respect to which a lien-
ordinarily attaches give him a lien upon property which chances to be in
his possession. The possession must have been acquired by virtue of
his position, or in the pursuit of the calling in which he is engaged.*^
Thus a factor can only claim a lien upon goods which came into his
possession as factor;*" an attorney only upon the deeds and papers
which came into his hands in the character of an attorney ; *^ a broker
only upon the property which was delivered to him in tliat capacity.**^
§ 1690. No lien if contrary to intention of parties — ^Waiver. — A
lien is presumed to be something of value. It may in its inception be
waived or given up without any valuable consideration, but when it
has once attached, an executory agreement to waive or surrender it
will not be obligatory unless based upon a legal consideration**'
A lien will not attach if it be inconsistent with the tenns upon which
possession was obtained.*^ The existence of a special contract is not,
of itself, inconsistent with a lien, but if it expressly or impliedly waives
it, the lien can not exist.*"
So it is a general principle that an agreement to give credit, or a
wHayg v. Riddle, 1 Sandf. (N. Y.)
248; Reeves v. Capper, 5 Bing. N. G.
136; Robinson v. Larrabee, 63 Me.
116.
•0 Scott V. Jester, 13 Ark. 438;
Thacher v. Hannahs, 4 Robert (N.
Y.), 407.
•1 Alien y. Megguire, 15 Mass. 496.
»3 Dixon V. Stansfeld, 10 C. B. 398
("A man is not entitled to a Uen
simply because he happens to fill a
character which gives him such a
right unless be has received the
goods or done the act in the particu-
lar character to which the right at-
taches." Jarvis^ C J.)«
»8 Drinkwater v. Goodwin, 1 Cowp.
251.
9* Stevenson v. Blakelock, 1 Maule
ft Sel. 535.
06 Dixon V. Stansfeld, supra,
»• Danforth v. Pratt, 42 Me. 50.
•7 CrawBhay v. Homfray, 4 Bam. 4k
Aid. 50; Chase v. Westmore, 6 Itfaule
ft Sel. 180.
»8Farrington v. Meek, 80 Mo. 578,.
77 Am. Dec. 627; Leese v. Martin, L.
R. 17 Eq. 224; Brandao v. Barnett, 12
a. ft F. 787.
Contract held not to amount to a
waiver, there being nothing incon-
sistent. Fisher Y. Smith, 4 App. Cas.
1.
xa8o
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL
[§ 169I
special contract for a particular mode of payment,** or the taking of a
note, acceptance or other similar instrument payable at a future time,*
or an agreement to deliver the property before payment or before the
time of payment arrives,' is a waiver of the lien. An agreement to
pay a fixed price is no waiver.*
§ 1691. Waiver by inconsistent conduct.^The lien will, however,
be waived by a general refusal of the person, to whom it inures, to
deliver the property, accompanied by a claim of title in himself, or by
a claim to retain it on other grounds distinct from his lien.* But a
claim of right to detain the goods in respect of two sums, as to one
only of which the person has a lien, has been held not to be a waiver.*
»» Chandler v. Belden, 18 Johns. (N.
Y.) 167, 9 Am. Dec. 19S; Hutchlns v.
Olctttt, 4 Vt 549, 24 Am. Dec. 634;
Moore v. Hitchcock, 4 Wend. (N. Y.)
296; Stoddard Woolen Manufactory v.
Huntley, 8 N. H. 441, SI Am. Dec.
198; Stevenson ▼. Blakelock, 1 M. ft
a 635; Raitt v. Mitchell, 4 Camp. 146;
Cowell v. Simpson, 16 Ves. Jr. 280.
iHutchins v. Olcutt, 4 Vt. 549, 24
Am. Dec. 634; Hewlson v. Outhrle, 2
Blng. N. C. 755; Cowell v. Simpson,
16 Ves. Jr. 275; Au Sahle Boom Co.
V. Sanborn, S6 Mich. 358; Bunney v.
Poyntz, 4 B. ft Ad. 568. Unless the
paper be dishonored while the prop-
erty yet remains in the agent's hands.
Feise v. Wray, 3 East, 93. It makes
no difference whether the note is pay-
able on demand or at future time,
or whether negotiable or not Hutch-
ins v. Olcutt, supra, A factor's lien
for money and supplies to make a
crop is not waived by taking personal
security for such money and supplies.
StoxT V. Floumoy, 65 Ga. 56. The
mere taking of some other form of
security is not per ae a waiver of the
Hen. Joslyn v. Smith, 2 N. Dak. 53
(a statutory lien in this case). To
have that effect there must be some-
thing In the nature of the security,
the length of time, or the other cir-
cumstances, fairly inconsistent with
an intention to rely upon the lien.
Rosenbaum v. Hayes, 10 N. Dak. 311
(citing many cases); Security Trust
Co. T. Temple Co., 67 N. J. Eq. 514.
» Chandler v. Belden, 18 Johns. (N.
Y.) 157, 9 Am. Dec. 193.
BHutton V. Bragg, 7 Taunt. 14;
Raitt V. Mitchell, 4 Camp. 146; Stod-
dard Woolen Manufactory v. Huntley,
8 N. H. 441, 31 Am. Dec. 198; Mathias
V. Sellers. 86 Pa. 486, 27 Am. Rep.
723; Hanna v. Phelps, 7 Ind. 21, 63
Am. Dec. 410.
4 White V. Gainer, 9 Moore, 41, 2
Ring. 23, 1 Car. ft P 324; Boardman
V. Sill, 1 Camp. 410 Note; Dirks v.
Richards, 5 Scott's N. R. 534; Weeks
V. Goode, 6 Com. B. N. S. 367; Can-
nee V. Spauton, 8 Scott's N. R. 714
s. 0. 7 Man. ft G. 903; Dows v. More-
wood, 10 Barb. (N. Y.) 183; Holbrook
V. Wight, 24 Wend. (N. Y.) 169, 35
Am. Dec. 607; Everett v. Saltus, 16
Wend. (N. Y.) 474; Judah v. Kemp,
2 Johns. (N. Y.) Cas. 411; Rogers v.
Weir, 34 N. Y. 463; Picquet v. McKay,
2 Blackf. (Ind.) 465; Hanna v.
Phelps, 7 Ind. 21, 68 Am. Dec. 410;
Leigh Y. Mobile, etc., R. R. Co., 68
Ala. 166.
"Where one wrongfully converts
property upon whlcli he has a lien,
such lien is extinguished." Peoples'
Bank v. Frlck Co., 18 Okla. 179.
s Scarfe v. Morgan, 4 Mees. ft Wels.
270 (compare Kerford v. Mondel, 6
H. ft N. 931.)
But a demand for more than is
due or for that to which the claimant
is not entitled, especially where the
lawful and the unlawful are united in
81
1281
§§ 1692,1693]
THE LAW OF AGENCY
[book IV
Whether the Hen is lost by a general refusal to deliver the goods, with-
out specifying any grounds, is a question upon which the authorities
are in conflict, but the better opinion is thought to be that it is.*
§ 1692. Claim of lien no waiver of personal remedies. — In general,
the lien holder has recourse to the personal responsibility of the debtor
as well as the lien upon the goods,^ but he may waive this personal re-
sponsibility if he so elects. Whether he has done so in any given case,
is a question of fact to be determined from its own circumstances.*
So although there may have been an undertaking to resort to the goods
in the first instance, this will not prevent recourse to the debtor after
the proceeds of the goods are exhausted, unless there has been an
agreement to look exclusively to the goods.*
§ 1693. How lien may be enforced. — It is a general rule that a
mere lien can not, in the absence of a statute authorizing it, be en-
forced by sale of the property.^* In such a case, either the ordinary
proceedings at law to an execution upon which the property may be
seized and sold, must be resorted to, or recourse must be had to the
more appropriate remedy of an action in equity. An exception, how-
ever, is made in the case of factors, who may, as will be hereafter seen,"
one sum, is usually held to work a
forfeiture of the lien. Hamilton r.
McLaughlin, 145 Mass. 20; Bowden ▼.
Dugan, 91 Me. 141; Stephenson y.
Lichtenstein, 72 N. J. L. 113; Viley v.
Lockwood, 102 Tenn. 426. But see,
Kirtley v. Morris, 43 Mo. App. 144.
In Kelley v. Kelley, 77 Me. 135, it is
said if the claimant has so mingled
and intermixed the matters concern-
ing which he is entitled to a lien with
those as to which he is not entitled,
that they cannot he separated, he
loses his lien. But a mere refusal to
furnish upon request "a full and item-
ized account of all claims and
charges" for which the lien was
claimed was held not a waiver In the
absence of any statutory provision to
that effect Sutton t. Stephan, 101
Cal. 545.
« Hanna v. Phelps, supra; Dows v.
Morewood, Bupra; Spence v. McMil-
lan, 10 Ala. 588. Contra; see Everett
V. Coffin, 6 Wend. (N. T.) 603, 22
Am. Dec. 651; Buckley r. Handy, 2
Miles (Penn.), 449.
,T Graham v. Ackroyd, 10 Hare, 192;
Peisch v. Dickson, 1 Mason (U. S.
C. C), 9 Fed. Cas. No. 10,911; Beck-
with Y. Sihley, 11 Pick. (Mass.) 482;
Colley ▼. Merrill, 6 GreenL (Me.) 50;
Upham ▼. Lefavour, 11 Mete. (Mass.)
174; Richards v. Gaskill, 39 Kan. 428.
• Burrill ▼. PhUlipa, 1 GalL (U. 8.
C. C.) 860, Fed. Cas. No. 2,200; Peisch
V. Dickson, 1 Mason (U. 8. C GL), 9
Fed. Cas. No. 10,911.
• Gihon V. Stanton, 9 N. Y. 476;
Parker r. Brancker, 22 Pick. (Mass.)
40; Burrill v. Phillips, supra; Peisch
V. Dickson, supra; Stoddard Woolen
Mfg. Co. ▼. Huntley, 8 N. H. 441, 31
Am. Dec. 198.
!• Briggs T. Boston, etc, R. R. CSo.,
6 Allen (Mass.), 246, 88 Am. Dec
626; Fox v. McGregor, 11 Barb. (N
T.) 41; Hunt ▼. Haskell, 24 Me. 889,
41 Am. Dec. 887; Cmmhacker t
Tucker, 9 Ark. 365; Bailey v. Shaw,
24 N. H. 297, 55 Am. Dec. 241.
11 See po«t, chapter on Factors.
128a
CHAP, rv]
DUTIES AND UABn^ITfCS OF FKINCIPAL
[§ 1694
seU the goods in their possessian to ttinsiyutst tbemselvbs for tbdr ad-'
va^csi Sp wb^re the case amounts to a bailment or a pledge of the
property, or to a deposit by way of security for a loan, 9 difftfent rulo
applies and the bailee or pledgee may» after reasonable demand and
notice, sell the property at public sale."
§ 1694. How these rules apply to agents.^ — It is not the purpose
here to go minutely into the question of the right of lien as applied to
agents of various kinds, but rather to state the most important prin-
ciples governing liens in general, leaving their particular application to
be considered hereafter when treating more fully of the more promi-^
nent classes of agents.^^
But, in general, it has been said that there "exists a particular right
of lien in the agent for all his commissions, expenditures, advailees and
services in and about the property or thing intrusted to his agency^
whenever they wete proper or necessary or incidei^t theijeto." **
The foundation of this lien, in the absence of a statute coilferring it,
must, as in the case of other common law liens, be either that the agent,
like a bailee for hire,^' has by his skill or labor added to the value of
some specific thing, or that by advancing hia own n1ojiey*or property
12 Parker v. Brancker, 22 Pick.
(Mass.) 40; Porter v. Blood, 6 Pick.
(Mass.) 64; Howard v. Ames, 3 Meta
(Mass.) 308; Potter v. Thompson, 10
R. I. 1.
'IS See po9t as to the Hens of Attor-
neys, Anctioneers, Factors, and Bro-
kers in the respective chapters de-
voted to those agents.
1* Story on Agency, § 373; Rleh-
ards V. Gasklll, 89 Kan. 428; McRen-
zie V. Nevius, 22 Me. 138, 8S Am. Dec;
291.
loMcRenzle v. Nevius, 22 Me. 138,
3* Am. Dee. 291; Mclntyre v. Carver,
2 W. ft S. (Penn.) 392, 87 Am. Dee.
519; Nevan v. Roup, 8 Iowa, 207;
Mor8;an v. Congdon, 4 N. T. 562;
arlnnell v. Cook, 3 Hill (N. Y.), 485,
33 Am. Dec. 663; Gregory v. Stryker,
2 Den. (N. Y.) 631; Wilson r. Martlh,
40 N. H. 88; Farrlngton v. Meek, 30
Mo. 681, 77 Am. Dec. 627; Lovett v.
Brown, 40 N. H. 511; Moore v. Hltch-
cock» 4 Wend. (N. Y.) 292; Mathias
V. Sellers, 86 Pa. 486, 27 Am. Rep.
728.
Accountants employed to examine
and investigate the accounts con*
talned tn certain books have no Hen
upon the books for their servlcea
Scott Shoe Mach. Co. v. Breaker, 35
N. Y. Misc. 382. Said the Court:
"They have done nothing to the
books, but have merely made an ex-
amlniatlon of them. After their ex-
amination the books remained as
they were before* nothing whatsoever
having been added to their value.
The object of the examination made
by an accountant Is the preparation
of a report. The report may be some-
thing of value, or It may not, but the
books themselves are not the least
changed or improved by the Investi-
gation."
In Qrauman V. Reese, 13 Ky. Law
Rep. 683, It was held that a traveling
salesman had a lien on the samples
entrusted with him by his employer,
for his eommissloni.
. In the absence of a statute, how-
ever. It is diifieult to see how this
decision can be upheld. It does not
1283
* t
§ i69S]
THE LAW OF AGENCY
[tOOK IV
he has obtained or produced the thing,^* or that he has made advances
to his principal in reliance upon the security of the property or thing
confided in his custody.
Thus it is said by a learned judge in New York, ^An agent may have
a lien on the property or funds of his principal for moneys advanced
or liabilities incurred in his behalf ; and if moneys have been advanced
or liabilities incurred upon the faith of the solvency of the principal,
and he becomes insolvent while the proceeds and fruit of such advances
or liabilities are in the possession of the agent, or within his reach, and
before they have come to the actual possession of the principal, withm
every principle of equity, the agent has a lien upon the same for his
protection and indemnity." *^
So where a principal consigns goods to an agent to sell under an
agreement that the agent will accept bills drawn upon him by the
principal, it is said to be a necessary inference that the bills were
drawn and accepted upon the credit of the goods, and the agent has a
lien upon the goods in his hands for the amount of his acceptances.^*
§ 1695. — — — Illustrations*— In accordance with these princi-
ples, it has been held that an agent employed to obtain a loan upon a
commission, has a lien for the same upon the loan which he secures ;^*
appear that the agent produced the
samples by his own labor, nor hj the
expenditure of his own meani, nor
that they were enhanced In Talue In
any way by the services which he
rendered. Missouri Glass Ck>. v. Rob-
erts, Tex. Civ. App. — , 1S7 S. W,
438, practically denies the right to
any such Hen.
M Johnston v. Qerry» S4 Wash. 524.
Agent who has advanced money to
buy land for his principal is entitled
to lien for his reimbursement Am«
old V. Arnold, 83 Kan. 689; Robertson
V. Rawlins Co., 84 Kan. 52. 80 of a
stock broker who has advanced his
own money to pay for stock he was
directed to purchase and receive for
his principal. Hope v. Glendinning,
[1911] App. Cas. 419.
" Muller V. Pondlr, 65 N. Y. 825, 14
Am. Rep. 259. In Underhill v. Jor-
dan, 72 N. Y. App. Dlv. 71, which r^
Hed upon and followed Mailer v.
Pondir, supra, an a«ent who had
had the general management oif the
property of non-residents, and who
had expended a large sum of hki own
money in tiie management of the
property was held to be entitled to
a lien on funds of theirs remaining
in hiB hands, at least to the extent
of his expenses and disbursemeata.
Although not strictly a lien, yet
where an agent, at the direction or
request of his principal, takes title
to land for the principal in the
agent's name, the agent i<nr in this
case his heirs) will not be compelled
to convey it to the principal except
upon being reimbursed for taxes
properly paid by him. Warren v.
Adams, 19 Colo. 515. Expense of ex-
ecuting such a trust said to be a
lien on the estate. Johnson v« Leman,
181 111. 609, 19 Am. St. Rep. 68, 7 L.
R. A. 656.
18 Nagle V. McFeeters, 97 N. Y. 196.
See also, Holbrook v. Wight, 24 Wend.
(N. Y.) 169, 85 Am. Dec 607; Bank
V. Jones, 4 N. Y. 497; In re Pavys Co.,
1 Ch. Div..581.
!• Vinton v. Baldwin, 95 Ind. 488.
Where the owner of real estate^ be-
1284
CHAP. IV]
DUTIES AND LIABIUTIBS OP PRINCIPAL
IS 169s
that a teal estate agent who has conducted negotiations for an exchange
of property, drawn the deeds of conveyance, made expenditures in
procuring a change in the terms of an incumbrance so that the ex-
change could be made, and at the request of the principal has received
delivery of the deed running to him, has a lien upon that particular
deed for his commissions and advances due from the grantee therein;**
that an agent who, at the request or consent of his principal carries
on a general mercantile business of the latter in the agent's name, with
authority to buy, sell and exchiuige, and thereby incurs personal obli-
gations, has a lien upon all the property in the business for his ad-
vances, expenses and liabilities, incurred in the proper management of
the business;*^ that an agent for the sale of agricultural machinery
who, upon the unjustifiable termination of his employment by the prin-
cipal, is forced to incur expense in caring for and storing machinery
for the principal's protection, has a lien upon it for such expenses ; '*
that an agent directed by his principal to obtain possession of personal
property, e. g., goods in the hands of a carrier, which could only be
obtained by paying certain charges upon it, and who pays the charges
with his own money, was entitled to a lien upon the property for the
money so advanced.^
fng Indebted to real estate agents, ex-
ecuted a contract, which was record*
ed, by which he agreed to place in
their hands for sale and to give them
the exclusive control of the sale of
the land, and to pay them out of the
proceeds in the event of a sale, it
was held that the contract gave the
agents an eqnitable lien upon the
land. Tlnsley v. Durfrey, 99 111. App.
239. See also, Greeham v. Oalveston
Co. (Tex. Civ. App.), 36 S. W. 796.
so Richards v. Gaskill, 39 Kan. 428.
"The accidental possession of a deed
will not sustain a lien; so, also, U a
deed is acquired under an express
contract, or circumstances showing
an implied contract incozuBlstent with
a lien, the real estate agent or broker
cannot claim any lien upon a deed
so received." Id.
"Real estate brokers have no lien
on money or papers placed in their
hands to use in the purchase of land."
Robinson v. Stewart, 97 Mich. 454.
In Peterson v. Hall, 61 Minn. 268,
it was held that a real estate broker,
to whom had been delivered a note
and noortgage upon which he under-
took to secure a loan, and who did,
within the reasonable time to which
the court held he was entitled, ac-
tually procure the loan, had a lien
upon the note and mortgage to se-
cure the payment of his commission
as against his principal who sought
to get back the papers and repudiate
the employment after the agent had
begun negotiations, but before he had
had time to receive the money.
»i Dewing V. Hutton, 40 W. Va. 621,
8. o. 48 Id. 676. The code made all
such property liable for the debts of'
the person carrying on the business
and incurred therein. It was also
said that the agent would have the
right to sell to satisfy the liabilities.
23 Deering Harvester Co. v. Hamil-
ton, 80 Minn. 162, citing Haebler v.
Luttgen, 61 Minn. 315.
s8 White V. Sheffield^ etc* Ry. Co.,
90 Ala. 253.
1285
§§ 1696, 1698]
TUB LAW OF AGENOr
[book IV
§ 1696. Agent's lien ordinarily a particular fieop— It will be seen
hereafter, in cases which stand upon distinctive grounds, that an agent
may have a general lien, as in the case of bankers, factors and attor-
neys. But the lien of an agent employed for a specific transaction is
ordinarily a particular lien, and is confined to the retention of the
property for services and disbursements in reference to that property
only, and not for a general balance of account, nor for services in ref-
erence to other property or affairs^ unless by general usage, special
agreement or mode of dealing, a general lien has been estabKsfaed.*^
§ 1697. For what sums the lien attaches^— Except by virtue of a
special agreement, the lien attaches only for debts which are certain
and liquidated, and not for ccmtingent, prospective or speculative dam-
ages or liabilities.'* The debts must also have been incurred by the
express or implied authority of liie principal, and not as the result of
the agent's own wrong, neglect or breach of instructions.** They
must also have been incurred for lawful and legitimate purposes, and
must be due as a matter of right and not as mere matter of favor.*'
The lien attaches also, in the absence of an express agreement en-
larging its scope, only to debts arising or incurred in transactions had
in the particular character by virtue of which the agent claims the lien,
and not from other and dissimilar transactions;*' and the demand
must be due from the person whose goods are sought to be retained,
and not from a stranger, and must accrue to the agent who claims Ac
lien.**
vir.
agent's right op stoppage in transit.
§ 1698. Agent liable for price of goods, may stop them in transit.— -
An agent who has made himself liable for the price of goods con-
signed by him to his principal, by obtaining them in his own name, and
on his own credit may stop them while in transit if th€ principal be-
comes insolvent.** The principle upon which this rule is based is that
<« Carpenter v. Momsen, 92 Wis.
449; McKenzle v. NeTius, 22 Me. 1S8,
38 Am. Dec. 291; Jarris ▼. Rogers, 16
Mass. 389; Barrj v. Boninger, 46 Md.
69. See also, Stevens t. Robins, 12
Mass. 180; Adams v. Clark, 9 Ctisli.
(Mass.) 216, 67 Am. Dec. 41; Rush-
forth V. Hadfleld, 6 East, 619; Wright
y. Snell, 6 B. ft Aid. 360; CastlUain ▼.
Thompson, IS C. B. (N. S.) 106.
«« Story on Agency, J 364,
••See ante, § 1683.
"Story on Agency, ! 364, ante,
S 1683.
w See ante, S 1689.
«• Story on Agency, { 366.
»<>Newhall r. Vargas, 13 Me. 93, 29
Am. Dec. 489; Seymour v. Newton,
106 Mass. 272; Felse v. Wray, 3 Bast,
93; D'Aquila y. LAmbert, 1 Amb. 399;
1286
CHAP. IV] DUTIES AND LIABILITIES OF PRINCIPAL [§§ 1699, I/CX)
the relation of the parties under such circumstances is rather that of
vendor and vendee than of principal and agent'^
The right, however, will not exist if at the time of the consignment
the agent is indebted to the principal on a general balance of account
to a greater amount than the value of the goods, and if such consign-
ment has been made in order to cover this balance.'* Nor does the
right exist if the agent is only a surety for the price of the goods.**
So the right is lost where the agent, in pursuance of a contract be-
tween the principal and a third person who has bought the goods of
the principal and paid him for them, delivers the goods to a carrier to
be shipped to the purchaser, taking the shipping receipt in the name
of the principal, although the principal fails to pay the agent for the
goods, before they are delivered to the purchaser.**
§ 1699. Right exercised as in other cases. — ^The agent's right of
stoppage in transitu is to be exercised in the same manner, and is sub-
ject to be defeated by the same contingencies as in the case of the
exercise of the same right by any other vendor.**
§ 1706. Right of such an agent to retain the title until paid for. —
Where an agent purchases goods intended for his principal, but, ac-
cording to the express or implied agreement of the parties, buys them
upon his own credit or with funds furnished by himself, he may retain
a hold upon the goods until they are paid for by the principal.**
This rule has been well stated by Folger, J., as follows : "When com-
mercial correspondents, on the order of a principal, make a purchase
of property ultimately for him, but on their own credit, or with funds
furnished or raised by them, and such course is contemplated when
the order is given, they may retain the title in themselves until they
are reimbursed. One of the means by which this may be done, is by
taking the bill of sale in their own names, and, when the property is
shipped, by taking from the carrier a bill of lading in such terms as
to show that they retain the power of control and disposition of it.
s. c. 2 Eden, 75; Tucker v. Humplirey, now In England, under the Meroan-
4 Blng. 516; Hawkes v. Dunn, 1 tile Law Amendment Act, 19-20 Vict
Gromp. A Jer. 519. See also, MuUer v. C. 97, | 5, see Imperial Bank v. Lon^
Pondlr, 55 N. Y. 325, 14 Am. Rep. 259; don, etc., Dock Co., 5 Ch. Div. 195.
Hollins y. Hubbard, 165 N. T. 534. 94 Gwyn v. Rlcbmond ft Danville R.
•1 Newhall v. Vargas, supra. R. Co., 85 N. C. 429, 39 Am. Rep. 708.
«» Wiseman r. Vandeputt, 2 Vern. '» See Parsons on Contracts, Vol. 1,
208; Vertue r. Jewell, 4 Camp. 31; Cbap. VI; Benjamin on Sales,
Bweirs Evans on Agency, 377. §§ 829 — 868; 2 Mechem on Sales,
••Siffken v. Wray, 6 'East, 371; §§ 1605-1607.
Swell's Evans on Agency, 377. Bui so Farmers', etc., Bank r. Logan, 74
1287
§ I700]
THE LAW OF AGENCY
[book IV
This results necessarily from the nature of the transaction. It is not,
at once, an irrevocable appropriation of the property to the principal.
It rests for all of its efficiency and prospect of performance, upon the
intention to withhold and the withholding the right to the property, so
that the right may be used to procure the money with which to pay.
It contemplates no title in the principal until he has reimbursed to his
correspondents the price paid by them or to the person with whom they
have dealt, the money obtained from him, with which to pay that price.
From the start, the idea formed and nursed is, that the property shall
be the means of getting the money with which to pay for it, and that
the title shall not pass to him who is to be the ultimate owner until he
has repaid the money thus got.
"Although such correspondents act as agents, and are set in motion
by the principal who orders the purchase, yet their rights as against
him, in the property are more like those of a vendor against a vendee
in a sale not wholly performed, where delivery and payment have not
been made and where delivery is dependent upon payment. ♦ * *
"If the vendor, when shipping the articles which he intends to de-
liver under the contract, takes the bill of lading to his own order and
does so, not as agent or on behalf of the purchaser but on his own be-
half, he thereby reserves to himself a power of disposing of the prop-
erty, and consequently there is no final appropriation and the property
does not on shipment pass to the purchaser. So if the vendor deals
with, or claims to retain, the bill of lading in order to secure the con-
tract price, as when he sends it forward with a draft attached, and
with directions that it is not to be delivered to the purchaser until pay-
ment of the draft, the appropriation is not absolute, and until payment,
or tender of the price, is conditional only, and until then the property
of the goods does not pass to the purchaser. We see no principle
which distinguishes the case of a vendor and vendee, in this respect,
from that of a correspondent or agent, buying for another, yet paying
the price from his own means, or from moneys by agreement raised
upon the property, or upon his own credit, and holding the property
N. Y. 568; Turner v. Trustees, 6
Bxch. 543; Mlrabita v. Imperial, etc.,
Bank, L. R. 3 Exch. Dlv. 164;
Shepherd v. Harrison, L. R. 4 Q. B.
196; Ogg V. Shuter. 1 C. P. D. 47.
Whether what Is retained Is the
general property or only a special
property in the goods depends largely
upon the circumstances. The Uni-
form Sales of Goods Act, { 20, p. 2,
provides that where the title would
have passed except for the form of
the bill of lading, the seller's prop-
erty shall be deemed to be only for
the purpose of securing performance.
1288
CHAP. IV]
DUTIES AND LIABIUTIES OF PRINCIPAL
[§ I7OI
as security until the principal has made reimbursement. Such is the
purpose of the parties. There is no intent that the property shall be
appropriated until payment is made. And unless third parties are
unavoidably misled to their harm, they have no cause to complain of a
purpose so reasonable and productive of so good results.'' *'
VIIL
RIGHTS OP SUB-AGENT AGAINST PRINCIPAL,
§ 1701. When principal liable for his compensation.^ — ^The right
of the sub-agent to recover his compensation from the principal de-
pends upon considerations already discussed. As has been seen, the
general principle is delegatus non potest delegari. The principal, how-
ever, may, either expressly or by implication, consent that a substitute
may be employed, and he may do this upon one or the other of two
conditions: first, he may consent merely that the agent may emprfoy
an assistant as his, the agent's, servant or agent, without at all consent-
ing that any privity of contract shall be created between himself and
the assistants so employed. Or, secondly, he may expressly or by im-
plication, authorize the appointment of a substitute or assistant for
him, the principal, and as his, the principal's, agent. In this case,
privity of contract will exist between the principal and the sub-agent."
In the second of these classes of cases where the appointment of the
sub-agent as the agent of the principal, is expressly or impliedly au-
thorized by the principal, the latter is liable for the sub-agent's cora-
pensation,'* but where the agent, having undertaken the performance
of some duty to his principal, employs upon his own account a servant
or sub-agent to assist him, the sub-agent must look to his immediate
employer, — ^the agent, — ^and not to the principal.*^
•T Fanners', etc, Bank v. Logan, 74
N. T. 56S; Moors v. Kidder, 106 N.
T. 82. But such a correspondent can-
not, even with the consent of the
principal, acquire a general lien tor
other Indebtedness which will pre-
vail against another correspondent
jointly interested in the same way in
the same goods. Drexel v. Pease, 138
N. T. 129.
••See ante, Book I, Chap. YI.
••See EBstland v. Maney, 88 Tex.
Civ. App. 147; Cotton States Life Ins.
Co. V. Mallard, 67 Ga. 64; Cf. U. S.
Life Ins. Co. v. Hessherg, 27 Ohio St.
398. '
«<» See ante, Chap. VI. Text quoted
with approval. Houston Co. Oil Mills
ft Mfg. Co. V. Bibby, 43 Tex. Civ. App.
100; Nat. Cash Register Co. ▼. Hagan
ft Co., 87 Tex. Civ. App. 281; Wil-
liams V. Moore, 41 Tex. Civ. App. 402.
Mere bond salesman has no implied
authority to employ a broker to as-
sist him at his prineipars expense.
Fudge V. Seckner Contracting Co., tO
1289
§ i/oa]
THE LAW OF AGENCY
[book IV
§ 170a.
Effect of ratification. — Although at the time of
the appointment, the employment of a sub-agent may not have been
authorized, this defect can, as in other cases, be cured by the subse*
quent ratification by the principal.^ It should be kept in mind, how-
ever, although it seems frequently to be overlooked, that the thing
IlL App. 86. A real estate broker,
employed to sell land for a commls-
sion, has no implied authority to ob-
tain assistants at the principal's ex-
pense. Carroll v. Tucker, 2 N. Y.
Misc. 397; Southack t. Ireland, 109
N. T. App. DlT. 45; Kohn ▼• Jacobs,
4 N. Y. Misc. 265; Hanback v. Corrl-
gan, 7 Kan. App. 479; Hill t. Mor-
ris, 15 Mo. App. 822; Cleaves v. Stock-
well, 33 Me. 841.
«iln CarroU v. Tucker, 2 N. Y.
Misc. 897, one Thompson, a broker
employed by defendant to sell land,
had, without express authority, em-
ployed plaintiff to assist him and
agreed to pay him a commission.
Plaintiff found a purchaser to whom
defendant sold, and now sned for
commissions. JBfeld, that he oould not
recover. "The respondent argues,"
•aid the court, "that by consummat-
ing the sale which he negotiated, the
appellants are estopped to question
his authority, upon the ground that
the enjoyment of the fruits of an
agent's act charges the principal
with responsibility. The principle
upon which the respondent relies is
of recognized and salutary operation;
but he misapprehends Its Import and
application. The rule as propounded
In a leading case of this state is,
that 'when an agent, acting within
the soope of his actual authority, per-
petrates a fraud for the benefit of his
principal, and the latter receives the
fruits of it, he thereby adopts the
fraudulent acts of his agent.' Smith
V. Sweeny, 35 N. Y. 291; Mayer v.
Dean, 116 id. 556, 6 L. R. A. 540.
Here, the act of Thompson in sub-
stituting plaintiff as broker, if there
were such substitution, was beyond
the scope of Thompson's authority;
and the transaction, the enjoyment of
the fruits of which is supposed to
estop the appellants, was not the
transaction of their agent but of a
stranger. The rule was never ap-
plied, and in reason can never be ap*
plied, so as to validate a delegation
of his agency by a broker; else the
principal would be at the mercy of
his broker, and might be burdened
with liability to as many deputies as
the broker should choose to appoint"
In Homan v. Brooklyn Life Ins.
Co., 7 Mo. App. 22, where a life in-
surance solicitor, employed by de-
fendant's agent without anthority,
was suing for payment for services,
the court said: "Where a person is
employed by an agent, the mere fact
that the principal of the agent knows
that the person so employed is act-
ing in the business committed by the
principal to his agent, and accepts
such employment as beneficial, does
not prove an agreement on the prin*
cipai's part to pay for the services of
the person so employed. To hold the
principal to payment, the element of
privity of contract between the prin-
cipal and subagent should appear.
So, acts of recognition and the ac-
ceptance of services on the part of
the principal do not necessarily tend
to prove ratification la the sense here
claimed; for the question arises, rati-
fication of what? If, for example.
Cole and Taylor [general agents of
the company], relying on what Wil-
son [the agent] seems to have dons
(that is, hired the plaintiff under the
obligation to pay him), accepted the
plaintiff's services as the employee of
and to be paid by Wilson, the acts of
Cole and Taylor in this behalf in no
way proves or tend to prove, their
1290
CHAP. IV]
DUTIES AND LIABILITIES OF PRINCIPAL
[§ 1703
which is tlius ratified, like the thing that might be originally authorizedi
may be either the appointment of a sub-agent at the agent's risk and
expense, or the appointment of a sub-agent at the principars risk and
expense. It must be kept in mind also that there can ordinarily be no
effective ratification without full knowledge on the part of the prin-
cipal of all the material facts. The mere fact that the principal knew
that a sub-agent had been employed would not warrant the inference
that he knew that this sub-agent was employed at the principal's ex-
pense. The fact that the principal has received the benefit of an act
is often evidence of a ratification, but fuU knowledge of the facts or a
voluntary waiver of such knowledge, is just as essential here as in
other cases of ratification. The retention of the benefits of an act is
also often evidence of a ratification. But as has been pointed out in
another place, this retention must be voluntary and can ordinarily be
operative only where the alternative of restoring the benefit was open
to him.
§ 1703. Same rules govern reimbursement and indenmity. — The
same general principles would govern the sub-agent's claim for reim-
aoceptance or ratification of any em-
ployment of the plaintiff as a sub-
agent to be paid by the company."
In Williams ▼. Moore, S4 Tex. Civ.
App. 402, it appeared that the prin-
cipal had authorized an agent to en-
deavor to sell land, and that the
agent had employed a broker to as-
sist him and had promised him a
commlsston. It was contended that
with knowledge of these facts tli9
principal had made a sale to a pur*
chaser found by the broker* It was
held that, even if these facts be eon-
ceded there was not such a ratifica-
tion as wonld make the principal
liable to pay the broker's commission.
The distinction between employment
of a subagent as the agent's agent
and as the principal's agent was
pointed out, and it was said that in*
asmuch as the owner has a natural
and inherent right to sell his prop-
erty the mere fact that he sold to a
person whose attention was oalled to
the property by the subagent was not
necesBarily a ratification of the prom-
ise made by the agent to the sub-
agent To the argument that the
principal may not adopt a part of a
contract and repudiate the residue,
it was said that the contract the prin-
cipal adopted was the contract of
the purchaser to buy the land (which
he adopted In full) and not the con-
tract between the agent and sub-
agent Hanback v. Corrigan, 7 Kan.
App. 479, is substantially to the same
effect
In Hombeck ▼. Qilmer, 110 La. 600,
an agent employed to sell land ar-
ranged with the plaintiff, Hornbeck»
to assist hiuL The agent wrote to
his principal, the defendant, that he
had made this arrangement and said
"if the sale is made to Uombeck's
party» he will expect part of the com-
mission which I assume you wiU be
willing to pay." Defendant made no
objections, and had some correspond-
ence directly wit)i Hombeck. After
this defendant made the sale to a
buyer produced by Hombeck. Held
(In a not very satisfactory opinion),
to be such a ratification of Horn-
beck's employment as to entitle him
1291
§§ 1704,1705]
THE LAW OF AGENCY
[book IV
bursement for expenses and indemnity against loss or injury.** Where
the principal at the time was undisclosed, a sub-agent, who would be
entitled to reimbursement or indemnity as against a disclosed princi-
pal, may enforce his claim against the previously undisclosed principal
when disclosed upon die same conditions as any other person dealing
with an undisclosed principal.**
§ 1704. How as to protection against injury. — So where in ac-
cordance with the principles referred to, the sub-agent is to be deemed
the agent of the principal, he would be entitled to the same remedies
as any other agent for an injury occasioned by the principal's negli-
gence.** Where, however, he is the agent of the agent merely, the
same rules would apply which govern the relation to the agents or
servants of an independent contractor.**
§ 1705. When sub-agent entitled to a lien. — A sub-agent ap-
pointed without the express or implied authority of the principal and
who is therefore regarded as the agent or servant of the agent merely,
can, by virtue of that relation, acquire no lien or charge upon the
goods or property of the principal confided to the possession of the
agent.** But where the sub-agent, being appointed by the express or
implied authority of the principal, is, in law, to be regarded as the
agent of the latter, such sub-agent is entitled to a lien to the same ex-
tent as any other agent.**^ So although the appointment of the sub-
agent was originally unauthorized, yet if his appointment has been
subsequently ratified by the principal, by availing himself of the pro-
to recoTer commissions from the do^
fendant
The case of Hurt v. Jones, 105 Mo.
App. 106, Is substantially to the same
effect. No reference Is made to Ho-
man t. Brookyln Life Ins. Co., tupra.
So In Dewing ▼. Hutton, 48 W. Va.
676, where an agent had been em-
ployed to buy land and engaged an-
other person to assist him for a
compensation, it was held that if the
principal accepted the purchases
made he became responsible for the
commissions of the subagent, upon
the ground that If he takes the bene*
fits of the seryices he must pay for
them. Howerer sound the eonelu*
sion in this case may be, the opin-
ion is not a very convincing one.
a See Mte, K 649-^61.
M Barrel! v. Newby, 62 0 CL A.
182, 127 Fed. 666.
M See ante, ^ 662 et 9eq.
« See a^te, % 1642.
M Story on Agency, f 389; Maanss
V. Henderson, 1 East, 386; Man y.
Shiffner, 2 East, 628; Westwood ▼.
Bell, 4 Camp. 848.
The right of Hen does BOt extend
to one not in privity with the prin-
cipal. Meyers v. Brateepiece, 174 Pa.
119; Clark ▼. Hale, 84 Goan. 898;
HollingBWorth v. Dow, 19 Pick.
(Mass.) 228.
«T story on Agency, § 389; McKen-
sle ▼. Nevius, 22 Me. 188, 8S Am.
Dee. 291.
1292
CHAP. IV] DUTIES AND UABILITIES OF PRINCIPAL [§ I705
ceeds or benefits accruing from his acts, or otherwise, the sub-agent's
lien will attach.**
At the same time, however, the sub-agent, though appointed without
authority, "will be at liberty to avail himself of his general lien against
the principal to the extent of the lien particular or general, which the
agent himself has against the principal, by way of substitution to the
rights of the agent, if the acts of the latter or his own are not torti-
ous." *•
So, in many cases, proceeds Judge Story, "a sub-agent who acts
without any knowledge or reason to believe that the party employing
him is acting as an agent for another, will acquire a rightful lien on
the property for his general balance. Thus, for example, if a sub-
agent or broker, at the request of an agent, should effect a policy on a
cargo, supposing it to be for the agent himself, but in fact it should
,be for a third person for whom the agent has purchased the cargo, and
afterwards, and while the policy is in the broker's hands, he should
make advances to the agent, before any notice of the real state of the
title to the property, he will be entitled to a lien on the policv, and on
the money received on it, to the extent of the money so advanced, and
also (as it should seem), for his general balance of account against the
agent." "
«s Story on Agency, 9 889; McKen- S. 298; Cochran v. Irlam, 2 M. A S
zie V. Nevlufl, supra, 301, note; Sehmallng v. Thomllnson
«• Story on Agency, S 389; McKen- 6 Taunt. 147.
zle V. NeviuB, iupra; MaansB y. Hen- bo Story on Agency, 8 890; Mann v.
derson, 1 East, 335; Man v. Shiffner, Forrester, 4 Camp. 60; Weatwood v
2 East, 523; McComble v. Da vies, 7 Bell, 4 Camp. 849.
East, 7; Solly v. Rathbone. 2 M. A
1293
r"
a bios Ob 135 aas ^
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